RingCentral RNG reported second-quarter 2026 non-GAAP earnings of $1.22 per share, beating the Zacks Consensus Estimate by 4.27% and rising 15.1% year over year.
Revenues of $657.01 million surpassed the consensus mark by 1.03% and increased 5.9% from the year-ago quarter.
The quarter benefited from steady subscription growth, broader AI adoption and margin expansion. Total annual recurring revenues reached $2.8 billion, up 7% year over year.
RNG’s Subscription Base Supports Growth
Subscription revenues increased 5.8% year over year to $634 million and accounted for 96% of total revenues. Other revenues were $23.36 million, up from $21.67 million a year earlier.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Monthly net retention remained above 99%, while the company served roughly 600,000 customer accounts. Management noted steady new customer additions and highlighted that the recurring revenue model continued to support durable growth.
RingCentral Gains From Expanding AI Adoption
Customers using RingCentral AI products generated more than 13% of total ARR and had net retention above 100%. These customers also produced meaningfully higher average revenue per user than the rest of the customer base. Customers using two or more AI products increased more than sevenfold over the past year.
AIR ended the quarter with more than 16,400 customers, up more than 400% year over year. ACE reached more than 6,300 customers, rising more than 70%, while the Customer Engagement Bundle exceeded 9,600 customers after growing more than 80% sequentially.
RNG’s Product Innovation Broadens Its Reach
RingCentral expanded AIR Pro with autonomous outbound outreach, multiple-intent handling and intelligent transfers to live agents with full customer context. AIR Pro also supports more than 100 prebuilt integrations across customer relationship management, scheduling, healthcare and billing systems.
The company added AI-powered workflow building and natural-language analytics to AVA. It also enhanced workforce engagement tools with live screen monitoring, giving supervisors real-time visibility for compliance, coaching and productivity management.
RingCentral’s Operating Details
Second-quarter 2026 non-GAAP gross margin expanded 40 bps from the prior-year quarter to 77.4%.
On a non-GAAP basis, research and development expenses increased 7.9% year over year to $66.6 million. Sales and marketing expenses increased 3.9% year over year to $243.7 million, while general and administrative expenses rose 7.5% year over year to $44.4 million in the reported quarter.
Non-GAAP operating income rose to $154 million from $140 million. Non-GAAP operating margin rose 90 basis points to 23.4%, while adjusted EBITDA margin expanded to 26.9% from 26.0%.
RNG Generates Strong Cash Flow and Returns Capital
As of June 30, 2026, cash and cash equivalents were $112 million compared with $116.58 million as of March 31, 2026
Net cash provided by operating activities increased 23.3% year over year to $206 million. Free cash flow climbed 24.8% to $180 million, representing 27.4% of revenues compared with 23.3% in the prior-year quarter.
The company reduced net leverage to 1.5 times and lowered gross debt by about $130 million during the first half of 2026. RingCentral has no debt maturities until 2030. The board also raised the quarterly dividend 66.7% to 12.5 cents per share.
In the second quarter of 2026, RNG repurchased about 2.2 million shares for $94 million, leaving roughly $326 million under its authorization.
RingCentral Raises Its 2026 Outlook
For the third quarter of 2026, RingCentral expects total revenues of $664-$670 million and subscription revenues of $643-$649 million. Non-GAAP operating margin is projected to be between 23.5% and 24.0%, with non-GAAP earnings of $1.25-$1.30 per share.
For 2026, RNG raised total revenue guidance to $2.635-$2.646 billion and subscription revenue guidance to $2.550-$2.561 billion. The company now expects non-GAAP earnings of $4.96-$5.10 per share and a non-GAAP operating margin of 23.6%-24.0%.
Free cash flow guidance was increased to $615-$625 million. GAAP operating margin is now projected to be between 9.0% and 9.7%, while stock-based compensation is expected to total $240-$245 million.
RNG’s Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Bandwidth BAND, Amphenol APH, and Amkor Technology AMKR. While Bandwidth and Amphenol sport a Zacks Rank #1 (Strong Buy), Amkor Technology carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bandwidth is set to report second-quarter 2026 results on July 29. Bandwidth shares have appreciated 280.2% year to date.
Amphenol is slated to report second-quarter 2026 results on July 29. Amphenol shares have gained 16.5% year to date.
Amkor Technology is set to report second-quarter 2026 results on July 29. Amkor Technology shares have surged 65.5% year to date.
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This article originally published on Zacks Investment Research (zacks.com).