What Happened: Shares of office and call center communications software provider RingCentral (NYSE:) jumped 15.7% in the post-market session after the company reported first-quarter results that beat analysts' billings, revenue and EPS expectations. Gross margin improved and free cash flow was strong. Looking ahead, revenue guidance for the upcoming quarter was roughly in line with Wall Street expectations. In detail, we believe that this quarter was good, which indicates that the company continues to achieve its goal.
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What the market is telling us: RingCentral shares are extremely volatile and over the past year have seen 24 movements greater than 5%. But moves of this magnitude are very rare even for RingCentral and this suggests to us that this news has had a significant impact on the market's perception of the business.
The biggest move we've written about over the past year was 12 months ago, when the stock rose 11.1% on news that the company reported an encouraging “beat and rise” quarter. First-quarter revenue, adjusted EBITDA, free cash flow and earnings per share (EPS) beat consensus estimates. Revenue guidance for the following quarter and full year came in roughly in line with consensus. On a more positive note, EPS guidance for the upcoming quarter beat expectations, and the company raised its full-year EPS guidance. Overall, this was a strong quarter for the company especially given the mixed results of peers and overall uncertainty.
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RingCentral is up 5.3% since the beginning of the year, but at $34.30 a share it still trades 20.1% below its 52-week high of $42.90 as of July 2023. Investors who bought $1,000 worth of RingCentral stock 5 years ago will be looking Now with an investment of $290.47.
