As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the video conferencing industry, including RingCentral (NYSE:RNG) and its peers.
Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.
The 4 video conferencing stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 1.2% while next quarter’s revenue guidance was 1.4% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Amidst this news, video conferencing stocks have had a rough stretch. On average, share prices are down 13.7% since the latest earnings results.
RingCentral (NYSE:RNG)
Founded in 1999 during the dot-com era, RingCentral (NYSE:RNG) provides software as a service that unifies phone, text, fax, video calls and chat in one platform.RingCentral reported revenues of $592.9 million, up 9.9% year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a satisfactory quarter for the company with a decent beat of analysts’ billings estimates but a decline in its gross margin.
“Q2 results were a continuation of the strong execution that we saw in the first quarter,” said Vlad Shmunis, RingCentral’s Founder and CEO.
RingCentral scored the highest full-year guidance raise of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 16.3% since reporting and currently trades at $70.08.
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Best Q2: Zoom (NASDAQ:ZM)
Started by Eric Yuan who once ran engineering for Cisco’s video conferencing business, Zoom (NASDAQ:ZM) offers an easy to use, cloud-based platform for video conferencing, audio conferencing and screen sharing.Zoom reported revenues of $1.16 billion, up 2.1% year on year, outperforming analysts’ expectations by 1.1%. The business had a satisfactory quarter with an impressive beat of analysts’ billings estimates but decelerating growth in large customers.
The market seems happy with the results as the stock is up 16.3% since reporting. It currently trades at $70.08.
Weakest Q2: 8x8 (NASDAQ:EGHT)
Founded in 1987, 8x8 (NYSE:EGHT) provides software for organizations to efficiently communicate and collaborate with their customers, employees, and partners.8x8 reported revenues of $178.1 million, down 2.8% year on year, in line with analysts’ expectations. It was a softer quarter as it posted underwhelming revenue guidance for the next quarter and a miss of analysts’ billings estimates.
8x8 delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 29.1% since the results and currently trades at $1.83.
Five9 (NASDAQ:FIVN)
Started in 2001, Five9 (NASDAQ: FIVN) offers software as a service that makes it easier for companies to set up and efficiently run call centers, and offer more tailored customer support.Five9 reported revenues of $252.1 million, up 13.1% year on year. This result beat analysts’ expectations by 2.8%. More broadly, it was a slower quarter as it logged underwhelming revenue guidance for the next quarter and a decline in its gross margin.
Five9 achieved the biggest analyst estimates beat and fastest revenue growth, but had the weakest full-year guidance update among its peers. The stock is down 33% since reporting and currently trades at $28.50.
This content was originally published on Stock Story
