2023-03-17 13:19:43 ET
RingCentral ( NYSE: RNG ) is trading as much as -7% on Friday after Oppenheimer downgraded the stock, noting that the cloud communications company has been "less profitable than expected".
Oppenheimer also cited new headwinds ahead for RingCentral with the recession hitting demand and greater competition from peers adopting AI. The brokerage firm highlighted AI as the "next leg of growth".
Notably, Microsoft has said it is integrated generative AI into its own cloud enterprise software suite, including Teams. Oppenheimer cited this as a major headwind ahead for RingCentral.
The firm was also called out for a "lack of transparency from management" over customer churn and other key performance indicators. Oppenheimer noted net debt has ballooned since 2019 and so has the ratio between selling and marketing expenses to net new ARR.
Evercore too downgraded the stock in February after the cloud company missed revenue forecasts for Q4 and guided to the light side for the current quarter, noting "there is no real catalyst on the horizon".
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RingCentral drops on downgrade by Oppenheimer