Economic Environment - The U.S. stock market is experiencing heightened volatility due to fears of an economic slowdown linked to newly imposed tariffs, including a 25% tariff on imports from Mexico and Canada and a 10% tariff on imports from China [1][2] - Trade from Canada, Mexico, and China accounts for 24% of the U.S. GDP, contributing to investor concerns and resulting in a 5% decline in the S&P 500 index over the past month [2] Market Performance - Year-to-date performance shows declines in major indices: Dow Jones Industrial Average down 1.3%, Nasdaq Composite down 7.9%, and S&P 500 down 3.6% [3] - The sluggish recovery in global automotive and industrial markets, driven by muted consumer demand and supply chain disruptions, is undermining investor confidence [2] Growth-Rated Tech Stocks - Growth-rated tech stocks such as NVIDIA, Marvell Technology, Okta, and RingCentral are highlighted as potential investment opportunities due to their financial stability and growth potential [4][5] - These stocks have shown resilience in the current macroeconomic environment and are expected to maintain growth momentum [5] Individual Company Insights - **RingCentral (RNG)**: Strong position in the Unified Communication as a Service (UCaaS) market, with a fiscal 2025 EPS estimate of $4.20, indicating a year-over-year growth of 13.5% [7][8] - **NVIDIA (NVDA)**: Leading in AI with its GPUs, fiscal 2026 EPS estimate of $4.40 reflects a year-over-year growth of 47.2% [9][12] - **Okta**: A key player in identity security, with a fiscal 2026 EPS estimate of $3.16, indicating a year-over-year growth of 12.5% [13][15] - **Marvell Technology (MRVL)**: Benefits from strong demand in the data center market, with a fiscal 2026 EPS estimate of $2.76, indicating a year-over-year growth of 75.8% [16][18] Investment Ratings - All highlighted stocks carry favorable Zacks Ranks: RingCentral and NVIDIA at Rank 1, while Okta and Marvell Technology at Rank 2, with Growth Scores of A or B indicating solid investment opportunities [6][12][15][18]

Company Overview - Invest Heroes LLC is a CIS-based research firm established in 2018, providing equity and fixed income research services that have gained local recognition among professional investors and private clients [1] - The firm covers over 120 Russian, US, and Chinese stocks, as well as more than 200 Russian bonds, including corporate and state-owned enterprises [1] - The research services are offered as a paid service to institutional clients, asset managers, and approximately 3000 private clients [1] Team and Recognition - The team consists of 2 strategists and 9 analysts specializing in equity and fixed income markets, achieving global professional recognition [1] - Within the first three years, the firm gained entry into Refinitiv and Factset, participated in Refinitiv consensus, and became recognized as the best analysts in the Refinitiv rating for several Russian companies [1] - The firm is in the process of signing with S&P Market Intelligence, indicating further growth and recognition in the industry [1] Research Approach - The forecasts provided by the firm are often ahead of the market due to a detailed business model built for each company [1]

Industry Overview - Unified Communication as a Service (UCaaS) is becoming a leading network standard, driven by the cloud business model, which offers an affordable, scalable, and easily deployable solution for unified collaboration communication, particularly popular among large enterprises by 2025 [1] - The UCaaS market is projected to grow from $56.14 billion in 2025 to $175.83 billion by 2030, with a compound annual growth rate (CAGR) of 25.65% during the forecast period [6] Technological Advancements - The UCaaS market will see deeper AI integration in 2025 to enhance communication, a shift towards mobile-first platforms, increased adoption of Web Real-Time Communication (WebRTC), and a focus on security and compliance [2] - AI-powered capabilities such as virtual assistants, automated chatbots, and predictive intelligence will improve communication efficiency and enhance the remote work experience [3] - The introduction of 5G networks is transforming video and audio conferencing by enabling fast, low-latency communication, with advancements like 5G network slicing improving video call quality [4] Key Players - RingCentral (RNG), Cisco Systems (CSCO), and Crexendo (CXDO) are key players positioned to benefit from the growing UCaaS market [6] - RingCentral has been recognized as a Leader in the 2024 Gartner Magic Quadrant for UCaaS for ten consecutive years, bolstered by strategic partnerships with companies like AT&T and Cox Communications [8][9] - Cisco has also been recognized as a Leader in the 2024 Gartner Magic Quadrant for UCaaS for the sixth consecutive year, highlighting its commitment to innovation through its Webex platform [11] - Crexendo has expanded its presence in the UCaaS sector and won the Unified Communications Excellence Award for the fourth time, showcasing its leadership and innovation [15] Earnings Estimates - The Zacks Consensus Estimate for RingCentral's 2025 earnings is $4.20 per share, which has increased by a penny in the past 30 days [10] - Cisco's 2025 earnings estimate is $3.72 per share, reflecting a 1.92% increase over the past 30 days [14] - Crexendo's 2025 earnings estimate is 28 cents per share, which has risen by 12% over the past 30 days [17]

Group 1 - RingCentral (RNG) has experienced significant selling pressure, resulting in a 20% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously predicted [1] - The stock is currently in oversold territory, indicated by an RSI reading of 28.26, suggesting a potential trend reversal is imminent [5] - There has been a 23.5% increase in the consensus EPS estimate for RNG over the last 30 days, driven by a strong agreement among sell-side analysts, which typically correlates with price appreciation [6] Group 2 - RNG holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks in the market [2] Company Analysis - Ringcentral (RNG) is highlighted as a strong value stock, currently holding a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating its attractiveness to value investors [3] - The P/S ratio for RNG is 0.99, significantly lower than the industry average of 1.59, suggesting it may be undervalued [4] - RNG's P/CF ratio stands at 7.38, compared to the industry's average of 19.18, further indicating its potential undervaluation based on cash flow outlook [5] - The stock's P/CF has fluctuated between a high of 16.16 and a low of 7.32 over the past year, with a median of 11.47, reinforcing the notion of its current undervaluation [5] - Overall, the combination of RNG's strong earnings outlook and favorable valuation metrics positions it as an impressive value stock at this time [6]

Here are two stocks with buy rank and strong value characteristics for investors to consider today, February 28th:  Ringcentral (RNG) : This company which is a leading provider of contact center software-as-a-service (SaaS) solutions, along with global enterprise cloud communications, video meetings, collaboration, and customer engagement solutions that enable businesses to communicate, collaborate, and connect, carries a Zacks Rank #1 (Strong Buy), and has witnessed the Zacks Consensus Estimate for its cur ...

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation m ...

Financial Performance - Total revenues for the year ended December 31, 2024, were $2,400.4 million, with $2,297.2 million attributed to subscriptions[350]. - Total revenues for 2024 reached $2,400,395, an increase of 9% from $2,202,429 in 2023[358]. - Subscription revenues grew to $2,297,192 in 2024, up 9% from $2,100,329 in 2023[358]. - Gross profit for 2024 was $1,694,888, representing a 10% increase from $1,538,138 in 2023[358]. - The net loss for 2024 was $58,288, a significant improvement compared to a net loss of $165,240 in 2023[358]. - The company reported a basic and diluted net loss per share of $0.63 for 2024, improving from $1.74 in 2023[358]. - The total net loss before provision for income taxes for the year ended December 31, 2024, was $47.225 million, compared to a loss of $156.845 million in 2023[507]. - The company reported a net loss of $58.288 million for the year ended December 31, 2024, compared to a net loss of $165.240 million in 2023, indicating an improvement of approximately 64.7%[520]. - Basic net loss per share for 2024 was $(0.63), a significant improvement from $(1.74) in 2023[520]. Cash and Liquidity - The company had cash and cash equivalents of $242.8 million as of December 31, 2024[332]. - Cash and cash equivalents increased to $242,811 in 2024, up from $222,195 in 2023, reflecting a growth of 9.3%[355]. - The company experienced a net increase in cash of $20.616 million in 2024, contrasting with a net decrease of $47.789 million in 2023, highlighting improved liquidity[364]. - Total cash, cash equivalents, and restricted cash at the end of 2024 was $242.811 million, up from $222.195 million at the end of 2023[364]. Debt and Liabilities - Outstanding amounts included $161.3 million from 2025 Convertible Notes and $609.1 million from 2026 Convertible Notes[333]. - The company had $370.0 million principal outstanding under its Term Loan as of December 31, 2024[334]. - Total liabilities decreased to $2,131,343 in 2024 from $2,248,033 in 2023, a reduction of about 5.2%[355]. - The fair value of the 0% convertible senior notes due 2026 was approximately $557.4 million as of December 31, 2024[434]. - As of December 31, 2024, the net carrying amount of long-term debt was $1,347.9 million, down from $1,525.5 million in 2023[443]. - The total interest expense related to long-term debt for the year ended December 31, 2024, was $63.4 million, compared to $33.9 million in 2023[457]. Investments and Expenses - Research and development expenses were $329,323 in 2024, slightly down from $335,851 in 2023[358]. - The company capitalized $59.3 million in internal-use software development costs in 2024, compared to $56.0 million in 2023, showing continued investment in technology[377]. - The company incurred restructuring costs of $12.6 million in 2024 as part of efforts to optimize its cost structure[524]. - Advertising costs for the years ended December 31 were $96.0 million in 2024, $97.0 million in 2023, and $125.6 million in 2022[411]. Stock and Shareholder Information - The company repurchased 9,600 thousand shares of Class A Common Stock for a total amount of $316.9 million during the year ended December 31, 2024, compared to 10,066 thousand shares for $315.0 million in 2023[483]. - The total share-based compensation expense for the year ended December 31, 2024, was $339.1 million, a decrease of 20.5% from $426.7 million in 2023[490]. - The Company has 138,445 thousand shares of Class A Common Stock reserved for future issuance as of December 31, 2024[481]. - The Company has authorized 1,000,000,000 shares of Class A Common Stock and 250,000,000 shares of Class B Common Stock for issuance[479]. Tax and Regulatory Matters - The total income tax provision for 2024 was $11.063 million, an increase from $8.395 million in 2023[510]. - As of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $1.4 billion, which do not expire[512]. - Unrecognized tax benefits at the end of 2024 totaled $30.193 million, a decrease from $31.976 million in 2023, reflecting a reduction of approximately 5.6%[515]. - The company has a full valuation allowance as of December 31, 2024, meaning current adjustments to unrecognized tax benefits will not impact the effective income tax rate[517]. Acquisitions and Goodwill - The Company acquired customer relationships and intellectual property assets for Mitel's offerings for a cash consideration of $26.3 million, with goodwill recognized at $7.7 million attributed primarily to assembled workforce and synergies[461]. - The acquisition of Hopin, Inc. was completed for a total purchase price of $22.2 million, including $14.7 million in cash and $7.5 million in contingent consideration, with goodwill recognized at $12.8 million[463]. - The carrying value of goodwill increased to $82.99 million as of December 31, 2024, from $67.37 million in 2023[426]. Accounting and Auditing - The company has adopted a new accounting method for convertible debt as of January 1, 2022[342]. - The company has been audited by KPMG LLP since 2010, with the latest audit report dated February 24, 2025[353].

Core Insights - RingCentral (RNG) reported fourth-quarter 2024 non-GAAP earnings of 98 cents per share, exceeding the Zacks Consensus Estimate by 2.08% and reflecting a 14% year-over-year increase [1] - Total revenues reached $614.5 million, surpassing the consensus mark by 0.37% and showing a 7.6% year-over-year growth, driven by a robust product portfolio and strong subscription revenues [2] - Despite the positive earnings report, RNG shares fell 2.57% in pre-market trading due to concerns over a subdued first-quarter 2025 outlook [2] Financial Performance - Software subscription revenues, which account for 96% of total revenues, increased 7.7% year over year to $589.7 million, beating the Zacks Consensus Estimate by 0.26% [4] - Other revenues, making up 4% of total revenues, rose 3.9% year over year to $24.8 million, exceeding the Zacks Consensus Estimate by 2.95% [4] - Annualized Exit Monthly Recurring Subscriptions (ARR) grew 7% year over year to $2.49 billion, with enterprise ARR also increasing 7% to $1.07 billion [4] Operating Metrics - Non-GAAP gross margin for the fourth quarter contracted by 110 basis points year over year to 77.3% [6] - Non-GAAP operating income was $131.2 million, up 12.1% year over year, with the operating margin expanding 90 basis points to 21.3% [7] - Non-GAAP EBITDA margin improved by 70 basis points year over year to 24.9% [7] Cash Flow and Share Repurchase - As of December 31, 2024, cash and cash equivalents were $243 million, up from $213 million as of September 30, 2024 [8] - Cash flow from operations was $132.9 million in the fourth quarter, compared to $127.2 million in the previous quarter [8] - The company repurchased shares worth $77 million in the fourth quarter, with a remaining repurchase authorization of $270 million [9] Guidance - For Q1 2025, RingCentral expects revenues of $607-$612 million, indicating year-over-year growth of 4-5%, with subscription revenues projected at $587-$592 million [10] - For the full year 2025, the company anticipates revenue growth of 4-6% and subscription revenue growth of 5-7% [11] - Non-GAAP earnings for 2025 are expected to be between $4.13 and $4.27 per share, with share-based compensation projected at $300-$310 million [11]

Financial Data and Key Metrics Changes - Q4 total revenue reached $615 million, with operating margins at 21.3%, both exceeding guidance [10] - Full year total revenue increased by 9% to $2.4 billion, with operating margins improving to 21% from 19.1% in 2023 [12][50] - Free cash flow for Q4 was a record $112 million, contributing to a total of $403 million for the year, up 24% year-over-year [11][50] - Stock-based compensation (SBC) as a percentage of revenue declined to 14% from 20% in 2023, with a 40% reduction in the value of net new shares granted [13][51] Business Line Data and Key Metrics Changes - The new product RingCX has over 700 customers, up from approximately 500 in the previous quarter, indicating strong adoption [17] - RingSense, the conversation intelligence platform, has over 2,000 customers, reflecting a 65% sequential increase [21] - RingCentral Events accounts increased to 700, up from about 600 in Q3 2024 [22] Market Data and Key Metrics Changes - Approximately 85% of the company's business is UCaaS, maintaining a market share of about 20% [53] - The CCaaS market is expected to see strong adoption of RingCX, which is projected to more than double in revenue in 2025 [53] Company Strategy and Development Direction - The company aims to empower businesses with an AI-first platform, focusing on integrating AI across its product portfolio [14] - Key priorities include building upon UCaaS leadership, expanding total addressable market (TAM) through multiproduct offerings, and driving profitable growth [25] - The introduction of AI Receptionist (AIR) is a significant step in the company's AI strategy, enhancing customer interactions [15][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the strong financial profile and culture of innovation [12][23] - The company anticipates generating $500 million in free cash flow in 2025, which will support debt reduction and share repurchases [59] - Management acknowledged macroeconomic uncertainties but emphasized strong margin expansion and free cash flow generation [127][128] Other Important Information - The company has repurchased approximately 9.7 million shares for $322 million during the year, with an additional $100 million approved for share repurchases [51] - The company is committed to reducing gross debt to $1 billion by the end of 2026 [55] Q&A Session Summary Question: Market share stability and future gains - Management clarified that RingCentral has maintained a market share of around 20% and is not losing ground to competitors like Microsoft and Zoom [66][67] Question: Insights on new CFO's contributions - The new CFO highlighted the importance of innovation and efficiency improvements in driving profitable growth [78] Question: Sales and positioning of RingCX - Management noted that RingCX is performing well in both down-market and up-market segments, with significant traction in large deals [84][86] Question: CCaaS ARR disclosure - Management indicated that CCaaS ARR grew in low double digits, with RingCX being the primary driver of new product ARR [91] Question: Impact of GSP partnerships - Management emphasized the unique position of GSP partnerships in expanding the reach of their multiproduct strategy [106][107] Question: Guidance context and market growth - Management acknowledged macroeconomic factors but expressed confidence in their guidance and ability to manage costs effectively [126][128]