One of last week's biggest gainers was RingCentral (NYSE:RNG), moving 10% higher after posting another quarter of better-than-expected financial results. The strong report sent the shares to fresh all-time highs. The stock is now nearly a seven-bagger since going public at $13 five years ago. 

RingCentral provides enterprise communications on the cloud. The platform's strength is in its versatility. RingCentral can take inbound calls, redirecting them to recipients on their IP phones, PCs, tablets, and perhaps more importantly smartphones. In this "bring your own device" climate, RingCentral's apps allow employees to make and receive calls from their corporate numbers or extensions without having to carry multiple devices. Beyond the mobile phone integration, RingCentral also makes it easy to set up conference calls, video conferencing, and internet-based faxing. Plans start at $15.99 a month. RingCentral is naturally not the only one trying to keep with the times by offering a malleable cloud-based platform, but there's room for plenty of winners judging by the company's heady growth.

RingCentral's platform across various devices.

Image source: RingCentral.  

Making the call

RingCentral's second quarter was another beauty. Revenue soared 34% to $160.8 million, well ahead of the $155.7 million that analysts were modeling and the 29% to 31% top-line growth that it was forecasting three months earlier. Adjusted earnings nearly doubled to $16.1 million or $0.19 a share. Wall Street was settling for $0.15 a share. 

The big bottom-line beat isn't a surprise. RingCentral has routinely trounced analyst estimates with ease.   

Quarter EPS expected EPS actual Surprise
Q3 2017 $0.05 $0.06 50%
Q4 2017 $0.06 $0.07 17%
Q1 2018 $0.12 $0.16 33%
Q2 2018 $0.15 $0.19 27%

Data source: Yahoo! Finance.

RingCentral's ability to exceed analyst profit expectations -- double-digit percentage beats, too -- has not gone unnoticed by Wall Street. The stock has soared 81% so far in this year and has more than quadrupled since the start of 2017. Buyout speculation was a catalyst last summer, but RingCentral is earning its keep as a swinging single these days.

The prospects seem to get rosier with every passing quarter. RingCentral now sees revenue rising 29% to 30% -- to between $649 million and $656 million -- in 2018, up from its earlier annual growth goal of 27% to 28%. It's forecasting an adjusted profit per share between $0.66 and $0.70, up from the $0.61 to $0.65 it was eyeing three months ago. Six months ago it initiated its 2018 guidance by calling for adjusted earnings per share of $0.56 to $0.60 on 25% to 27% top-line growth.

Analysts at Jefferies, Craig-Hallum, JPMorgan, and SunTrust all jacked up their price targets following the report. They're encouraged by RingCentral's strong growth in subscription revenue and the big deals it's been signing along the way. RingCentral is excelling at the game of perpetually exceeding its conservative growth targets, and investors are the ones that are winning.

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