Five9, Bandwidth, RingCentral have good setups going into Q3: Barclays
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Investment firm Barclays said on Monday that software companies Five9 (NASDAQ:FIVN), Bandwidth (NASDAQ:BAND) and RingCentral (NYSE:RNG) have good setups going into third-quarter earnings. 
Analyst Ryan MacWilliams, who has an overweight rating on all three stocks, said the three companies have or are in the process of landing large contact center deals, which could boost their results.
In the case of Five9 (FIVN), MacWilliams said that recent checks suggest it signed a "large" deal with a financial services company. While details are sparse, it's likely that the company signed a deal with more than $20M in annual recurring revenue, MacWilliams wrote.
"While 4Q upside has been a key debate for investors, mgmt. noted mega deal ramps remain on track in our recent conversations, which we believe will support the 4Q guide and FY24 outlook," MacWilliams wrote in an investor note. He added that current Wall Street estimates suggest roughly 17% revenue growth in fiscal 2024.
For RingCentral (RNG), MacWilliams said a "similar-to-better" beat compared to the first and second quarters could move the stock higher. 
"Investors in our conversations are debating the near-term growth outlook following RNG's CEO transition and whether partnerships (Avaya, Mitel, etc.) can drive a 2H23 re-acceleration," MacWilliams wrote in an investor note. 
He added that the third and fourth quarter have been historically stronger for RingCentral (RNG), though the company may offer conservative guidance, given it changed CEOs late in the quarter.
"In our meeting with new CEO Tarek Robbiati, he emphasized that his focus is on innovation, execution, and efficiently deploying capital in the near term as the company strives to improve net new ARR growth," MacWilliams added. "We were pleased to hear that focus, and also note that resellers reports significant improved commission rates from RNG in the channel to help spur growth."
For Bandwidth (BAND), MacWilliams said the stock is down 33% over the past three months, but the focus on getting larger enterprise customers could drive second-half improvement in adjusted EBITDA margins. 
"We also think investors can look forward to better days ahead as BAND can capitalize on additional U.S. SMS volumes in a 2024 presidential election year," MacWilliams explained. "While macro pressure is likely to limit near-term top-line upside, we believe BAND could continue to benefit from elevated CCaaS demand, and were pleased to see mgmt. raise its FY23 rev. guidance to $588-592 mil. (from $576-584 mil.) in 2Q." 
In addition, MacWilliams weighed in on HubSpot (HUBS), Atlassian (TEAM) and Twilio (TWLO), saying that investors have been concerned about all three for different reasons going into earnings season.

More on Bandwidth, Five9, etc.

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