Summary
RingCentral posted total revenue of $620.4 million for the second quarter of fiscal 2025, up 4.6% year over year. Gross profit was $441.4 million, up 6.1%, and gross margin reached 71.2%, up 1.0 percentage point. The company swung to GAAP operating income of $36.96 million, and operating margin was 6.0%, up 6.9 percentage points. GAAP net income was $13.19 million, or $0.14 per diluted share, compared with a net loss in the prior-year quarter. Year to date, revenue rose 4.7% to $1.23 billion.
Cash generation was a highlight. Operating cash flow was $167.4 million for the quarter, up 31.7% year over year. Capital expenditures were $8.96 million, up 77.3%. Free cash flow, a non-GAAP measure, was $144 million, up 32.7%. Non-GAAP operating margin was 22.6%, up 160 basis points. Adjusted EBITDA was $162 million, or 26.0% of total revenue, compared with $146 million, or 24.6% of total revenue, in the prior-year period. Non-GAAP diluted net income per share was $1.06, compared with $0.91.
Annualized Exit Monthly Recurring Subscriptions, or ARR, increased 7% year over year to $2.59 billion. Monthly recurring subscriptions at June 30, 2025 was $215.6 million, and the Net Monthly Subscription Dollar Retention Rate was above 99%. The AI Receptionist product tripled its customer base to over 3,000 in the last quarter. RingSense now serves more than 3,600 customers, up from 2,800 last quarter. RingCX serves more than 1,200 customers. Management says the company is on track to reach $100 million in new product ARR by the end of 2025. RingCentral also extended its partnership with NiCE, and AT&T will add RingCX and RingSense to its portfolio. Six global service providers now resell RingCX. Vaibhav Agarwal was promoted to Chief Financial Officer, while Abhey Lamba stepped down and will serve as an executive advisor through December 31, 2025.
Guidance for the third quarter of 2025 points to total revenue growth of 4% to 5% year over year and subscriptions revenue growth of 5% to 6%. Non-GAAP operating margin is guided to approximately 22.6%, up approximately 160 basis points year over year, with non-GAAP earnings per share of $1.06 to $1.08 on 93.0 million fully diluted shares. For the full year 2025, management reiterated total revenue growth of 4% to 6% and subscriptions revenue growth of 5% to 7%. It raised its GAAP operating margin outlook, kept non-GAAP operating margin at approximately 22.5%, increased non-GAAP earnings per share to $4.20 to $4.32, reduced share-based compensation to $285 million to $295 million, and raised free cash flow guidance to $515 million to $520 million, which represents growth of approximately 28% at the midpoint.
The company faces risks from macroeconomic conditions, including persistent inflation, higher interest rates, tariffs, and currency exchange rate fluctuations. Customer buying behavior could be affected by lower upsell and increased downsell, churn, payment terms, and credit card declines. Deferred revenue was $262.99 million, flat year over year, and remaining performance obligations were $2.60 billion, also flat. Management notes that deferred revenue is not a reliable indicator of future revenues and that remaining performance obligations exclude contracts with an original expected length of less than one year. It also has legal proceedings and debt obligations, including the 2026 Convertible Notes, to manage.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $620.4M | $612.1M | +1.4% | $592.9M | +4.6% |
| Gross profit | $441.4M | $431.6M | +2.3% | $416.2M | +6.1% |
| Gross margin | 71.2% | 70.5% | +0.6 pp | 70.2% | +1.0 pp |
| Research & development | $77.5M | $82.0M | -5.4% | $79.8M | -2.8% |
| Sales & marketing | $263.6M | $274.9M | -4.1% | $269.5M | -2.2% |
| General & administrative | $63.4M | $64.4M | -1.6% | $72.4M | -12.4% |
| Total operating expenses | $404.5M | $421.3M | -4.0% | $421.6M | -4.1% |
| Operating income (loss) | $37.0M | $10.3M | +257.5% | -$5.4M | +789.7% |
| Operating margin | 6.0% | 1.7% | +4.3 pp | -0.9% | +6.9 pp |
| Net income (loss) | $13.2M | -$10.3M | +227.7% | -$14.8M | +189.4% |
| Net margin | 2.1% | -1.7% | +3.8 pp | -2.5% | +4.6 pp |
| Diluted EPS | $0.14 | -$0.11 | +$0.25 | -$0.16 | +$0.30 |
Risks
Persistent inflation, higher interest rates, tariffs, trade barriers and geopolitical conflicts may pressure customer buying behavior; MD&A notes lower upsell and increased downsell as customers slow hiring and rationalize employee counts. A significant portion of revenues comes from small and medium-sized businesses that may be more vulnerable to these conditions.
Turnover and downsell risk remains high: month-to-month customers can terminate without penalty, large contracts renew annually, and customers may renew for fewer users or cheaper plans. MD&A states the company has experienced and may continue to experience lower upsell and increased downsell as customers rationalize employee counts.
As of June 30, 2025, $609.1 million principal of the 2026 Convertible Notes matures in 2026 and total debt principal is $1.269 billion, while cash and cash equivalents were $168.1 million. The Credit Agreement contains a maximum total net leverage ratio and minimum interest coverage ratio, and failure to generate sufficient cash or refinance could force asset sales, restructuring or dilutive financing.
Competitors and peers continue to invest significantly in AI, including machine learning and large language models, and failure to develop or sell AI features such as RingCX, AI Receptionist, RingSense and RingCentral Events on a timely and cost-effective basis could make solutions obsolete and harm upsell and renewals.
RingCentral relies on NICE and Zoom for contact center and video services and on Bandwidth for SMS; changes or terminations in these relationships could materially affect the business. TCR registration and carrier SMS blocking may be cumbersome, costly and cause customer churn, especially for SMB customers.
A substantial portion of revenues comes through channel partners and global service providers, with generally no long-term contracts. The company is adjusting its channel partner go-to-market strategy to a resale/wholesale model, requiring significant system and process changes that could lengthen implementation and impact revenue.
Efforts to sell to medium-sized and larger businesses involve higher costs, longer sales cycles, more technical and management approvals, greater customization and potential delays in revenue recognition until implementation requirements are met.
AI features subject RingCentral to new or enhanced regulatory scrutiny, privacy, data protection, intellectual property and information security laws, plus litigation and class action risk. Large language models can generate biased, inaccurate or offensive content, and compliance costs could increase operating expenses.
In January 2025, RingCentral experienced an interruption in service due to an internal system error that impacted customers for a limited number of hours. Services depend on third-party data centers, AWS and Google Cloud, and NICE and Zoom, and interruptions can reduce revenues, require credits or penalties and cause churn.
A majority of revenues are derived from subscriptions to RingEX, and future success depends on introducing and selling newer services such as RingCX, AI Receptionist, RingSense and RingCentral Events. If customers do not adopt these newer offerings, growth and renewal outcomes could be harmed.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Annualized Exit Monthly Recurring Subscriptions (ARR)
Adjusted EBITDA
Adjusted EBITDA Margin
Free Cash Flow
Free Cash Flow Margin
Monthly Recurring Subscriptions (MRR)
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q2 FY2025 (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.