Loss-Making RingCentral, Inc. (NYSE:RNG) Expected To Breakeven In The Medium-Term

RingCentral, Inc. Class A -0.72% Post

RingCentral, Inc. Class A

RNG

34.53

34.53

-0.72%

0.00% Post

With the business potentially at an important milestone, we thought we'd take a closer look at RingCentral, Inc.'s (NYSE:RNG) future prospects. RingCentral, Inc., together with its subsidiaries, provides cloud communications, video meetings, collaboration, and contact center software-as-a-service solutions worldwide. On 31 December 2023, the US$3.2b market-cap company posted a loss of US$165m for its most recent financial year. Many investors are wondering about the rate at which RingCentral will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for RingCentral

According to the 24 industry analysts covering RingCentral, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$107m in 2026. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 73% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:RNG Earnings Per Share Growth March 28th 2024

We're not going to go through company-specific developments for RingCentral given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. RingCentral currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on RingCentral, so if you are interested in understanding the company at a deeper level, take a look at RingCentral's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

  1. Valuation: What is RingCentral worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether RingCentral is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on RingCentral’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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