Summary
RingCentral posted total revenue of $657.0 million in the second quarter of fiscal 2026, up 5.9% from the prior-year quarter. Subscriptions revenue was $634 million, or 96% of the total, and rose about 5.8%. Gross profit increased to $472.3 million from $441.4 million, and gross margin expanded to 71.9% from 71.2%. GAAP operating income was $50.3 million, up 36.0% from the prior-year quarter, and GAAP operating margin improved to 7.7% from 6.0%. Net income was $39.1 million compared with $13.2 million, and diluted EPS was $0.45 compared with $0.14. Non-GAAP operating income was $154 million at a 23.4% margin, and non-GAAP EPS was $1.22. Adjusted EBITDA was $177 million, or 26.9% of revenue. For the six months, revenue rose 5.6% to $1.30 billion, net income was $69.7 million compared with $2.9 million, and diluted EPS was $0.80 compared with $0.03.
Cash generation was the standout. Net cash provided by operating activities was $206.4 million in the quarter, up 23.3% and equal to 31.4% of total revenue. Free cash flow, a non-GAAP measure, was $180 million, up 24.8% and 27.4% of total revenue. For the six months, operating cash flow was $370.5 million and free cash flow was $320.8 million. Capital expenditures were $10.6 million in the quarter and $17.1 million for the six months. The company repurchased approximately 2.2 million shares for $94 million in the quarter and roughly 4.8 million shares for $175 million in the first half, leaving about $325.8 million authorized. The board lifted the quarterly dividend by approximately 67%, to $0.125 per share from $0.075, payable on August 20, 2026 to stockholders of record on August 6, 2026. Cash and cash equivalents were $112 million at June 30, 2026, the Term Loan balance was $879.1 million, the Revolving Credit Facility balance was zero, and 2030 Senior Notes principal stood at $250.0 million.
Annualized exit monthly recurring subscriptions reached $2.76 billion at June 30, 2026, up from $2.59 billion a year earlier. Customers using at least one paid AI product accounted for approximately 13% of ARR, doubling year-over-year. Net Monthly Subscription Dollar Retention Rate remained above 99% across the five quarterly periods ended June 30, 2026. Remaining performance obligations were $2.7 billion, up 3.8% from the prior-year quarter, while deferred revenue, current portion only, rose 12.3% to $295.3 million. Stock-based compensation fell to about 8.7% of revenue from about 10.2% a year earlier. Product work included AIR Pro with agentic AI capabilities in RingCX, AVA with an AI-powered Workflow Builder, and Live Screen Monitoring in RingWEM. Management plans to invest over $250 million in research and development in 2026.
For the third quarter of 2026, guidance calls for non-GAAP operating margin of 23.5% to 24.0% and non-GAAP EPS of $1.25 to $1.30, based on approximately 86.5 million fully diluted shares, with share-based compensation of $63 million to $67 million. Guidance for the full year 2026 raises the outlook on revenue, GAAP and non-GAAP margins, and free cash flow. The full-year plan points to non-GAAP operating margin of approximately 23.6% to 24.0%, non-GAAP EPS of $4.96 to $5.10, and free cash flow of $615 million to $625 million. The company also guided full-year share-based compensation of $240 million to $245 million.
The principal risks are macro and execution related. Management flagged persistent inflation, elevated interest rates, tariffs and other trade barriers, geopolitical conflict, and currency swings as factors that could pressure buying behavior, upsell, downsell, churn, contract duration, payment terms, and credit card declines. Legal proceedings remain unpredictable and could move results materially. A reversal of the valuation allowance on deferred tax assets is reasonably possible and would produce a one-time income tax benefit plus a corresponding increase in net income. The higher dividend and ongoing buybacks return capital, but they compete with debt reduction and innovation spending for the same cash.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $657.0M | $644.2M | +2.0% | $620.4M | +5.9% |
| Gross profit | $472.3M | $464.8M | +1.6% | $441.4M | +7.0% |
| Gross margin | 71.9% | 72.2% | -0.3 pp | 71.2% | +0.7 pp |
| Research & development | $82.8M | $81.7M | +1.3% | $77.5M | +6.8% |
| Sales & marketing | $274.9M | $272.8M | +0.8% | $263.6M | +4.3% |
| General & administrative | $64.3M | $60.2M | +6.9% | $63.4M | +1.5% |
| Total operating expenses | $422.0M | $414.7M | +1.8% | $404.5M | +4.3% |
| Operating income (loss) | $50.3M | $50.0M | +0.5% | $37.0M | +36.0% |
| Operating margin | 7.7% | 7.8% | -0.1 pp | 6.0% | +1.7 pp |
| Net income (loss) | $39.1M | $30.6M | +27.8% | $13.2M | +196.5% |
| Net margin | 6.0% | 4.8% | +1.2 pp | 2.1% | +3.8 pp |
| Diluted EPS | $0.45 | $0.35 | +$0.10 | $0.14 | +$0.31 |
Risks
Filing cites persistent inflation, elevated interest rates, tariffs, and geopolitical conflict as pressures on customer buying behavior, with the risk factor noting that a significant portion of revenues comes from small and medium-sized businesses that are more exposed to those conditions. MD&A states the company has in the past and may in the future experience lower upsell and increased downsell as customers slow hiring and rationalize employee counts.
Risk factors state AI and agentic AI may make certain products and services redundant, obsolete or less relevant, particularly if customers can more easily develop their own solutions with AI technologies. MD&A says the company plans to invest over $250 million in research and development in 2026, framing AI-led products as central to future growth.
The company discloses it is adjusting its channel partner go-to-market strategy to better enable a resale and wholesale model, requiring significant changes to systems and processes that could lengthen the time to implement the strategy and impact revenue. The filing also notes some strategic partners have failed in the past, and may fail in the future, to meet minimum contractual seat or revenue commitments, and that partners have been converted from exclusive to non-exclusive.
The filing expands AI risk disclosure to agentic AI specifically, warning that AI agents may operate unpredictably, exceed prescribed authorizations, or fail to align with internal policies or legal obligations, with errors potentially having a material adverse impact on regulatory compliance and financial condition. It notes the company is increasingly developing and deploying agentic AI features designed to act with limited human intervention.
Risk factors state that selling and marketing to medium-sized and larger businesses requires higher costs, longer sales cycles and approval from more technical and management personnel, with larger customers demanding more features, integration and customization. Such sales may require delaying revenue recognition until technical or implementation requirements are met.
Interest expense increased 13% in the quarter ended June 30, 2026 versus the prior-year period, primarily from interest on the incremental Term Loan. As of June 30, 2026, the company had $879.1 million principal outstanding under its Term Loan and $250.0 million principal of 2030 Senior Notes, subject to Credit Agreement covenants including a maximum total net leverage ratio and minimum interest coverage ratio tested quarterly.
The company relies on third-party vendors and competitors, particularly NICE, to deliver contact center and SMS services, and warns that termination or deterioration of those relationships could materially reduce revenues. The SMS aggregator Bandwidth currently blocks SMS sent from phone numbers not registered with The Campaign Registry, and registration and related vetting can cause customer churn, especially among SMB customers.
The filing states the company depends to a considerable degree on the vision, skills and effort of co-founder, Chairman and CEO Vladimir Shmunis, who has provided strategic direction for over 25 years, and that executive officers serve at will. It also cites intense competition for highly skilled personnel and changes to U.S. H-1B and other visa programs as a constraint on attracting talent.
The filing highlights an evolving legal landscape for AI, including privacy laws regulating automated decision making and uncertainty over intellectual property and copyright rights in AI technologies. It also notes U.S. mobile carrier requirements for SMS registration with The Campaign Registry and FCC number porting timeframes that can lead to fines and penalties.
As of December 31, 2025, the company had federal net operating loss carryforwards of $1.3 billion and state NOLs of $1.0 billion, against which it maintains a full valuation allowance as of June 30, 2026. The filing also cites California legislation suspending NOL use and capping business tax credits, plus Pillar Two global minimum tax rules and digital services taxes in jurisdictions such as the U.K. and France.
As of June 30, 2026, holders of Class B Common Stock, including founders and certain executive officers, together held approximately 57% of the voting power of outstanding capital stock, with founders holding a majority of that voting power. Holders of Series A Convertible Preferred Stock have preferential liquidation rights and automatic redemption at $1,000 per share upon certain change of control events, which could reduce cash flows available for working capital and other corporate purposes.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Monthly Recurring Subscriptions
Adjusted EBITDA
Adjusted EBITDA Margin
Free Cash Flow
Free Cash Flow Margin
ARR
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q2 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.