RingCentral third-quarter revenue rises 5.9% to $676 million, raises full-year outlook

RingCentral, Inc. (RNG) said Thursday that third-quarter revenue rose 5.9% from a year earlier to $676 million, and it raised its full-year 2026 outlook for revenue, non-GAAP margins and free cash flow. The results cover the quarter ended Sept. 30.

The company said in a press release attached to a regulatory filing that subscriptions revenue grew 6.0% to $653 million. Subscriptions made up 97% of total revenue, the company said.

Here’s how the company did:

• Total revenue: $676 million vs. $639 million a year earlier
• Subscriptions revenue: $653 million vs. $615.8 million a year earlier
• GAAP operating income: $54 million vs. $31 million a year earlier
• Non-GAAP operating income: $167 million vs. $146 million a year earlier
• GAAP operating margin: 8.0% vs. 4.8% a year earlier
• Non-GAAP operating margin: 24.7% vs. 22.8% a year earlier
• Adjusted EBITDA: $190 million vs. $168 million a year earlier
• GAAP diluted EPS: $6.50 vs. $0.19 a year earlier
• Non-GAAP diluted EPS: $1.33 vs. $1.13 a year earlier
• Free cash flow: $157 million vs. $130 million a year earlier

The GAAP per-share figure includes a $544.9 million discrete income tax benefit from a partial release of a valuation allowance on U.S. deferred tax assets. Excluding that release, GAAP diluted EPS was $0.28, up 47.4% from a year earlier.

Non-GAAP measures exclude items such as share-based compensation, amortization of acquired intangibles and restructuring costs. The company said its non-GAAP tax rate was about 22.5% in both the third quarters of 2026 and 2025.

Other revenue, which is separate from subscriptions, was $23.1 million, compared with $22.8 million a year earlier. The filing does not break out results by business segment.

Operating cash flow rose 18.8% to $180 million. Free cash flow was 23.2% of total revenue, compared with 20.3% a year earlier.

The company said it ended the quarter with $110 million in cash and cash equivalents.

The company said ARR, or annualized recurring revenue, from customers using a native paid AI product is approaching 15%, and that this figure has doubled year over year.

The company said it reduced gross debt to approximately $1 billion. Chief Financial Officer Vaibhav Agarwal said the company reached its $1 billion gross debt target ahead of schedule.

The cash flow statement for the first nine months shows $650 million of long-term debt issued, $609 million paid to settle convertible notes, and $261 million for repurchases of senior notes, including premium paid.

In the quarter, the company repurchased about 0.4 million shares for a total of $18 million. It said about $309 million remains under its total authorization.

The board approved a quarterly cash dividend of $0.125 per share, payable Nov. 20, 2026, to stockholders of record at the close of business on Nov. 6, 2026.

Founder, Chairman and CEO Vlad Shmunis said, “Voice is central to the next wave of AI innovation, and RingCentral is uniquely positioned to lead this transformation.”

Chief Financial Officer Vaibhav Agarwal said, “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.”

For the fourth quarter, the company expects subscriptions revenue of $653 million to $659 million and total revenue of $673 million to $680 million.

The company also expects GAAP operating margin of 13.3% to 14.7% and non-GAAP operating margin of 25.0% to 25.5%. It expects non-GAAP EPS of $1.32 to $1.37 on approximately 88.7 million fully diluted shares, and share-based compensation of $57 million to $62 million.

For full-year 2026, the company raised its subscriptions revenue range to $2.563 billion to $2.569 billion. It raised its total revenue range to $2.650 billion to $2.657 billion.

The company also raised its full-year GAAP operating margin range to 9.2% to 9.6% and its non-GAAP operating margin range to approximately 24.0% to 24.2%. It raised non-GAAP EPS to $5.07 to $5.12 on 87.5 million fully diluted shares.

Full-year share-based compensation is now expected at $240 million to $245 million. The company raised its free cash flow guidance to $620 million to $630 million.

GAAP restructuring costs were $12.9 million in the quarter, compared with $2.5 million a year earlier. Of that, $10.2 million was recorded in sales and marketing. The filing does not give a reason for the charges and does not disclose any headcount reduction.

Share-based compensation was $66.3 million, compared with $66.0 million a year earlier. Amortization of acquired intangibles was $33.3 million, compared with $34.6 million.

The deferred tax asset on the balance sheet was $546.9 million at Sept. 30, up from $2.1 million at Dec. 31, 2025.

In other news, the company said it launched plugins for ChatGPT and Claude, including Claude for Small Business. It also said it expanded its partnership with the Golden State Warriors, naming RingCentral the team’s official Agentic AI-Powered Voice Platform for fan engagement.

The company also signed Digital Island as its first partner in New Zealand and Allnet. Italia as its first wholesale partner in Italy, which it said gives Allnet. Italia’s 5,000+ channel partners access to Agentic Voice AI.