What is driving RingCentral Inc (NYSE: RNG) stock

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RingCentral Inc (NYSE: RNG) stock rose over 8.2% on 11th Feb, 2020 (as of 10:01 am GMT-5; Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19 driven by strength in mid-market, enterprise and channel. Total ARR posted the growth of 32% year-over-year to $960 million, and ARR for RingCentral office, which is the core UCaaS solution rose to $877 million, up 36% year-over-year. Enterprise ARR grew 71% year-over-year to $293 million on the back of digital transformation momentum at large scale customers. Channel ARR reached $300 million in Q4, which is up 63% and also accounted for seven-figure TCV deals.

RNG in the fourth quarter of FY 19 has reported the adjusted earnings per share of 22 cents, beating the analysts’ estimates for the adjusted earnings per share of 21 cents. The company had reported the adjusted revenue growth of 34 percent to $253 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $239.45 million.

For the first quarter 2020, the company expects earnings per share to be in the range of $0.18-$0.19, versus the consensus of $0.18. Ringcentral, Inc. expects Q1 2020 revenue to be in the range of $257-259 million, versus the consensus of $249.2 million. First quarter 2020, Subscriptions revenue range is expected to be in the range of $233 to $235 million, representing annual growth of 28% to 29%, Non-GAAP operating margin is expected to be in the range of 8.0% to 8.1%, Non-GAAP tax rate is projected to be 22.5%, share-based compensation range to be in the range of $37 to $38 million, amortization of debt discount to be of $5 million, and amortization of acquired intangibles range to be in the range of $8.5 to $9.0 million.

For the fiscal 2020, the company expects earnings per share to be in the range of $0.93-$0.94, versus the consensus of $0.93. Ringcentral, Inc. sees FY2020 revenue to be in the range of $1.125-1.35 billion, versus the consensus of $1.1 billion. 2020 Subscriptions revenue range is expected to be in the range of $1.019 to $1.027 billion, representing annual growth of 25% to 26%, Non-GAAP operating margin is expected to be between 9.6% and 9.7%, Non-GAAP tax rate is projected to be 22.5%, share-based compensation range is expected to be in the range of $185 to $195 million, amortization of debt discount to be of $22 million, and amortization of acquired intangibles range to be in the range of $34 to $36 million.

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