Key Highlights

● Second-quarter total revenue rose 5.9 per cent year over year to $657 million.

● Free cash flow rose 24.8 per cent year over year to $180 million.

● Customers using a paid AI product reached about 13 per cent of annual recurring revenue.

● The board raised the quarterly dividend about 67 per cent to $0.125 per share.

RingCentral (NYSE:RNG) reported second-quarter 2026 results on 23 July 2026. Total revenue was $657 million, up 5.9 per cent from $620 million, and subscriptions revenue of $634 million, up 5.8 per cent, made up 96 per cent of the total. GAAP operating income was $50 million, a 7.7 per cent margin, compared with $37 million and 6.0 per cent a year earlier, while non-GAAP operating income was $154 million, a 23.4 per cent margin, about 90 basis points above the 22.6 per cent of the prior-year quarter. Adjusted EBITDA was $177 million, or 26.9 per cent of revenue, against $162 million. Diluted GAAP earnings per share were $0.45 against $0.14, and non-GAAP earnings per share were $1.22 against $1.06. For the six months, GAAP earnings per share were $0.80 and non-GAAP earnings per share were $2.42.

Cash Generation and Artificial Intelligence

Net cash from operations was $206 million and free cash flow was $180 million, or 27.4 per cent of revenue, up 24.8 per cent from $144 million. For the first half, revenue was $1,301 million and free cash flow was $321 million. On product, the company said customers using at least one paid artificial intelligence product represented about 13 per cent of annual recurring revenue, double the proportion a year earlier; it did not disclose an absolute recurring revenue figure in the release reviewed. The gap between GAAP and non-GAAP profit is large, and the company's own guidance shows why: it expects share-based compensation of $240 million to $245 million for the full year, set against GAAP operating income guidance of $237 million to $258 million and non-GAAP operating income guidance of $623 million to $635 million.

Guidance for the Rest of 2026

RingCentral raised its full-year outlook. It now expects total revenue of $2.635 billion to $2.646 billion, a GAAP operating margin of 9.0 per cent to 9.7 per cent, a non-GAAP operating margin of about 23.6 per cent to 24.0 per cent, non-GAAP earnings per share of $4.96 to $5.10, and free cash flow of $615 million to $625 million. For the third quarter it guided to revenue of $664 million to $670 million and non-GAAP earnings per share of $1.25 to $1.30. These are management forecasts, not reported results, and they depend on customer retention and competitive conditions in cloud communications.

Stock Compensation Explains the GAAP Gap

RingCentral's revenue growth was modest but its cash generation and AI product adoption both accelerated, with the share of recurring revenue tied to paid AI products doubling from a year earlier. The wide gap between GAAP and non-GAAP operating income traces mainly to $240-245 million of guided share-based compensation for the year, while refinancing activity, including $600 million of new long-term debt issued against $609 million of convertible notes settled, shows the company working to reshape its debt maturity profile ahead of the 22 October third-quarter report.