RingCentral (RNG) Stock Forecast & Price Target

RingCentral demonstrated a solid financial performance in Q3, with total revenue reaching $639 million, representing a 5% year-over-year increase, and subscription revenue growing 6% year-over-year to $616 million. The company’s focus on profitability is evident in its Non-GAAP operating margin of 22.8%, reflecting a 180 basis point improvement compared to the previous year, coupled with a Non-GAAP EPS of $1.13, up 19% year-over-year. Additionally, customer adoption of its AI-led products is accelerating, contributing to a nearly doubling of AIR customers to 5,800, alongside a robust increase in annual recurring revenue (ARR) of 7%, further supporting a strong business outlook.

RingCentral's stock outlook is negatively impacted by a combination of underperforming gross margins, which fell short of both internal and consensus forecasts, landing at 77.6% instead of the expected 78.8%. Additionally, the company's slower than anticipated expansion into international markets raises concerns about its future growth and customer base diversification. Finally, potential delays in manufacturing and shipping processes may further hinder its ability to meet customer demands, negatively affecting overall performance.