Tired of losing money? Our Tech Contrarians team of Wall Street analysts sifts through the noise in the tech industry and captures outperformers through a coveted research process. We let the work speak for itself here .We’re picking up our coverage of RingCentral, Inc. (NYSE: RNG ); the last article we wrote on RingCentral dates back to December 2022. We now update our thoughts on the stock and seek toAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies me ...

Financial Data and Key Metrics Changes - Subscription revenue for Q3 2024 was $583 million, up 10% year-over-year, exceeding guidance [35] - ARR reached $2.48 billion, a 9% increase year-over-year, with enterprise ARR rising 11% and mid-market and small business up 8% [35] - Free cash flow was $105 million, up 51% year-over-year, with a free cash flow margin of 17.3%, an increase of 480 basis points [38][39] - Operating margin increased approximately 2 points year-over-year to 21%, driven by spending discipline and efficiency [37] Business Line Data and Key Metrics Changes - RingCX, the new CCaaS product, saw strong traction with over 500 customers, a 45% sequential increase, and significant ARPU expansion [22][24] - RingSense, the conversation intelligence platform, now has over 1,200 customers, also up 45% sequentially [25] - RingCentral Events added over 100 new customers during the quarter, including notable Fortune 500 companies [26] Market Data and Key Metrics Changes - The company has been recognized by Gartner as a Leader in the 2024 Magic Quadrant for UCaaS for the tenth consecutive year, highlighting its competitive advantage in voice services [13] - The integration with Microsoft Teams continues to drive enterprise growth, with many larger customers choosing RingCentral as an add-on to Teams [77] Company Strategy and Development Direction - The company aims to solidify its UCaaS leadership by infusing AI across its portfolio and expanding its total addressable market (TAM) through new AI-powered products [10] - A strategic partnership with Verint was announced to enhance RingCX's capabilities, targeting a wide range of use cases from SMBs to large enterprises [23][66] - The focus on reducing stock-based compensation and returning capital to shareholders through buybacks is part of the company's strategy to improve financial health [39][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of AI products, indicating that AI will be a significant growth driver and ARPU solidifier [56][60] - The company is optimistic about the performance of RingCX and expects it to capture a meaningful share of the CCaaS market [24][51] - The outlook for Q4 2024 includes subscription revenue growth of 7% to 8% and total revenue growth of 7% [47] Other Important Information - The company has secured a $275 million delayed draw commitment to its Term Loan A, bringing total commitments to $350 million [42] - The liquidity position as of Q3 stands at $788 million, which includes cash on hand and undrawn commitments [43] Q&A Session Summary Question: Insights on AI strategy and its impact on growth - Management highlighted that AI is transformative and is already being monetized, with products like RingSense contributing positively to ARPU [56][60] Question: Trends in CCaaS for SMB vs. enterprise - RingCX is performing well in both segments, with strong growth in SMB and enterprise accounts, indicating its versatility [62][64] Question: Gross margin outlook - The gross margin is still strong at 81%, with slight headwinds due to investments in new products like RingCX [68] Question: Performance of Microsoft Teams opportunities - The integration with Teams is beneficial for larger customers, and the company expects to enhance RingCX's compatibility with Teams in the future [78] Question: Drivers of ARPU expansion - ARPU is being driven by cross-selling new products like RingCX and AI-based solutions, with a focus on delivering high value for the price [80][84]

Core Insights - RingCentral reported revenue of $608.77 million for Q3 2024, a year-over-year increase of 9.1% and a surprise of +1.14% over the Zacks Consensus Estimate of $601.91 million [1] - The company achieved an EPS of $0.95, compared to $0.78 a year ago, with an EPS surprise of +3.26% over the consensus estimate of $0.92 [1] Financial Performance Metrics - Mid-Market and Enterprise ARR was reported at $1.07 billion, below the average estimate of $1.55 billion from two analysts [3] - Annualized Exit Monthly Recurring Subscriptions (ARR) reached $2.48 billion, slightly above the average estimate of $2.47 billion from two analysts [3] - Subscription revenues totaled $582.97 million, exceeding the average estimate of $573.77 million from seven analysts, reflecting a year-over-year change of +9.8% [3] - Other revenues were reported at $25.80 million, below the average estimate of $28.01 million from seven analysts, indicating a year-over-year decline of -4.9% [3] Stock Performance - Over the past month, RingCentral shares have returned +23.3%, significantly outperforming the Zacks S&P 500 composite's +3.2% change [4] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [4]

Core Insights - RingCentral's (RNG) shares have increased by 7.4% over the past month, outperforming the Zacks Computer & Technology sector's growth of 5.6% due to its expanding AI initiatives, particularly the launch of RingCX, an AI-first cloud contact center product [1] - The company's Annual Recurring Revenue (ARR) reached $2.43 billion in Q2 2024, driven by strong demand for its Unified Communications as a Service (UCaaS) and contact center SaaS solutions [2] - RingCentral's strategic partnerships, including a collaboration with Zayo to launch Zayo UC+, are enhancing its AI capabilities and customer experiences [2] Growth Drivers - The expansion into vertical markets such as healthcare, financial services, and retail has significantly contributed to RingCentral's growth, with notable improvements in operational efficiency reported by clients like MedCare Equipment [3] - The enterprise segment has shown strong momentum, with double-digit year-over-year growth in Q2 2024 and nearly 20 deals closed with total contract values exceeding $1 million, alongside a 30% increase in average TCV for large deals [4] - The partnership with Vodafone Business aims to enhance customer experiences across 30 markets by early 2025, further solidifying RingCentral's market position [5] Financial Outlook - For Q3 2024, RingCentral anticipates revenues between $600.5 million and $603.5 million, reflecting an 8% year-over-year growth, with the Zacks Consensus Estimate at $601.9 million, indicating a 7.84% increase from the previous year [6] - The consensus estimate for earnings stands at 92 cents, suggesting a year-over-year growth of 17.95% [7] Investment Considerations - RingCentral's stock is currently viewed as undervalued, with a Value Score of A and a forward 12-month Price/Sales ratio of 1.26, significantly lower than the industry average of 3.40 [8] - The company holds a Zacks Rank 2 (Buy), indicating positive sentiment among analysts [8]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Ringcentral (RNG) as a strong value stock based on various financial metrics [2][8]. Company Metrics - Ringcentral (RNG) has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock's P/E ratio is 7.51, significantly lower than the industry average of 20.62, suggesting it may be undervalued [4]. - RNG's Forward P/E has fluctuated between 6.89 and 10.63 over the past 52 weeks, with a median of 8.73 [4]. - The PEG ratio for RNG is 0.37, compared to the industry's average of 0.96, indicating favorable growth expectations relative to its valuation [5]. - Over the last 12 months, RNG's PEG has ranged from 0.24 to 0.48, with a median of 0.35 [5]. - The P/S ratio for RNG is 1.2, while the industry average is 2.53, further supporting the notion of undervaluation [6]. - RNG's P/CF ratio stands at 11.02, compared to the industry's average of 13.08, reflecting a strong cash flow outlook [7]. - The P/CF ratio has varied from -126.77 to 16.16 over the past 52 weeks, with a median of 11.82 [7]. Investment Outlook - The combination of RNG's strong value metrics and positive earnings outlook positions it as an attractive investment opportunity for value investors [8].

Core Viewpoint - RingCentral (RNG) has experienced an 18.3% decline in share price year-to-date, contrasting with a 12.6% rise in the Zacks Computer & Technology sector, primarily due to challenging macroeconomic conditions, unfavorable forex, and stiff competition [1] Group 1: Company Performance and Prospects - RingCentral's expanding partner base, including a recent partnership with Zayo, is expected to enhance its growth prospects [1][5] - The new Zayo UC+ offering integrates RingCentral's AI-driven UCaaS solution with Zayo's network infrastructure, providing a comprehensive platform for communication services [2] - The enterprise segment showed strong momentum, with double-digit year-over-year growth in the UCaaS business and approximately 20 deals exceeding $1 million in total contract value [5] Group 2: Strategic Partnerships and Innovations - An expanded partnership with Vodafone Business aims to offer Vodafone Business Contact Center with RingCentral, extending to 30 markets by early 2025 [6] - RingCentral's AI-powered contact center, RingCX, has secured a significant client and introduced over 300 new features, enhancing integrations with platforms like ServiceNow and Microsoft Teams [6] Group 3: Financial Guidance and Valuation - For Q3 2024, RingCentral anticipates revenues between $600.5 million and $603.5 million, reflecting an 8% year-over-year growth [8] - The consensus estimate for Q3 2024 earnings is 92 cents, indicating a 17.95% year-over-year growth [9] - RingCentral is considered an attractive investment due to its growth initiatives, with a Growth Score of A and a Valuation Score of A, indicating it is currently undervalued [9]

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers. Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, i ...

Core Viewpoint - RingCentral (RNG) has shown resilience in its stock performance, gaining 1.9% over the past six months, contrasting with a 13.4% decline in the Zacks Internet - Software and Services industry, primarily driven by its expanding AI initiatives and the launch of its AI-based contact center solution, RingCX [1] Group 1: AI Initiatives and Product Development - RingCentral has introduced new AI features for its RingCX platform, including real-time AI-powered assistant support and AI-based coaching insights for managers [2] - The Intelligent Virtual Agent (IVA) framework allows customers to integrate their preferred IVA with RingCX, supported by partners like Yellow.ai, Cognigy, and Google DialogFlow [2] - The AI features will be available in the U.S. in the coming months, with international expansion expected by early 2025, which is anticipated to increase demand for RingCX [3] Group 2: Customer Adoption and Growth Metrics - Since its launch in November 2023, RingCX has been adopted by 350 customers, reflecting a more than 70% sequential increase [4] - RingCentral has added 300 features to its platform in the past quarter, with 50% of RingCX customers opting for the paid AI capability [4] - The company aims to achieve at least $100 million in exit Annual Recurring Revenue (ARR) from new products by the end of 2025 and is currently on track to meet this goal [6] Group 3: Financial Performance and Guidance - For Q3 2024, RingCentral expects revenues between $600.5 million and $603.5 million, indicating an 8% year-over-year growth [9] - Subscription revenues are projected to be between $572 million and $575 million, also reflecting an 8% year-over-year growth [9] - The consensus estimate for earnings is pegged at 92 cents, suggesting a 17.95% year-over-year growth [10] Group 4: Market Position and Competitive Advantage - RingCentral's focus on AI-supported features is a key growth catalyst, benefiting from strong demand for Unified Communications as a Service (UCaaS) and contact center SaaS solutions [5] - The enterprise segment has shown strong momentum, with double-digit year-over-year growth and significant deals closed, including 20 deals with over $1 million total contract value [7] - Partnerships with companies like Cox Communications, Vodafone, and Microsoft enhance RingCentral's market presence and product integration [7][8]

Coupa's AI-driven total spend management platform empowers RingCentral to optimize spend FOSTER CITY, Calif., Aug. 8, 2024 /PRNewswire/ -- Coupa, the margin multiplier company, today announced that RingCentral, Inc. (NYSE: RNG), a leading provider of AI-driven cloud business communications, contact center, video and hybrid event solutions, has deployed Coupa to help optimize its spend and business operations. After a decade of growing revenues, RingCentral was looking to modernize its back-office operations ...

Core Insights - RingCentral reported revenue of $592.91 million for the quarter ended June 2024, reflecting a year-over-year increase of 9.9% and surpassing the Zacks Consensus Estimate of $586.28 million by 1.13% [1] - The company's EPS for the quarter was $0.91, up from $0.83 in the same quarter last year, exceeding the consensus EPS estimate of $0.88 by 3.41% [1] Financial Performance Metrics - Gross Margin for Subscriptions was reported at 80.9%, slightly below the estimated 81.8% by analysts [3] - Gross Margin for Other revenues was -2.5%, significantly lower than the average estimate of 5.3% [4] - Annualized Exit Monthly Recurring Subscriptions (ARR) reached $2.43 billion, exceeding the estimated $2.41 billion [5] - Revenues from Other sources were $25.85 million, below the estimated $26.38 million, with a year-over-year change of 0.7% [6] - Subscription Revenues amounted to $567.06 million, surpassing the estimated $559.92 million, marking a year-over-year increase of 10.4% [7] Stock Performance - Over the past month, RingCentral's shares have returned +22.7%, significantly outperforming the Zacks S&P 500 composite's +1.1% change [7] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [7]