RingCentral Earnings: Good Quarter All Around With Stable Demand and Improved Profitability

No-moat RingCentral opened its fiscal year well with results that surpassed both our expectations and the high-end of guidance on the top and bottom line. Additionally, management raised its full-year outlook as win rates remain stable and lead generation is strong despite challenging economic conditions. The macro environment resulted in fewer upselling opportunities along with longer sales cycles as deals are more heavily scrutinized and require additional levels of approval. Despite good performance and a raised outlook, we have not changed our longer-term thinking and therefore we are maintaining our fair value estimate of $51 per share. Shares remain undervalued as the stock has sold off this year, but we continue prefer wide-moat stocks under our coverage during this period of economic turmoil.