Wedbush has adjusted its price target for RingCentral (RNG, Financial), reducing it from $38 to $30 due to a revised valuation multiple, while maintaining a Neutral outlook on the stock. This decision follows the company's release of its first-quarter 2025 results, which exceeded expectations in both revenue and earnings. Despite these strong results, RingCentral continues to project a cautious full-year 2025 outlook as it aims to boost its growth in the Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) sectors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for RingCentral Inc (RNG, Financial) is $33.06 with a high estimate of $45.00 and a low estimate of $24.00. The average target implies an upside of 23.97% from the current price of $26.67. More detailed estimate data can be found on the RingCentral Inc (RNG) Forecast page.
Based on the consensus recommendation from 18 brokerage firms, RingCentral Inc's (RNG, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for RingCentral Inc (RNG, Financial) in one year is $42.70, suggesting a upside of 60.1% from the current price of $26.67. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the RingCentral Inc (RNG) Summary page.
RNG Key Business Developments
Release Date: May 08, 2025
- Total Revenue: $612 million, up 5% year over year.
- Subscription Revenue: $590 million, up 6% year over year.
- Annual Recurring Revenue (ARR): $2.53 billion, up 7% year over year.
- Operating Margin: 21.8%, exceeding guidance range.
- Free Cash Flow: $130 million, up 70% year over year.
- Debt Reduction: Paid down $166 million of debt, reducing net leverage ratio to 2x.
- Gross Margin: Subscription gross margin above 80%.
- Share Repurchase: Approximately 1.8 million shares repurchased for $50 million.
- Net Debt: Gross debt reduced to $1.36 billion.
- Non-GAAP EPS Guidance for Q2: $1 to $1.04.
- Non-GAAP Operating Margin Guidance for Full Year 2025: Approximately 22.5%.
- Free Cash Flow Guidance for Full Year 2025: Approximately $500 million to $510 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- RingCentral Inc (RNG, Financial) exceeded $2.5 billion in Annual Recurring Revenue (ARR) and delivered revenue at the upper end of guidance.
- The company achieved a record quarterly free cash flow of $130 million, up 70% year over year.
- RingCentral Inc (RNG) reduced its net leverage ratio to 2x by paying down $166 million of debt during the quarter.
- The AI-powered multi-product strategy is resonating with customers, with strong growth in new products like RingCX and RingSense.
- The company maintains a strong position in the $30 billion UCaaS market with a steady 20% market share.
Negative Points
- The macroeconomic environment remains uncertain, which could impact future performance.
- The competitive environment is more challenging in larger business cohorts, particularly with some larger enterprises.
- Despite strong performance, the company is taking a prudent approach in guiding for the remainder of 2025 due to macro uncertainties.
- RingCentral Inc (RNG) faces competition from both smaller, unproven vendors and larger, directly competitive companies.
- The company is still largely reliant on the US and Canada markets, with international expansion being more challenging.
