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RingCentral - Look Out Below

|About: RingCentral, Inc. (RNG), Includes: AVYA, BOX, DBX, EGHT, FIVN, JCOM, LOGM, VG, WORK, ZM
Summary

We have run a comparable analysis of what we believe are appropriate comparables for RNG in the enterprise communications, VOIP and UC space.

Based on yesterday's close, RNG is trading at an enterprise value (EV) 2020E sales multiple of 13.4x, a premium to its peer group median and mean of 3.6x and 6.7x.

We believe our basket fairly reflects the mix of RNG's business as a provider of cloud based unified communications services along with a myriad of VOIP and other features.

It is inappropriate to position RNG as a proprietary software provider to the enterprise cloud, especially since the Company resells other products, does not own any infrastructure and we can only find scant evidence of a valuable portfolio of IP/patents.

We maintain our STRONG SELL recommendation and $110 price target based on 10x 2020E recurring revenues and adjusted for AVYA dilution and cash needs.

RNG_comps_10-25-2019.pdf

Disclosure: I am/we are short RNG.

Additional disclosure: We intend to provide additional commentary in our ongoing coverage of RNG.