RingCentral RNG is scheduled to report fourth-quarter 2024 results on Feb. 20.

For fourth-quarter 2024, the company expects earnings in the range of 96-97 cents per share.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is pegged at 96 cents per share, unchanged in the past 30 days. The figure indicates an increase of 11.63% year over year.

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For the fourth quarter of 2024, RingCentral expects revenues between $611 million and $613 million, indicating year-over-year growth of 7%.

The Zacks Consensus Estimate for revenues is pegged at $612.24 million, suggesting an increase of 7.17% from the year-ago quarter’s reported number.

The company beat the Zacks Consensus Estimate for earnings in all the trailing four quarters the average surprise being 4.76%.

Let’s see how things have shaped up for RNG prior to this announcement.

Factors to Note

RingCentral’s fourth-quarter performance is expected to have benefited from its robust product portfolio and strong subscription revenue growth.

Subscription revenues for the fourth quarter are expected to be between $587 million and $589 million, indicating year-over-year growth of 7% to 8%.

RingCX, an AI-powered CCaaS (Contact Center as a Service) platform, along with RingSense (conversation intelligence) and RingCentral Events (virtual and hybrid events platform), are showing strong traction. These platforms performances are expected to have driven revenue and ARR (Annual Recurring Revenue) growth in the to-be-reported quarter.

The introduction of RingCentral AI Assistant is expected to enhance businesses' value proposition, particularly in improving productivity through AI-driven note-taking and insights. As AI becomes increasingly integral to businesses' offerings, it is expected to fuel growth.

RingCentral has been targeting specific industries, such as healthcare, retail, and finance, which are showing strong demand for unified communication solutions. This targeted approach is likely to have yielded positive results in the fourth quarter.

With the increasing shift toward remote and hybrid work environments, the demand for unified communications and collaboration solutions continues to rise. This trend is expected to have driven customer acquisition and retention in the to-be-reported quarter.

However, challenging macroeconomic conditions, unfavorable forex rates and stiff competition are expected to have hurt RNG’s top line in the to-be-reported quarter.

Robust Partnerships and Client Base Bode Well for RNG

Ongoing partnerships with global service providers such as Vodafone VOD, AT&T T, Optus, and others have helped expand RingCentral's global footprint. This is expected to continue driving growth in the fourth quarter.

RNG announced an expanded strategic partnership with Vodafone Business to offer Vodafone Business Contact Center with RingCentral, powered by RingCX, extending to 30 markets by early 2025. Benefits from this partnership are likely to have been reflected in the to-be-reported quarter.

In the third quarter of 2024, RNG renewed its agreement with AT&T, enhancing access to AI-driven communications platforms for businesses of all sizes. This is likely to have boosted RNG’s top line in the fourth quarter as well.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Ring Central currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock to Consider

Here is a company worth considering, as our model shows that it has the right combination of elements to beat on earnings in the quarter to be reported.

Autohome ATHM has an Earnings ESP of +7.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Autohome shares have gained 8.4% year to date. ATHM is slated to report its fourth-quarter 2024 results on Feb. 20.

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