categories

HOT TOPICS

NEWSLETTER

If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Cloud Stocks: RingCentral’s Powerful Partner Strategy Would Augment with PaaS

Posted on Thursday, Feb 13th 2020

Cloud-based communication services provider RingCentral (NYSE:RNG), which is one of our Top 20 Cloud Stocks for 2020, reported its fourth quarter results this week that blew past all market expectations, and its stock has soared to a record high post the announcement.

RingCentral’s Financials

RingCentral’s fourth quarter revenues grew 34% over the year to $253 million, significantly ahead of the market’s forecast of $239.5 million. This was the first quarter that the company reported a billion dollar annual revenue run rate. EPS of $0.22 was also ahead of the Street’s estimates of $0.21.

By segment, software subscriptions revenue increased 33% to $229 million. Other revenues grew 40% to $23.5 million.

Among key metrics, Annualized Exit Monthly Recurring Subscriptions (ARR) grew 32% to $960 million with RingCentral Office ARR increasing 36% to $877 million and Mid-market and Enterprise ARR increased 59% to $479 million.

RingCentral ended the year with revenues growing 34% over the year to $903 million. GAAP net loss per share of ($0.64) was higher than previous year’s loss of ($0.33) per share due to higher share-based compensation, amortization of intangibles, and acquisition related spends. On an adjusted basis, it reported an EPS of $0.82, compared to $0.77 a year ago.

For the first quarter, RingCentral expects revenues of $257-$259 million with a non-GAAP EPS of $0.18-$0.19. The market was looking for revenues of $249.2 million with an EPS of $0.18. RingCentral expects to end 2020 with revenues of $1.125-$1.135 billion, again ahead of the Street’s forecast of $1.1 billion.

RingCentral’s Growing Partnerships

RingCentral continues to drive growth by building strategic partners. After its earlier tie-up with Avaya, it recently entered an expanded relationship with AT&T. As part of the agreement, AT&T will market a business communication product supported by RingCentral. Known as the AT&T Office@Hand agreement, the two players will bring mobile-first voice, video, online meetings, messaging, and team collaboration capabilities to organizations. The partnership will help RingCentral get access to the wide market supported by AT&T. Additionally, the two players will work together to develop global capabilities to deliver enhanced Unified Communications as a Service(UCaaS).

Earlier this week, RingCentral also announced its strategic system integrated partnership with Atos. Atos is a global leader in enabling enterprise digital transformation. As part of the agreement, Atos will add RingCentral as the preferred provider of UCaaS solutions. They will enter into a System Integrator relationship and will introduce a co-branded UCaaS solution that will become a critical part of Atos’ Digital Workplace client and partner offering. The tie-up will help RingCentral extend its presence into large enterprise accounts that are focusing on moving towards digital transformation initiatives.

This was the third strategic partnership that RingCentral has entered into in the recent past. The first one being its tie-up with Avaya last year that was focused on introducing a new joint solution, Avaya Cloud Office (ACO) by RingCentral.

I think SaaS companies like RingCentral also need to focus on exploring a PaaS strategy that can further expand their product ecosystem and help build a developer ecosystem and marketplace around it. As I mentioned in an earlier post, the beauty of the marketplace model lies in the leveraged multiplier effect of developers writing apps on their platform, selling to their customers through the marketplace, and paying platform/marketplace fees of ~30%. Companies like Salesforce and Atlassian have successfully delivered on this model.

The market is pleased with RingCentral’s collaborative approach to growth. Its stock is currently trading at $227.02 with a market capitalization of $19.5 billion. Earlier this week, it had touched a 52-week high of $233.81. It was trading at a 52-week low of $98.19 in February last year.

This segment is a part in the series : Cloud Stocks


. Smartsheet Acquiring Bootstrapped Startups to Drive Growth
. Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups
. Netflix Price Hike Ruffles Competition
. How Will Carbon Black Differentiate?
. ServiceNow Grows Through Addition of Capital-Efficient Startups
. Zendesk and Freshworks Follow Different Acquisition Strategies
. Tableau Grows Through Small Acquisitions
. Open Platform Strategy Stands Intuit in Good Stead
. Will GoDaddy Follow the PaaS Route?
. Adobe Delivers Via PaaS
. A Look at Oracle’s 2018 M&A Activity
. What Apps Will Drive More Traction for Cloudera?
. Slack's App Focus Will Be Key to Post-IPO Success
. IBM Counts on its Cloud and Platform for the Turnaround
. Atlassian Acquires From its PaaS Marketplace
. What Should SAP Acquire to Triple its Value by 2023?
. Expect ServiceNow to Acquire From App Marketplace
. Should Alarm.com Follow a PaaS Strategy?
. How Upwork Can Leverage the Virtual Company Trend
. Qualys Scouting For Acquisitions
. Should SAP Acquire Zendesk or Freshworks?
. HubSpot Counts on its API Strategy
. SurveyMonkey Eyes Acquisitions for Growth
. Workday Wants to Disrupt Cloud Computing Using Machine Learning
. Einstein and Open-Source Platform Lead the Charge for Salesforce
. DocuSign Prepares to Beat Rival Adobe
. Veeva Soars, But Dassault Acquires Medidata for $5.8 Billion
. Tableau Acquisition Signals Massive Analytics Push for Salesforce
. Oracle Joins Hands with Microsoft to Take on Amazon
. GoDaddy is Making Strategic Acquisitions for the Next Level of Growth
. Alteryx Sees Strong Momentum
. Adobe Leveraging Magento and Marketo to Deliver Blockbuster Performance
. Is Slack Overvalued?
. How Will Cloudera Address the Competition?
. Zoom is Not Bothered by Cisco or Microsoft
. Domo Counts on Enterprise Revenue for Growth
. Netflix Plays with Pricing and Games to Attract Subscribers
. CrowdStrike Has a Successful IPO
. Atlassian Crosses the Billion Dollar Revenue Milestone
. ServiceNow Believes Strength Lies in Tie-ups
. Partnerships are the Mantra for BlackLine
. SurveyMonkey Counts on Enterprise Segment for Growth
. HubSpot Soars to a New High
. Intuit Pushes AI to Simplify Tax Filing
. Splunk Sees Strong Cloud Momentum
. Forescout Partners with Big Names
. Smartsheet Tapping into the Government Sector
. Salesforce Continues its Shopping Spree
. Palo Alto Networks Targets the IoT Security Market
. DocuSign Focuses on the Mortgage Sector
. Oracle Brags About Autonomous Database
. Blackbaud Acquires YourCause to Grow Addressable Market
. The Market Expects a Lot More from Adobe
. Anaplan Makes its First Acquisition Post IPO
. Activist Investor Drives Market Interest in Box
. MongoDB's Formula for Success
. Coupa Aims for $1B Revenue
. Dropbox on a Rocky Road
. Medallia Banks on Acquisitions
. IBM Banks on AI
. Time For Skepticism with Netflix
. SAP Riding High on the Cloud
. Amazon's Faster Shipping Hurting its Earnings
. ServiceNow CEO Change Signals Focus on Acquisitions
. Will Google Acquire Fitbit?
. HubSpot Focuses on Its Platform
. BlackLine Partners with Google Cloud
. Rapid7’s Focus on Cloud SIEM Pays Off
. Splunk Bets Big on Data Streaming
. Intuit's QBO Scores Big
. VMware Builds Up With Acquisitions
. Palo Alto Targets $5B Revenue by 2022
. Workday Targeting Procure-to-Pay Cycle
. Will Salesforce Acquire DocuSign?
. Okta Targets Enterprise Customers
. MongoDB Eyeing China With Alibaba Partnership
. Twilio Counts on API Upgrades for Growth
. Adobe Revs up its Experience Platform
. Top 20 for 2020
. Anaplan Sees Expanding Use Cases
. Dropbox Gears Up to Regain Lost Valuation
. Forescout Fails to Deliver
. Enterprise Bet Pays Off for SurveyMonkey
. SAP Bets Big on Experience Management
. Twilio Steps up Investment in 2020 to Preserve Growth Momentum
. Zendesk, Freshworks Focus on Marketplaces and Integrations
. Proofpoint Targets Insider Threats Through Acquisition
. RingCentral's Powerful Partner Strategy Would Augment with PaaS
. Qualys Counts on Google and Microsoft for Growth
. Shopify Soars on Improved Merchant Offerings

Hacker News
() Comments

Featured Videos