RingCentral (RNG) Stock Forecast & Price Target

RingCentral reported a solid Q3, with total revenue reaching $639 million, representing a 5% year-over-year growth, alongside a Non-GAAP operating margin of 22.8%, an increase of 180 basis points year-over-year. The company's subscription revenue also grew by 6% year-over-year to $616 million, and Non-GAAP EPS rose 19% year-over-year to $1.13, all exceeding consensus estimates. Furthermore, strong customer adoption trends, particularly in AI-led product offerings, contributed to a doubling of AIR customers, increased annual recurring revenue (ARR) by 7% year-over-year, and generated $130 million in free cash flow, which grew by 23% year-over-year, reflecting robust underlying business performance.

RingCentral's stock outlook is negatively impacted by a decline in gross margin, which registered at 77.6%, falling short of both internal and consensus expectations. Additionally, the company's slower-than-expected penetration into international markets raises concerns about its future growth prospects, as expansion efforts are critical for increasing its customer base. Lastly, potential interruptions in the manufacturing and delivery processes could lead to reduced shipments, further straining the company's performance and revenue stability.