RingCentral’s Investments Set a Promising Stage for Continued Growth in 2022; Maintaining $275 FVE

Narrow-moat RingCentral reported strong fourth-quarter results that exceeded both the high end of guidance and our at-FactSet consensus expectations for revenue and adjusted EPS. Management issued strong first-quarter and full-year 2022 guidance, which we view as appropriate given the long growth runway created by several of the strategic initiatives from 2021. In the quarter, strategic partnerships experienced an acceleration of seat wins, with sequential growth across all partners in both number of accounts and seats per customer. We expect the investments made in expanding these strategic partnerships, namely with Mitel in the third quarter of this year, as well as rapid expansion in the number of global service provider relationships formed, will drive profitable growth for the firm in the coming years as their incremental contributions to sales are largely yet to come. As our model already contemplated upside and accelerating profitability, we are maintaining our fair value estimate of $275 per share. With shares trading at a discount to our fair value, we currently see an attractive buying opportunity for investors.