RingCentral, Inc.

RingCentral delivered a mixed set of results and failed to meet the revenue expectations of analysts given the challenging macroeconomic backdrop. The company did manage an earnings beat and made significant progress in lowering SBC as a percentage of revenue by about 400 basis points in 2022, and it anticipates continuing development in this area in the future. This quarter, they added support for end-to-end encryption beyond video. Customers now have the option to safeguard sensitive information due to the addition of messaging and phones. Given the importance of privacy and security to their consumers, management intends to keep investing in these areas to maintain their position. Furthermore, the company started a new collaboration with AWS to deliver technologies and ideas that enhance corporate communications for today’s hybrid workforce. RingCentral and AWS look to directly offer the product under the terms of this new multiyear strategic collaboration. This will enable customers to purchase RingCentral MVP and Contact Center solutions immediately through the AWS Marketplace. Additionally, the company announced an expanded and extended agreement to its strategic collaboration with Avaya. We give RingCentral a ‘Buy’ rating with a revised target price.