Summary
RingCentral closed its fiscal 2026 first quarter with $644.2 million of total revenue, up 5.3% from the prior-year quarter and at the higher end of its own guidance. Subscriptions accounted for 97% of the total, with the rest coming from phones and professional services. Gross profit rose 7.7% to $464.8 million, and gross margin of 72.1% was 1.6 percentage points better than a year earlier. Operating leverage was the sharper story. GAAP operating income reached $50.0 million, up 383.8% year over year, and operating margin of 7.8% improved 6.1 percentage points to a record for the company on a GAAP basis. Net income of $30.6 million replaced a prior-year loss, and diluted EPS of $0.35 rose $0.46.
Cash generation kept pace. Operating cash flow was $164.0 million, up 9.6% year over year, while free cash flow, a non-GAAP measure, was $141 million, up 8.0%. Non-GAAP operating margin of 22.9% was 110 basis points wider than a year ago, and non-GAAP diluted EPS of $1.20 compared with $1.00. Adjusted EBITDA of $170 million was 26.3% of revenue, versus 25.3% in the prior-year quarter. Much of the profit work came from lower stock-based compensation, which the 10-Q puts at about 8.9% of revenue compared with roughly 13.1% a year earlier. Management also pointed to disciplined hiring, expanded use of offshore service providers, vendor consolidation and increased internal deployment of AI tools.
The recurring base kept growing. Annualized exit monthly recurring subscriptions stood at $2.71 billion at March 31, 2026, up from $2.53 billion a year earlier, and the net monthly subscription dollar retention rate held above 99% for the five quarters ended March 31, 2026. Remaining performance obligations of $2.70 billion were up 3.8%, and current deferred revenue of $257.4 million rose 3.5%. AI monetization is the number management wants investors to watch. ARR from customers using at least one paid AI product now exceeds 10% of total ARR and doubled year over year. Product news in the quarter included AIR Pro for voice and digital agents, Branded Messaging over RCS and Enterprise Branded Calling, SMS in the UK and Australia, SMS notifications across 190 countries, and a Customer Engagement Bundle for Microsoft Teams. Cox Business and Spectrum Business both expanded AI-first contact center offerings built on RingCentral, and the company plans to invest over $250 million in research and development in 2026.
Capital allocation leaned on debt reduction and shareholder returns. RingCentral repurchased about 2.6 million shares for $81 million and had roughly $418 million left under its authorization. It paid its first quarterly dividend of $0.075 per share on March 16, 2026 and declared another $0.075 per share dividend payable June 11, 2026. In March the company repaid the $609.1 million principal of its 2026 convertible notes at maturity, funded by a $600 million term loan draw and cash on hand. The term loan balance was $890.7 million at quarter end, the revolver was undrawn, and management said no debt maturities come due until 2030. Cash and cash equivalents ended the quarter at $116.6 million. The 2030 senior notes carried $325.0 million of principal after a $25.0 million repurchase in the quarter, with another $75.0 million repurchased after March 31.
Guidance points to a slightly different mix in the near term. For the second quarter of 2026 the company guided non-GAAP operating margin to 23.0% to 23.2% and non-GAAP EPS of $1.15 to $1.17 on roughly 87.0 million fully diluted shares, with share-based compensation of $58 million to $62 million. For the full fiscal year 2026 RingCentral raised its outlook on revenue, margins and free cash flow. That full year plan includes non-GAAP operating margin of approximately 23.3% to 23.7%, non-GAAP EPS of $4.85 to $5.01, share-based compensation of $240 million to $245 million and free cash flow of $590 million to $605 million.
Risks have not gone away. The 10-Q lists persistent inflation, elevated interest rates, tariffs and other trade barriers, supply chain disruption, geopolitical conflict and currency swings as factors that can pressure customer buying behavior. It also flags the possibility of lower upsell and higher downsell if customers slow hiring or reduce seat counts, plus variability from contract duration, churn, pricing changes, renewals, payment terms and credit card declines. Competition, the ability to add and retain larger enterprise customers, and the integration of acquisitions stay on the watch list, and the company notes that legal and regulatory proceedings are inherently unpredictable. Margin discipline, not top-line acceleration, remains the core of the equity case.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $644.2M | $644.0M | +0.0% | $612.1M | +5.3% |
| Gross profit | $464.8M | $460.5M | +0.9% | $431.6M | +7.7% |
| Gross margin | 72.2% | 71.5% | +0.6 pp | 70.5% | +1.6 pp |
| Research & development | $81.7M | $77.6M | +5.4% | $82.0M | -0.3% |
| Sales & marketing | $272.8M | $275.9M | -1.1% | $274.9M | -0.7% |
| General & administrative | $60.2M | $64.6M | -6.9% | $64.4M | -6.5% |
| Total operating expenses | $414.7M | $418.1M | -0.8% | $421.3M | -1.5% |
| Operating income (loss) | $50.0M | $42.4M | +17.9% | $10.3M | +383.8% |
| Operating margin | 7.8% | 6.6% | +1.2 pp | 1.7% | +6.1 pp |
| Net income (loss) | $30.6M | $23.0M | +33.3% | -$10.3M | +396.5% |
| Net margin | 4.8% | 3.6% | +1.2 pp | -1.7% | +6.4 pp |
| Diluted EPS | $0.35 | $0.25 | +$0.10 | -$0.11 | +$0.46 |
Risks
Risk factors state AI and agentic AI could make our products redundant or obsolete, particularly if customers can develop their own solutions with AI technologies. We are also deploying agentic AI, which introduces risks that AI agents may operate unpredictably, exceed authorizations, or fail to align with internal policies or legal obligations.
Customer turnover and reductions in users or pricing tiers could significantly impact results; month-to-month customers may terminate without penalty and larger contracts renew annually. MD&A notes the company may experience lower upsell and increased downsell within its existing base.
The company is adjusting its channel partner go-to-market strategy to better enable a resale/wholesale model, requiring significant changes to systems and processes. The filing states these changes could result in a longer time to implement the strategy, which could impact revenue.
Risk factors highlight persistent inflation, elevated interest rates, supply chain disruptions, new tariffs, retaliatory measures, and geopolitical conflicts including the Middle East and U.S.-China relations. MD&A states these conditions may cause lower upsell and increased downsell as customers slow hiring or rationalize employee counts.
As of March 31, 2026, $325.0 million principal of 2030 Senior Notes and $890.7 million principal under the Term Loan were outstanding. The Credit Agreement contains restrictive covenants including maximum total net leverage ratio and minimum interest coverage ratio, and failure could result in default and acceleration.
Risk factors state dependence on third-party competitors including NICE, Bandwidth.com, and Microsoft to deliver contact center and SMS services; loss or non-renewal of these relationships could have a material adverse effect. Bandwidth currently blocks SMS from phone numbers not registered with The Campaign Registry, which may cause customer churn.
AI-powered features subject us to new or enhanced governmental or regulatory scrutiny, data privacy laws, litigation, and ethical concerns. The filing notes FTC actions requiring disgorgement of AI-generated insights and the EU Digital Operational Resiliency Act as evolving compliance risks.
The company depends heavily on CEO Vladimir Shmunis and other key employees, and competition for specialized AI personnel is intense. Recent and future U.S. immigration restrictions, particularly H-1B changes, could restrain technical talent flow.
In February 2026 the board initiated the first-ever quarterly cash dividend and the company paid $6.4 million during the quarter, while also repurchasing $82.1 million of Class A Common Stock. There is no assurance dividends will continue, and repurchases or dividends could diminish cash reserves.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Annualized Exit Monthly Recurring Subscriptions (ARR)
Monthly Recurring Subscriptions
Adjusted EBITDA
Adjusted EBITDA Margin
Free Cash Flow
Free Cash Flow Margin
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q1 FY2026 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.