RingCentral shares rose 7% to $85.24 on October 23, 2026, following third-quarter results that showed higher subscription revenue, stronger operating margins and growing adoption of paid artificial-intelligence products. The cloud communications company also raised its full-year revenue, adjusted earnings and free cash flow forecasts.
Key Takeaways
- Subscription revenue rose 6% to $653 million, exceeding the high end of company guidance.
- Customers using a native paid AI product accounted for nearly 15% of annual recurring revenue, not AI products alone.
- Management raised its 2026 outlook and declared a quarterly dividend of $0.125 per share.
Table of Contents
- RingCentral shares advance as subscription revenue grows
- AI adoption expands, but the revenue measure matters
- Margins improve while a tax item lifts reported earnings
- Higher full-year forecasts set the next benchmark
- Conclusion
RingCentral shares advance as subscription revenue grows
RingCentral’s third-quarter 2026 financial results, released on October 22, covered the quarter ended September 30. Total revenue increased 5.9% year over year to $676 million, with subscriptions accounting for 97% of sales.
Subscription revenue grew 6% to $653 million. That figure describes year-over-year growth, rather than a six-percentage-point acceleration. The result exceeded the high end of management’s guidance.
Analysts also raised their price targets. Morgan Stanley lifted its target to $91, while RBC Capital Markets increased its target to $105, citing subscription performance and AI adoption. Those targets represent analyst expectations, not company guidance or assured future trading prices.
| Item | Details |
|---|---|
| Quarter-end cash and equivalents | $110 million at September 30, 2026. |
| Third-quarter share repurchases | Approximately 0.4 million shares for $18 million. |
| Remaining repurchase authorization | Approximately $309 million. |
| Full-year GAAP operating margin guidance | Raised to 9.2%–9.6%. |
| Full-year non-GAAP operating margin guidance | Raised to approximately 24.0%–24.2%. |
AI adoption expands, but the revenue measure matters
RingCentral said annual recurring revenue from customers using a native paid AI product was approaching 15% of total ARR, with that share doubling year over year. The measure captures revenue from customers who use those products; it does not mean AI products themselves generated nearly 15% of recurring revenue.
The company supplies business calling, messaging, video collaboration and contact-center services. During the quarter, it launched plugins for ChatGPT and Claude, along with connectors that make voice, SMS and chat data available within large language models.
The adoption measure indicates that paid AI tools are reaching more of RingCentral’s recurring-revenue customer base. It does not separately disclose the incremental revenue those tools generated.
Margins improve while a tax item lifts reported earnings
GAAP operating margin rose to 8.0% from 4.8% a year earlier. Non-GAAP operating margin increased to 24.7% from 22.8%, showing that profitability improved alongside the revenue gain.
Reported GAAP diluted earnings per share reached $6.50, but that figure included the impact of a valuation allowance release. Excluding that impact, GAAP diluted EPS was $0.28, up 47.4% year over year. Non-GAAP diluted EPS increased to $1.33 from $1.13.
Free cash flow rose 21% to $157 million, while operating cash flow increased 18.8% to $180 million. Chief Financial Officer Vaibhav Agarwal said the company reached its approximately $1 billion gross debt target ahead of schedule.
Higher full-year forecasts set the next benchmark
For full-year 2026, management raised its total revenue forecast to $2.650 billion–$2.657 billion and its subscription revenue forecast to $2.563 billion–$2.569 billion. It also increased its non-GAAP EPS outlook to $5.07–$5.12 and free cash flow guidance to $620 million–$630 million.
Fourth-quarter guidance calls for total revenue of $673 million–$680 million, subscription revenue of $653 million–$659 million and non-GAAP EPS of $1.32–$1.37. These are management forecasts, not completed results.
The board approved a quarterly cash dividend of $0.125 per share, payable on November 20, 2026, to shareholders of record at the close of business on November 6.
Conclusion
RingCentral’s results combined subscription growth with stronger margins and cash generation. The next operating benchmark is its fourth-quarter guidance, while the next confirmed shareholder dates are the November 6 dividend record date and November 20 payment.
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