Third Quarter 2026
Filed Oct 22, 2026Subscriptions revenue up 6.0%, above high end of guidance, with record GAAP and non-GAAP margins; full year outlook raised for revenue, non-GAAP margins and free cash flow.
Third-quarter subscriptions revenue grew 6.0%, total revenue grew 5.9%, and operating and free-cash-flow margins expanded. The company also raised full-year revenue, non-GAAP operating-margin and free-cash-flow outlook, while GAAP EPS included a $544,861 thousand discrete income-tax benefit from a partial release of valuation allowance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, three months ended September 30, 2026GAAP | $676M | – | 5.9% |
| Subscriptions revenue, three months ended September 30, 2026GAAP | $653M | – | 6.0% |
| Other revenue, three months ended September 30, 2026GAAP | $23.10M | – | – |
| Gross profit, three months ended September 30, 2026GAAP | $494.3M | – | – |
| Non-GAAP subscriptions gross margin, three months ended September 30, 2026non-GAAP | 80.6% | – | – |
| Non-GAAP other gross margin, three months ended September 30, 2026non-GAAP | 9.7% | – | – |
| Non-GAAP gross margin, three months ended September 30, 2026non-GAAP | 78.2% | – | – |
| Income from operations, three months ended September 30, 2026GAAP | $54M | – | – |
| Operating margin, three months ended September 30, 2026GAAP | 8.0% | – | – |
| Non-GAAP income from operations, three months ended September 30, 2026non-GAAP | $167M | – | – |
| Non-GAAP operating margin, three months ended September 30, 2026non-GAAP | 24.7% | – | up approximately 190 basis points year-over-year |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $190M | – | – |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 28.1% | – | – |
| Net income, three months ended September 30, 2026GAAP | $569.7M | – | – |
| Diluted EPS, three months ended September 30, 2026GAAP | $6.50 | – | – |
| Diluted EPS excluding the impact of valuation allowance release, three months ended September 30, 2026GAAP | $0.28 | – | 47.4% |
| Non-GAAP diluted EPS, three months ended September 30, 2026non-GAAP | $1.33 | – | – |
| Non-GAAP tax rate, three months ended September 30, 2026non-GAAP | approximately 22.5% | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $180M | – | 18.8% |
| Operating cash flow margin, three months ended September 30, 2026GAAP | 26.6% | – | – |
| Free cash flow, three months ended September 30, 2026non-GAAP | $157M | – | 21.0% |
| Non-GAAP free cash flow margin, three months ended September 30, 2026non-GAAP | 23.2% | – | – |
| Total revenue, nine months ended September 30, 2026GAAP | $1.98B | – | – |
| Subscriptions revenue, nine months ended September 30, 2026GAAP | $1.91B | – | – |
| Gross profit, nine months ended September 30, 2026GAAP | $1.43B | – | – |
| Non-GAAP gross margin, nine months ended September 30, 2026non-GAAP | 77.8% | – | – |
| Income from operations, nine months ended September 30, 2026GAAP | $154.2M | – | – |
| Non-GAAP income from operations, nine months ended September 30, 2026non-GAAP | $468.3M | – | – |
| Non-GAAP operating margin, nine months ended September 30, 2026non-GAAP | 23.7% | – | – |
| Net income, nine months ended September 30, 2026GAAP | $639.4M | – | – |
| Diluted EPS, nine months ended September 30, 2026GAAP | $7.34 | – | – |
| Non-GAAP diluted EPS, nine months ended September 30, 2026non-GAAP | $3.75 | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $550.4M | – | – |
| Non-GAAP free cash flow, nine months ended September 30, 2026non-GAAP | $477.6M | – | – |
| Non-GAAP free cash flow margin, nine months ended September 30, 2026non-GAAP | 24.2% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| SubscriptionsSubscriptions accounted for 97% of total revenue. | $653M | – | 6.0% |
| OtherNo segment driver was quantified. | $23.10M | – | – |
Fourth Quarter 2026 and full year 2026 outlook
- RevenueQ4 2026 subscriptions revenue of $653 to $659 million; Q4 2026 total revenue of $673 to $680 million. FY 2026 subscriptions revenue of $2.563 billion to $2.569 billion; FY 2026 total revenue of $2.650 billion to $2.657 billion.
- Tax rateFor fiscal 2026, projected non-GAAP tax rate of 22.5%.
- NoteQ4 2026 GAAP operating margin of 13.3% to 14.7%.
- NoteQ4 2026 non-GAAP operating margin of 25.0% to 25.5%.
- NoteQ4 2026 non-GAAP EPS of $1.32 to $1.37 based on approximately 88.7 million fully diluted shares.
- NoteQ4 2026 share-based compensation of $57 to $62 million.
- NoteFY 2026 GAAP operating margin of 9.2% to 9.6%.
- NoteFY 2026 non-GAAP operating margin of approximately 24.0% to 24.2%.
- NoteFY 2026 non-GAAP EPS of $5.07 to $5.12 based on 87.5 million fully diluted shares.
- NoteFY 2026 share-based compensation of $240 to $245 million.
- NoteFY 2026 free cash flow of $620 to $630 million.
- NoteFY 2026 GAAP income from operations of $244 to $254 million.
- NoteFY 2026 non-GAAP income from operations of $637 to $642 million.
- NoteFY 2026 GAAP net cash provided by operating activities of $725 to $730 million.
- NoteFY 2026 capitalized expenditures of $(105) to $(100) million.
Capital returns
- Repurchased approximately 0.4 million shares for a total of $18 million as of the end of the quarter.
- Approximately $309 million remained under the total share-repurchase authorization.
- Board approved a quarterly cash dividend of $0.125 per share, payable on November 20, 2026 to stockholders of record as of the close of business on November 6, 2026.
- Payments for repurchases of common stock were $(192,973) thousand for the nine months ended September 30, 2026.
- Payment of dividends was $(23,284) thousand for the nine months ended September 30, 2026.
What drove it
- ARR from customers utilizing a native paid AI product is approaching 15%, doubling year-over-year.
- The company launched plugins for ChatGPT and Claude, including Claude for Small Business, and MCP connectors that make voice, SMS and chat data available in LLMs.
- RingCentral signed Digital Island as its first New Zealand partner to design, sell, implement and support Agentic Voice AI.
- RingCentral signed Allnet.Italia as its first wholesale partnership in Italy, providing access to Allnet.Italia’s 5,000+ channel partners.
Concerns
- Total revenue growth was 5.9% year-over-year and subscriptions revenue growth was 6.0% year-over-year.
- GAAP diluted EPS of $6.50 reflected a $544,861 thousand discrete income-tax benefit from a partial release of valuation allowance on U.S. deferred tax assets.
- Other revenue was $23,099 thousand, while non-GAAP other gross margin was 9.7%.
- Interest expense was $(17,134) thousand in the third quarter, compared with $(13,940) thousand in the prior-year period.
What to watch
- Fourth-quarter subscriptions revenue guidance of $653 to $659 million and total revenue guidance of $673 to $680 million.
- Fourth-quarter GAAP operating-margin guidance of 13.3% to 14.7% and non-GAAP operating-margin guidance of 25.0% to 25.5%.
- FY 2026 free-cash-flow guidance of $620 to $630 million.
- Progress of native paid AI product ARR, which management said is approaching 15%.
- Execution of the New Zealand and Italy Agentic Voice AI partner launches.
Balance sheet and cash flow
- Total cash and cash equivalents at the end of the third quarter of 2026 was $110 million.
- Cash and cash equivalents were $110,118 thousand at September 30, 2026, compared with $132,564 thousand at December 31, 2025.
- The company reduced gross debt to approximately $1 billion.
- Current portion of long-term debt, net was $48,901 thousand and long-term debt, net was $961,674 thousand at September 30, 2026.
- Net cash provided by operating activities was $179,889 thousand for the third quarter and $550,369 thousand for the nine months ended September 30, 2026.
- Capitalized expenditures were $(23,125) thousand for the third quarter and $(72,767) thousand for the nine months ended September 30, 2026.
- Net cash used in financing activities was $(491,018) thousand for the nine months ended September 30, 2026.
Analysis
RingCentral reported third-quarter total revenue of $676 million, up 5.9% year-over-year, led by subscriptions revenue of $653 million, up 6.0%. Subscriptions represented 97% of total revenue. The release states that subscriptions revenue was above the high end of guidance, while ARR from customers utilizing a native paid AI product was approaching 15% and doubling year-over-year.
Profitability improved across the operating model. GAAP operating margin was 8.0%, compared with 4.8% in the prior year, while non-GAAP operating margin reached 24.7% from 22.8%. Non-GAAP gross margin was 78.2%, compared with 77.6%, and adjusted EBITDA margin was 28.1%, compared with 26.3%. Third-quarter non-GAAP sales and marketing expense was $244,826 thousand, compared with $240,026 thousand, while non-GAAP general and administrative expense was $45,457 thousand, compared with $47,473 thousand.
Cash generation also strengthened. Net cash provided by operating activities was $180 million, up 18.8% year-over-year, and free cash flow was $157 million, up 21.0% year-over-year. The associated margins were 26.6% and 23.2%, respectively. The company reported $110 million of cash and cash equivalents and said it reached its approximately $1 billion gross-debt target ahead of schedule. It repurchased approximately 0.4 million shares for $18 million during the quarter and declared a $0.125 per-share quarterly cash dividend.
GAAP net income was $569,700 thousand and GAAP diluted EPS was $6.50, but these figures included a $544,861 thousand discrete income-tax benefit from a partial release of valuation allowance on U.S. deferred tax assets. GAAP diluted EPS excluding the valuation-allowance release was $0.28, up 47.4% year-over-year. Non-GAAP diluted EPS was $1.33, compared with $1.13 per share in the prior-year quarter.
The outlook was raised for FY 2026 subscriptions revenue, total revenue, GAAP and non-GAAP operating margin, non-GAAP EPS and free cash flow. Fourth-quarter guidance calls for 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%, and non-GAAP EPS of $1.32 to $1.37. The guide keeps attention on whether AI-product adoption and partner expansion can support the raised full-year revenue range while preserving the higher margin and cash-flow profile.
Management, verbatim
Voice is central to the next wave of AI innovation, and RingCentral is uniquely positioned to lead this transformation.
Vlad Shmunis, Founder, Chairman and CEO of RingCentral
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.
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.
Vaibhav Agarwal, Chief Financial Officer of RingCentral
Not in the filing
stated, not guessed- Previous-quarter comparisons for third-quarter revenue, operating income, net income, EPS, operating cash flow and free cash flow were not provided.
- GAAP gross margin for the third quarter and prior-year third quarter was not reported.
- Prior guidance was not provided, so no actual-versus-prior-guidance comparison is available.
- GAAP EPS guidance was not provided.
- Net Monthly Subscription Dollar Retention Rate was defined but no reported rate was provided.
- A quantified total ARR figure was not provided.
- A full gross-debt balance-sheet line item was not provided; the release states gross debt was reduced to approximately $1 billion.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.