RiverPark Funds, an investment management company, released its “RiverPark Large Growth Fund” third quarter 2022 investor letter — a copy of which can be downloaded here. For the quarter, the RiverPark Large Growth Fund (the “Fund”) lost 3.3% – a bit better than the S&P 500 (-4.9% for the quarter) and about in line with the Russell 1000 Growth index (-3.6% for the quarter). Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.
In its Q3 2022 investor letter, RiverPark Large Growth Fund mentioned RingCentral, Inc. (NYSE:RNG) and explained its insights for the company. Founded in 1999, RingCentral, Inc. (NYSE:RNG) is a Belmont, California-based cloud-based communication and collaboration products and services provider with a $3.3 billion market capitalization. RingCentral, Inc. (NYSE:RNG) delivered a -81.25% return since the beginning of the year, while its 12-month returns are down by -85.47%. The stock closed at $35.12 per share on October 25, 2022.
Here is what RiverPark Large Growth Fund has to say about RingCentral, Inc. (NYSE:RNG) in its Q3 2022 investor letter:
“RingCentral: Despite better-than-expected 2Q results and reiterated 2022 guidance, RNG shares were our final detractor for the quarter in sympathy with a negative preannouncement from the company’s re-sale partner Avaya, as well as macro concerns. Avaya reduced its revenue guidance to a 21% year-over-year revenue decline, from a 4%-7% decline previously. We note that Ring has significantly less hardware and international exposure and Avaya was not one of Ring’s largest channel partners. Although RNG’s results have remained robust all year—for its 2Q, RNG reported $487 million of total revenue (up 28% year over year), $463 million subscription revenue (up 32% year over year), and annual recurring revenue of $2.0 billion (up 31% year over year) with stronger-than-expected profitability as the company’s non-GAAP operating margin increased 110 basis points year over year to 11.3%–investors remain hyper concerned around the competitive dynamics in the space.
We continue to believe that RNG remains far ahead of its competition in both product breadth and depth in what is an enormous available market that is extremely fragmented market and is growing rapidly. RNG has consistently maintained its #1 product ranking by Garner for Large Enterprises and continues to expand its channel partnerships with large scale telecom services firms including Alcatel-Lucent, Atos, and Mitel (in addition to Avaya), giving the company a significant leg up in converting on-premises PBX customers to its cloud product. The company started in the small-and-medium business market and has migrated to also serving larger enterprises, helped by its channel partnerships. The company’s increasing scale from its growing recurring revenue should improve operating margins, allowing the company to achieve its longterm target of 20%-25% while also generating increasing FCF (which grew 50% last year). We also are encouraged by recent management additions (the company recently brought on a new and very well-respected COO and CFO) as well as the CEO’s recent open market purchases of the company’s stock.”
Our calculations show that RingCentral, Inc. (NYSE:RNG) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. RingCentral, Inc. (NYSE:RNG) was in 42 hedge fund portfolios at the end of the second quarter of 2022, compared to 43 funds in the previous quarter. RingCentral, Inc. (NYSE:RNG) delivered a -31.43% return in the past 3 months.
In September 2022, we also shared another hedge fund’s views on RingCentral, Inc. (NYSE:RNG) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.
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Disclosure: None. This article is originally published at Insider Monkey.
