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Image source: The Motley Fool. Oct. 22, 2026 - Founder, Chairman and CEO - Vladimir G. Shmunis - president and COO - Kira Makagon - CFO - Vaibhav Agarwal - VP of Investor Relations - Steven Horwitz Need a quote from a Motley Fool analyst? Email [email protected] Operator: Good day, and welcome to the RingCentral Third Quarter 26 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Steven Horwitz, VP of Investor Relations. Please go ahead. Steven Horwitz: Thank you. Good afternoon, and welcome to RingCentral's third quarter 26 conference call. Joining me today are Vladimir G. Shmunis, Founder, Chairman and CEO Kira Makagon, president and COO, and Vaibhav Agarwal, CFO. Our remarks today include forward looking statements regarding the company's business operations, financial performance and outlook. These statements are subject to risks and uncertainties, some of which are beyond our control and are not guarantees of future performance. Actual results may differ materially from our forward looking statements and we undertake no obligation to update these statements after this call. If the call is replayed after today, the information presented may not contain current or accurate information. For a complete discussion of the risks and uncertainties related to our business, please refer to the information contained in our filings with the Securities and Exchange Commission as well as today's earnings release. Unless otherwise indicated, all measures that follow are non GAAP with year over year comparisons. A reconciliation of all GAAP to non GAAP results is provided with our earnings release and in the slide presentation. Which you can find under the financial results section at ir.ringcentral.com. With that, I will turn the call over to Vlad. Vladimir G. Shmunis: Good afternoon, and thank you for joining us. We delivered another strong quarter in Q3. With subscription and total revenue above the high end of our guidance. We also achieved record GAAP and non GAAP operating margins. Free cash flow generation remains strong, which enabled us to reach an important milestone of reducing gross debt to under $1 billion as of today. Which is ahead of schedule. These results reflect RingCentral's leadership in agentic Voice AI, healthy demand, and our continued focus on expanding operating margins through disciplined execution. We are building on this momentum by investing in innovation that strengthens our market position and brings AI and human agents together on a complete integrated customer engagement platform. Our strong momentum with agentic Voice AI has been recognized by Business Insider, which named RingCentral to its America's most innovative businesses list. Innovation has always been a driving force behind RingCentral's success. We pioneered the shift from legacy communication systems to the cloud. The mega-trend of AI represents an even larger opportunity and the powerful tailwind for RingCentral. We are leading this next transformation with agentic Voice AI, making customer interactions more efficient, intelligent, and actionable. Our AI results provide strong proof points for our building success. AI Receptionist, or AIR, now has more than 22 thousand customers. Up nearly 4x year over year. Ace, our AI conversation expert, is approaching 7 thousand customers, up 60% year over year. And our newest lightweight contact center offering CEB, or customer engagement business solution, has reached more than 14 thousand paying customers. Growing nearly 50% quarter over quarter. Nearly 2 thirds of CEB customers have also purchased 1 or more of our AI products. Importantly, RingCentral AI which we define as customers using at least 1 native paid AI product, now represent approximately 15% of total ARR or over $400 million. Doubling year over year. This cohort of customers also has meaningfully higher ARPU and net retention. These trends demonstrate how AI is expanding wallet share strengthening retention, and creating a more durable foundation for profitable growth. The momentum we are seeing is rooted in our wealth established position as a leader in consumer to business communications. Voice and SMS remain central to how consumers engage with their business providers. Such as doctors, bankers, insurance agents, and a host of other service providers. RingCentral is a leader in consumer to business communications with the platform carrying approximately 40 billion minutes, 14 billion calls, and 4 billion text messages annually. Importantly, our customers can utilize the bridge context in their own conversations to generate actionable insights, automate tasks, and drive resolutions through the use of our AI products. Our carrier grade network global scale, security, and decades of operating expertise in invoice, creates an opportunity for us to become a critical infrastructure layer for business communications, and is a significant barrier to entry. Our ability to connect consumers with their service providers at scale well positions us to deploy AI agents across all stages of a consumer-business interaction. Whether it be human to human, human to AI, or human to AI and back to human. Otherwise known as a human in the loop. For a little more color, AI agents can handle routine inquiries automate workflows, and resolve issues autonomously. When judgment, empathy, or specialized expertise is required, a human can step in. In health care, for example, AI can help manage routine interactions while bringing in a qualified professional when a patient needs medical advice. Another strong competitive moat for us is our distribution reach. Along with our direct sales force, we have a global ecosystem of more than 6 thousand channel partners and resellers. Including some of the leading global service providers such as AT&T, British Telecom, Charter Communications, Optus, TELUS, and Vodafone, amongst others. Our GSP and channel partners are increasingly incorporating our AI portfolio into their product line. Their established customer relationships and local expertise create a distribution advantage that is difficult to replicate. Let me close with 3 key points. First, RingCentral has a deep and defensible mode in a large and expanding market. Our global voice infrastructure, billions of calls, text messages, and minutes that we process every year, and integrated customer engagement platform provides a distinct foundation for strengthening our leadership through agentic Voice AI. Our partner ecosystem gives us the reach to scale these capabilities globally. Second, our investments in agentic Voice AI strategy are delivering tangible results. Growing paid adoption, broader use of our AI portfolio, and stronger customer economics demonstrate how AI is expanding the value of our platform and accelerating our business. Third, our large and growing TAM combined with execution and operating model leverage is resulting in a strong and improving financial profile. We are growing revenue, expanding profitability, and generating substantial free cash flow and free cash flow per share. With our gross debt, now below our stated $1 billion target, we now have the balance sheet strength to continue investing in innovation, while also delivering sustained long term shareholder value via share buybacks and dividends. I want to thank our employees for their innovation and execution our customers and partners for their trust, and our shareholders for their continued support. I am excited about the opportunity ahead and confident in our ability to deliver. With that, I will turn it over to Kira. Kira Makagon: Thank you, Vladimir and good afternoon, everyone. As Vladimir highlighted, RingCentral brings together a complete and integrated customer engagement platform with agentic Voice AI and humans working together. Our leadership in voice puts us at the heart of consumer to business conversations. And gives RingCentral AI the foundation to turn those conversations into better outcomes. We are building on that foundation to meet customers wherever they work. Including the LLMs they use every day. This quarter, we introduced plug ins for OpenAI's ChatGPT and CP connectors for Anthropic's Claude. We were also selected as a Claude for Small Business launch partner. RingCentral provides the conversation context and the AI models provide reasoning. it is great to see how our innovation is helping our customers turn conversations into action. As part of their everyday workflows. In less than a month, we are already seeing early traction with thousands of active customers. Enabling humans and AI to work together is core to our strategy. And where we are uniquely positioned because we bring voice contact center, and AI into 1 platform so AI can either handle the entire task or hand off to humans as needed. For example, an industrial parts manufacturer and supplier replaced its fragmented copiers with our CEB our customer engagement business solution. Bringing advanced call queues SMS live agent tracking and virtual callbacks onto 1 place. Customers now spend less time on hold get issues resolved in fewer handoffs, and report higher satisfaction, which means lower cost to serve, stronger retention. They are also leveraging ACE our AI conversation expert, for rough scorecard reading, and coaching. Plus, they are deploying AIR our AI receptionist, for handling inquiries with context aware routing. We see this in action with customers across all segments, including 1 million TCV deals. Such as a rapidly growing national fitness operator with millions of members, are all using RingEX, this customer added ACE to identify key call drivers then AIR to handle a high volume recurring inquiries. This illustrates our AI flywheel. Ace uncovers opportunities, and AIR automates interactions. Giving calls immediate answers while freeing staff to build member relationships. Lead club tours, and support membership enrollments. As they have recognized value, they have expanded their investment with us by 4x. This past quarter, we also saw strong adoption of AIR Pro, AIR Pro extends the value of our agentic Voice AI. Delivering voice first omnichannel AI agents that autonomously complete multistep workflows and bring in human agents when judgment and empathy are needed. As an example, 1 of the largest technology equipment and procurement providers for senior living in The United States already uses RingEX, RingCX, and ACE. This quarter, they added AirPro to help them take their customer experience to the next level. AirPro understands intent and automates more complex workflow. When a customer calls, AirPro verifies the caller's identity, matches the caller to their record, and identifies the reason for the call. Then takes action. When needed, AirPRO hands off to a human with full context and then follows up. In just the first month, this customer achieved an over 95% accuracy rate in end to end workflow completion. We are also delighted to see our existing customer Destination Pet, a nationwide pet care provider, extend their use case of our RCAI. They started with ACE to analyze call transcripts, and identify opportunities to improve service. And recently expanded to AirPro to automate workflows around scheduling appointments sending confirmations, and updating records for customers across locations. This supports destination pets goal of capturing every opportunity improving customer experience, increasing revenue and lowering labor costs. When our solutions work together, as they do for these customers it creates a virtuous loop that turns conversation context into action. that is the value of RingCentral's agentic Voice AI. it is changing the game for businesses. and that is, something we are really excited about. Speaking of changing the game, today we announced the extension of our decade long partnership with Golden State Warriors. To be named the official agentic Voice AI platform for fan engagement. Together, the 2 organizations will work to elevate fan experiences from ticket inquiries to game day questions and ongoing engagement. We continue to expand our agentic Voice AI solutions to more businesses around the world through a network of 17 global service providers. This quarter, we extended our partnership with BT Business, This extension enables BT customers to seamlessly layer native intelligent automation over their existing telephony setups. Together, we are empowering UK organizations to capture lost revenue, and drive operational efficiency. Additionally, we added 2 new partners to our GSP portfolio. Digital Island our first partner in New Zealand, will sell, implement, and support our agentic Voice AI. In Italy, Iliad Italia, our first partner there, will bring RingEX with the full suite of RCAI agents onto its network. These partnerships are key to our overall go to market strategy, and international reach. In closing, our customer wins show our vision in action. Humans and AI working together on 1 platform to turn conversations into better outcomes. With growing AI adoption, expanding global reach, we are bringing that opportunity to more businesses around the world. With that, I will turn it over to Vaibhav. Vaibhav Agarwal: Thank you, Kira, and good afternoon, everyone. Q3 was a solid quarter with key metrics above the high end of our guidance. Reflecting continued execution against the financial framework and commitments we have outlined. Our core business remains resilient, with growing contributions from our AI portfolio. Just as importantly, we are expanding margins and free cash flow. Reducing SBC, and making meaningful progress towards our target of 20% GAAP operating margin and steady state SBC of 3% to 4% of revenue. We also reached an important milestone reducing gross debt to below $1 billion, as of now, significantly strengthening our balance sheet, while continuing to return capital to shareholders through share repurchases and dividends. This combination of growth, improving profitability, and disciplined capital allocation is translating into stronger free cash flow per share growth. With that context, let me turn to our third quarter performance. Starting with growth, subscription revenue was approximately $653 million up 6% year over year while total revenue was approximately $676 million up 5.9%. Underlying customer trends remain healthy with steady new customer additions and monthly net retention above 99%, underscoring the mission critical nature of our platform. Notably, our RCAI portfolio, continues to gain traction which reinforces the role of AI not only as an incremental growth driver, but also as a meaningful contributor to strong customer economics. We believe these trends, combined with our established competitive position provide a solid foundation for durable growth over time. Turning to profitability. We delivered another quarter of record GAAP and non GAAP operating margins alongside further reductions in SBC. Subscription gross margin remains strong, at above 80% Non GAAP operating margin reached 24.7% up nearly 200 basis points and SBC as a percent of revenue declined 50 basis points reflecting our continued discipline around equity compensation. The combination of stronger non GAAP margin and lower SBC drove a record GAAP operating margin of 8%. An improvement of 23 basis points. GAAP EPS was $6.50 per share, which included a noncash benefit of $545 million from the release of a valuation allowance against certain domestic deferred tax assets. This adjustment was driven by an improvement in GAAP profitability The valuation allowance release had no impact on non GAAP results and we do not expect material changes to our near term cash taxes as we continue to utilize deferred tax assets. Excluding this benefit, diluted EPS was $0.28, an improvement of 47% year over year. Non GAAP EPS increased about 18% to $1.33. Our margin expansion trend is driven by multiple drivers, such as strong gross margins, operating leverage, disciplined cost management, broader internal adoption of AI, and a focus on our highest return investments. Together with SBC reduction, these drivers reinforce our confidence in long term sustainability and durability of margin expansion while investing in growth. Turning to cash flow. We generated $157 million in free cash flow in Q3. Up 21% year over year. Our recurring revenue model strong gross margins, and improving operating efficiency continue to translate into substantial cash generation. Reflecting this performance, we are raising our full year free cash flow outlook to $625 million at the midpoint, representing nearly 24% of revenues. This represents over $7 of free cash flow per share up about 23% year over year. We believe the durability of our recurring revenue base AI tailwinds, structural margin expansion, disciplined capital allocation, and continued reduction in SBC provide a strong foundation for sustained free cash flow generation over time. Turning to capital allocation. In Q3, we prioritized repayment of our highest cost debt the 8.5% high-yield notes that became callable reducing gross debt by just over $110 million and bringing net leverage to 1.3x. In fact, as of today, our gross debt is now below $1 billion, As a reminder, there are no debt maturities until 2030. And we have $305 million of undrawn credit capacity. We also continue to return capital to shareholders spending approximately $18 million on share repurchases during the quarter and paying a dividend of $0.0125 per share. Diluted share count declined about 5% year over year to approximately 87.7 million shares. We have over $300 million remaining under our share repurchase authorization. Our substantial cash generation and our stronger balance sheet gives us the flexibility on capital allocation, while maintaining a consistent focus on long term value creation. With that, let me turn to guidance. For fiscal 26, we are raising subscription revenue to be $2.563 billion to $2.569 billion, representing growth of 5.6% to 5.9%. Raising total revenue to $2.650 billion to $2.657 billion, representing growth of 5.4% to 5.6%. GAAP operating margin of 9.2% to 9.6% expanding by 460 basis points. Raising non GAAP operating margin to 24% to 24.2% raising free cash flow to $620 million to $630 million up 18% SBC in the range of approximately $240 million to $245 million representing 9% of revenues. Fully diluted share count of approximately 87.5 million shares, raising non GAAP EPS to be $5.07 to $5.12 up about 17%. This results in free cash flow per share of $7.09 to $7.20 per share for the year up 23%. For Q4 26, we expect subscription revenue of approximately $653 million to $659 million total revenue of approximately $673 million to $680 million GAAP operating margin of 13.3% to 14.7% up 740 basis points. Non GAAP operating margin of 25% to 25.5% up 250 basis points Non GAAP EPS of $1.32 to $1.37 up 14% fully diluted share count of approximately 89 million shares. As we look ahead, our execution is delivering tangible results with a durable core business, growing momentum across our AI portfolio and continued improvement in profitability and cash generation. Together with a stronger balance sheet and disciplined capital allocation, we believe these fundamentals position RingCentral to compound free cash flow per share and drive meaningful long term shareholder value. With that, let's open the call for questions. Operator: Thank you. Will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. First question comes from Elizabeth Porter with Morgan Stanley. Please go ahead. Elizabeth Porter: Great. Thank you so much for the question. So and congrats on the quarter. Subscription revenue growth has been mostly improving for several quarters now and the beat was more pronounced in Q3. So could you just help us unpack what drove the upside in the quarter? I am curious if there were any specific drivers to call out, whether it was any stronger AI driven demand or potentially starting to see some easing of those enterprise renewal headwinds you guys briefly discussed? Thanks. Vaibhav Agarwal: Yeah. Thanks, Elizabeth, for the for the question. And look, the beat was driven by product mix execution across. We had a solid quarter. We did. We delivered results on top line and the bottom line. Fundamentally, we are executing with discipline results from all our commitments And as you called out, we are showing a sustainable and a stabilized growth profile. And that is what is getting reflected in our full year guide, basically reflecting the confidence in the underlying growth drivers, particularly AI. On the top line, our core business continues to be a scaled recurring revenue business that is durable. Supported by strong retention metrics and steady customer demand. Usage on the platform continues to be healthy, and it just underscores the mission-critical nature. Of our solutions. And on top of the core, we are seeing growing contribution from our AI-led products As we called out in our prepared remarks, adoption is strong across the board. We are seeing strong customer engagement. Customers who are using 1 or more paid AI products are now approaching 15% of ARR. Doubling year over year. And within these cohorts, very importantly, we see strong customer economics in terms of increased ARPUs and over 100% net retention rate So net, it reinforces both the monetization opportunity as well as it demonstrates the stickiness of the base. And very importantly, we are not only growing, but we are also very focused on the quality of the growth that we deliver. Record GAAP and non GAAP operating margins and a strong free cash flow profile. So, net, we have a recurring model We have a diversified customer base from small to enterprise customers. Our solutions are mission critical. We have a deep competitive moat that is built on platform scale, you know, the depth of our product and differentiated GTM. And these fundamentals are frankly contributing to you know, the durability and the sustainability of our ability to expand both margins and free cash flow. Elizabeth Porter: Great. And then just as a follow-up, I wanted to hit on capital allocation. It was great to see that the gross debt target was ahead of schedule, and you have free cash flow to grow faster than revenue. When we think about this set of opportunities, how should we think about the case for increasing any sort of organic investment to go after AI and contact center? Relative to pursuing acquisitions or prioritizing further capital returns. Vladimir G. Shmunis: Yeah. Hi, Elizabeth. Vladimir here. Look, this question comes up fairly regularly. Look. Fundamentally, we are a very tech heavy organization. We view ourselves as an innovator at heart. I think that you all know my background is quite technical. Many of the original contributors including the CTO, are still with us. Which I think is not that common. So we feel we have a lot of talent. now in-house. And our commitment and spend on product technology continues to be quite healthy over $250 million per year. So we can do a lot ourselves Now having said that, we are always looking out opportunistically. People are calling us. We do have an m and a function in house, and we are evaluating multiple opportunities always. You know? And as things clear the bar, we consider them, and then we move forward. So I am not going to tell you that we will never do a sizable acquisition. But I am also saying that we are very confident in our ability to deliver on our roadmap using, the capacity we have at hand. So we will just have to see what the future brings. But as you can see for now, we are able to deliver the results without having to go outside. Great. Great. Thank you. Operator: The next question comes from Siti Panigrahi with Mizuho. Please go ahead. Siti Panigrahi: Thank you. Thanks for taking my question and congrats on a good quarter. Just wanted to ask you about the new product ARR that you guys talked about, 100 million run rate exiting 25. How fast that is been growing in Q3? And how should we think about that exiting this year? And I have a follow-up. Vaibhav Agarwal: Yeah. Hey, Siti. Thanks for the question. This is Vaibhav. So in terms of the ARR for new products, the metric we provided this quarter was customers adopting at least 1 paid AI product wherewhich we call it RCAI. So that is approaching 15% or $400 million. And it is doubling year over year. And as I mentioned, in my previous comment, the customer economics are very healthy. ARPUs are higher. Net retention rates are above 100%. And the reason that we are focused on that metric and we manage the business, frankly, based on that metric is it is a very. it is the clearest proof point of AI adoption and penetration both into the base as well as with new sales And what that metric is clearly showing is that there is healthy customer demand Customers are moving beyond experimentation You know, they are getting tangible ROI benefits from the use of AI. And it is leading to the base being more sticky. So, over time, this metric has been continuously growing, and we provided an update on this every quarter. So our expectation is that as adoption continues to grow, and as customers adopt more AI products, that this metric will continue to grow. Siti Panigrahi: that is great. Just on the margin side, I think what is impressive is your subscription margin still holding well. You know, despite AI investment. Can you help us, like, how should we think about the gross margin as you ramp on AI? Vaibhav Agarwal: Yeah. So, look, overall gross margins as you called out are strong at 80% plus. And our gross margins on AI products are generally holding in line with the corporate average as well. And, really, we are optimizing with 2 levers there. 1 is pricing, and the other 1 is cost. So on the pricing front relative to AI, we are being very deliberate in our pricing strategy. You know, the idea is to charge customers for the value and the usage that they receive. And customers are willing to pay because they are getting tangible ROI benefits both from a revenue standpoint as well as a cost avoidance or cost savings standpoint And that is the uplift as indicated in the metric that I just talked about. In terms of the costs, we are optimizing against model selection, call it inference efficiency, and infrastructure. So in terms of inference, as it is getting better, with the. With the different models, the price per unit is coming down. In terms of model selection, we are currently using Frontier models. And over time, we will benefit from the use of open source models And a very important point is that these AI products are being delivered through the same platform. And through the same engine. Therefore, we get very good incremental unit of economics. So I think, overall, our expectation is that gross margins will continue to hold at around 80%. Thank you. Operator: The next question comes from Brian Peterson with Raymond James. Please go ahead. Brian Peterson: Hey, guys. Thanks for taking my question. So I wanted to hit on the AI adoption a bit. I am curious if there is any part of the customer segment, whether that is enterprise or U. S. Or SMB that is really kind of embracing some of that portfolio? And where do you think that next unlock may come as we think about that expanding beyond the mid to high teens number you just gave us? Kira Makagon: Yeah. Hi. This is Kira. So we see adoption across all segments. from enterprise to the same customers for AI. And for all our products. for AIR, ACE, and our other offerings. So, Brian, this is really. We were happy to see that it is across the board. What was the second part of the question? Brian Peterson: Just as we think about, you know, where the incremental adoption is coming from, is there a certain part of a geography or customer base or maybe even thinking about some partner channels where you could see that leverage kind of expanding beyond the number you just gave us? Vladimir G. Shmunis: Yeah. I can take that out here. Yeah. The good question. Look. So we have been on record with our. what we call our golden verticals. Which is fundamentally health care and financial services. So as we continue, we are seeing more AI within those sectors that were stronger for us to begin with. And, again, as we have been saying for quite some time now, our best traction is in consumer to business interactions. Many of which are by voice and text. and we are very strong in both of those channels. Moving, you know, billions and tens of billions of minutes through our platform. Okay? So that as far as verticals is concerned, On the partnership side, it is also very interesting. Because we are seeing increasing adoption of our AI portfolio, by the partner community and in particular, global service providers. And there were some releases, relatively recently for example, with British Telecom. Some others. So, as a word of caution when we say that it is still pretty early, very early, with AI in general, for this type of an application. It is yet earlier, through the channel in particular with GSPs. They just tend to move a little slower. But once they move, they move, with very strong force. So we are pretty optimistic that as we get our formula down, that we will be able to propagate it, through our channel, which, as is large and unique. Thanks, Vladimir. Brian Peterson: And, by the way, maybe just a follow-up. I know the margins have been ramping up. Can you remind us just from a GAAP perspective, how are you thinking about goals like stock comp and targeting that? And how should we be thinking about kind of the non GAAP and GAAP operating margins going forward? Thanks, guys. Vaibhav Agarwal: Yes. Thank you, Brian. So look, we are very pleased with the work that we have done on both operating margins from a GAAP standpoint as well as a non GAAP standpoint over the years. So we laid out a medium term target of reaching 20% in GAAP operating margins. And we remain confident in our ability to get there And the proof point there is if you look at our guide for 2026, we are expanding GAAP operating margins by about roughly 400 basis points or so. And about half of that is coming from improvements in non GAAP operating margins. And the other half is coming from SBC. So roughly 200 basis points each And if you were to project these out into the outer years, that is how we remain confident in our ability to reach the 20% target. In terms of the non GAAP operating margin, look, we have a lot of structural drivers behind that. You know, we have a scale recurring revenue model that is producing gross margins at 80%, which is industry leading. So we inherently get a lot of leverage in our operating model, and that is coupled with the discipline and cost across the board that we have. It is resulting in material improvements in non GAAP operating margins. And then on the SBC side, we are continuing our discipline in terms of managing grants, managing SBC, And what is flowing through the SBC model now is also the prior grants. As well as the new grants and as the impact of the prior grants that were given at higher prices as that kind of tails off. That gives us the confidence to continue to reduce SBC over time. And that is where we have laid out a target of getting to 3% to 4%. In the next 3 to 4 years. So net, it is a combination of expansion in non GAAP operating profit as well as reductions in FPC you know, that will allow us to kind of make those targets. And we remain on track to achieve that. Thanks, guys. Operator: The next question comes from Peter Levine with Evercore. Please go ahead. Peter Levine: Maybe the first 1 I have, if you think about you know, I guess, the trajectory of subscription revenue growth into 2027? I know you have not guided, but how should we think about, I think, distinguishing between, I think, the underlying performance of, the core UCaaS business versus how much of that is coming from, like, newer AI, you know, some of your customer engagement, consumer customer engagement products. So I am just trying to understand, like, how much growth is dependent on, like, upsell, cross sell of AI versus, you know, stabilization in your in your core business? Vladimir G. Shmunis: I think we have been sharing this before. That it is roughly 50%,, from the base and, you know, the other half from new customers. And I think we will always also saying that as of new customers, also about half of them take AI and the other ones do not yet take AI, but they may well be upgraded or cross sold to AI over time. But for now, those are the metrics. Vaibhav Agarwal: And then with the AI receptionist, sorry. Go on, please. Yeah. Peter, just to add to I think what Vladimir was mentioning is the is the contribution from. On bookings from the AI product. In terms of 2027, look. We are not providing formal guidance here today. But I think the underlying growth drivers similar to what I talked about before. Which is the core business continues to be durable. You know, margins are high. it is a recurring revenue base. And the retention metrics that are strong and AI will be a layer on the top, and that is growing rapidly today. And it is becoming an increasing contributor to growth. The thing is that it is growing off a smaller base relative to the size of the overall subscription business. But net, we are seeing strong adoption to Vladimir's point in customer engagement across the platform. And, you know, we talked about the margin expansion, the progress there in free cash flow. And we expect to continue to kind of do a lot of the same. Peter Levine: Great. Yeah, it is a good segue to my You know, the question. You know,, AI receptionist is gained a lot of traction. How do you think about the opportunity, I guess, then to expand monetization within that installed base? Like, what are other avenues usage or use cases pricing mechanisms, that you think you could use with an AI receptionist or even AIR. Thank you. Vaibhav Agarwal: Yeah. So thanks for the question on the momentum in AIR. So it now has over 22 thousand customers. So the reason it is seeing this momentum is the ROI that we hear from customers is real. Customers are able to address missed calls and they are capturing more leads, which is resulting in more revenue. So from a pricing standpoint, Peter, it is usage based pricing. So the more customers use the product, the more they consume it. You know, it kind of contributes to revenue it is currently selling I think, in a big part in our small- to medium-sized business segment. And over time, it is also going up market. To the midmarket and the enterprise customers. So that is 1 of way to think of it. Kira Makagon: In terms of the use cases, you know, customers are looking for more and more AI agents. AIR is a form of an AI agent that helps customers address missed calls. And over time, the idea is for AIR to of handle more sophisticated use cases and workflows over time and integrate into more kind of platforms and workflows to do more and more, if you will. And as we just announced, and as we mentioned in our prepared remarks, we have AirPro that addresses more complex use cases. Those more complex use cases usually have, more workflow attached to them and take on sort of more turns in the conversation. So they are more autonomous. And the big thing for our AI, whether it is AIR, AIR Pro, any of our products that we think of. As we think about, we think about human in the loop. Think about handling as much as possible by AI. But also making sure that for judgment sentiment or more complex questions and require, those are handed off to a human being, and then they work together in preserving that context, which our customers are telling us is very important. We provided some of those, scenarios in our prepared remarks. Of where customers are finding that to be especially valuable to be able to do the warm handoff with full context. And if necessary, hand it off from a human being and then back to AI where you have this virtuous continuous loop. And those create additional use cases for us. And we see those are. As expansion opportunities as customers get more and more comfortable adopting AI for what initially we went to market with, AI Receptionist, also known as AIR, for missed calls, which continues to be a big driver because businesses do miss calls and miss opportunities, but then it gets into handoffs within the business. And more involved use cases as such as handling more complex billing inquiries, returns, appointment settings that require dips into database knowledge bases. So those are being now handled with, AIR Pro. And the use cases will continue as we see from our customers. So they will continue to grow. They are almost growing, as incrementally 1 by 1, as customers are realizing value with our products. Great. Thank you very much for the questions. Operator: Ladies and gentlemen, in the interest of The next question comes from Ryan MacWilliams with Wells Fargo. Please go ahead. Ryan MacWilliams: Thanks for taking my question. This drafts off the last question. Vladimir, I thought your comments on the Voice AI potential for RingCentral was interesting. As AI agents become more of the inbound call volume for business how do you think RingCentral Air benefits from businesses wanting an AI line of defense from inbound calls from other AI agents. Like, AirPro seems like it could fit here. Like, let AIR talk with a human agent or another VoiceAI agent, and then if a human calls, then you can flip it over for another human to chat. How do you think the soon to be increase in voice AI means for the demand for your AI products? Thanks. Vladimir G. Shmunis: Yeah, so if I understand the question, look. So there are 2 fundamental growth drivers for RingCentral. 1 is more calls. And the other 1 is more AI. So they tend to go together. that is a good news. So the more calls through the system, the more AI we have a chance to apply and the larger the percentage of AI assisted calls on the network, the better off we are because, obviously, we are able to extract better value. Deliver better value, but also extract better value for the intelligence and insight that AI brings. So they work they work together. I can tell you that our, you know, traffic has. Growth has been strong, but linear. Our AI growth has been explosive, obviously. But overall penetration of AI and AI answered calls on our network is still very, very small percentage wise. So we think that there is a very meaningful opportunity to simply if you will, in the very simplest terms, help our customers assigned AI to more of their traffic. And this is very much front and center what our teams are working on. As well as overall. As well as obviously increasing overall traffic, you know, adding new logos, and better engagement with the base in general. Operator: The next question comes from James Fish with Piper Sandler. Please go ahead. James Fish: Hey, guys. Hey, guys. Good morning. To build off of the last couple of questions here. Really, what I am trying to understand is what you guys view as the opportunity in terms of the ability to cross sell CB, ACE, and AIR, in terms of where we could see that penetration go over the next 2, 3 years. And you kind of alluded to this in 1 answer, but how does penetration differ between sort of major customer accounts versus the more SMB commercial customer base? Thanks, guys. Vladimir G. Shmunis: So CEB, I will start with the second part of the question. CEB is fundamentally smaller business product. Because it is basically an informal contact center and larger enterprises tend to have formal contact center. So they would be a better fit for our Ring CX product. Which is a full-fledged contact center. Okay? Now how do we deliver it to them, you know, each and every way we can? But, fundamentally, certainly, our sales teams are well aware We have — look, it is been growing, you know, really, really well for us. That means that we have you know, lots of satisfied customers and lots of reference cases. So our sales teams are able to leverage that. And, of course, we are doubling down on product led growth, PLG, and that is showing results as well. So we are also working on ways on specifically, explaining to customers what CEB can do for them, And in as much as possible, we try to make them understand. That RingCentral does not need to be sort of as a cost center, just a cost center. But we can actually help them generate revenues capture more leads, do better leads processing. CEB does that in particular, the flavor of CEB that we sell with AI. That really is our most explosive new offering. This year. Operator: Our next question comes from Andrew King with Rosenblatt Securities. Please go ahead. Andrew King: Congrats on the quarter. I just wanted to touch base quickly on 2 of your partnerships NICE obviously began reselling RingEX in July. Any early pipeline wins to share to call out there? And then also, if you just touch base on ACO transition, if you are seeing any increased churn as you go through that transition, that would be great. Thanks. Vladimir G. Shmunis: Yeah. So I think second question is no. It was very orderly. Remember, those customers their experience does not change. You know? it is just a small tweak in the logo, in the upper-left corner, and that is about it. That is it. So there is no friction whatsoever. So I am not aware of any churn related to that. As far as partnerships in general, Yeah, look, definitely, there is NICE. that is kind of new, and, again,, it is early. And remember, they are very much high end enterprise. So we do not expect, many logos there just because they do not have that many logos, basically. But we are, hoping for traction, with some whales. So the rest of the channel, you know, it is performing. Look. it is all edged up, and as you know, various folks are doing channel checks. On the industry and us in particular. And, you know, the signs are pretty positive at this point. I think people understand that voice is here to stay. In business. And as long as voice stays in business, ring stays in business. Because we are the voice leader. Operator: The next question comes from Shablish Sarathy with FBN Securities. Please go ahead. Shablish Sarathy: Yeah. Thank you very much. So, related to the NICE partnership, what is your plan for RingCentral Contact Center when the 1 year NICE extension ends? And it seems to me that 1 year is rather small. Why would not you have, like, a 3-year extension or something like that? Vladimir G. Shmunis: So first, I am not sure, where you got 1 year from. I do not think that we have ever disclosed. Any specifics. But be that as it may, and I am not, you know, suggesting that it is 1 year, by the way. But in any case, it is an extension to the whatever term was there to begin with. So we still have very much multiple years left on this contract. But to fast forward it, you know, a number of years. Look. Number of things. You know, this partnership could continue being extended as it has been for the last, I do not know, 10, 12 years. But, also, very importantly, our RingCX product is getting stronger and stronger. We believe that we have a very robust offering already today with RingCX for the mid market. And moving forward, we think that we will be, you know, quite viable and attractive for the larger enterprise as well. Especially if you take into account the fact that the world is changing. And that these, gigantic, call centers that traditionally were utilized by large enterprises, you know,, AI will change, the situation there for sure. You know? While smaller businesses, very much pride themselves and differentiate on their ability to you know, answer customer inquiries with a human being. and that is, at least for the time being, basically, regardless of how good AI gets because that is part of the service that they provide. You know, larger enterprises, you know, it is a cost center. And they can do a very good job there, and we are seeing that as well. You know, in our own case as well as through our customers. So, net, we are very confident that this base will be taken care of. Well taken care of. And increasingly, so with AI involved while still keeping human while still keeping human in the loop. The next question comes from Taylor McGinnis with UBS. Operator: Please go ahead. Taylor McGinnis: Yes, hi. Thanks so much for taking my question, and sorry for any background noise. But if I look at the 4Q subscription revenue guide, it is a bit stronger than what we saw in 3Q and 2Q. It seems like there is a little bit more of an unlock or an uptick in growth that you guys are seeing. So could you just unpack for us what is driving that? Is that more stability with the UCaaS business, but now we are starting to see the strength in AI revenue, start to show through. Any contribution from the NICE partnership? Maybe you could just unpack that as we think about that potential momentum going into next year. Thanks. Vaibhav Agarwal: Yes. Thanks, Taylor, for the question. So I think it is most of what you said. Look. Our core business continues to be durable. Retention metrics there are strong, and it is a recurring revenue base for us, which, as Vladimir said, you know, the usage metrics on the platform are very healthy. Which underscore the mission-critical. And then on top of that, AI is continuing to add more contributions. it is growing off a smaller base, but it is already additive, and as it becomes a larger part of the mix, its contribution will grow to the overall number will grow over time. So I think it is a combination of a durable core, growing contributions from our AI products, strong retention are kind of all the drivers for growth. And then in addition to that, I called out, we had growth, and at the same time, we are also expanding margins and free cash flow in a very meaningful way. And we are being very disciplined in terms of how we are using that money and allocating that capital So, all in all, the goal for us is to be a compounding free cash flow per share story. And you know, our free cash flow per share that we have guided to this year is over $7 and growing faster than free cash flow at above 20%. So I think that is how I would characterize the quarter and things kind of going forward. Operator: that is all the time we have for questions today. This concludes the question and answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in RingCentral, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and RingCentral wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. RingCentral (RNG) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- RingCentral shares jumped 7% today after third-quarter results beat estimates and the company raised its full-year outlook for revenue, margins, EPS and free cash flow. - Recurring revenue from customers using a paid AI product doubled from a year earlier and is now close to 15% of RingCentral's total. - Morgan Stanley, UBS and Jefferies sharply raised their price targets but kept their neutral ratings. - Even after the jump, the stock trades below its five-year average forward P/E, so the beat doesn't look fully priced in. RingCentral (RNG:NYSE) is up 7% today on a third-quarter beat, reported after Thursday's close, and a raised outlook for the year. Morgan Stanley's analysts called it RingCentral's "strongest topline quarter" and more than doubled their price target, to $91 from $41. They also kept their Equal Weight rating. Third-quarter revenue grew 5.9% to $676 million, ahead of the $667 million analysts expected, and subscriptions revenue beat the high end of RingCentral's own guidance. Plus: - Adjusted EPS of $1.33, up from $1.13 a year ago and ahead of the $1.27 expected - A record 24.7% adjusted operating margin, up from 22.8% - Free cash flow of $157 million, up 21% - Gross debt cut to about $1 billion, reaching management's target ahead of schedule The AI push is also starting to show up in the numbers: recurring revenue from customers using a paid AI product doubled from a year earlier and is close to 15% of RingCentral's total. The company also raised its full-year outlook across the board, including adjusted EPS of $5.07 to $5.12 and free cash flow of $620 million to $630 million. TIKR tracks 15 analysts on RingCentral. How many say "Buy"? See the full breakdown of Buy, Hold, and Sell ratings on RingCentral, along with Wall Street's revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See RingCentral's Analyst Ratings Analysts expect adjusted EPS of $5.11 this year, near the top of that new range. After that, they expect growth of about 8% in 2027 and 10% in 2028… And nothing in this quarter's report points to cuts. Yet the stock is still cheap against its own history. RingCentral traded at 15x forward earnings at Thursday's close. Today's jump takes it closer to 17x, which is still well below its five-year average of 21x. Less than the ratings suggest. Going into the report, analysts' average price target was $58. Today's jump takes the stock past even the highest target, $85… UBS has now raised its target to $105 from $45, and Jefferies has raised its target to $75 from $40. Both kept neutral ratings. Morgan Stanley's $91 target is right about where the stock trades now. My take: Those neutral ratings look too cautious. A company growing earnings about 8% to 10% a year while its AI revenue doubles shouldn't trade below its usual multiple, and I see more upside from here. Of course, total revenue is still growing just 6%, so the case depends on AI pushing that higher. Fourth-quarter results, due early next year, will show whether it can. TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what RingCentral could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use. Value RingCentral for free

- RingCentral reported third quarter 2026 revenue of US$676.04 million and net income of US$569.7 million, with earnings per share from continuing operations far above the prior year period. - Allnet.Italia announced a partnership that introduces RingCentral's AI focused RingEX platform to more than 5,000 Italian channel partners, directly linking the earnings story to broader, AI led international distribution. - We will now look at how RingCentral's investment narrative could shift in light of the sharp jump in profitability and AI focused Italian expansion. Spot 55 AI infrastructure stocks that, like RingCentral, are tying real earnings momentum to AI heavy communication and infrastructure platforms. To own RingCentral, you need to believe the business can turn its agentic voice AI and cloud communications stack into durable, high quality earnings while holding its own against bundled suites such as Microsoft Teams and Zoom One. The latest quarter delivered very strong profitability on modest revenue growth, which sharpens the near term focus on sustainability of margins as the key catalyst. The flip side is clear. Execution missteps in AI products, pressure on pricing in UCaaS and CCaaS, or any strain in distribution partnerships could quickly matter more than one strong quarter. High debt levels and negative shareholders equity keep balance sheet risk relevant, so you are relying heavily on continued cash generation and operational discipline. The Allnet.Italia agreement looks most relevant here because it directly connects RingCentral's AI products with a large, established distribution channel. Over 5,000 partners now have a reason to pitch RingEX and related AI tools to Italian businesses, which could support usage of higher value features if execution on enablement and support is tight. This sort of wholesale partnership also cuts both ways. Channel driven growth can scale quickly, yet it deepens reliance on external partners at a time when competition from larger ecosystems is intense. For you as an investor, the operational question becomes whether RingCentral can keep those partners engaged, avoid heavy discounting, and still protect the profitability profile that appeared so strongly in the latest results. RingCentral's narrative projects US$3.0b revenue and US$447.9 million earnings by 2029. This implies 4.7% yearly revenue growth and an earnings increase of about 4x from US$110.3 million today. Uncover why RingCentral's fair value indicates a 27% potential downside to its current price, suggesting that this premium may not hold. One alternate view puts the Allnet.Italia deal in a much brighter light for RingCentral. The most optimistic analysts were already penciling in roughly US$3.1b of revenue and US$586.1 million of earnings by 2029. That is a far more upbeat story than the consensus, and this fresh Italian AI push could nudge forecasts again. Explore 3 other RingCentral fair value estimates, including one that suggests as much as 123% upside from the current price. Don't just follow the ticker. Dig into the data and build a conviction that's truly your own. - A great starting point for your RingCentral research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision. - See our latest analysis for RingCentral. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easy to evaluate RingCentral's overall financial health at a glance. If the RingCentral story has you thinking about where else real earnings and balance sheet strength might meet your checklist, it can help to scan a wider field of companies that fit different risk and return profiles. - For readers hunting for smaller companies with higher risk but potentially outsized moves, start by reviewing 9 elite penny stocks with strong financials that already pass basic financial quality filters. - If the priority is quality at a reasonable price, narrow your focus to a 30 high quality undervalued stocks where cash generation and balance sheets are front and center. - For a sleep better at night approach, concentrate on a 30 resilient stocks with low risk scores that screens for resilient earnings profiles and more measured volatility. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include RNG. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. - Subscription Revenue: ~$653 million, up 6% year-over-year. - Total Revenue: ~$676 million, up 5.9% year-over-year. - Subscription Gross Margin: Above 80%. - Non-GAAP Operating Margin: 24.7%, up nearly 200 basis points. - GAAP Operating Margin: Record 8%, up 320 basis points. - GAAP EPS: $6.50 per share, including a $545 million non-cash tax valuation allowance benefit; $0.28 diluted excluding the benefit, up 47% year-over-year. - Non-GAAP EPS: $1.33, up ~18% year-over-year. - Free Cash Flow: $157 million in Q3, up 21% year-over-year. - Monthly Net Retention: Above 99%. - AI ARR: RingCentral AI ~15% of total ARR, over $400 million, doubling year-over-year. - AI Receptionist (AIR): More than 22,000 customers, up nearly 4x year-over-year. - AI Conversation Expert (ACE): Approaching 7,000 customers, up 60% year-over-year. - Customer Engagement Business Solution (CEB): More than 14,000 paying customers, growing nearly 50% quarter-over-quarter. - Gross Debt: Reduced to below $1 billion; net leverage at 1.3x. - Share Repurchases: ~$18 million in Q3; over $300 million remaining under authorization. - Diluted Share Count: ~87.7 million shares, down ~5% year-over-year. - FY2026 Total Revenue Guidance: $2.650 billion to $2.657 billion, growth of 5.4% to 5.6%. - FY2026 Subscription Revenue Guidance: $2.563 billion to $2.569 billion, growth of 5.6% to 5.9%. - FY2026 Free Cash Flow Guidance: $620 million to $630 million, up 18%. - FY2026 Non-GAAP EPS Guidance: $5.07 to $5.12, up ~17%. - Warning! GuruFocus has detected 5 Warning Sign with RNG. - Is RNG fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - RingCentral Inc (NYSE:RNG) delivered Q3 2026 subscription and total revenue above the high end of guidance, with subscription revenue up 6% year-over-year to approximately $653 million. - RingCentral Inc (NYSE:RNG) achieved record GAAP and non-GAAP operating margins, with non-GAAP operating margin reaching 24.7% and GAAP operating margin at 8%, reflecting disciplined cost management. - RingCentral Inc (NYSE:RNG) reduced gross debt to below $1 billion ahead of schedule, strengthening its balance sheet and enabling continued investment in innovation and shareholder returns. - RingCentral Inc (NYSE:RNG) reported strong AI momentum, with AI Receptionist surpassing 22,000 customers (up nearly 4x year-over-year) and RingCentral AI representing approximately 15% of total ARR, or over $400 million, doubling year-over-year. - RingCentral Inc (NYSE:RNG) raised its full-year free cash flow outlook to $625 million at the midpoint, representing nearly 24% of revenues and over $7 of free cash flow per share, up about 23% year-over-year. - RingCentral Inc (NYSE:RNG) total revenue growth remains modest at 5.9% year-over-year, indicating the core business is growing at a relatively slow pace. - RingCentral Inc (NYSE:RNG) AI products are still growing off a smaller base relative to the overall subscription business, limiting their near-term contribution to total growth. - RingCentral Inc (NYSE:RNG) noted that AI adoption through channel partners and global service providers is still very early and moving slower than direct sales. - RingCentral Inc (NYSE:RNG) faces potential uncertainty around its contact center strategy as the NICE partnership extension term remains undisclosed and the company transitions toward its own RingCX product for larger enterprises. - RingCentral Inc (NYSE:RNG) stock-based compensation remains elevated at approximately 9% of revenues for 2026, well above its long-term target of 3% to 4%, which weighs on GAAP profitability. Q: Subscription revenue growth has been improving for several quarters, and the Q3 beat was more pronounced. What drove the upside stronger AI-driven demand or easing enterprise renewal headwinds? A: CFO Vaibhav Agarwal attributed the beat to broad-based execution, with the core recurring business remaining durable and supported by strong retention and steady demand. AI-led products are contributing growing incremental revenue, with customers using at least one paid AI product now approaching 15% of ARR (over $400 million), doubling year over year, and showing higher ARPU and net retention above 100%. Q: With gross debt now below the $1 billion target ahead of schedule and free cash flow growing faster than revenue, how should investors weigh increased organic AI/contact center investment versus acquisitions versus capital returns? A: CEO Vlad Shmunis said RingCentral is a tech-heavy organization with strong in-house talent and spends over a quarter billion dollars annually on product technology, so it can deliver much of its roadmap internally. It maintains an in-house M&A function and evaluates opportunities opportunistically, but is confident in delivering results without going outside, while continuing buybacks and dividends. Q: How fast is the new product ARR growing in Q3, and how should we think about it exiting the year? A: CFO Vaibhav Agarwal said the key metric is customers adopting at least one paid AI product (RCAI), now approaching 15% of ARR or roughly $400 million and doubling year over year. He noted healthy customer economics with higher ARPU and net retention above 100%, and said the metric is the clearest proof point of AI adoption and is expected to keep growing as customers adopt more AI products. Q: Subscription gross margin is holding above 80% despite AI investment. How should we think about gross margin as AI ramps? A: CFO Vaibhav Agarwal said AI product gross margins are generally in line with the corporate average, managed through pricing and cost levers. Pricing is value- and usage-based, while costs are optimized via model selection, improving inference efficiency, and infrastructure, with a shift toward open-source models over time. He expects gross margins to continue holding around 80%. Q: Which customer segments are embracing the AI portfolio, and where might the next unlock come from beyond the mid-to-high teens penetration? A: President and COO Kira Makagon said adoption is occurring across all segments, from enterprise to SMB. CEO Vlad Shmunis added that traction is strongest in "golden verticals" of healthcare and financial services and in consumer-to-business voice and text interactions, with increasing adoption through global service providers, though channel adoption remains early. Q: From a GAAP perspective, how are you thinking about stock comp and the path to your operating margin goals? A: CFO Vaibhav Agarwal reaffirmed the medium-term target of 20% GAAP operating margin, noting 2026 guidance implies about 400 basis points of GAAP margin expansion, split roughly evenly between non-GAAP margin improvement and SBC reduction. He cited structural drivers including 80% gross margins and operating leverage, and reiterated the target of reducing SBC to 3%4% of revenue over the next three to four years. Q: How should we think about the mix of core UCaaS performance versus AI and customer engagement products in the subscription revenue growth trajectory into 2027? A: CEO Vlad Shmunis said bookings are roughly 50-50 between the existing base and new customers, with about half of new customers adopting AI. CFO Vaibhav Agarwal added that while no formal 2027 guidance was given, the core business remains durable with strong retention, and AI is a rapidly growing layer off a smaller base that is becoming an increasing contributor to growth. Q: AI Receptionist has gained significant traction. How do you think about expanding monetization within that install base through usage, use cases, or pricing? A: CFO Vaibhav Agarwal said AIR now has over 22,000 customers, driven by real ROI in capturing missed calls and leads, and uses usage-based pricing, currently selling largely in the small business segment while moving upmarket. President and COO Kira Makagon added that AIR Pro addresses more complex, multi-step workflows with human-in-the-loop handoffs, creating expansion opportunities as customers grow more comfortable with AI. Q: As AI agents account for more inbound call volume, how does RingCentral's AI benefit from businesses wanting an AI line of defense against inbound AI agents? A: CEO Vlad Shmunis said there are two fundamental growth drivers more calls and more AI and they reinforce each other. Traffic growth has been strong and linear while AI growth has been explosive, but AI-answered calls remain a small percentage of network volume, representing a meaningful opportunity to assign AI to more customer traffic. Q: What is the cross-sell opportunity for CEB, ACE, and AIR over the next two to three years, and how does penetration differ between major accounts and SMB? A: CEO Vlad Shmunis said CEB is fundamentally a smaller-business product, as it functions as an informal contact center, while larger enterprises tend to buy the full RingCX contact center. He noted CEB is growing well with satisfied customers and reference cases, and that the AI-enabled flavor of CEB is the company's most explosive new offering this year, supported by product-led growth. Q: Any early pipeline wins from the NICE partnership reselling RingEX, and are you seeing increased churn from the ACO transition? A: CEO Vlad Shmunis said the ACO transition was orderly with no friction or churn, as the customer experience is essentially unchanged. On NICE, he said it is early and focused on high-end enterprise accounts with limited logos, but the company is hoping for traction with large deals, while the broader channel is performing well. Q: What is the plan for RingCentral Contact Center when the NICE extension ends, and why not a longer extension? A: CEO Vlad Shmunis disputed the one-year characterization, saying the company has not disclosed specifics and that multiple years remain on the contract. He said the partnership could continue to be extended as it has for 12 years, but also emphasized that RingCX is getting stronger for the mid-market and increasingly viable for larger enterprises as AI reshapes large call centers.For the complete transcript of the earnings call, please refer to the full earnings call transcript.

- Interested in RingCentral, Inc.? Here are five stocks we like better. - RingCentral exceeded third-quarter guidance, with subscription revenue up 6% year over year to approximately $653 million, non-GAAP operating margin reaching 24.7%, and free cash flow rising 21% to $157 million. - AI adoption accelerated: AI Receptionist surpassed 22,000 customers, AI Conversation Expert approached 7,000, and paid AI products contributed more than $400 million in annual recurring revenue—double the prior year. - The company raised its full-year fiscal 2026 outlook, increased its free-cash-flow forecast to $620 million–$630 million, and reduced gross debt below $1 billion while continuing share repurchases and dividends. - RingCentral's Cash Flow Hit a Record—And It's Fueling Bigger Returns RingCentral (NYSE:RNG) reported third-quarter 2026 results above the high end of its guidance, citing growth in its artificial intelligence portfolio, continued customer demand and expanding operating margins. The company also said it reduced gross debt to below $1 billion ahead of schedule. Founder, Chairman and CEO Vlad Shmunis said subscription and total revenue exceeded the company's outlook, while both GAAP and non-GAAP operating margins reached records. He said the company's free cash flow generation supported debt reduction and will allow it to continue investing in product development while returning capital to shareholders through buybacks and dividends. → The AI Buildout Is Only 15% Complete—Here Is Where the Next Dollar Actually Goes - It's RingCentral (NYSE: RNG) You Want In Your 2021 Portfolio, Not Zoom (NASDAQ: ZM) RingCentral emphasized the growing contribution of its agentic voice AI products. Shmunis said AI Receptionist, or AIR, surpassed 22,000 customers, nearly quadrupling from a year earlier. AI Conversation Expert, or ACE, approached 7,000 customers, up 60% year over year. The company's Customer Engagement Bundle, or CEB, reached more than 14,000 paying customers, growing nearly 50% sequentially. Nearly two-thirds of CEB customers have also purchased at least one AI product, according to management. → GM Beat and Added a $20 Billion Buyback—Why Did the Stock Fall? Customers using at least one native paid AI product represented about 15% of total annual recurring revenue, or more than $400 million, and that figure doubled year over year. Shmunis said this customer group has higher average revenue per user and stronger net retention. President and COO Kira Makagon said RingCentral introduced plugins for OpenAI's ChatGPT and Model Context Protocol connectors for Anthropic's Claude during the quarter. The company was also selected as a Claude for Small Business launch partner. Makagon said the offerings had attracted thousands of active customers in less than a month. → Tech Stocks Took a Hit—These 2 Pharma Stocks Are Near New Highs The company described AI products designed to automate routine customer interactions while escalating issues requiring judgment, empathy or specialized knowledge to human employees. Makagon said AIR Pro, a voice-first omnichannel AI agent product, is being used for more complex workflows such as identity verification, record matching and follow-up tasks. CFO Vaibhav Agarwal said third-quarter subscription revenue was about $653 million, up 6% year over year, while total revenue was approximately $676 million, up 5.9%. Monthly net retention remained above 99%, which Agarwal said reflected the mission-critical role of the company's platform. - Non-GAAP operating margin reached 24.7%, an increase of nearly 200 basis points. - GAAP operating margin was 8%, up 320 basis points. - Subscription gross margin remained above 80%. - Stock-based compensation declined by 50 basis points as a percentage of revenue. - Free cash flow totaled $157 million, up 21% from the prior year. GAAP earnings per share were $6.50, including a $545 million non-cash benefit from the release of a valuation allowance related to certain domestic deferred tax assets. Excluding that benefit, diluted EPS was $0.28, up 47% year over year. Non-GAAP EPS rose about 18% to $1.33. Agarwal said the company expects its AI products to maintain gross margins broadly in line with its corporate average. He cited value-based and usage-based pricing, model selection, improving inference efficiency and shared platform infrastructure as factors supporting AI product economics. During the quarter, RingCentral repaid more than $110 million of its 8.5% high-yield notes after they became callable. Net leverage fell to 1.3 times, and gross debt was below $1 billion as of the earnings call. The company said it has no debt maturities until 2030 and has $305 million in undrawn credit capacity. RingCentral spent about $18 million on share repurchases in the third quarter and paid a quarterly dividend of $0.125 per share. Diluted share count declined roughly 5% year over year to approximately 87.7 million shares, and the company had more than $300 million remaining under its repurchase authorization. Shmunis said the company spends more than $250 million annually on product and technology and is evaluating acquisition opportunities, though he said RingCentral is confident it can execute its roadmap with its existing internal capabilities. RingCentral raised its fiscal 2026 guidance. The company now expects subscription revenue of $2.563 billion to $2.569 billion, representing growth of 5.6% to 5.9%, and total revenue of $2.650 billion to $2.657 billion, representing growth of 5.4% to 5.6%. The company forecast GAAP operating margin of 9.2% to 9.6% and non-GAAP operating margin of 24% to 24.2%. It raised expected free cash flow to $620 million to $630 million and projected non-GAAP EPS of $5.07 to $5.12. For the fourth quarter, RingCentral expects subscription revenue of $653 million to $659 million, total revenue of $673 million to $680 million, GAAP operating margin of 13.3% to 14.7%, and non-GAAP EPS of $1.32 to $1.37. RingCentral, Inc is a provider of cloud-based business communications and collaboration solutions. Its platform enables organizations to manage business phone services, team messaging, video meetings, contact center operations and other communications through internet-based applications rather than traditional on-premises systems. The company's offerings include RingEX, a unified communications platform that combines voice, messaging and video; RingCentral Video for online meetings and collaboration; and RingCX, a cloud contact center solution. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What RingCentral (RNG) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

RingCentral (RNG) came out with quarterly earnings of $1.33 per share, beating the Zacks Consensus Estimate of $1.27 per share. This compares to earnings of $1.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +4.72%. A quarter ago, it was expected that this cloud-based phone system provider for small businesses would post earnings of $1.17 per share when it actually produced earnings of $1.22, delivering a surprise of +4.27%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. RingCentral, which belongs to the Zacks Internet - Software and Services industry, posted revenues of $676.04 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.36%. This compares to year-ago revenues of $638.66 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. RingCentral shares have added about 185.4% since the beginning of the year versus the S&P 500's gain of 13.3%. While RingCentral 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 RingCentral was favorable. 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 #2 (Buy) for the stock. So, the shares are expected to outperform 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 the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.35 on $672.33 million in revenues for the coming quarter and $5.04 on $2.64 billion 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 35% 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. One other stock from the same industry, Globant (GLOB), is yet to report results for the quarter ended September 2026. This information technology services provider is expected to post quarterly earnings of $1.47 per share in its upcoming report, which represents a year-over-year change of -3.9%. The consensus EPS estimate for the quarter has been revised 0.3% lower over the last 30 days to the current level. Globant's revenues are expected to be $611.06 million, down 1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ringcentral, Inc. (RNG) : Free Stock Analysis Report Globant S.A. (GLOB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Subscriptions revenue up 6.0%, above high end of guidance, with record GAAP and non-GAAP margins ARR from customers utilizing a native paid AI product is approaching 15%, doubling year-over-year Reduced gross debt to approximately $1 billion Raising full year outlook for revenue, non-GAAP margins and free cash flow BELMONT, Calif., October 22, 2026--(BUSINESS WIRE)--RingCentral, Inc. (NYSE: RNG), a global leader in AI-powered customer engagement, today announced financial results for the third quarter ended September 30, 2026. Third Quarter Financial Highlights - Subscriptions revenue increased approximately 6.0% year-over-year to $653 million. - Total revenue increased approximately 5.9% year-over-year to $676 million. - GAAP operating margin of 8.0%, compared to 4.8% in the prior year. - Non-GAAP operating margin of 24.7%, up approximately 190 basis points year-over-year. - GAAP diluted EPS of $6.50. GAAP diluted EPS, excluding the impact of valuation allowance release, was $0.28, up 47.4% year-over-year. - Non-GAAP EPS of $1.33 compared to $1.13 last year. - Net cash provided by operating activities of $180 million, up 18.8% year-over-year. - Free cash flow of $157 million, up 21.0% year-over-year. - Repurchased approximately 0.4 million shares for a total of $18 million as of the end of the quarter. "Voice is central to the next wave of AI innovation, and RingCentral is uniquely positioned to lead this transformation," said Vlad Shmunis, Founder, Chairman and CEO of RingCentral. "Our trusted communications platform and expanding Agentic Voice AI portfolio puts us at the front door of customer interactions. By bringing communications, contact center, and AI together, we are redefining how businesses engage with customers, turning conversations into intelligent actions, better experiences, and measurable business outcomes. We see a significant opportunity ahead as businesses embrace the next generation of AI-powered customer engagement." "Our third-quarter results demonstrate strong execution against our financial commitments, with durable growth, expanding operating and free cash flow margins, and improving GAAP profitability," said Vaibhav Agarwal, Chief Financial Officer of RingCentral. "We also reached our $1 billion gross debt target ahead of schedule, further strengthening our balance sheet while returning capital to shareholders. These results underscore the strength of our financial model and our focus on driving profitable growth and long-term shareholder value." RingCentral Declares a Dividend RingCentral's Board of Directors approved a quarterly cash dividend of $0.125 per share of our outstanding capital stock, payable on November 20, 2026 to stockholders of record as of the close of business on November 6, 2026. Financial Results for the Third Quarter 2026 - Revenue: Total revenue was $676 million for the third quarter of 2026, up from $639 million in the third quarter of 2025, representing 5.9% year-over-year growth. Subscriptions revenue of $653 million increased 6.0% year-over-year and accounted for 97% of total revenue. - Operating Income: GAAP operating income was $54 million, compared to $31 million in the same period last year. Non-GAAP operating income was $167 million, or 24.7% of total revenue, compared to $146 million, or 22.8% of total revenue, in the same period last year. - Adjusted EBITDA: Adjusted EBITDA was $190 million, or 28.1% of total revenue, compared to $168 million, or 26.3% of total revenue, in the same period last year. - Net Income Per Share: GAAP diluted EPS improved to $6.50, compared to $0.19 in the same period last year. GAAP diluted EPS, excluding the impact of valuation allowance release, was $0.28, up 47.4% year-over-year. Non-GAAP diluted EPS was $1.33, compared to $1.13 per share in the same period last year. The third quarters of 2026 and 2025 each reflected a non-GAAP tax rate of approximately 22.5%. - Cash Flow: Net cash provided by operating activities for the third quarter of 2026 was $180 million, or 26.6% of total revenue, compared to $151 million, or 23.7% of total revenue, for the third quarter of 2025. Free cash flow for the third quarter of 2026 was $157 million, or 23.2% of total revenue, compared to $130 million, or 20.3% of total revenue, for the third quarter of 2025. - Cash and Cash Equivalents: Total cash and cash equivalents at the end of the third quarter of 2026 was $110 million. Our cash balance reflects the repurchase of $18 million in shares during the third quarter of 2026 under the share repurchase plans previously authorized by our Board. We currently have approximately $309 million remaining under our total authorization. Additional Highlights - Launched plugins for ChatGPT and Claude, including Claude for Small Business, and MCP connectors to make voice, SMS, and chat data available in LLMs. This enables business users to prompt actions that save time, improve productivity, and complete tasks to drive better business outcomes. - Expanded partnership with the Golden State Warriors, naming RingCentral the team's official Agentic AI-Powered Voice Platform for fan engagement. - Signed Digital Island as our first partner in New Zealand to design, sell, implement, and support Agentic Voice AI, with early-adopter engagement underway ahead of general availability later this year. - Signed Allnet.Italia as our first wholesale partnership in Italy, putting Agentic Voice AI in the hands of Allnet.Italia's 5,000+ channel partners to sell to their customer base. - Named to Business Insider's America's Most Innovative Businesses 2027 list, one of 500 public U.S. companies chosen from 4,000+ reviewed on reputation, patent impact, and R&D investment. - Recognized by several industry analyst firms, including as a Leader in CCaaS, a Major Player in Conversational Intelligence and Analytics, and an Innovator in CPaaS, for its omnichannel engagement, integrated AI capabilities, and ability to turn conversations into business intelligence and automate workflows. Financial Outlook Fourth Quarter 2026 Guidance: - Subscriptions revenue of $653 to $659 million. - Total revenue of $673 to $680 million. - GAAP operating margin of 13.3% to 14.7%. - Non-GAAP operating margin of 25.0% to 25.5%. - Non-GAAP EPS of $1.32 to $1.37 based on approximately 88.7 million fully diluted shares. - Share-based compensation of $57 to $62 million. This results in full year 2026 guidance of: - Raising subscriptions revenue range to $2.563 billion to $2.569 billion. - Raising total revenue range to $2.650 billion to $2.657 billion. - Raising GAAP operating margin to 9.2% to 9.6%. - Raising non-GAAP operating margin to approximately 24.0% to 24.2%. - Raising non-GAAP EPS of $5.07 to $5.12 based on 87.5 million fully diluted shares. - Share-based compensation of $240 to $245 million. - Raising free cash flow guidance of $620 to $630 million. Conference Call Details: - What: RingCentral financial results for the third quarter of 2026 and outlook for the fourth quarter and full year of 2026. - When: Thursday, October 22, 2026 at 2:00PM PT (5:00PM ET). - Dial-in: 1-888-349-0093 from the United States; 1-412-317-5201 internationally - Webcast: https://ir.ringcentral.com (live and replay). Investor Presentation Details An investor presentation providing additional information and analysis can be found at https://ir.ringcentral.com. About RingCentral RingCentral is a global leader in AI–powered customer engagement, delivering an integrated platform for business phone, SMS, contact center, workforce engagement management, video collaboration, and messaging. Powered by advanced AI capabilities, RingCentral delivers intelligence at every phase of the conversation journey — before, during, and after each human interaction. With RingCentral, businesses can work smarter, respond faster, and connect more meaningfully with their customers. Visit ringcentral.com to learn more. Forward-Looking Statements This press release contains "forward-looking statements," including but not limited to, statements regarding our future financial results, our GAAP and non-GAAP guidance, the results of the pace of our innovation, our expectations around our platform and the contribution of our new products, and the payment of dividends. Forward-looking statements are subject to known and unknown risks and uncertainties, and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: our ability to attract new customers and grow at our expected rate of growth; our ability to add and retain larger and enterprise customers and enter new geographies and markets; our ability to develop and continue to release, and gain customer acceptance of, new and improved versions of our services; our use of AI technologies to help drive future growth; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with channel partners and strategic partners; our ability to realize the anticipated benefits of our strategic relationships; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; our ability to manage our expenses and growth; factors affecting the payment of dividends; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, and in other filings we make with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter. Non-GAAP Financial Measures Our reported financial results and financial outlook include certain Non-GAAP financial measures, including Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP income from operations, Non-GAAP operating margin, Non-GAAP adjusted EBITDA, Non-GAAP net income, Non-GAAP net income per diluted share, Non-GAAP free cash flow and Non-GAAP free cash flow margin. Non-GAAP subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenues. Non-GAAP subscriptions gross profit is defined as GAAP subscriptions revenues less Non-GAAP subscriptions cost of revenues. Non-GAAP subscriptions cost of revenues is defined as GAAP subscriptions cost of revenues adjusted for share-based compensation which includes related employer payroll taxes, amortization of acquired intangibles, third-party relocation and other costs and restructuring costs. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenues. Non-GAAP other gross profit is defined as GAAP other revenues less Non-GAAP other cost of revenues. Non-GAAP other cost of revenues is defined as GAAP other cost of revenues adjusted for share-based compensation which includes related employer payroll taxes, amortization of acquired intangibles and restructuring costs. Non-GAAP income from operations is defined as GAAP income from operations excluding share-based compensation which includes related employer payroll taxes, amortization of acquired intangibles, asset write-down charges, third-party relocation costs tied to the conflict between Russia and Ukraine and other costs including acquisition-related transaction costs, certain litigation-related costs, impairment charges related to abandoned internal-use software, change in fair-value of contingent consideration, one-time expenses related to strategic consulting services, other cost-reduction and productivity initiatives, and restructuring costs. Non-GAAP operating margin is defined as Non-GAAP income from operations divided by total GAAP revenue. Non-GAAP adjusted EBITDA is defined as Non-GAAP income from operations excluding depreciation and amortization. Non-GAAP net income is defined as GAAP net income (loss) excluding share-based compensation which includes related employer payroll taxes, amortization of acquired intangibles, asset write-down charges, third-party relocation costs tied to the conflict between Russia and Ukraine and other costs including acquisition-related transaction costs, certain litigation-related costs, impairment charges related to abandoned internal-use software, change in fair-value of contingent consideration, net impact of amended agreements with partners, loss (gain) associated with investments, intercompany remeasurement gains or losses, one-time expenses related to strategic consulting services, other cost-reduction and productivity initiatives, restructuring costs, non-cash interest expense associated with amortization of debt discount and loss (gain) on early extinguishment of debt, related income tax expense effects of these adjustments, and the income tax benefit from a partial release of valuation allowance on U.S. deferred tax assets. Non-GAAP free cash flow is defined as GAAP net cash provided by operating activities adjusted for capital expenditures including purchases of property and equipment and capitalized internal-use software. We believe information regarding Non-GAAP free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash. Non-GAAP free cash flow margin is defined as Non-GAAP free cash flow divided by total GAAP revenues. We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income, Non-GAAP net income per diluted share, Non-GAAP free cash flow and Non-GAAP free cash flow margin in this press release because they are key measures used by us to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, the exclusion of certain expenses and cash flow items in calculating Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income, Non-GAAP net income per diluted share, Non-GAAP free cash flow, and Non-GAAP free cash flow margin provide useful measure for period-to-period comparisons of our business. Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income, Non-GAAP net income per diluted share, Non-GAAP free cash flow and Non-GAAP free cash flow margin are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures. For a reconciliation of our forecasted non-GAAP operating margin and free cash flow, see "Reconciliation of Forecasted Operating Margin and Free Cash Flow GAAP Measures to Non-GAAP Measures." We have not reconciled our forecasted non-GAAP EPS to its respective forecasted GAAP measure because we do not provide guidance on it. We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and complexity involved in forecasting the intercompany remeasurement gain (loss), gain (loss) associated with investments, gain (loss) on early debt extinguishment, and provision (benefit) from income taxes including the effect and timing of release of valuation allowance related to our deferred tax assets in certain jurisdictions, which could be significant reconciling items between the non-GAAP and respective GAAP measures. The intercompany remeasurement gain (loss) is affected by the movement in various exchange rates relative to the U.S. Dollar, which is difficult to predict and subject to constant change. We do not provide guidance on gain (loss) associated with investments as it is based on future share prices, which are difficult to predict and subject to inherent uncertainties. We do not provide guidance on gain (loss) on early debt extinguishments as these are based on timing of future settlement requests and interest rates, which are difficult to predict and are subject to inherent uncertainties. We do not provide guidance on forecasted GAAP tax rates as we do not forecast discrete tax items as they are difficult to predict. We utilized a projected long-term tax rate in our computation of the non-GAAP income tax provision. For fiscal 2026, we have determined the projected non-GAAP tax rate to be 22.5%. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. Reconciliations of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release. Our reported results also include our annualized exit monthly recurring subscriptions (ARR), as well as Net Monthly Subscriptions Dollar Retention Rate. We define our ARR as our monthly recurring subscriptions (MRR) multiplied by 12. Our MRR equals the monthly value of all customer recurring charges contracted at the end of a given month. We believe this metric is a leading indicator of our anticipated subscriptions revenue. We define our Net Monthly Subscription Dollar Retention Rate as (i) one plus (ii) the quotient of Dollar Net Change divided by Average Monthly Recurring Subscriptions. We calculate dollar net change as the quotient of (i) the difference of our monthly recurring subscriptions at the end of a period minus our monthly recurring subscriptions at the beginning of a period minus our monthly recurring subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We define our average monthly recurring subscriptions as the average of the monthly recurring subscriptions at the beginning and end of the measurement period. © 2026 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Contact Center and the RingCentral logo are trademarks of RingCentral, Inc. TABLE 1 RINGCENTRAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) | | | | | | September 30, 2026 | | December 31, 2025 Assets | | | | Current assets | | | | Cash and cash equivalents | | $ | 110,118 | | | $ | 132,564 | Accounts receivable, net | | | 377,654 | | | | 384,100 | Deferred and prepaid sales commission costs | | | 150,570 | | | | 167,304 | Prepaid expenses and other current assets | | | 84,707 | | | | 81,190 | Total current assets | | | 723,049 | | | | 765,158 | Property and equipment, net | | | 193,337 | | | | 186,570 | Operating lease right-of-use assets | | | 39,765 | | | | 30,855 | Deferred and prepaid sales commission costs, non-current | | | 215,485 | | | | 252,504 | Goodwill | | | 102,749 | | | | 97,792 | Acquired intangibles, net | | | 44,021 | | | | 135,410 | Deferred tax asset | | | 546,912 | | | | 2,094 | Other assets | | | 9,738 | | | | 11,072 | Total assets | | $ | 1,875,056 | | | $ | 1,481,455 | Liabilities, Temporary Equity, and Stockholders' Deficit | | | | Current liabilities | | | | Accounts payable | | $ | 27,525 | | | $ | 27,677 | Accrued liabilities | | | 306,667 | | | | 297,633 | Current portion of long-term debt, net | | | 48,901 | | | | 624,216 | Deferred revenue | | | 296,068 | | | | 269,122 | Total current liabilities | | | 679,161 | | | | 1,218,648 | Long-term debt, net | | | 961,674 | | | | 629,580 | Operating lease liabilities | | | 22,340 | | | | 14,372 | Other long-term liabilities | | | 24,817 | | | | 7,525 | Total liabilities | | | 1,687,992 | | | | 1,870,125 | | | | | Temporary equity | | | | Series A convertible preferred stock | | | 199,449 | | | | 199,449 | | | | | Stockholders' deficit | | | | Common stock | | | 8 | | | | 9 | Additional paid-in capital | | | 1,079,624 | | | | 1,123,447 | Accumulated other comprehensive income | | | 5,867 | | | | 2,458 | Accumulated deficit | | | (1,097,884 | ) | | | (1,714,033 | ) Total stockholders' deficit | | | (12,385 | ) | | | (588,119 | ) Total liabilities, temporary equity and stockholders' deficit | | $ | 1,875,056 | | | $ | 1,481,455 | | | | | | | | | TABLE 2 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) | | | | | | | | | | Three Months EndedSeptember 30, | | Nine Months EndedSeptember 30, | | 2026 | | 2025 | | 2026 | | 2025 Revenues | | | | | | | | Subscriptions | | $ | 652,944 | | | $ | 615,821 | | | $ | 1,909,759 | | | $ | 1,804,661 | Other | | | 23,099 | | | | 22,834 | | | | 67,494 | | | | 66,448 | Total revenues | | | 676,043 | | | | 638,655 | | | | 1,977,253 | | | | 1,871,109 | Cost of revenues | | | | | | | | Subscriptions | | | 160,841 | | | | 153,938 | | | | 474,753 | | | | 457,821 | Other | | | 20,899 | | | | 26,388 | | | | 71,119 | | | | 81,905 | Total cost of revenues | | | 181,740 | | | | 180,326 | | | | 545,872 | | | | 539,726 | Gross profit | | | 494,303 | | | | 458,329 | | | | 1,431,381 | | | | 1,331,383 | Operating expenses | | | | | | | | Research and development | | | 88,065 | | | | 79,908 | | | | 252,579 | | | | 239,430 | Sales and marketing | | | 282,918 | | | | 281,558 | | | | 830,668 | | | | 820,041 | General and administrative | | | 69,434 | | | | 66,056 | | | | 193,935 | | | | 193,802 | Total operating expenses | | | 440,417 | | | | 427,522 | | | | 1,277,182 | | | | 1,253,273 | Income from operations | | | 53,886 | | | | 30,807 | | | | 154,199 | | | | 78,110 | Other income (expense), net | | | | | | | | Interest expense | | | (17,134 | ) | | | (13,940 | ) | | | (50,611 | ) | | | (46,521 | ) Other (expense) income | | | (8,738 | ) | | | 179 | | | | 786 | | | | (3,239 | ) Other expense, net | | | (25,872 | ) | | | (13,761 | ) | | | (49,825 | ) | | | (49,760 | ) Income before income taxes | | | 28,014 | | | | 17,046 | | | | 104,374 | | | | 28,350 | (Benefit from) provision for income taxes | | | (541,686 | ) | | | (513 | ) | | | (535,059 | ) | | | 7,926 | Net income | | $ | 569,700 | | | $ | 17,559 | | | $ | 639,433 | | | $ | 20,424 | Net income per share attributable to common stockholders | | | | | | | | Basic | | $ | 6.73 | | | $ | 0.19 | | | $ | 7.53 | | | $ | 0.23 | Diluted | | $ | 6.50 | | | $ | 0.19 | | | $ | 7.34 | | | $ | 0.22 | Weighted-average number of shares used in computing net income per share attributable to common stockholders | | | | | | | | Basic | | | 83,859 | | | | 90,141 | | | | 84,187 | | | | 90,619 | Diluted | | | 87,687 | | | | 91,964 | | | | 87,096 | | | | 92,311 | | | | | | | | | | | | | | | | | TABLE 3 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) | | | | | | Nine Months EndedSeptember 30, | | 2026 | | 2025 Cash flows from operating activities | | | | Net income | | $ | 639,433 | | | $ | 20,424 | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation and amortization | | | 170,598 | | | | 166,402 | Share-based compensation | | | 176,446 | | | | 206,049 | Asset write-down charge | | | — | | | | 11,440 | Amortization of deferred and prepaid sales commission costs | | | 117,761 | | | | 123,003 | Amortization of debt discount and issuance costs | | | 2,199 | | | | 3,553 | Loss on early extinguishment of debt | | | 14,722 | | | | 4,988 | Reduction of operating lease right-of-use assets | | | 17,373 | | | | 18,684 | Provision for bad debt | | | 10,892 | | | | 13,605 | Tax benefit related to release of valuation allowance | | | (544,861 | ) | | | — | Other | | | 5,466 | | | | (3,062 | ) Changes in assets and liabilities: | | | | Accounts receivable | | | (1,531 | ) | | | (7,298 | ) Deferred and prepaid sales commission costs | | | (84,493 | ) | | | (78,136 | ) Prepaid expenses and other assets | | | (2,944 | ) | | | (1,196 | ) Accounts payable | | | (2,420 | ) | | | 12,500 | Accrued and other liabilities | | | 23,942 | | | | (4,852 | ) Deferred revenue | | | 26,838 | | | | (298 | ) Operating lease liabilities | | | (19,052 | ) | | | (17,368 | ) Net cash provided by operating activities | | | 550,369 | | | | 468,438 | Cash flows from investing activities | | | | Purchases of property and equipment | | | (24,127 | ) | | | (22,113 | ) Capitalized internal-use software | | | (48,640 | ) | | | (42,242 | ) Cash paid for business combination, net of cash acquired | | | (7,929 | ) | | | (20,754 | ) Net cash used in investing activities | | | (80,696 | ) | | | (85,109 | ) Cash flows from financing activities | | | | Proceeds from issuance of stock in connection with stock plans | | | 9,978 | | | | 9,064 | Payments for taxes related to net share settlement of equity awards | | | (22,317 | ) | | | (8,307 | ) Payments for repurchases of common stock | | | (192,973 | ) | | | (199,036 | ) Payment of dividends | | | (23,284 | ) | | | — | Proceeds from issuance of long-term debt | | | 650,000 | | | | — | Payments for the settlement of convertible notes | | | (609,065 | ) | | | (161,326 | ) Repurchases of senior notes, including premium paid | | | (261,375 | ) | | | (53,903 | ) Repayments of principal on term loan | | | (35,360 | ) | | | (63,875 | ) Payments for contingent consideration | | | (4,889 | ) | | | — | Other | | | (1,733 | ) | | | (7,270 | ) Net cash used in financing activities | | | (491,018 | ) | | | (484,653 | ) Effect of exchange rate changes | | | (1,101 | ) | | | 3,884 | Net decrease in cash, cash equivalents, and restricted cash | | | (22,446 | ) | | | (97,440 | ) Cash, cash equivalents, and restricted cash | | | | Beginning of period | | | 132,564 | | | | 242,811 | End of period | | $ | 110,118 | | | $ | 145,371 | | | | | | | | | TABLE 4 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) | | | | | | | | | | Three Months EndedSeptember 30, | | Nine Months EndedSeptember 30, | | 2026 | | 2025 | | 2026 | | 2025 | | | | | | | | Revenues | | | | | | | | Subscriptions | | $ | 652,944 | | | $ | 615,821 | | | $ | 1,909,759 | | | $ | 1,804,661 | Other | | | 23,099 | | | | 22,834 | | | | 67,494 | | | | 66,448 | Total revenues | | | 676,043 | | | | 638,655 | | | | 1,977,253 | | | | 1,871,109 | Cost of revenues reconciliation | | | | | | | | GAAP Subscriptions cost of revenues | | $ | 160,841 | | | $ | 153,938 | | | $ | 474,753 | | | $ | 457,821 | Share-based compensation | | | (2,719 | ) | | | (3,384 | ) | | | (8,219 | ) | | | (11,529 | ) Amortization of acquired intangibles | | | (30,832 | ) | | | (32,100 | ) | | | (93,688 | ) | | | (94,547 | ) Third-party relocation and other costs, net | | | — | | | | (32 | ) | | | — | | | | (126 | ) Restructuring costs | | | (927 | ) | | | (407 | ) | | | (2,471 | ) | | | (1,375 | ) Non-GAAP Subscriptions cost of revenues | | $ | 126,363 | | | $ | 118,015 | | | $ | 370,375 | | | $ | 350,244 | | | | | | | | | GAAP Other cost of revenues | | $ | 20,899 | | | $ | 26,388 | | | $ | 71,119 | | | $ | 81,905 | Share-based compensation | | | (319 | ) | | | (987 | ) | | | (1,181 | ) | | | (3,794 | ) Amortization of acquired intangibles | | | (76 | ) | | | (83 | ) | | | (232 | ) | | | (251 | ) Restructuring costs | | | 361 | | | | — | | | | (649 | ) | | | (716 | ) Non-GAAP Other cost of revenues | | $ | 20,865 | | | $ | 25,318 | | | $ | 69,057 | | | $ | 77,144 | Gross profit and gross margin reconciliation | | | | | | | | Non-GAAP Subscriptions | | | 80.6 | % | | | 80.8 | % | | | 80.6 | % | | | 80.6 | % Non-GAAP Other | | | 9.7 | % | | | (10.9 | )% | | | (2.3 | )% | | | (16.1 | )% Non-GAAP Gross profit | | | 78.2 | % | | | 77.6 | % | | | 77.8 | % | | | 77.2 | % Operating expenses reconciliation | | | | | | | | GAAP Research and development | | $ | 88,065 | | | $ | 79,908 | | | $ | 252,579 | | | $ | 239,430 | Share-based compensation | | | (15,183 | ) | | | (16,093 | ) | | | (45,791 | ) | | | (48,782 | ) Third-party relocation and other costs, net | | | (143 | ) | | | (328 | ) | | | (249 | ) | | | (844 | ) Restructuring costs | | | (1,161 | ) | | | (1,578 | ) | | | (2,198 | ) | | | (4,474 | ) Non-GAAP Research and development | | $ | 71,578 | | | $ | 61,909 | | | $ | 204,341 | | | $ | 185,330 | As a % of total revenues non-GAAP | | | 10.6 | % | | | 9.7 | % | | | 10.3 | % | | | 9.9 | % | | | | | | | | GAAP Sales and marketing | | $ | 282,918 | | | $ | 281,558 | | | $ | 830,668 | | | $ | 820,041 | Share-based compensation | | | (25,537 | ) | | | (27,214 | ) | | | (74,126 | ) | | | (89,148 | ) Amortization of acquired intangibles | | | (2,384 | ) | | | (2,368 | ) | | | (7,991 | ) | | | (6,478 | ) Asset write-down charges | | | — | | | | (11,440 | ) | | | — | | | | (11,440 | ) Third-party relocation and other costs, net | | | (2 | ) | | | (182 | ) | | | (376 | ) | | | (999 | ) Restructuring costs | | | (10,169 | ) | | | (328 | ) | | | (14,993 | ) | | | (4,241 | ) Non-GAAP Sales and marketing | | $ | 244,826 | | | $ | 240,026 | | | $ | 733,182 | | | $ | 707,735 | As a % of total revenues non-GAAP | | | 36.2 | % | | | 37.6 | % | | | 37.1 | % | | | 37.8 | % | | | | | | | | GAAP General and administrative | | $ | 69,434 | | | $ | 66,056 | | | $ | 193,935 | | | $ | 193,802 | Share-based compensation | | | (22,555 | ) | | | (18,282 | ) | | | (53,458 | ) | | | (57,970 | ) Third-party relocation and other costs, net | | | (417 | ) | | | (148 | ) | | | (5,494 | ) | | | (2,870 | ) Restructuring costs | | | (1,005 | ) | | | (153 | ) | | | (2,941 | ) | | | (1,563 | ) Non-GAAP General and administrative | | $ | 45,457 | | | $ | 47,473 | | | $ | 132,042 | | | $ | 131,399 | As a % of total revenues non-GAAP | | | 6.7 | % | | | 7.4 | % | | | 6.7 | % | | | 7.0 | % Income (loss) from operations reconciliation | | | | | | | | GAAP income from operations | | $ | 53,886 | | | $ | 30,807 | | | $ | 154,199 | | | $ | 78,110 | Share-based compensation | | | 66,313 | | | | 65,960 | | | | 182,775 | | | | 211,223 | Amortization of acquired intangibles | | | 33,292 | | | | 34,551 | | | | 101,911 | | | | 101,276 | Asset write-down charges | | | — | | | | 11,440 | | | | — | | | | 11,440 | Third-party relocation and other costs, net | | | 562 | | | | 690 | | | | 6,119 | | | | 4,839 | Restructuring costs | | | 12,901 | | | | 2,466 | | | | 23,252 | | | | 12,369 | Non-GAAP Income from operations | | $ | 166,954 | | | $ | 145,914 | | | $ | 468,256 | | | $ | 419,257 | Non-GAAP Operating margin | | | 24.7 | % | | | 22.8 | % | | | 23.7 | % | | | 22.4 | % Adjusted EBITDA reconciliation | | | | | | | | Depreciation and amortization | | | 23,309 | | | | 21,869 | | | | 68,687 | | | | 65,126 | Non-GAAP Adjusted EBITDA | | $ | 190,263 | | | $ | 167,783 | | | $ | 536,943 | | | $ | 484,383 | As a % of total revenues non-GAAP | | | 28.1 | % | | | 26.3 | % | | | 27.2 | % | | | 25.9 | % | | | | | | | | | | | | | | | | TABLE 5 RINGCENTRAL, INC. RECONCILIATION OF NET INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) | | | | | | | | | | Three Months EndedSeptember 30, | | Nine Months EndedSeptember 30, | | 2026 | | 2025 | | 2026 | | 2025 Net income (loss) reconciliation | | | | | | | | GAAP net income | | $ | 569,700 | | | $ | 17,559 | | | $ | 639,433 | | | $ | 20,424 | Share-based compensation | | | 66,313 | | | | 65,960 | | | | 182,775 | | | | 211,223 | Amortization of acquired intangibles | | | 33,292 | | | | 34,551 | | | | 101,911 | | | | 101,276 | Asset write-down charges | | | — | | | | 11,440 | | | | — | | | | 11,440 | Third-party relocation and other costs, net | | | 1,081 | | | | 1,426 | | | | (7,595 | ) | | | 6,115 | Restructuring costs | | | 12,901 | | | | 2,466 | | | | 23,252 | | | | 12,369 | Amortization of debt discount and extinguishment costs | | | 8,907 | | | | 1,172 | | | | 16,921 | | | | 8,541 | Income tax expense effects related to the above adjustments | | | (30,689 | ) | | | (30,677 | ) | | | (85,066 | ) | | | (77,420 | ) Discrete income tax benefit from a partial release of valuation allowance on U.S. deferred tax assets | | | (544,861 | ) | | | — | | | | (544,861 | ) | | | — | Non-GAAP net income | | $ | 116,644 | | | $ | 103,897 | | | $ | 326,770 | | | $ | 293,968 | Reconciliation between GAAP and non-GAAP weighted average shares used in computing basic and diluted net income (loss) per common share: | | | | | | | | Weighted average number of shares used incomputing basic net income per share | | | 83,859 | | | | 90,141 | | | | 84,187 | | | | 90,619 | Effect of dilutive securities | | | 3,828 | | | | 1,823 | | | | 2,909 | | | | 1,692 | GAAP weighted average shares used incomputing GAAP diluted net income per share | | | 87,687 | | | | 91,964 | | | | 87,096 | | | | 92,311 | Effect of dilutive securities | | | — | | | | — | | | | — | | | | — | Non-GAAP weighted average shares used incomputing non-GAAP diluted net income per share | | | 87,687 | | | | 91,964 | | | | 87,096 | | | | 92,311 | | | | | | | | | Diluted net income (loss) per share | | | | | | | | GAAP net income per share | | $ | 6.50 | | | $ | 0.19 | | | $ | 7.34 | | | $ | 0.22 | Non-GAAP net income per share | | $ | 1.33 | | | $ | 1.13 | | | $ | 3.75 | | | $ | 3.18 | | | | | | | | | | | | | | | TABLE 6 RINGCENTRAL, INC. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES (Unaudited, in thousands) | | | | | | | | | | Three Months EndedSeptember 30, | | Nine Months EndedSeptember 30, | | 2026 | | 2025 | | 2026 | | 2025 Net cash provided by operating activities | | $ | 179,889 | | | $ | 151,362 | | | $ | 550,369 | | | $ | 468,438 | Capitalized expenditures | | | (23,125 | ) | | | (21,840 | ) | | | (72,767 | ) | | | (64,355 | ) Non-GAAP free cash flow | | $ | 156,764 | | | $ | 129,522 | | | $ | 477,602 | | | $ | 404,083 | Non-GAAP free cash flow margin | | | 23.2 | % | | | 20.3 | % | | | 24.2 | % | | | 21.6 | % TABLE 7 RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN AND FREE CASH FLOW GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in millions) | | | | | | | | | | Q4 2026 | | FY 2026 | | Low Range | | High Range | | Low Range | | High Range GAAP income from operations | | $ | 90 | | | $ | 100 | | | $ | 244 | | | $ | 254 | GAAP operating margin | | | 13.3 | % | | | 14.7 | % | | | 9.2 | % | | | 9.6 | % Share-based compensation | | | 62 | | | | 57 | | | | 245 | | | | 240 | Amortization of acquired intangibles | | | 15 | | | | 15 | | | | 117 | | | | 117 | Third-party relocation, restructuring and other costs | | | 1 | | | | 1 | | | | 31 | | | | 31 | Non-GAAP income from operations | | $ | 168 | | | $ | 173 | | | $ | 637 | | | $ | 642 | Non-GAAP operating margin | | | 25.0 | % | | | 25.5 | % | | | 24.0 | % | | | 24.2 | % | FY 2026 | Low Range | | High Range GAAP net cash provided by operating activities | $ | 725 | | | $ | 730 | Capitalized expenditures | | (105 | ) | | | (100 | ) Non-GAAP free cash flow | $ | 620 | | | $ | 630 | View source version on businesswire.com: https://www.businesswire.com/news/home/20261022608824/en/ Contacts Investor Relations Contact: Steven Horwitz [email protected] Media Contact: Mariana Leventis, RingCentral [email protected]