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RingCentral (RNG) to Report Q2 Earnings: What's in Store?

Zacks Equity Research
·4 mins read

RingCentral RNG is set to release second-quarter 2020 results on Aug 3.

For the quarter, the company expects revenues between $260 million and $266 million. Unfavorable forex is expected to hurt revenues by $5-$10 million.

The Zacks Consensus Estimate for revenues currently stands at $263 million, indicating growth of 22.2% from the year-ago quarter’s reported figure.

Moreover, RingCentral expects earnings between 20 cents and 21 cents per share.

The consensus mark for earnings has stayed at 20 cents per share over the past 30 days, indicating a 4.8% decline from the figure reported in the year-ago quarter.

Ringcentral, Inc. Price and EPS Surprise


Ringcentral, Inc. Price and EPS Surprise
Ringcentral, Inc. Price and EPS Surprise

Ringcentral, Inc. price-eps-surprise | Ringcentral, Inc. Quote

Notably, the company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average being 14.3%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

RingCentral is a dominant name in the cloud-based Unified Communications as a Service space. The company is benefiting from a continual shift to the cloud, as well as the trend toward convergence in business communications. Moreover, the coronavirus-induced remote-working trend is expected to have expanded its subscriber base in the to-be-reported quarter.

Notably, momentum in the mid-market and enterprise business (RingCentral Office subscribers that generate $25,000 or more in annual recurring revenues) drove the first-quarter top line, a trend that most likely continued in the second quarter on the back of a burgeoning RingCentral Office customer base due to the work-from-home wave.

Moreover, a strong partner base that includes the likes of AT&T, Telus, BT, Atos and Altura is expected to have benefited the top line. Additionally, integrations with NetSuite, Salesforce and Microsoft Teams are likely to have strengthened RingCentral’s product offerings and effectiveness among enterprises, thereby driving its user base and subscription revenues.

Additionally, the company’s solid footprint among public sector enterprises and education space is noteworthy. During the quarter, RingCentral’s solution was selected by Berkeley College, Southern New Hampshire University, and Texas Christian University.

Key Q2 Developments

During the quarter, RingCentral and Avaya announced the general availability of Avaya Cloud Office by RingCentral solution. The solution was made available in Australia, Canada, and the U.K. late quarter.

Moreover, the company announced RingCentral Cloud PBX for Microsoft Teams, enabling Direct Routing integration.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

RingCentral has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Here are a few companies worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

GoPro GPRO has an Earnings ESP of +43.66% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Take Two Interactive Software TTWO has an Earnings ESP of +8.26% and is #2 Ranked.

AMETEK AME has an Earnings ESP of +3.96% and a Zacks Rank #2.

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