Summary
RingCentral reported third quarter revenue of $638.66 million, up 4.9% from $608.76 million in the prior-year quarter. Gross profit was $458.33 million, up 6.9%, and gross margin improved to 71.8% from 70.4%. Operating income was $30.81 million, up from $3.29 million, which lifted operating margin to 4.8% from 0.5%. Net income was $17.56 million, a swing from a net loss of $7.85 million. Diluted earnings per share were $0.19, compared with a loss of $0.09 per share. Operating cash flow rose 19.0% to $151.36 million from $127.22 million. Capital expenditures were $7.57 million, up from $7.43 million.
The nine-month picture matches the quarter. Revenue for the period ended September 30, 2025 was $1.87 billion, up 4.8% from $1.79 billion. Gross margin was 71.2%, up from 70.5%. Operating income was $78.11 million, a swing from an operating loss of $12.97 million. Operating margin was 4.2%, compared with -0.7%. Net income was $20.42 million, a swing from a net loss of $51.10 million, and diluted earnings per share were $0.22, compared with a loss of $0.55. Operating cash flow was $468.44 million, up 33.7% from $350.39 million. The current portion of deferred revenue was $262.08 million, flat from $261.00 million. Remaining performance obligations were $2.60 billion, flat from $2.60 billion.
Non-GAAP results were stronger. Non-GAAP operating margin was 22.8%, up from 21.0%, adjusted EBITDA was $168 million, up from $149 million, and non-GAAP diluted earnings per share were $1.13, up from $0.95. Free cash flow was $130 million, up 23% from $105 million. Annualized exit monthly recurring subscriptions were $2.63 billion at September 30, 2025, up 6% from $2.48 billion a year earlier, and monthly recurring subscriptions were $219.2 million. The net monthly subscription dollar retention rate stayed above 99% for each of the five quarterly periods ended September 30, 2025. The AI-led product portfolio is approaching $100 million in ARR. RingCentral unveiled an agentic voice AI suite covering AI Receptionist, AI Virtual Assistant, and AI Conversation Expert, plus RingWEM, which builds on the CommunityWFM acquisition. It expanded its AT&T partnership, with AT&T offering AI Receptionist to its customers. The company was named a Leader in the 2025 Gartner Magic Quadrant for Unified Communications as a Service for the eleventh straight year, and it ranked first in two of six Use Case categories and tied for first in another in the Gartner Critical Capabilities for UCaaS report. S&P upgraded its credit rating. RingCentral expanded its credit facility to $1.26 billion, of which $955 million is undrawn, and it intends to use the proceeds mainly to address convertible notes due in March 2026 while extending debt maturities to 2030. It repurchased $117 million of stock in the quarter and had about $384 million left under its authorization. Stock-based compensation as a percentage of revenue fell 365 basis points year over year.
For the fourth quarter of 2025, guidance calls for non-GAAP operating margin of 22.8%, up approximately 145 basis points year over year, non-GAAP earnings per share of $1.12 to $1.15, and share-based compensation of $64 million to $69 million. For the full year 2025, guidance calls for total revenue growth of 4.5% to 5.0%, non-GAAP operating margin of about 22.5%, up approximately 150 basis points year over year, non-GAAP earnings per share of $4.29 to $4.33, and free cash flow of $525 million to $530 million. Management flagged macroeconomic risks, including persistent inflation, higher interest rates, tariffs and other trade barriers, supply chain disruption, geopolitical conflict, and currency swings. The filing also points to slower hiring and employee count rationalization among customers, which can lower upsell and raise downsell. Other named risks include churn, renewals, payment terms, credit card declines, legal proceedings, and uncertainty around the benefits of acquisitions. RingCentral said it was in compliance with all debt covenants as of September 30, 2025, and it plans to use cash flow from operations, along with $650.0 million of incremental term loan capacity and $305.0 million on its revolving credit facility, to settle the 2026 convertible notes on time.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $638.7M | $620.4M | +2.9% | $608.8M | +4.9% |
| Gross profit | $458.3M | $441.4M | +3.8% | $428.6M | +6.9% |
| Gross margin | 71.8% | 71.2% | +0.6 pp | 70.4% | +1.4 pp |
| Research & development | $79.9M | $77.5M | +3.1% | $84.1M | -5.0% |
| Sales & marketing | $281.6M | $263.6M | +6.8% | $277.0M | +1.7% |
| General & administrative | $66.1M | $63.4M | +4.3% | $64.2M | +2.9% |
| Total operating expenses | $427.5M | $404.5M | +5.7% | $425.3M | +0.5% |
| Operating income (loss) | $30.8M | $37.0M | -16.7% | $3.3M | +836.1% |
| Operating margin | 4.8% | 6.0% | -1.1 pp | 0.5% | +4.3 pp |
| Net income (loss) | $17.6M | $13.2M | +33.1% | -$7.9M | +323.6% |
| Net margin | 2.8% | 2.1% | +0.6 pp | -1.3% | +4.0 pp |
| Diluted EPS | $0.19 | $0.14 | +$0.05 | -$0.09 | +$0.28 |
Risks
MD&A cites persistent inflation, higher interest rates, tariffs, geopolitical conflict, and currency fluctuations as creating uncertainty that may reduce customer demand. It notes the company has experienced lower upsell and increased downsell of additional RingEX services as customers slow hiring and rationalize employee counts.
The risk factors state revenue growth has slowed and revenues may decline due to macroeconomic conditions, increasing competition including pricing pressure, lower customer demand, product mix shifts, or failure to capitalize on AI initiatives. Reported total revenue was up 4.9% in FY2025 Q3 versus the prior-year quarter, but the filing emphasizes the slowdown risk.
The company is adjusting its channel partner go-to-market strategy toward a resale/wholesale model, which requires significant changes to systems and processes and could take longer to implement, impacting revenue. It also relies significantly on channel partners and global service providers, and some strategic partners have failed to meet minimum contractual seat or revenue commitments.
The company relies on third-party competitors NICE and Zoom to deliver contact center, video, and other services, and on Bandwidth.com for SMS. Bandwidth currently blocks SMS sent by phone numbers not registered with The Campaign Registry, and TCR registration can be cumbersome and costly, potentially causing customer churn especially among SMB customers.
AI-powered features such as AI Receptionist, AI Virtual Assistant, and AI Conversation Expert are central to the product portfolio, but AI technologies are complex and rapidly evolving, face intense competition, and are subject to evolving regulation, IP claims, and demand for specialized AI personnel. The risk factors state there can be no assurance the company will realize the desired benefits from AI.
As of September 30, 2025, $609.1 million principal of the 2026 Convertible Notes is due in 2026, and the company plans to settle it using cash flows plus $650.0 million of Term Loan capacity and $305.0 million under the Revolving Credit Facility. The Credit Agreement contains restrictive covenants including a maximum total net leverage ratio and minimum interest coverage ratio, and a breach could accelerate debt.
In January 2025, the company experienced an interruption in service due to an internal system error that impacted customers for a limited number of hours. Future interruptions could reduce revenues, require credits or penalties, cause customer terminations, and harm renewal rates, and the company depends on third-party data center facilities including Equinix, Amazon Web Services, and Google Cloud.
The company depends on senior management including co-founder, Chairman and CEO Vladimir Shmunis, and on highly skilled personnel. Competition for AI specialized personnel is intense, and changes to U.S. immigration policies such as H-1B and other visa programs could restrain the flow of technical and professional talent.
Subscriptions are subject to regulation, and number portability delays depend on third-party GSPs, potentially subjecting the company to FCC or state fines and penalties. U.S. mobile carriers require businesses using SMS on over-the-top providers to register with The Campaign Registry, and France has implemented new rules for obtaining direct inward dialing numbers.
The company has been subject to communications fraud, social engineering, cyber-attacks, and denial-of-service events in the past, and may be subject to similar attacks in the future. Its use of AI features may create additional cybersecurity risks, and geopolitical conflicts may heighten cyber-attack risks from nation-state actors.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Annualized Exit Monthly Recurring Subscriptions (ARR)
Non-GAAP Free Cash Flow
Non-GAAP Free Cash Flow Margin
Monthly Recurring Subscriptions (MRR)
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q3 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.