RingCentral's New CFO Appears To Have Solid Handle On Costs - Analysts Say After Q3 Peformance

Needham analyst Ryan Koontz reiterated RingCentral Inc RNG with a Buy and a $46 price target.

RNG delivered in-line revenue and beat EPS expectations by $0.03, while 4Q guidance was in line. The 3Q adjusted operating margin of 19.1% (+560bp Y/Y) sustained an impressive trend as EBITDA and FCF margins followed suit. 

Koontz modestly increased his CY24 EPS estimates on the higher conviction that RNG benefits from less competitive pressure from struggling smaller players. 

New CFO Sonalee Park appears to have a solid handle on costs, and the analyst is optimistic that new CEO Tarek Robbiati can sustain top-line growth.

The analyst projects Q4 revenue and EPS of $571.7 million and EPS of $0.81.

Mizuho analyst Siti Panigrahi maintained a Buy and $40 price target.

Though the uncertain macro environment continues to elongate enterprise sales cycles and pressure top-line growth, Panigrahi remains encouraged by RingCentral's consistent margin improvements and renewed growth initiatives under Robbiati and argues that RNG remains a value stock in software. 

The analyst projects Q4 revenue and EPS of $571 million (prior $573 million) and EPS of $0.83 (prior $0.81).

Piper Sandler analyst James E. Fish maintained a Neutral and cut the price target from $37 to $32 on lower comps.

While RingCentral did see strength in the Enterprise segment this quarter, Robbiati noted a desire to focus more on the SMB and Mid-Market space due to a better ability to bundle UCaaS, RingCX, and other new products. 

Management remains focused on partnership expansions, with the recent Amazon.Com Inc AMZN partnership still in the early stages. 

Fish remains concerned with the top-line slowdown (notably in net-new ARR), NRR weakness, and competition impacting the ability to sell into the enterprise.

The analyst projects Q4 revenue and EPS of $572.3 million and EPS of $0.83.

Wedbush analyst Taz Koujalgi had a Neutral rating with a price target of $40.

The analyst projects Q4 revenue and EPS of $570.4 million (prior $573.4 million) and EPS of $0.82 (prior $0.77).

Rosenblatt analyst Catharine Trebnick reiterated a Neutral and a price target of $35.

Price Action: RNG shares are trading higher by 1.73% at $28.74 on the last check Tuesday.