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RingCentral (RNG) to Report Q4 Earnings: What's in Store?

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RingCentral (RNG - Free Report) is set to release fourth-quarter 2020 results on Feb 16.

For the quarter, the company expects revenues between $315 million and $318 million, indicating year-over-year growth of 25-26%.

The Zacks Consensus Estimate for revenues currently stands at $316.9 million, indicating growth of 25.3% from the year-ago reported figure.

Moreover, RingCentral expects earnings between 26 cents and 27 cents per share.

The consensus mark for earnings has been unchanged at 27 cents per share over the past 30 days. The company reported earnings of 22 cents per share in the year-ago quarter.

Notably, its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being 9.7%.

Let’s see how things have shaped up for this announcement.

Ringcentral, Inc. Price and EPS Surprise

Ringcentral, Inc. Price and EPS Surprise

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

Factors to Consider

RingCentral is a dominant name in the cloud-based Unified Communications as a Service space. The company has been benefiting from a continual shift to the cloud, as well as the trend toward convergence in business communications.

It expects software-subscription revenues for the fourth quarter between $290.5 million and $292.5 million, indicating year-over-year growth of 27-28%.

During the quarter, the company announced that RingCentral Global Office will be available in six continents including Africa, Asia, Australia, Europe, North America and South America. It also announced expansion in several countries including Estonia, Greece, Lithuania, Slovenia and South Africa.

Moreover, the coronavirus-induced remote-working trend is expected to have helped the company in expanding subscriber base in the to-be-reported quarter.

On Oct 20, RingCentral introduced a fully-integrated high-volume SMS service to enable rapid communication between the business and customers.

Moreover, the company released more than 70 new features to RingCentral Video. The new innovation enables faster and more secure business video meetings.

The momentum enterprise business (RingCentral Office subscribers that generate $25,000 or more in annual recurring revenues) drove the top line in the third quarter, a trend that most likely continued in the fourth 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.

During the quarter, RingCentral announced that Horizon Telecom will offer RingCentral Office to large-scale multinational enterprises around the world.

Additionally, it announced during the quarter that Stack8 — a leading North American provider of unified communications (UC) solutions — will offer RingCentral’s UCaaS platform to large enterprise customers globally, and provide RingCentral Office along with an international cloud phone system to all customers.

Moreover, RingCentral entered into a strategic partnership with Vodafone Business to deliver new cloud-based communications services.

Additionally, the company released RingCentral Glip, a free, unlimited, easy-to-use solution that offers high quality and high-availability video and audio conferencing, seamlessly integrated with team messaging, file sharing, contact, task, and calendar management for a Smart Video Meetings experience.

Meanwhile, integrations with NetSuite, Salesforce and Microsoft Teams are likely to have strengthened RingCentral’s product offerings and led to effectiveness among enterprises, thereby driving its user base and subscription revenues.

Moreover, during the quarter, RingCentral announced its availability in the new Amazon Web Services Activate Console Exclusive Offers Program.

Further, the company’s solid footprint among public sector enterprises, hospitals and education space may have acted as growth catalyst.

Key Q4 Developments

RingCentral announced the extension of its partnership with BT, U.K.’s leading network provider, to facilitate digital transformation and rapid adoption of cloud-based communications across businesses in the country.

On Nov 17, RingCentral announced that Gartner has recognized RingCentral as a Leader in the 2020 Magic Quadrant for Unified Communications as a Service report.

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.

RingCentral has an Earnings ESP of +3.03% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

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

CrowdStrike Holdings Inc. (CRWD - Free Report) has an Earnings ESP of +57.75% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday, Inc. (WDAY - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2.

Zacks #2 Ranked Corsair Gaming, Inc. (CRSR - Free Report) has an Earnings ESP of +15.07%.

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