RingCentral, Inc.

Q1 total revenue was approximately $644 million, up 5.3% year over year, and subscription revenue was approximately $623 million, up 5.6% year over year. Subscription gross margin remained above 80%, non-GAAP operating margin was approximately 23% (up 110 basis points year over year), and GAAP operating margin was 7.8% (up more than 600 basis points year over year). Free cash flow was more than $140 million, up 8% year over year, and free cash flow per share was $1.62, up 15.4% year over year. For FY2026, management raised subscription revenue guidance to $2.54 billion-$2.56 billion, total revenue to $2.62 billion-$2.64 billion, non-GAAP EPS to $4.85-$5.01, GAAP operating margin to 8.9%-9.6%, non-GAAP operating margin to 23.3%-23.7%, and free cash flow to $590 million-$605 million. For Q2 2026, the company guided to subscription revenue of $628 million-$633 million, total revenue of $648 million-$653 million, non-GAAP EPS of $1.15-$1.17, GAAP operating margin of 6.6%-7.6%, and non-GAAP operating margin of about 23%-23.2%.

Vlad Shmunis framed the quarter as evidence that RingCentral is becoming more efficient, more profitable, and more durable. He emphasized a hybrid AI-plus-human model as the company’s long-term advantage, arguing that RingCentral sits at the “front door” of customer communications and can orchestrate AI and human interactions on one platform. His tone was confident and upbeat, with repeated references to a deep moat, strong innovation spend, and a large opportunity as agentic voice AI expands.

Vaibhav Agarwal highlighted continued operating leverage and margin expansion, pointing to subscription gross margin above 80%, non-GAAP operating margin of about 23%, and GAAP operating margin of 7.8% in Q1. He noted SBC fell to 9% of revenue in Q1 and is expected to be about 9% for FY2026, down from about 11% in 2025, while GAAP operating margin is expected to rise from 4.8% in 2025 to more than 9% in 2026. He also cited more than $140 million of free cash flow in Q1, a raised full-year FCF outlook of $590 million-$605 million, $46 million of debt reduction, net leverage of 1.6x, $355 million of undrawn credit capacity, $81 million of share repurchases, and the first quarterly dividend of $0.075 per share.

Analysts pressed on when revenue growth might break decisively above the roughly 5% range, and management said there are real AI and contact-center green shoots but also pricing rationalization and some remaining COVID-era contract renewals weighing on growth. On margins versus AI investment, management said AI is not necessarily a margin tradeoff because customers will pay for good AI and the company can maintain gross margins while improving efficiency. On free cash flow and capital allocation, management said the business is becoming a compounding FCF story, with cash prioritized across reinvestment, deleveraging toward $1 billion of gross debt, buybacks, and a continuing dividend. They also said GSP adoption of newer AI products is encouraging but still early, with more meaningful contribution expected in 2027 and 2028 rather than this year.