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RingCentral Inc (RNG)
:RNG
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RingCentral
(NYSE:RNG)
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Rating:56Neutral
Price Target:
$29.00
▲(2.33% Upside)
RingCentral's overall stock score is primarily influenced by its strong revenue growth and cash flow generation. However, significant challenges with profitability, high leverage, and bearish technical indicators weigh down the score. Positive earnings call highlights provide some optimism, but valuation concerns persist.
Positive Factors
Revenue Growth
Consistent revenue growth demonstrates the company's ability to expand its market reach and increase product adoption, supporting long-term business sustainability.
Cash Flow Generation
Strong cash flow generation enhances financial flexibility, allowing for reinvestment in growth initiatives and providing a buffer against economic downturns.
AI Product Momentum
The development and adoption of AI-powered products position RingCentral at the forefront of innovation, potentially driving future revenue and market share gains.
Negative Factors
Profitability Challenges
Ongoing profitability issues could hinder the company's ability to sustain long-term growth and invest in new opportunities, impacting overall financial health.
High Leverage
High leverage and negative equity indicate financial instability, posing risks to the company's ability to meet obligations and invest in growth.
Stock-Based Compensation
High stock-based compensation expenses can dilute shareholder value and impact net income, potentially affecting investor perception and financial performance.
RingCentral (RNG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.78B
Dividend YieldN/A
Average Volume (3M)1.72M
Price to Earnings (P/E)―
Beta (1Y)1.59
Revenue Growth6.47%
EPS Growth90.60%
CountryUS
Employees4,260
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.06
Shares Outstanding80,738,180
10 Day Avg. Volume1,494,756
30 Day Avg. Volume1,716,123
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 Cap1.42
Enterprise Value/Revenue1.61
Enterprise Value/Gross Profit2.27
Enterprise Value/Ebitda13.53
Forecast
1Y Price Target
$31.50Price Target Upside11.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
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: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook for RingCentral, with strong financial performance, significant customer wins, and impressive growth in AI products. However, the flat revenue guidance and ongoing impact of SBC on financials were noted as challenges.Q2-2025 Updates
Positive Updates
Record Free Cash Flow
RingCentral delivered a record free cash flow of $144 million, up 33% year-over-year, and increased its free cash flow per share by 37%.
Positive GAAP Net Income
For the first time in RingCentral's history, the company achieved positive GAAP operating income and GAAP net income.
Significant Customer Wins
RingCentral and Vodafone secured Ryanair and a top 10 European bank as customers, showcasing the company's strong performance in the enterprise sector.
AI Product Momentum
Products like RingCX, RingSense, and AIR are contributing to ARR growth, with the company on track to meet a $100 million ARR target for new products.
AT&T Partnership Expansion
AT&T expanded its long-standing relationship with RingCentral, adding new AI-first products to its portfolio, enhancing customer engagement capabilities.
Negative Updates
Flat Revenue Guidance
Despite a strong quarter, RingCentral maintained its full-year revenue guidance, reflecting cautious expectations for the remainder of the year.
High SBC Impact on Financials
Stock-based compensation (SBC) remains a significant expense, although RingCentral is taking steps to reduce it over time.
Company Guidance
During RingCentral's Second Quarter 2025 Earnings Call, the company provided a comprehensive overview of its financial performance, highlighting key metrics and strategic initiatives. Total revenue for the quarter reached $620 million, marking a year-over-year growth of 5% and aligning with the high end of the company's guidance. Subscription revenue increased by 6% to approximately $600 million, contributing to an annual recurring revenue (ARR) of about $2.6 billion, reflecting a 7% increase. The company also achieved a non-GAAP operating margin of 22.6%, exceeding expectations by 160 basis points, and reported a non-GAAP EPS of $1.06, growing 16% compared to the previous year. Free cash flow reached a record $144 million, up 33% from the same period last year, with a free cash flow per share of $1.57, representing a 37% increase. The call also emphasized the significant reduction in stock-based compensation and the company's debt, alongside strategic partnerships and the introduction of new AI-powered products contributing to ARR growth. RingCentral reaffirmed its commitment to sustainable growth and profitability while announcing an increase in its stock repurchase authorization to $500 million.RingCentral Financial Statement Overview
Summary
RingCentral shows strong revenue growth and cash flow generation, but faces challenges with profitability and high leverage, indicating financial instability.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 | 647.22M | 1.58B | 1.59B | 1.68B | 1.43B | 1.45B |
| Total Liabilities | 2.09B | 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
Negative
28.34
Price Trends
29.47
Negative
28.39
Negative
29.27
Negative
Market Momentum
-0.14
Positive
38.12
Neutral
11.91
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RNG, the sentiment is Negative. The current price of 28.34 is below the 20-day moving average (MA) of 30.85, below the 50-day MA of 29.47, and below the 200-day MA of 29.27, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 38.12 is Neutral, neither overbought nor oversold. The STOCH value of 11.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RNG.
RingCentral Risk Analysis
RingCentral disclosed 55 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $3.27B | 39.24 | 5.75% | ― | -0.54% | 626.94% | |
62 Neutral | $1.76B | 36.44 | -190.60% | ― | -7.41% | ― | |
56 Neutral | $2.78B | ― | 16.58% | ― | 6.47% | 90.60% | |
54 Neutral | $289.10M | -13.01 | -16.57% | ― | -0.73% | 67.98% | |
52 Neutral | $349.73M | -15.60 | -3.92% | ― | -3.34% | 48.15% | |
51 Neutral | $3.13B | -14.84 | -92.63% | ― | 9.74% | 22.36% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
RNG
RingCentral
28.11
-2.92
-9.41%
EGHT
8X8
2.12
0.11
5.47%
PRCH
Porch Group
16.91
15.53
1125.36%
GTM
ZoomInfo Technologies
10.27
0.55
5.66%
API
Agora
3.74
-1.21
-24.44%
ASAN
Asana
13.27
2.07
18.48%
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.