Earnings

RingCentral Raises 2026 Outlook After Paying Debt Down To $1 Billion Ahead Of Schedule

The business-communications software company lifted its full-year revenue, margin and free cash flow guidance after third-quarter sales rose about 5.9%.

RingCentral, which sells cloud-based business phone, messaging, video and contact center software, raised its 2026 outlook for revenue, adjusted margins and free cash flow after third-quarter revenue rose about 5.9% to $676 million, the company said Thursday in an 8-K filing. It also said it hit its $1 billion gross debt target ahead of schedule.

Margins widen, cash flow climbs

Subscriptions revenue, which made up 97% of the total, rose about 6.0% to $653 million. The company's own release called that above the high end of its guidance and touted record margins on both standard and adjusted measures.

Adjusted operating margin reached 24.7%, up from 22.8% a year earlier. Standard operating margin was 8.0%, against 4.8%. Free cash flow rose 21.0% to $157 million, and operating cash flow rose 18.8% to $180 million.

Adjusted earnings were $1.33 per share, against $1.13 a year ago.

A $570 million tax-driven profit

Net income was $569.7 million, or $6.50 per diluted share, against $0.19 a year earlier. The jump comes from a tax benefit tied to releasing a valuation allowance on U.S. deferred tax assets. Excluding that release, diluted earnings were $0.28 per share, up 47.4%.

Cash stood at $110 million at the end of September. The company repurchased about 0.4 million shares for $18 million during the quarter and has about $309 million left on its buyback authorization.

Higher guidance, AI push

For the full year, RingCentral now expects total revenue of $2.650 billion to $2.657 billion, adjusted operating margin of about 24.0% to 24.2% and free cash flow of $620 million to $630 million. Fourth-quarter revenue is guided to $673 million to $680 million, with adjusted earnings of $1.32 to $1.37 per share.

The company said annual recurring revenue from customers using a native paid AI product is approaching 15%, doubling from a year earlier. Founder and CEO Vlad Shmunis said the company is "uniquely positioned to lead this transformation." CFO Vaibhav Agarwal said reaching the debt target early further strengthens the balance sheet.

RingCentral holds its earnings call at 5:00 p.m. ET Thursday, and its $0.125 quarterly dividend is payable November 20 to holders of record on November 6.