RingCentral's RNG shares have gained 7.4% in the past month compared with the Zacks Computer & Technology sector’s rise of 5.6%.

The uptick can be attributed to RNG’s growing AI initiatives, including the introduction of RingCX — its AI-first cloud contact center product. In second-quarter 2024, the customer count for RingCX increased above 70% sequentially, reaching more than 350 customers.

RNG is riding on solid demand for its Unified Communications as a Service (UCaaS) and contact center software-as-a-service (SaaS) solutions.

In the second quarter, ARR (Annual Recurring Revenue) rose to $2.43 billion, with strong contributions from RNG’s UCaaS and SAAS businesses.

Given RNG’s expanding portfolio, you should ask this question — is now the right time to invest in RNG shares?

RNG’s Prospects Ride on Strong AI Prowess

RingCentral’s focus on adding AI-supported features to its platforms has been a key catalyst. In September, RingCentral and Zayo announced a strategic relationship to launch Zayo UC+, an AI-powered cloud communications and contact center solution, enhancing workforce productivity and customer experiences.

RNG’s expansion into vertical markets such as healthcare, financial services and retail has been a major growth driver for its success.

In September, RNG announced that its solutions have significantly improved employee and patient experiences at MedCare Equipment, resulting in a 40% reduction in average call wait times and a 92%-time savings on agent coaching and call reviews.

Strong momentum across the enterprise segment has been a key catalyst. In the second quarter enterprise business grew double-digit on a year-over-year basis. RNG closed nearly 20 deals with more than $1 million total contract value (TCV). The average TCV of large deals rallied 30% year over year.

RingCentral’s expanding partner base includes the likes of Zayo, Cox Communications, Vodafone VOD, ServiceNow NOW and Microsoft MSFT.

In August, RingCentral announced an expansion of its partnership with Vodafone Business to offer Vodafone Business Contact Center powered by RingCX, enhancing customer experiences across 30 markets by early 2025.

In second-quarter 2024, RingCentral also secured notable customers, including one of the top 25 largest counties in the U.S., while enhancing RingCX with more than 300 new features, including integrations with ServiceNow, HubSpot and Microsoft Teams.

RNG Offers Strong Q3 Outlook

RingCentral’s robust AI portfolio and expanding partner base are contributing to its growth prospects continuously, driving top-line growth.

For third-quarter 2024, RingCentral expects revenues to be between $600.5 million and $603.5 million, indicating year-over-year growth of 8%.

The Zacks Consensus Estimate for third-quarter 2024 revenues is currently pegged at $601.9 million, suggesting 7.84% growth over the figure reported in the year-ago quarter. 

The consensus mark for earnings is currently pegged at 92 cents, unchanged in the past 30 days and suggesting 17.95% year-over-year growth.

Here’s What Investors Should do With RNG Stock

With a Value Score of A, the RNG stock appears to be undervalued at present. The forward 12-month Price/Sales ratio for RNG stands at 1.26, significantly below the industry average of 3.40.

RingCentral currently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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