RingCentral (NYSE:RNG) reported second-quarter 2026 results that exceeded the high end of its guidance across revenue, operating margin and free cash flow metrics, while management highlighted growing adoption of its artificial intelligence products and announced an increase to the company’s quarterly dividend.
Founder, Chairman and CEO Vlad Shmunis said the company’s performance reflected a multi-year effort to improve profitability and cash generation while repositioning RingCentral around “agentic voice AI.” He said the company is seeking to become an “intelligence layer” where AI agents and human agents work together to manage customer interactions.
Revenue and Profitability Top Guidance
CFO Vaibhav Agarwal said total revenue in the quarter was approximately $657 million, up 5.9% year over year. Subscription revenue was approximately $634 million, up 5.8% from the prior year. Both measures came in above the high end of the company’s guidance.
Agarwal said customer trends remained healthy, citing steady new customer additions and monthly net retention above 99%. He said the company’s recurring revenue model continues to be supported by the “mission-critical role” RingCentral’s platform plays for customers.
RingCentral also expanded profitability in the quarter. Subscription gross margin remained above 80%, while non-GAAP operating margin reached 23.4%, up nearly 90 basis points year over year and above guidance. GAAP operating margin was 7.7%, improving by more than 170 basis points from the year-ago period.
Stock-based compensation as a percentage of revenue declined about 150 basis points year over year to 9% in the second quarter. Agarwal said RingCentral remains on track for stock-based compensation to be approximately 9% of revenue in 2026, down 180 basis points from 2025.
Free Cash Flow Outlook Raised, Dividend Increased
RingCentral generated $180 million of free cash flow in the quarter, up 25% year over year. Agarwal attributed the increase to operating performance, efficiency gains and working capital improvements, including certain one-time benefits from customer and partner prepayments.
The company raised its full-year free cash flow outlook to a midpoint of $620 million, or more than 23% of revenue. For the full year, RingCentral now expects free cash flow per share of $7.07 to $7.23, up 23% year over year.
Management also announced that RingCentral’s board approved an increase in the quarterly dividend to $0.125 per share. Agarwal said the dividend increase reflects confidence in the company’s cash flow durability and is part of a balanced capital allocation strategy that also includes investment in innovation, debt reduction and share repurchases.
During the quarter, RingCentral reduced overall debt by approximately $85 million and lowered net leverage to 1.5 times. In the first half of 2026, the company reduced gross debt by about $130 million. Management said RingCentral remains on track to reduce gross debt to $1 billion by the end of 2026. Agarwal also noted that the company has no maturities until 2030 and maintains $355 million of undrawn credit capacity.
RingCentral repurchased approximately 2.2 million shares during the quarter for about $94 million. At quarter-end, approximately $326 million remained under the company’s repurchase authorization. Diluted share count declined 6% year over year to roughly 87 million shares.
AI Products Drive Customer Expansion
Executives emphasized AI adoption as a key theme of the quarter. Shmunis said annual recurring revenue from customers using at least one of RingCentral’s native paid AI products now represents about 13% of ARR, doubling year over year. He said those customers have net retention “well above 100%” and meaningfully higher average revenue per user than the rest of the customer base.
RingCentral ended the second quarter with more than 16,000 paying AIR, or AI Receptionist, customers, up 400% year over year. ACE, the company’s AI Conversation Expert product, had more than 6,300 customers, growing more than 70% year over year. ARR from AI-led new products grew nearly 60% during the first half of the year, according to Shmunis.
President and COO Kira Makagon said customers accelerated adoption of RingCentral AI during the quarter. She cited VGM Group, a national post-acute healthcare organization, which deployed RingCentral’s AIR, AVA and ACE products on top of RingEX. Makagon said AIR recovered 45% of calls previously lost to abandonment for that customer, AVA eliminated manual note-taking and ACE provided call visibility and coaching.
Makagon said AIR has been enhanced with spam blocking filters and lead capture capabilities that sync with Salesforce, HubSpot and Zoho. Based on a recent customer survey, she said AIR customers reduced missed call rates from an average of 20% to close to zero.
RingCentral’s Customer Engagement Bundle, or CEB, also saw growth. Shmunis said CEB now serves more than 9,600 customers and grew more than 80% sequentially. The bundle adds lightweight contact center features to RingEX, including call queues, shared SMS inboxes and analytics.
Partnerships With NiCE and Avaya Updated
RingCentral announced an expanded partnership with NiCE under which NiCE will begin marketing and selling RingEX in combination with CXone, while RingCentral continues to offer NiCE CXone to its customers. Shmunis described the arrangement as a “symmetrical, mutually reinforcing partnership” between the two companies.
In response to an analyst question, Shmunis said the expanded NiCE relationship could give RingCentral access to NiCE’s enterprise customer base, where NiCE has a strong position in contact center software. He said RingCentral Contact Center powered by NiCE has historically been more mid-market by logo count, while NiCE has large enterprise accounts.
RingCentral also said it restructured its relationship with Avaya. Shmunis said RingCentral will remain Avaya’s exclusive multi-tenant cloud UCaaS offering, while existing Avaya Cloud Office customers and partners will transition directly to the RingCentral platform and brand.
Full-Year Guidance Raised
For fiscal 2026, RingCentral raised its subscription revenue outlook to $2.55 billion to $2.561 billion, representing growth of 5.1% to 5.5%. Total revenue is now expected to be $2.635 billion to $2.646 billion, representing growth of 4.8% to 5.2%.
The company expects full-year GAAP operating margin of 9% to 9.7%, non-GAAP operating margin of approximately 23.6% to 24%, and non-GAAP earnings per share of $4.96 to $5.10. RingCentral also said it now expects to reach its 20% GAAP operating margin target within two to three years, one year ahead of its prior schedule.
For the third quarter, RingCentral guided for subscription revenue of $643 million to $649 million and total revenue of $664 million to $670 million. The company expects third-quarter GAAP operating margin of 7.2% to 8.6%, non-GAAP operating margin of 23.5% to 24%, and non-GAAP earnings per share of $1.25 to $1.30.
Management said AI adoption, margin expansion and free cash flow generation remain central to RingCentral’s strategy. “We believe RingCentral is well-positioned to continue compounding shareholder value,” Agarwal said.
About RingCentral (NYSE:RNG)
RingCentral, Inc is a leading provider of cloud-based business communications and collaboration solutions. The company’s flagship platform delivers unified communications as a service (UCaaS), integrating voice over IP (VoIP) phone systems, video conferencing, team messaging and SMS into a single, cloud-native application. In addition to its UCaaS offering, RingCentral provides contact center as a service (CCaaS) capabilities, enabling organizations to manage customer interactions across voice, email, chat and social channels from a centralized dashboard.
Founded in 1999 and headquartered in Belmont, California, RingCentral went public on the New York Stock Exchange under the ticker RNG in 2013.
