Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Moody’s Ratings has upgraded RingCentral (NYSE:RNG), Inc.’s corporate family rating (CFR) to Ba2 from Ba3, while maintaining a stable outlook, the ratings agency announced Thursday.
The upgrade reflects RingCentral’s improved profitability over recent years, with Moody’s expecting the company’s adjusted EBITDA margin to further improve to the low teen percent range over the next 12-18 months due to continued cost discipline.
"We expect free cash flow to exceed $500 million annually over the next two years. RingCentral also intends to reduce gross debt by more than $350 million to $1 billion by year end 2026," said Moody’s Ratings Senior Analyst Justin Remsen.
Moody’s anticipates the company’s adjusted leverage to decline to near 3x by 2026, from about 5x for the twelve months ending March 31, 2025.
The Ba2 CFR reflects RingCentral’s position among the largest unified & collaboration as-a-service providers. The company reported annualized recurring revenue of more than $2.5 billion at March 31, 2025, growing approximately 7% year-over-year.
Moody’s expects continued mid-single digit percent ARR growth, supported by core UCaaS products and new offerings. The company’s Contact center as-a-service solution, RingCX, has gained traction with substantial customer growth.
The rating also considers competitive threats in both UCaaS and CCaaS markets, which Moody’s expects to remain intensely competitive. The agency notes that migration of on-premises seats to the cloud will support mid-single digit UCaaS market growth over the next few years.
RingCentral’s unsecured notes were upgraded to Ba3 from B1, one notch below the CFR, reflecting their junior position to the company’s secured term loan and revolving credit facility.
The company maintains very good liquidity with about $150 million in cash and an undrawn $225 million revolving credit facility as of March 31, 2025. Moody’s expects the company to allocate free cash flow and availability under its delayed draw term loan to repay $609 million in convertible notes maturing in March 2026.
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