RingCentral Earnings: Better Profitability With Enterprise Strength and Ramping New Products

No-moat RingCentral reported fourth-quarter 2023 results that exceeded our profitability expectations and landed in line with our revenue assumption, while the outlook was slightly shy of our model. Vlad Shmunis made his return as CEO and emphasized his priorities for building a multiproduct business, expanding margins, and reducing stock-based compensation. The firm noted traction with new products, mainly RingCX, which it thinks can help drive $100 million in new annual recurring revenue by the end of 2025. The firm also detailed its improving balance sheet including continued repurchasing of convertible notes. Given results and guidance, our model changes are negligible, thus we maintain our fair value estimate of $51 per share. Shares remain undervalued in our view, but we prefer wide-moat stocks in our coverage.