What Happened?
Shares of office and call centre communications software provider RingCentral (NYSE:RNG) jumped 25.6% in the afternoon session after the company reported better-than-expected second-quarter financial results, raised its full-year profit forecast, and received an analyst upgrade. The business communications provider announced revenue of $620 million and adjusted earnings of $1.06 per share, both of which beat Wall Street's forecasts. Based on the strong quarter, RingCentral lifted its full-year earnings guidance. The positive report prompted Oppenheimer to upgrade the stock to "Outperform" with a $35 price target. Adding to the good news, the company also achieved positive GAAP net income for the first time in its history and announced an expanded partnership with AT&T.
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What Is The Market Telling Us
RingCentral’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for RingCentral and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 6.6% on the news that the company announced an expanded partnership with AT&T, amid a broader rally in software stocks.
The collaboration introduced new AI-powered tools to AT&T's business communications portfolio, including RingCentral's contact center and conversational intelligence solutions. These additions were designed to help businesses improve customer experiences. The positive company news was amplified by a favorable market environment for Software as a Service (SaaS) stocks. A weaker-than-expected U.S. jobs report increased investor expectations for a Federal Reserve interest rate cut, which generally boosted valuations for growth sectors like technology.
RingCentral is down 15.2% since the beginning of the year, and at $29.55 per share, it is trading 29.4% below its 52-week high of $41.82 from December 2024. Investors who bought $1,000 worth of RingCentral’s shares 5 years ago would now be looking at an investment worth $102.84.
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