Goldman Sachs Reiterates Neutral Rating on RingCentral (RNG)
Goldman Sachs analyst Kash Rangan reiterated a Neutral rating and $30.00 price target on RingCentral (NYSE: RNG).
The analyst comments "We reiterate our Neutral rating and our $30 PT following solid F2Q25 results, where RingCentral reported Subscription Revenue +0.2% above Consensus, OpM +30bps, and FCF +400bps. The stock is indicated +11% AH which we believe is likely tied to a number of dynamics: 1) RNG struck a renewed partnership agreement with NiCE InContact (~$400mn in GSe CCaaS ARR), 2) Ticked up FCF growth expectations, implying 28% growth in FY25 (vs. +24% in FY24), 3) Solid momentum with SMBs and GSPs ($1B+ ARR growing double-digits), evidence that RNG is executing on its core demographic, 4) Continued new product momentum, reiterating their $100M+ target and notably reporting AIR customers 3x QoQ. That being said, we note the business in aggregate continues to decelerate on both Revenue and ARR. Specifically, we highlight the disconnect between SMB and enterprise, with SMB performing well (particularly in Gold verticals) while Enterprise ARR is growing closer to +5%. This upmarket deceleration continues to amplify competition concerns vs. players like Zoom and Microsoft. Stepping back, we are constructive on RNG's clear emerging product velocity, but we would prefer to see better stability in core UCaaS before getting more comfortable with sustainable growth reacceleration."
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Shares of RingCentral closed at $23.62 yesterday.