A recently published Gartner Magic Quadrant report estimates that within the next three years, 90% of IT leaders will no longer purchase premises-based unified communications infrastructure, compared with nearly 50% in 2018. In the next three years, cloud-based communications offerings are expected to dominate the market due to their functionality, features, analytics, and dashboarding capabilities. The report puts RingCentral (NYSE:RNG) as the leader of this phenomenon.
Last month, RingCentral reported its fourth quarter results that surpassed all market expectations. Revenues for the quarter grew 34% over the year to $188.6 million, ahead of the market’s forecast of $180.9 million. It ended the quarter with an adjusted net loss of $0.23 per share, also ahead of the Street’s forecast of $0.18 for the quarter.
By segment, software subscription revenues grew 32% over the year to $172 million and revenues from other sources came in at $16.6 million.
For the year, RingCentral saw revenues grow 34% to $674 million driven by a 32% growth in subscription revenues. It ended the year with EPS growing 65% to $0.77.
For the current quarter, RingCentral expects revenues of $191.5-$194.5 million with a non GAAP EPS of $0.14-$0.16. It expects to end the year with revenues of $847-$859 million and an EPS of $0.69-$0.73. The market was looking for revenues of $188.93 million and an EPS of $0.15 for the quarter and revenues of $823.04 million with an EPS of $0.71 for the year. RingCentral is targeting revenues of $1 billion by 2020, which some analysts believe is “starting to look like a walk in the park”.
RingCentral’s Cloud Focus
RingCentral recently announced the launch of RingCentral Persist, a new solution that enables enterprise customers to maintain communications services even in the case of an internet outage at the customer’s location. The new solution will allow customers to continue communications services including emergency calling, extension-to-extension dialing, and inbound and outbound calling. The solution will be available later this quarter.
RingCentral continues to follow a strong platform strategy to drive growth. Its open platform integrates with leading business apps and enables customers to easily customize business workflows. Its Connect Platform Partner Program allows organizations to build solutions on its platform that are then marketed and sold to a broad customer base on the RingCentral App Gallery. The marketplace also provides support to help grow business and provides developers with the technology and go-to-market resources needed to maximize customer success. For instance, Workato has built an iPaaS integration on the RingCentral Connect Platform that automates workflows from calls and SMSs.
As part of its platform expansion, the company recently announced the expansion of its open platform with RingCentral Embeddable. Embeddable will enable developers to easily and quickly embed communications into their enterprise applications. It will add capabilities such as account record screen pop with inbound call, click-to-dial, click-to-SMS, access to softphone settings, messages, and call history.
RingCentral also announced extensions to its API library with new e-Discovery and message retention APIs. The new APIs will give developers direct access to communication information related to voice, SMS, fax, account configuration, and communications data for RingCentral customers. E-Discovery API will allow administrators to generate a report of all messages including data, such as SMS, chat, MMS, voicemail, and fax, and track them by user for additional enterprise legal and compliance guidelines. Its message retention API will enable administrators to extract messages that can be used for additional compliance and data retention requirements.
Currently, the RingCentral open platform has more than 20,000 developers and over 2,000 integrations. I would like to know from RingCentral which of these apps and integrations are driving the most traction? What other apps can entrepreneurs build on to continue to drive the strong momentum that RingCentral is currently witnessing?
Till 2013, RingCentral was privately held. It 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. In 2013, it went public by raising $97.5 million in an IPO that valued it at $790 million. In the five years since listing, the stock has had robust growth. It is currently trading at $110.59 with a market capitalization of $8.98 billion. It touched a 2-week high of $111.70 earlier last week. It has climbed from a 52-week low of $61.55 that it was trading at nearly a year ago.