Oct 22, 2026 earnings call — AI adoption and margin expansion
RingCentral AI now represent approximately 15% of total ARR or over $400 million.
Revenue $0.7B (est $0.7B) · EPS $1.33 (est $1.28) · Next-quarter revenue outlook $0.7B–$0.7B
Key quotes
"RingCentral AI which we define as customers using at least 1 native paid AI product, now represent approximately 15% of total ARR or over $400 million."
"Non GAAP operating margin reached 24.7% up nearly 200 basis points and SBC as a percent of revenue declined 50 basis points reflecting our continued discipline around equity compensation."
"With our gross debt, now below our stated $1 billion target, we now have the balance sheet strength to continue investing in innovation, while also delivering sustained long term shareholder value via share buybacks and dividends."
Analyst Q&A 9
what drove subscription revenue beat
Q (Elizabeth Porter · Morgan Stanley): She asked what drove the subscription revenue upside in Q3 and whether stronger AI demand or easing enterprise renewal headwinds explained it.
A: Management said the beat came from product mix execution and a durable, scaled recurring revenue core. They said AI-led products are growing: customers using 1 or more paid AI products are approaching 15% of ARR, doubling year over year, with higher ARPUs and over 100% net retention. They also noted record GAAP and non-GAAP operating margins and strong free cash flow, and emphasized confidence in the underlying growth drivers.
"Customers who are using 1 or more paid AI products are now approaching 15% of ARR." — Vaibhav Agarwal (CFO)
AI product ARR growth and gross margins
Q (Siti Panigrahi · Mizuho): She asked how fast the new-product ARR (the 100 million run rate exiting 25) grew in Q3 and how to think about exiting the year. She also asked about gross margins as AI ramps.
A: Management defined the new-products metric as customers adopting at least 1 paid AI product (RCAI), which is approaching 15% or $400 million and is doubling year over year; ARPUs are higher and net retention is above 100%. On margins, they said overall gross margins are strong at 80% plus, AI product margins are generally in line with the corporate average, and they are optimizing via pricing, model selection, inference efficiency, and infrastructure; they expect gross margins to hold around 80%.
"So, look, overall gross margins as you called out are strong at 80% plus." — Vaibhav Agarwal (CFO)
who adopts AI and margin targets
Q (Brian Peterson · Raymond James): He asked which customer segments (enterprise, SMB, geography) are embracing AI and where the next expansion might come from. He also asked about GAAP targets, stock-based comp, and the path for GAAP and non-GAAP operating margins.
A: Management said AI adoption is happening across all segments, including enterprise and SMB, with strong traction in their golden verticals of health care and financial services and in consumer-to-business voice/text interactions; partner channels and global service providers move slower but can scale strongly once they adopt. They reiterated a medium-term GAAP operating margin target of reaching 20%, said their 2026 guide expands GAAP operating margins by about roughly 400 basis points with roughly 200 basis points from non-GAAP improvements and 200 basis points from SBC reduction, and they target SBC of 3% to 4% in the next 3 to 4 years; non-GAAP expansion is supported by 80% gross margins and operating leverage.
"We laid out a medium term target of reaching 20% in GAAP operating margins." — Vaibhav Agarwal (CFO)
core vs AI growth and AIR monetization
Q (Peter Levine · Evercore): He asked how much subscription growth depends on upsell/cross-sell of AI versus stabilization in the core UCaaS business. He also asked how AIR (AI Receptionist) can expand monetization and what additional use cases or pricing levers exist.
A: Management said roughly half of growth comes from the base and half from new customers, and about half of new customers take AI today; AI is growing rapidly but off a smaller base and will be an increasing contributor. On AIR, they said it now has over 22 thousand customers, pricing is usage based, it is strong in small- to medium-sized businesses and moving upmarket, and AIR Pro addresses more complex workflows with human-in-the-loop warm handoffs and higher autonomy for more sophisticated cases like billing inquiries, returns, and appointment settings.
"So it now has over 22 thousand customers." — Vaibhav Agarwal (CFO)
voice AI effect on demand for AIR products
Q (Ryan MacWilliams · Wells Fargo): He asked how the rise of voice AI (AI agents handling inbound calls) affects demand for RingCentral AIR and AirPro, and how AI-to-AI or AI-to-human handoffs might work.
A: Management said RingCentral has two fundamental growth drivers — more calls and more AI — and they work together: more calls give more chances to apply AI and more AI-assigned calls increase value extraction. They said traffic growth has been strong but linear while AI growth has been explosive, but overall AI-answered call penetration on their network is still a very small percentage, so there is meaningful opportunity to assign AI to more traffic and teams are focused on that.
"But overall penetration of AI and AI answered calls on our network is still very, very small percentage wise." — Vladimir G. Shmunis (CEO·CHAIR)
cross-sell penetration CB/ACE/AIR by customer size
Q (James Fish · Piper Sandler): He asked about the opportunity to cross-sell CB, ACE, and AIR over the next 2–3 years and how penetration differs between large customers and SMBs.
A: Management said CEB (CB) is fundamentally a smaller-business product while larger enterprises tend to use Ring CX, their full contact center product. They noted strong growth, many satisfied customers and reference cases, and product-led growth helping sales; the AI-flavored version of CEB is their most explosive new offering this year.
"That means that we have you know, lots of satisfied customers and lots of reference cases." — Vladimir G. Shmunis (CEO·CHAIR)
NICE partnership and ACO transition churn
Q (Andrew King · Rosenblatt): He asked whether the NICE reseller arrangement has produced any early pipeline wins and whether the ACO transition has caused increased churn.
A: Management said the ACO transition was orderly and the customer experience did not change, and they are not aware of any churn related to it. On partnerships, they said NICE is new and targets high-end enterprise so they do not expect many logos but hope for large deals; overall the channel is edging up and signs are positive.
"So I am not aware of any churn related to that." — Vladimir G. Shmunis (CEO·CHAIR)
RingCX plan after NICE extension
Q (Shablish Sarathy · FBN): He asked what the plan is for RingCentral Contact Center when the reported 1-year NICE extension ends and why there was not a longer extension.
A: Management said they did not disclose any 1-year term and are not sure where that came from; they said the extension adds to the existing term and they still have multiple years left. They also said the RingCX product is getting stronger and viable for larger enterprises, partnerships could continue to be extended as before, and AI will change big call-center dynamics while keeping humans in the loop remains important for many customers.
"So first, I am not sure, where you got 1 year from." — Vladimir G. Shmunis (CEO·CHAIR)
drivers for stronger Q4 subscription guide
Q (Taylor McGinnis · UBS): He asked why the Q4 subscription revenue guide looks stronger than prior quarters and whether that reflects UCaaS stability, growing AI revenue, NICE partnership contributions, or other momentum.
A: Management said it is a mix: a durable core business with strong retention and healthy platform usage, plus growing contributions from AI (additive today and growing as a share of mix). They added they are expanding margins and free cash flow, are disciplined in capital allocation, and said "free cash flow per share" guided this year is over $7 and growing faster than free cash flow at above 20%.
"Our free cash flow per share that we have guided to this year is over $7 and growing faster than free cash flow at above 20%." — Vaibhav Agarwal (CFO)