RingCentral (RNG) Q1 Earnings Report Preview: What To Look For

Radek Strnad /
2022/05/06 7:14 am EDT

Office and call centre communications software provider RingCentral (NYSE:RNG) will be announcing earnings results next Monday after market hours. Here's what to expect.

Last quarter RingCentral reported revenues of $448.4 million, up 34% year on year, beating analyst revenue expectations by 3.14%. It was a mixed quarter for the company, with a strong top line growth but 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 30% year on year to $458.3 million, in line with the 31.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.34 per share.

RingCentral Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing two downward revisions over the last thirty days. 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 4.8%.

Looking at RingCentral's peers in the productivity software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Five9 delivered top-line growth of 32.5% year on year, beating analyst estimates by 6.96% and Atlassian reported revenues up 30.2% year on year, exceeding estimates by 5.2%. Five9 traded up 5.2% on the results, and Atlassian was down 3.8%. Read our full analysis of Five9's results here and Atlassian's results here.

Tech stocks have had a rocky start in 2022 and software stocks have not been spared, with share price down on average 17% over the last month. RingCentral is down 31.2% during the same time and is heading into the earnings with analyst price target of $212.2, compared to share price of $81.3.

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.