Key Highlights

  • Total Revenue rose 5.9% to USD 676 million; subscriptions rose 6.0%.
  • Non-GAAP Operating Margin reached 24.7%, up about 190 basis points.
  • Free Cash Flow rose 21.0% to USD 157 million.
  • Gross Debt fell to about USD 1 billion, ahead of schedule.

Quarter Results

RingCentral (NYSE:RNG) reported third-quarter 2026 results on Thursday. Total revenue was USD 676 million against USD 639 million a year earlier, and subscriptions revenue of USD 653 million was 97% of the total. GAAP Operating Income rose to USD 54 million from USD 31 million, a margin of 8.0% versus 4.8%. Non-GAAP operating income was USD 167 million, a margin of 24.7% versus 22.8%.

Adjusted EBITDA was USD 190 million, or 28.1% of revenue. Non-GAAP Earnings were USD 1.33 per share against USD 1.13. GAAP diluted earnings were USD 6.50 per share, which included a non-cash benefit of USD 544.9 million from releasing a valuation allowance on deferred tax assets. Excluding that release, GAAP diluted earnings were USD 0.28, up 47.4%.

AI Adoption

Annual Recurring Revenue from customers using a native paid AI product is approaching 15% of the total, about USD 400 million, and has doubled year over year. More than 22,000 customers use the AI Receptionist product, nearly four times the number a year earlier, and about 7,000 use the Ace conversation product, up 60%. The customer engagement Business has 14,000 customers, up nearly 50% from the prior quarter.

Net retention for the overall platform was above 99%, and above 100% for customers on native paid AI products. The company launched plugins for ChatGPT and Claude, extended a Partnership with the Golden State Warriors, and signed first partners in New Zealand and Italy for its agentic voice portfolio. CEO Vlad Shmunis said voice sits at the center of the next wave of AI development.

Debt, Cash and Dividend

Operating cash flow was USD 180 million, up 18.8%, and free cash flow was USD 157 million, or 23.2% of revenue. The company repaid USD 110 million of high-yield notes and reached its USD 1 billion gross debt target ahead of schedule. Net Leverage was 1.3 times, and cash and equivalents were USD 110 million.

RingCentral repurchased about 0.4 million shares for USD 18 million and has about USD 309 million remaining under its authorizations. The quarterly Dividend of USD 0.125 per share is payable on Nov. 20 to holders of record on Nov. 6.

Raised Outlook

The company raised its 2026 outlook for revenue, non-GAAP margins and free cash flow. Revenue is guided at USD 2.650 billion to USD 2.657 billion and free cash flow at USD 620 million to USD 630 million, nearly 24% of revenue. Non-GAAP earnings are guided at USD 5.07 to USD 5.12 per share, up about 17%, and stock-based compensation at USD 240 million to USD 245 million, about 9% of revenue.

Next Checkpoints

Non-GAAP earnings growth of 17.7% (USD 1.33 versus USD 1.13) compares with revenue growth of 5.9%. GAAP earnings carry a one-time tax item of USD 544.9 million, so the underlying GAAP figure is USD 0.28. With gross debt at its target, the allocation between repurchases, dividends and further debt is a reference point, alongside subscriptions growth, the AI share of recurring revenue near 15%, net retention and free cash flow against the guided range.