RingCentral (RNG) provides a sophisticated set of telephony capabilities to the small business (SMB) market. It’s naturally delivered as a cloud-based solution based on IP networking. RingCentral provides a set of services that business pay for on a monthly basis. (SaaS model)

At the low end the company competes with more personal options like Google Voice or Skype. At the higher end the company goes against hardware providers like Cisco (CSCO) or Avaya or software solutions from Microsoft (MSFT) and Broadsoft (BSFT).

For 2012 the company posted revenue of $115M and is growing at 40%. Gross margins are between 60% and 70% and the company hopes to boost them to 70-80% in their target model.

Today the company is still unprofitable by a substantial amount (-22% operating margins so far in 2013) but management believes that they will ultimately achieve 20-25% operating margins in their target model.

The model looks a little aggressive in terms of sales and marketing expenses and gross margins. It’s probably more reasonable to project a target model that achieves operating margins in the range of 15% to 20%.

The company filed to offer 7.5M shares at a $12 mid-point with Goldman, JP Morgan and BofA running the books. They priced at upper end of the range at $13 and traded up to the $17 range and a $1B market capitalization.

RingCentral Company Roadshow Slides

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