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RingCentral (RNG)
NYSE:RNG
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RingCentral
(NYSE:RNG)
Rating:60Neutral
Price Target:
$31.00
▲(14.43% Upside)
Positive Factors
Earnings
RingCentral reported solid 2Q results with beats across the board, and management modestly raised its FY25 EPS and FCF guidance.
Product Development
There is strong traction with new products such as RingCX and RingSense, with a significant number of customers adopting these solutions.
Share Buyback
RNG repurchased $32 million of stock in Q2 and raised its buyback, showing strong share repurchase potential.
Negative Factors
Competitive Risks
Competitive risks and consistent management turnover keeps the analyst on the sideline.
Enterprise Growth
Enterprise ARR growth continues to decelerate from previous quarters.
Macroeconomic Risks
Concerns around macroeconomic risks with the SMB customer base may eliminate any short-term catalysts for growth.
RingCentral (RNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.59B
Dividend YieldN/A
Average Volume (3M)1.71M
Price to Earnings (P/E)―
Beta (1Y)1.64
Revenue Growth6.47%
EPS Growth90.60%
CountryUS
Employees4,260
SectorTechnology
Sector Strength98
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.06
Shares Outstanding80,131,680
10 Day Avg. Volume2,195,859
30 Day Avg. Volume1,713,416
Financial Highlights & Ratios
PEG Ratio0.87
Price to Book (P/B)-5.85
Price to Sales (P/S)1.34
P/FCF Ratio8.06
Enterprise Value/Market Cap1.53
Enterprise Value/Revenue1.61
Enterprise Value/Gross Profit2.27
Enterprise Value/Ebitda13.53
Forecast
1Y Price Target
$31.80Price Target Upside17.39% Upside
Rating ConsensusHold
Number of Analyst Covering12
RingCentral Business Overview & Revenue Model
Company DescriptionRingCentral, Inc. provides software-as-a-service solutions that enable businesses to communicate, collaborate, and connect in North America. The company offers business cloud communications and contact center solutions based on its Message Video Phone? platform. Its products include RingCentral Office that provides communication and collaboration across various modes, including high-definition voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax; RingCentral Contact Center, a collaborative contact center solution that delivers omni-channel; and RingCentral Engage Digital, a digital customer engagement platform that allows enterprises to interact with their customers. The company's products also comprise RingCentral Engage Voice, a cloud-based outbound/blended customer engagement platform for midsize and enterprise companies; RingCentral Video, a video meeting service which includes our RCV video and team messaging capabilities and offers video and audio conferencing, file sharing, contact, task, and calendar management. In addition, it offers RingCentral Professional, a cloud based virtual telephone service that provides inbound call answering and management services for professionals; and RingCentral Fax that provides online fax capabilities. The company serves a range of industries, including financial services, education, healthcare, legal services, real estate, retail, technology, insurance, construction, hospitality, and state and local government, as well as others. It sells its products through a network of direct sales representatives, as well as sales agents, resellers, and channel partners. RingCentral, Inc. has strategic partnerships with Alcatel-Lucent Enterprise; and Vodafone Business. The company was incorporated in 1999 and is headquartered in Belmont, California.
How the Company Makes MoneyRingCentral generates revenue primarily through subscription-based services, charging businesses for access to its cloud-based communication and collaboration tools. The company offers various pricing tiers that cater to different business needs, which typically include monthly or annual subscription fees. Key revenue streams include the sale of its RingCentral Office packages, additional features and integrations, and premium services such as advanced analytics and enhanced security. Furthermore, strategic partnerships with telecommunications providers and technology companies enhance its offerings and expand its customer base, contributing positively to its earnings. The company also benefits from upselling opportunities as customers scale their communication needs.
RingCentral Key Performance Indicators (KPIs)
Any
Subscription ARR
Shows the annual recurring revenue from subscriptions, reflecting the stability and predictability of the company's income stream.
Shows the annual recurring revenue from subscriptions, reflecting the stability and predictability of the company's income stream.
Data provided by:
Main Street Data
Main Street DataRingCentral Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: 14.69%|
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook for RingCentral, with strong financial results, record free cash flow, and strategic expansions in partnerships and AI products. However, challenges remain with moderate revenue growth and ongoing management of stock-based compensation. The highlights significantly outweigh the lowlights, indicating a strong position for future growth.Q2-2025 Updates
Positive Updates
Strong Financial Performance
RingCentral reported total revenue of $620 million, up 5% year-over-year, with subscription revenue growing 6% to approximately $600 million. The company achieved positive GAAP operating income and GAAP net income for the first time in its history.
Record Free Cash Flow
The company delivered a record free cash flow of $144 million, up 33% year-over-year, and increased its free cash flow per share by 37%.
New Product and Partnership Expansions
RingCentral announced an extension of its partnership with NiCE and expanded its decade-long relationship with AT&T by adding new AI-first products to AT&T’s portfolio.
AI Product Growth
RingCentral's new AI-first products, including RingCX, RingSense, and AI Receptionist (AIR), are gaining momentum, contributing to ARR growth with expectations to meet the $100 million ARR new products goal for the year.
Improved Credit Ratings and Capital Allocation
Fitch and Moody's upgraded RingCentral's credit ratings. The Board increased the stock repurchase authorization to $500 million, reflecting strong financial health and capital management.
Negative Updates
Moderate Revenue Growth
Despite a strong quarter, the company maintained its full-year revenue guidance suggesting limited acceleration in growth rates, with expected subscription revenue growth of 5% to 6% for the third quarter.
Stock-Based Compensation Concerns
Although stock-based compensation was reduced, it remains a significant component of expenses, impacting overall profitability.
Company Guidance
During the RingCentral second quarter 2025 earnings call, the company provided guidance highlighting several key metrics. Total revenue for the quarter grew by 5% year-over-year, reaching $620 million, which was at the high end of their guidance. Subscription revenue increased by 6% to approximately $600 million, while annual recurring revenue (ARR) rose by 7% to around $2.6 billion. The company achieved a non-GAAP operating margin of 22.6%, exceeding the high end of their guidance and marking a 160 basis point improvement year-over-year. Additionally, non-GAAP EPS increased by 16% to $1.06 per diluted share. RingCentral also delivered record free cash flow of $144 million, a 33% increase from the previous year, and raised their full-year free cash flow outlook to $515 million to $520 million. The board approved an increase in stock repurchase authorization to $500 million, reflecting the company's strong financial position and commitment to returning value to shareholders.RingCentral Financial Statement Overview
Summary
RingCentral shows strong revenue growth and cash flow generation, but faces challenges with profitability and high leverage. The negative equity and debt-to-equity ratio indicate financial instability, which needs addressing for sustainable growth.Income Statement
RingCentral has shown consistent revenue growth, with a TTM growth rate of 13.2%. However, profitability remains a challenge, as indicated by negative net profit margins and fluctuating EBIT margins. The gross profit margin is strong at over 70%, suggesting efficient cost management. Overall, while revenue is growing, the company needs to improve its profitability metrics.65
Positive
Balance Sheet
The balance sheet reveals high leverage, with a negative equity position and a concerning debt-to-equity ratio of -2.60 in the TTM period. This indicates financial instability and potential risk. Return on equity is positive but misleading due to negative equity. The company needs to address its capital structure to enhance financial stability.45
Neutral
Cash Flow
Cash flow performance is a bright spot, with strong free cash flow growth of 14.08% in the TTM period. The operating cash flow to net income ratio is healthy, indicating good cash generation relative to earnings. However, the free cash flow to net income ratio suggests that while cash flow is strong, profitability remains an issue.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.46B | 2.40B | 2.20B | 1.99B | 1.59B | 1.18B |
| Gross Profit | 1.74B | 1.69B | 1.54B | 1.35B | 1.15B | 860.05M |
| EBITDA | 291.47M | 236.58M | 133.56M | -649.48M | -166.02M | 58.54M |
| Net Income | -12.18M | -58.29M | -165.24M | -879.17M | -376.25M | -83.00M |
Balance Sheet | ||||||
| Total Assets | 1.61B | 1.78B | 1.94B | 2.07B | 2.58B | 2.18B |
| Cash, Cash Equivalents and Short-Term Investments | 168.11M | 242.81M | 222.19M | 269.98M | 267.16M | 639.85M |
| Total Debt | 1.48B | 1.58B | 1.59B | 1.68B | 1.43B | 1.45B |
| Total Liabilities | 1.89B | 2.33B | 2.45B | 2.56B | 2.04B | 1.87B |
| Stockholders Equity | -287.14M | -550.92M | -502.57M | -482.79M | 538.42M | 312.25M |
Cash Flow | ||||||
| Free Cash Flow | 517.27M | 400.21M | 323.92M | 100.87M | -232.80M | -142.88M |
| Operating Cash Flow | 577.18M | 483.28M | 399.66M | 191.31M | 152.15M | -35.19M |
| Investing Cash Flow | -87.88M | -109.36M | -90.45M | -87.21M | -396.83M | -107.69M |
| Financing Cash Flow | -524.00M | -351.08M | -358.02M | -98.22M | -127.05M | 437.59M |
RingCentral Technical Analysis
Neutral
27.09
Price Trends
27.18
Negative
26.34
Positive
30.42
Negative
Market Momentum
0.03
Negative
50.35
Neutral
67.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RNG, the sentiment is Neutral. The current price of 27.09 is above the 20-day moving average (MA) of 26.68, below the 50-day MA of 27.18, and below the 200-day MA of 30.42, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 50.35 is Neutral, neither overbought nor oversold. The STOCH value of 67.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RNG.
RingCentral Risk Analysis
RingCentral disclosed 56 risk factors in its most recent earnings report. RingCentral reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RingCentral Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.91B | 209.51 | 5.21% | ― | 17.91% | -86.60% | |
70 Outperform | $3.13B | 37.52 | 5.22% | ― | -0.54% | 626.94% | |
65 Neutral | $3.69B | ― | -3.52% | ― | -8.80% | -657.91% | |
61 Neutral | $35.87B | 6.13 | -9.30% | 2.06% | 7.63% | -6.38% | |
60 Neutral | $2.59B | ― | 16.58% | ― | 6.47% | 90.60% | |
60 Neutral | $1.05B | ― | -6.68% | ― | 11.36% | 46.67% | |
49 Neutral | $263.19M | ― | -18.25% | ― | -0.73% | 67.98% |
* Technology Sector Average
Performance Comparison
RNG
RingCentral
27.09
-5.52
-16.93%
EGHT
8X8
1.75
0.09
5.42%
AGYS
Agilysys
105.51
-4.76
-4.32%
CALX
Calix
56.68
19.22
51.31%
GTM
ZoomInfo Technologies
9.54
0.33
3.58%
JAMF
Jamf Holding
7.94
-9.05
-53.27%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.