Eyes on RingCentral: Anticipation Builds Ahead of Q3 Earnings Report
RingCentral (RNG) is set to announce its third-quarter results for 2024 on November 7.
For fiscal 2025’s first quarter, analysts predict earnings will be in the range of 92-93 cents per share.
The consensus for the third quarter of 2024 stands at 92 cents per share, remaining unchanged over the past month. This projection reflects a year-over-year increase of 17.95%.
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Price and Earnings Trends for RingCentral, Inc.
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For the upcoming third quarter, RingCentral forecasts revenues between $600.5 million and $603.5 million, signaling an 8% growth compared to last year.
The Zacks Consensus Estimate for revenues sits at $601.91 million, implying a year-over-year rise of 7.84% over the corresponding quarter last year.
Notably, RingCentral has surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, with an average surprise of 4.60%.
Now, let’s examine how RingCentral is shaping up as they approach this earnings announcement.
Key Factors to Watch
RingCentral’s performance in the third quarter is expected to capitalize on its strong product offerings and the growth of subscription revenues.
Subscription revenue projections for Q3 are between $572 million and $575 million, indicating an 8% year-over-year growth.
Continued momentum in new products, such as RingCX, their AI-powered contact center solution, and RingSense, an AI analytics platform, is likely contributing to revenue growth as businesses increasingly look to integrate these technologies.
Strategic partnerships with major players like Microsoft (MSFT) and Vodafone (VOD) have also likely broadened RingCentral’s market reach and boosted sales through bundled offerings.
In a notable development, RingCentral expanded its partnership with Vodafone Business, aiming to deliver the Vodafone Business Contact Center powered by RingCX to 30 markets by early 2025. This partnership is expected to positively impact Q3 results.
In the previous quarter, RingCentral’s AI-driven contact center service secured a significant client—one of the top 25 U.S. counties—while adding over 300 new features, including integrations with ServiceNow, HubSpot, and Microsoft Teams. This expansion could further enhance their Q3 financial performance.
Targeting specific industries such as healthcare, retail, and finance has shown significant demand for unified communication solutions, likely yielding favorable outcomes in Q3.
The shift toward remote and hybrid work models continues to drive the demand for unified communications and collaboration solutions. This trend likely aided in customer acquisition and retention during the quarter.
Despite these positive factors, RingCentral faces hurdles from challenging macroeconomic conditions, foreign exchange issues, and stiff market competition, which may have affected revenue performance.
Earnings Prediction Model Insights
According to the Zacks model, a combination of a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) suggests higher chances of an earnings beat. However, RingCentral’s current situation deviates from this pattern.
The company currently displays an Earnings ESP of +0.81% along with a Zacks Rank of #4 (Sell). To explore more about profitable stock options, use our Earnings ESP Filter.
Stock Insights for Consideration
Here’s a stock worth noting, as our model suggests it has the potential to surpass earnings expectations in its upcoming release:
Shopify (SHOP) has an Earnings ESP of +4.13% coupled with a Zacks Rank of #1. Interested investors can view our complete list of today’s Zacks #1 Rank stocks here.
Shopify’s shares have risen by 0.7% year-to-date, and it will report its own third-quarter results on November 12.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
