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Investing.com -- RingCentral Inc (NYSE:RNG) shares fell 12% in early Tuesday trade after third-quarter profit guidance that was lower than expected.
The company reported adjusted earnings per share for the second quarter of 83 cents and revenue of $539.3 million. Analysts expected the company to report adjusted earnings per share of 75 cents on revenue of $536.2M.
For the third quarter, the company sees earnings per share in a range of 75 cents to 78 cents, versus analyst expectations for 82 cents. Third-quarter revenue is seen coming in around $552M to $556M, almost in line with expectations for $553.7M.
RingCentral sees full-year 2023 adjusted earnings per share of $3.11 to $3.25, also in line with expectations. Full-year revenue is expected in a range of $2.18 billion to $2.2B.
RingCentral named Tarek Robbiati as its new CEO. He has been a member of the RingCentral Board of Directors since December 2022 and CFO of Hewlett Packard Enterprise (NYSE:HPE). He will succeed Vlad Shmunis as CEO, effective August 28, 2023. Shmunis remains as executive chairman.
Shmunis said, “When I founded RingCentral two decades ago, we were a tiny, unfunded startup with an ambitious mission to improve how businesses around the world communicate internally and with their customers. From those humble beginnings, we have become a recognized leader in our space and one of the largest pure-play SaaS companies in the world. My plan is to stay engaged in the Company, while dedicating most of my time to innovation, product development and long-term strategy. I am excited for the road ahead.”
The Company also announced that Mo Katibeh, RingCentral's president and chief operating officer, will be stepping down.
BTIG analysts said the CEO succession "points to potential evolution of strategy."
"We view this news as the Board seeking someone to lead the company through a period of further innovation to better compete in the coming years to shore up product gaps, such as advanced AI and video events recently addressed with the acquisition of certain technologies from Hopin (Private). We remain Neutral for now as margin improvements are encouraging, but growth remains muted," the analysts said.
Deutsche Bank analysts expect the announced CEO transition to weigh on shares and overshadow 2Q results near-term.
"While we remain constructive on the longer-term upside to RNG shares, we do acknowledge the near-term overhang for the stock that such a transition could create in the interim," they said.
(Additional reporting by Senad Karaahmetovic)