Ring In The Profits

RingCentral is strategically positioned to meet exploding demand with an enterprise program, global and trusted unified Message Video Phone, or MVP, platform.

The results speak for themselves and investors should look at deploying capital in this company.

The pandemic has created unprecedented global challenges and is having a transformative impact that we all need to reckon with.

Cloud transformation of business communications platform has become a priority as companies adjust to a work-from-anywhere environment.

Businesses of all sizes now require communication solutions where employees can work productively with clients, partners, and peers from anywhere on any device and in any model.

This complexities of enabling cloud migration of business communications started over a decade ago and could never be more important today.

Ring delivered a strong second quarter as they continue to take advantage of strong contributions from mid-market, enterprise, and mid-channel partners.

First, Ring announced an expansion of strategic partnership with Atos.

Second, together with Avaya, Ring announced a further global rollout of Avaya Cloud Office by RingCentral.

Several of these large wins were in targeted verticals of healthcare, financial services, and education.

Total revenue grew to $278 million. This is a 29% increase year over year and is above the high end of the guidance range.

Approximately 60% of their on-premise installed base of 40 million users is in Europe, with a strong presence in Germany.

Other locations of strategic importance include France, Spain, Italy, Netherlands, Austria, Belgium, Ireland, U.S., U.K., and Australia.

There is a robust pipeline building and several critical large deals already on the books. An example of a large joint win was the selection of Ring’s platform by a large organization that supports the U.K. government's virus tracing program to control the spread of the virus.

In this highly urgent and critical use case, the solution-leveraged RingCentral's open API platform and was rolled out to multiple thousands of users in approximately six weeks.

To add to the growing hype, Ring saw double-digit growth in messaging and triple-digit growth in video and mobile voice minutes on Ring’s MVP platform quarter over quarter.

Speaking of video, RingCentral Video, or RCV platform, has been quickly proving itself since the April launch.

As part of the agreement, Alcatel-Lucent channel partners and customers will have full access to RNG’s mobile-voice-phone (MVP) platform capabilities, with it also including a $100 million cash payment from RingCentral and providing exclusive access, minimum seat commitment and future commissions to Alcatel-Lucent.

Both companies will also be on the hook for operating expenses related to product development.

This deal will serve as another opportunity for RingCentral to expand sales more quickly globally, especially given Alcatel-Lucent's 40 million-plus unified communications (UC) customer base.

Following this new partnership, RNG now has roughly 45% of the estimated global UCaaS market accounted for via strategic partnerships (180 million seats of a total of 400 million seats).

RingCentral will consistently grow its seat count above an expected industry growth rate of 15% - 20% over the next five years.

The partnerships mean and added $1 billion of incremental revenue opportunity.

In all, this extrapolates into potentially a 40% compounded top-line growth longer term.

With a tech company such as Ring that is locked and loaded in the middle of its sweet spot growth trajectory, it’s hard not to see the underlying stock higher in the next 1 to 2 years.

Then, when investors consider that the Federal Reserve has artificially propped up markets, with traditional valuation metrics no longer telling the whole story, one must conclude that tech growth companies targeting the cloud are prime for a doubling or tripling from current valuations.

The virus has cut off the start-up culture with a round of layoffs from unprofitable companies in Silicon Valley.

The last tech growth companies “in the door” will benefit most since the scarcity value of these firms will filter down to the bottom line.

I am very bullish on RingCentral’s prospects.