What Happened: Shares of office and call center communications software provider RingCentral (NYSE:) jumped 15.7% in after-hours trading after the company reported first-quarter results that beat analysts’ expectations on billings, revenue and earnings. per share. The company’s gross profit increased and free cash flow became stable. Looking ahead, earnings guidance for the next quarter was roughly in line with Wall Street expectations. Zooming out, we think it was a decent quarter, showing the company remains on target.
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What the market is telling us: RingCentral stock is highly volatile, with 24 moves greater than 5% over the past year. But such large-scale moves are very rare even for RingCentral, which indicates to us that this news had a significant impact on the market’s perception of the business.
The biggest move we’ve written about in the last year came 12 months ago, when shares rose 11.1% on news that the company reported an encouraging quarter to “outperform and outperform.” First-quarter revenue, adjusted EBITDA, free cash flow and earnings per share (EPS) beat consensus estimates. Earnings guidance for the next quarter and full year was roughly in line with consensus. On a more positive note, EPS guidance for the next quarter beat expectations and the company raised its full-year EPS guidance. Overall, it was a strong quarter for the company, especially given the mixed performance of its peers and macroeconomic uncertainty.
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RingCentral is up 5.3% year to date, but at $34.30 per share it is still trading 20.1% below its 52-week high of $42.90 from July 2023. Investors who bought $1,000 worth of RingCentral shares 5 years ago will now be looking at an investment of $290.47.