The coronavirus-induced work-from-home wave is increasing the demand for RingCentral’s (RNG) Unified Communications as a Service (UCaaS) solutions. Expanding clientele is bringing in strong subscription revenue growth.
The company recently released its Q3 results, which reflected strong demand for its cloud-communication solutions. Non-GAAP earnings surged 38.5% year-over-year, whereas revenues jumped 36.6%. (See Analysts’ Top Stocks on TipRanks)
Partnerships Boosting Growth
On the same day, RingCentral announced a strategic partnership to migrate Mitel’s customers seamlessly to its MVP cloud communications platform. This is important because the deal will help RingCentral assist the transition of 35 additional customers.
Notably, partnerships have been an important factor in RingCentral’s growth and its client roster includes big names of the communications industry such as Alcatel and Atos SE.
Website Visits Decreasing
Despite the strong Q3, we noticed unique users experienced by RingCentral to its website from July through September fell 5.3% compared with Q2. Moreover, this period was also met by decreasing share prices, which dropped 25.2% sequentially.
Nonetheless, a different pattern has been observed so far in Q4. We saw that despite website traffic still being on a downward slope, the share prices are moving upwards, probably because of the strong Q3 results.
These data were retrieved with the help of TipRanks’ new Website Traffic tool, which sources its data from Semrush (SEMR).
The declining visitors to the company’s website shouldn’t be a concern as the fundamentals of the company are very attractive. Moreover, upbeat guidance for Q4 and full-year 2021 gives us something to look forward to.
Experts Opine
Encouraged by the impressive Q3 print and recent partnership with Mitel, Piper Sandler analyst James Fish reiterated a Buy rating on the stock and raised his price target to $352 from $342.
Wall Street analyst consensus also has an optimistic stance towards RingCentral, with a Strong Buy rating based on 15 unanimous Buys. The average RingCentral price target of $378.64 indicates an upside potential of 39.3%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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