Okta (OKTA) Stock Moves -0.29%: What You Should Know

Paymentus (PAY) came out with quarterly earnings of $0.15 per share, beating the Zacks Consensus Estimate of $0.09 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 66.67%. A quarter ago, it was expected that this electronic bill payment services would post earnings of $0.09 per share when it actually produced earnings of $0.12, delivering a surprise of 33.33%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Paymentus, which belongs to the Zacks Internet - Software and Services industry, posted revenues of $231.57 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 20.74%. This compares to year-ago revenues of $152.42 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Paymentus shares have added about 49.9% since the beginning of the year versus the S&P 500's gain of 25.8%.

What's Next for Paymentus?

While Paymentus has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Paymentus: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.10 on $202.78 million in revenues for the coming quarter and $0.41 on $776.88 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software and Services is currently in the top 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Okta (OKTA), has yet to report results for the quarter ended October 2024. The results are expected to be released on December 3.

This cloud identity management company is expected to post quarterly earnings of $0.57 per share in its upcoming report, which represents a year-over-year change of +29.6%. The consensus EPS estimate for the quarter has been revised 2.9% higher over the last 30 days to the current level.

Okta's revenues are expected to be $649.4 million, up 11.2% from the year-ago quarter.

Zacks Investment Research

Top Wall Street analysts changed their outlook on these top names. For a complete view of all analyst rating changes, including upgrades and downgrades, please see our analyst ratings page.

• Wolfe Research analyst Andy Chen downgraded the rating for Alnylam Pharmaceuticals, Inc. from Peer Perform to Underperform. Alnylam Pharmaceuticals shares closed at $279.82 on Monday. See how other analysts view this stock.
• Phillip Securities downgraded the rating for Airbnb, Inc. from Neutral to Reduce and announced a $120 price target. Airbnb shares closed at $137.40 on Monday. See how other analysts view this stock.
• HC Wainwright & Co. analyst Scott Buck downgraded Phunware, Inc. from Buy to Neutral and lowered the price target from $9 to $6. Phunware shares closed at $5.99 on Monday. See how other analysts view this stock.
• Deutsche Bank analyst Brad Zelnick downgraded Okta, Inc. from Buy to Hold and lowered the price target from $115 to $85. Okta shares closed at $78.45 on Monday. See how other analysts view this stock.
• Keefe, Bruyette & Woods analyst Meyer Shields downgraded the rating for Horace Mann Educators Corporation from Outperform to Market Perform and raised the price target from $39 to $44. Horace Mann Educators shares closed at $42.31 on Monday. See how other analysts view this stock.

Considering buying ABNB stock? Here’s what analysts think:

RingCentral RNG reported third-quarter 2024 non-GAAP earnings of 95 cents per share, beating the Zacks Consensus Estimate by 3.26% and increasing 21.8% year over year.

RNG’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the earnings surprise being 4.60%, on average.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net revenues of $608.8 million comfortably beat the consensus mark by 1.14% and increased 9.1% year over year. A robust product portfolio and strong subscription revenues drove the upside.

Ringcentral, Inc. Price, Consensus and EPS Surprise

Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote

What Should You Expect From RNG Shares Post Q3 Earnings?

RingCentral shares were down 3.32% in the pre-market trading.

RNG shares have returned 11.9% year to date (YTD), underperforming the Zacks Computer & Technology sector’s 28.5%.

RingCentral shares have outperformed the Zacks Internet Software-Services industry and peers, including Okta OKTA, Donnelley Financial DFIN and Sabre SABR.

YTD, shares of Donnelley Financial have returned 0.1%, while Okta and Sabre shares have fell 14.7% and 20.2%, respectively. The industry fell 6.5% over the same timeframe.

RNG raised earnings guidance for 2024, which bodes well for investors. It is benefiting from continued momentum with new products, specifically RingCX, and a strong market position in its core UCaaS market.

RNG’s Software Subscriptions Rises Y/Y

Software subscription revenues (95.8% of total revenues) increased 9.8% year over year to $583 million.

Other revenues (4.2% of total revenues) decreased 4.9% year over year to $25.8 million.

Annualized Exit Monthly Recurring Subscriptions (ARR) increased 9% year over year to $2.48 billion. Enterprise ARR increased 11% year over year to $1.07 billion.

RNG’s Operating Details

The third-quarter 2024 non-GAAP gross margin contracted 120 basis points (bps) from the year-ago quarter’s tally to 76.9%.

On a non-GAAP basis, research & development expenses increased 11.9% year over year to $62.3 million. Sales and marketing expenses increased 3.1% to $237.4 million.

General and administrative expenses fell 6.7% year over year to $40.6 million in the reported quarter.

The non-GAAP operating margin expanded 190 bps from the year-ago quarter to 21%.

RNG’s Balance Sheet and Cash Flow Remain Strong

As of Sept. 30, 2024, cash and cash equivalents were $213 million compared with $199 million as of June 30, 2024.

Cash flow from operations was $127 million in the third quarter, unchanged sequentially.

Non-GAAP free cash flow was $105 million compared with $109 million reported in the previous quarter. The non-GAAP cash flow margin was 17.3% in the second quarter.

In the third quarter of 2024, RNG bought shares worth $83 million. The current remaining repurchase authorization is $243 million.

RNG Offers Positive Guidance for 2024

For 2024, RingCentral expects revenues between $2.397 billion and $2.399 billion, indicating 9% growth over 2023.

Subscription revenues for 2024 are expected between $2.295 billion and $2.399 billion, indicating 9% growth over 2023.

The non-GAAP operating margin is expected to be 21% for 2024.

Earnings are expected to be $3.69 per share, better than the previous guidance of $3.62-$3.67 per share range.

For the fourth quarter of 2024, RingCentral expects revenues between $611 million and $613 million, indicating year-over-year growth of 7%.

Subscription revenues for the fourth quarter are expected to be between $587 million and $589 million, indicating year-over-year growth between 7% and 8%.

The non-GAAP operating margin is expected to be 21.2% in the fourth quarter of 2024. Earnings are expected to be 96-97 cents per share.

Zacks Rank

Currently, RingCentral has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research