California-based RingCentral (RNG) provides cloud-based business communications and collaboration solutions. It recently partnered with Germany’s 1&1 Versatel to introduce a new solution to enhance the experience for its customers with gigabit Internet.
Furthermore, RingCentral has secured its role as the exclusive cloud-based business communications solutions partner for Mitel. The arrangement involves RingCentral acquiring Mitel’s CloudLink technology for $650 million, and a group of Mitel investors investing $200 million in RingCentral stock.
With this in mind, let’s take a look at RingCentral’s financials and understand what has changed in its key risk factors. (See Insiders’ Hot Stocks on TipRanks)
Q3 Financial Results
RingCentral reported revenue of $415 million for Q3 2021, surpassing the consensus estimate of $393.4 million. The revenue figure stood at $304 million in the same quarter last year.
The company posted adjusted EPS of $0.36, beating the consensus estimate of $0.33. Adjusted EPS was $0.26 in the same quarter last year. RingCentral ended the quarter with $345 million in cash. (See RingCentral stock charts on TipRanks).
According to the new TipRanks’ Risk Factors tool, RNG’s main risk categories are Finance & Corporate and Tech & Innovation, which account for 35% and 20%, respectively, of the total 55 risks identified for the stock. The company has recently updated three risks across different categories.
Under the Finance and Corporate risk factor, RingCentral reminds investors that it has entered into strategic arrangements with various companies. The company observes that that its future operating results may be adversely affected if it fails to successfully execute its strategic partnerships.
Under the Tech and Innovation risk factor, the company acknowledges that it faces many cybersecurity threats. It highlights that a breach of its system could disrupt services to its customers, damage its reputation, and expose it to significant liability.
Under the Legal and Regulatory risk factor, the company points out that its future effective tax rates could be subject to volatility because of lapses in tax credits and expansion into new geographies. It cautions that changes in its effective tax rate could adversely impact its operating results.
Following RingCentral’s Q3 earnings report, Needham analyst Ryan Koontz reiterated a Buy rating on the stock and raised its price target to $400 from $360. Koontz’s new price target suggests 55.6% upside potential.
Consensus among analysts is a Strong Buy based on 15 Buys. The average RingCentral price target of $378.64 implies 47.6% upside potential to current levels.