RingCentral Earnings: What To Look For From RNG

Adam Hejl /
2022/08/01 5:03 am EDT

Office and call centre communications software provider RingCentral (NYSE:RNG) will be reporting earnings tomorrow after the bell. Here's what to look for.

Last quarter RingCentral reported revenues of $467.6 million, up 32.7% year on year, beating analyst revenue expectations by 2.02%. Despite the strong topline growth, It was a weaker quarter for the company, with a full year guidance missing analysts' expectations and a decline in gross margin.

Is RingCentral buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting RingCentral's revenue to grow 27% year on year to $482 million, slowing down from the 36.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.40 per share.

RingCentral Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 4.53%.

Looking at RingCentral's peers in the productivity software segment, some of them have already reported Q2 earnings results, giving us a hint of what we can expect. Five9 delivered top-line growth of 31.7% year on year, beating analyst estimates by 5.16% and 8x8 reported revenues up 26.4% year on year, exceeding estimates by 0.44%. Five9 traded up 8.25% on the results, and 8x8 was down 2.81%. Read our full analysis of Five9's results here and 8x8's results here.

Technology stocks have been hit hard on fears of higher interest rates and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 3.81% over the last month. RingCentral is down 20.4% during the same time, and is heading into the earnings with analyst price target of $107.7, compared to share price of $48.78.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.