RingCentral Earnings: Steadfast New Product Sales Drive Topline Growth and Strong Product Attach

No-moat RingCentral reported first-quarter earnings that topped our expectations on the top and bottom lines, while second-quarter guidance was largely in line with our model and full-year guidance remains unchanged. The firm continues to expand its product portfolio while integrating its solutions with artificial intelligence. The new AI Receptionist solution has already shown solid early signs of success and is expected to support greater product attachment. Our estimates are largely unchanged, so we therefore maintain our fair value estimate of $55 per share. While we acknowledge the market view that pricing will come under pressure, we believe our assumptions already reflect that. For context, we have to assume some combination of both revenue and margin contraction within our explicit forecast to arrive at the current share price, for which we do not see support at present. Although we view shares as attractive, we continue to prefer moatier names in our coverage.