Why RingCentral Stock Soared 24% in July

Investors in the cloud-based communications solutions provider have grabbed the brass ring, as shares are up 70% in 2019.

Beth McKenna
Beth McKenna
Aug 10, 2019 at 4:30PM
Technology and Telecom

What happened

Last month, RingCentral (NYSE:RNG) stock popped 23.6%, according to data from S&P Global Market Intelligence. The S&P 500 returned 1.4% in July. 

Shares of the San Francisco Bay area-based provider of enterprise communications, collaboration, and contact-center solutions are up a whopping 69.6% in 2019, versus the broader market's 17.8% return.

Various images of people using technology to communicate and collaborate with a city in background.

Image source: Getty Images.

So what

We can attribute RingCentral stock's robust July performance in part to a continuation of its upward momentum that been driven by the company posting a long string of better-than-expected quarterly earnings results. 

There was also a specific July catalyst for the stock's rise: RingCentral's release of its second-quarter report, which included an increase in full-year 2019 guidance. On July 30, shares popped 11.1% following the release. In Q2, the company's revenue rose 34% year over year to $215.2 million, its GAAP (generally accepted accounting principles) net loss widened 10% to $0.11, and its adjusted earnings per share (EPS) increased 11% to $0.21, handily beating Wall Street's $0.16 consensus estimate. 

RNG Chart

Data by YCharts.

Here's the 2019 stock performance picture:

RNG Chart

Data by YCharts.


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Now what

For 2019, RingCentral now expects revenue between $874 to $877 million, which at the midpoint represents growth of 30% year over year. Its prior outlook was for revenue of $862 to $866 million. The company guided for 2019 adjusted EPS of $0.77 to $0.79, approximately in line with 2018's adjusted EPS of $0.77. It previously expected adjusted EPS of $0.71 to $0.75.

Investors can almost surely count on 2019 adjusted EPS coming in higher than the company's outlook, as RingCentral routinely issues quite conservative guidance.