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Bull of the Day: RingCentral (RNG)

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Based in San Mateo, CA, RingCentral (RNG - Free Report) provides solutions for business communications primarily in the United States. Its products include RingCentral Office, RingCentral Mobile and RingCentral Fax. It provides solutions such as auto-receptionist, flexible extension structure, multiple voicemail boxes, smart call routing, business answering rules, extension dialing, call transfers, and integration with smartphones.

Better-Than-Expected Q2 Earnings

RingCentral’s second quarter results showed nice growth overall, and shares popped 11% after the earnings release.

Adjusted earnings per share increased 11% to 21 cents, easily beating Street estimates; revenues jumped 34% to $215 million, also beating the consensus estimate.

Software subscriptions also saw major growth in Q2, jumping 33% year-over-year to $195 million, while ARR (annualized exit monthly recurring subscriptions) hit $831 million, increasing 32%

In the company’s Q2 earnings press release, Vlad Shumis, founder, chairman, and CEO said “We had another strong quarter. Enterprise continues to drive our growth, benefiting from strong contributions from channel. We also reached a new milestone of 30 seven-digit TCV deals… “We had another strong quarter. Enterprise continues to drive our growth, benefiting from strong contributions from channel. We also reached a new milestone of 30 seven-digit TCV deals.”

Year-to-date, RNG stock is up almost 74%, and shares have risen about 55% over the past 12 months.

Estimates have been rising lately too, pushing the stocks towards a Zacks Rank #1 (Strong Buy).

For the current fiscal year, RingCentral’s earnings growth is expected to remain positive year-over-year. 14 analysts have revised their estimate upwards in the past 60 days, and the Zacks Consensus Estimate has moved five cents higher from 73 cents to 78 cents during the same time frame.

2020 looks pretty strong too, and earnings are expected to grow more than 20%; next year’s consensus estimate sits at 95 cents per share, with eight upward revisions in the last 60 days (though four analysts cut estimates during the same time frame).

Bottom Line

Looking ahead, RingCentral boosted its full-year outlook. It now projects revenue to surge 30% from the prior-year period to between $874 million and $877 million, up from prior guidance of $862 million to $866 million.

Earnings outlook is looking up too, and the company now expects its bottom line in the range of $0.77 to $0.79, up from $0.71 to $0.75.

If you’re an investor looking for an internet-software stock to add to your portfolio, make sure to keep RNG on your shortlist.

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