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RingCentral (RNG) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

RingCentral RNG is set to release third-quarter 2019 results on Nov 4.

For the quarter, revenues are anticipated between $220 million and $222 million. The Zacks Consensus Estimate for revenues currently stands at $221.5 million, indicating growth of 27.4% from the year-ago quarter’s reported figure.

Moreover, earnings are expected between 18 cents and 20 cents per share. The consensus mark for earnings stayed at 19 cents over the past 30 days, in line with the figure reported in the year-ago quarter.

Notably, the company’s earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 22.8%.

In the second quarter, RingCentral reported non-GAAP earnings of 21 cents per share that beat the Zacks Consensus Estimate by a nickel. Revenues of $215 million surpassed the consensus mark of $205 million.

At the end of second-quarter 2019, paid customer accounts were roughly 149,000. The company’s dollar-based net expansion rate was healthy at 117%.
 

Ringcentral, Inc. Price and EPS Surprise

Ringcentral, Inc. Price and EPS Surprise

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

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

Factors to Watch

RingCentral is a dominant name in the cloud-based Unified Communications as a Service (UCaaS) space. The company is benefiting from a continuing shift to the cloud as well as the trend toward convergence in business communications. These are expected to have benefited subscription revenues in the to-be-reported quarter.

Notably, momentum in the mid-market and enterprise business (defined as Office subscribers that generate $25,000 or more in annual recurring revenues) drove the second-quarter top line, a trend that most likely continued in the third quarter because of an expanding RingCentral Office customer base.

Moreover, a strong partner base that includes the likes of AT&T, Telus and BT is expected to have benefited the top line in the third quarter.

Further, RingCentral’s efforts to expand enterprise customer base through direct and channel sales are expected to have aided the top line in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates.

Although RingCentral has a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

BlackLine BL has an Earnings ESP of +21.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastly FSLY has an Earnings ESP of +1.82% and a Zacks Rank #3.

Zillow Group ZG has an Earnings ESP of +5.09% and a Zacks Rank #3.

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