RingCentral Single Executive Departure Creates Confusion

RingCentral stock has been negatively impacted over the past few days due to some confusion around the departure of Bob Lawson, who was a senior vice president and treasurer at the company.

Mr. Lawson had been the CFO prior to RingCentral’s IPO last year, but before going public, the company brought on Clyde Hosein as executive vice president and CFO. While Mr. Lawson was a key executive and was very important to the company’s success, we believe that the bench at RingCentral is strong and can sustain his departure. Furthermore, Mr. Hosein is a credible financial leader, in our view, having served as the CFO of Marvell Technology Group, Integrated Device Technologies, and Advanced Interconnect Technologies. Mr. Hosein remains the CFO at RingCentral.

At current valuation levels the stock trades below its closest peer, 8×8, which is a smaller, slower growth company. This presents an attractive buying opportunity.

RingCentral’s shares trade at 3.7 times projected 2015 revenue, which is well below the SaaS group median of 4.5 times and even below its closest peer 8×8. We believe the shares deserve to trade in line with or even slightly above the SaaS group, given the company’s above-average revenue growth, large market opportunity, and multiple growth drivers.

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