Why RingCentral Inc (NYSE: RNG) Stock Is Under Pressure

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RingCentral Inc (NYSE: RNG) stock fell over 3% in the pre-market session of Feb 17th, 2021 (Source: Google finance) as the company posted lower than expected results for the fourth quarter of FY 20.

Non-GAAP operating income has risen to $34 million, compared to a non-GAAP operating income of $24 million in the same period last year. The total cash and cash equivalents at the end of the fourth quarter of 2020 has decreased to $640 million, due to a one-time payment related to a recent strategic partnership, as well as $69 million cash paid for partial repurchase of the 2023 convertible senior notes. This is compared to $746 million at the end of the third quarter of 2020.

RNG in the fourth quarter of FY 20 has reported the adjusted earnings per share of 29 cents, while reported the adjusted revenue growth of 32 percent to $334.5 million in the fourth quarter of FY 20. Subscriptions revenue increased 34% year over year to over $306 million and accounted for 92% of total revenue. Other revenue increased 20% year over year to $28 million, due to higher adoption of RingCentral apps in the current work from anywhere environment.

For the first quarter ending in April, RingCentral expects its per-share earnings to range from 24 cents to 25 cents. The company expects Q1 2021 revenue to be in the range of $337 million to $340 million for the fiscal first quarter. For the first quarter of 2021, the company expects subscriptions revenue to be in the range of $311.5 to $313.5 million, representing annual growth of 28% to 29%, and Non-GAAP operating margin to be in the range of 8.6% to 8.8%.

RingCentral expects full-year 2021 earnings to be in the range of $1.20 to $1.24 per share, with revenue expected to be in the range of $1.48 billion to $1.49 billion. For full-year 2021, the company expects Subscriptions revenue to be in the range of $1.365 to $1.375 billion, representing annual growth of 26% to 27%. 2021 Non-GAAP operating margin is expected to be in the range of 10.0% to 10.1%.

Meanwhile, the company has announced a strategic partnership with Vodafone Business to deliver new cloud-based communications services. The company has also announced a new partnership between RingCentral and Stack8.

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