Ringcentral, Inc. (RNG) Earnings & Analysis

Latest quarter

RingCentral reported Q3 FY2026 revenue of $676.0 million, above the $667.0 million consensus and up from $638.7 million a year earlier. Adjusted earnings per share were $1.33, above the $1.27 consensus.

In its filing, RingCentral attributed subscription revenue growth primarily to new customers and sales of additional products to existing customers, including AI-led products. Other revenue increased as higher device sales were partly offset by lower professional services revenue, the filing said. Annualized recurring subscriptions reached $2.80 billion at September 30, 2026, compared with $2.63 billion a year earlier.

RingCentral’s gross margin rose to 73.1% from 71.8%, while operating margin increased to 7.97% from 4.82%. Diluted EPS rose to $6.50 from $0.19; CFO Vaibhav Agarwal said the latest figure included a noncash benefit of $545 million from releasing a valuation allowance against certain domestic deferred tax assets. RingCentral reported free cash flow of $156.8 million, up from $129.5 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Vladimir Shmunis said AI Receptionist had more than 22 thousand customers, up nearly 4x year over year. He said customers using at least one native paid AI product represented approximately 15% of total annual recurring revenue, or over $400 million, with that cohort doubling year over year. In response to a question about AI bookings, Shmunis said roughly half came from existing customers and the other half from new customers.

CFO Vaibhav Agarwal said monthly net retention was above 99% in Q3. Asked about AI customer economics, he said customers using paid AI products had higher average revenue per user and net retention above 100%. He said AI Receptionist uses usage-based pricing, so greater consumption contributes more revenue.

Analysts also asked about the cost of AI. Agarwal said AI product gross margins were generally in line with the corporate average and that RingCentral was managing both pricing and costs. He cited model selection, inference efficiency and infrastructure as cost levers, adding that the products use the same platform and engine.

President and COO Kira Makagon said AI Receptionist initially addressed missed calls, while AIR Pro handles more involved tasks such as billing inquiries, returns and appointment setting. She said the company wants AI to handle what it can while handing questions requiring judgment or more complex responses to a person with the conversation context preserved.

On margins, Agarwal reiterated a medium-term target of 20% GAAP operating margin and said reductions in stock-based compensation and non-GAAP margin expansion were the intended routes to that goal. He said RingCentral targets stock-based compensation of 3% to 4% of revenue in the next 3 to 4 years. Shmunis also said RingCX serves the midmarket and that RingCentral expects it to become viable for larger enterprises.

Guidance

For FY2026, RingCentral raised its subscription revenue outlook to $2.563 billion to $2.569 billion and total revenue outlook to $2.650 billion to $2.657 billion. The company also raised its GAAP operating margin outlook to 9.2% to 9.6% and its non-GAAP operating margin outlook to 24% to 24.2%. RingCentral raised its free cash flow outlook to $620 million to $630 million and its non-GAAP EPS outlook to $5.07 to $5.12.