Posted on Wednesday, Nov 21st 2018
According to a Mordor Intelligence report published recently, the global telecom cloud market is estimated to grow 20% annually over the next five years to become a $34.6 billion industry by 2023. The researcher pegged the market at $12.5 billion in 2017. The growth in the market is expected to be driven by the demand for unified and virtualized communication and collaboration solutions. Billion Dollar Unicorn RingCentral (NYSE:RNG) recently announced its third quarter results that surpassed all market expectations.
Revenues for the quarter grew 33% over the year to $173.8 million, ahead of the market’s forecast of $166.7 million. It ended the quarter with a GAAP net loss of $0.12 per share or $9.5 million, compared with a break-even quarter a year ago. The higher losses were attributed to an increase in stock-based compensation, amortization of debt discount and issuance costs, and acquisition-related expenses. On an adjusted basis, it reported a net income of $0.19 per share, ahead of the Street’s forecast of $0.16 per share.
By segment, software subscription revenues grew 32% over the year to $158 million. Revenues from other sources grew 52% to $15.8 million.
For the current quarter, RingCentral expects revenues of $179-$182 million with non-GAAP EPS of $0.17-$0.19. It expects to end the year with revenues of $664-$667 million and an EPS of $0.71-$0.73. The market was looking for revenues of $175.4 million with an EPS of $0.17 for the quarter and revenues of $653.7 million with an EPS of $0.68 for the year.
RingCentral was privately held till 2013. In 2013, it went public by raising $97.5 million in an IPO that valued it at $790 million. Prior to the listing, the company had raised $45 million from investors including Akkadian Ventures, Hermes Growth Partners, RTP Ventures, Scale Venture Partners, Khosla Ventures, Silicon Valley Bank, DAG Ventures, Cisco, and Sequoia Capital.
RingCentral Acquires Dimelo
RingCentral recently announced the acquisition of a leading cloud-based digital customer engagement platform called Dimelo for an undisclosed sum. Paris-based Dimelo was founded in 2006 to offer a digital-only customer engagement platform. Its customer list includes names like Allianz, AXA, BNP Paribas, ENGIE, Orange, and Telenor. RingCentral plans to leverage Dimelo’s capabilities to offer a modern end-to-end solution in the high-growth customer engagement solutions market. Dimelo’s AI-based routing engine will allow its agents to efficiently manage customer interactions across digital channels via a single interface. Prior to the acquisition, Dimelo was privately held. Its financial and funding details are not publicly known.
RingCentral’s AI Upgrades
RingCentral has been working on the addition of artificial intelligence capabilities to its services by tying up with third party partners. It recently announced partnerships with Gong.io, ThetaLake, and Velvetech to provide real-time and post-call voice analytics services to global customers. For instance, Velvetech is leveraging RingCentral’s open APIs to build a custom, real-time transcription solution with machine learning capabilities that can extract real-time insights to coach sales agents and drive improved sales performance.
Additionally, RingCentral is also adding enhancements to its integrations with Box and Google. The new enhancements with Box include the capability to allow users to archive key RingCentral communications data such as SMS, fax, voicemails, and call recordings automatically to their Box account. This information can then be used by Box’s AI tool called Box Skills to improve performance. Similarly, Google’s enhancements include the native Google Calendar Add-on that will allow users to schedule a meeting or conference call without having to toggle between applications.
RingCentral’s product upgrades will help it compete more effectively with its rivals like Nextiva and 8×8, which offer similar services at similar price points. These players are also tying up with other technology players to offer seamless products. For instance, recently, Nextiva announced a strategic tie up with Nitel, a technology services provider to improve their customer experience.
I would like to know from SMB users of these integrated VoIP services about the features that attract them to their VoIP vendor. What makes you choose RingCentral over other alternatives?
RingCentral’s shares are currently trading at $76.40 with a market capitalization of $6.1 billion. It touched a 52-week high of $98.15 in September this year and a 52-week low of $43.85 in November last year.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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