We feel now is a pretty good time to analyse RingCentral, Inc.'s (NYSE:RNG) business as it appears the company may be on the cusp of a considerable accomplishment. RingCentral, Inc., together with its subsidiaries, provides cloud communications, video meetings, collaboration, and contact center software-as-a-service solutions worldwide. On 31 December 2023, the US$3.0b market-cap company posted a loss of US$165m for its most recent financial year. Many investors are wondering about the rate at which RingCentral will turn a profit, with the big question being "when will the company breakeven?" We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 25 of the American Software analysts is that RingCentral is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$107m in 2026. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 73% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
NYSE:RNG Earnings Per Share Growth March 1st 2024
Given this is a high-level overview, we won't go into details of RingCentral's upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there's one issue worth mentioning. RingCentral currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
Next Steps:
This article is not intended to be a comprehensive analysis on RingCentral, so if you are interested in understanding the company at a deeper level, take a look at RingCentral's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is RingCentral worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether RingCentral is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on RingCentral's board and the CEO's background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
