RingCentral delivered a robust performance in the first quarter of 2026, surpassing analyst predictions with its earnings and revenue, further showcasing record profit margins. This impressive achievement prompted the company to raise its full-year guidance, underpinned by a doubling in the adoption of its artificial intelligence (AI) products.
The cloud communications leader reported a revenue surge to $644 million, reflecting a 5.3% increase year over year. Non-GAAP earnings per share (EPS) climbed to $1.20, which is 20% higher than the corresponding period last year, thus slightly surpassing expert consensus. Meanwhile, subscription revenue—a significant 97% of overall revenue—increased to $623 million with a 5.6% growth rate.
A particularly noteworthy element of this quarter was the profitability margins. The Generally Accepted Accounting Principles (GAAP) operating margin sculpted a company record at 7.8%, amplified by a reduction in stock-based compensation to 9% of revenue from 13% the previous year. Furthermore, the non-GAAP operating margin achieved 23%, supported by a free cash flow of $140.65 million, marking an 8% rise. Additionally, RingCentral issued its first-ever quarterly dividend and initiated stock buybacks worth $81 million, having no debt maturities until 2030.
Chief Financial Officer Vaibhav Agarwal highlighted the free cash flow enhancement as a structural accomplishment, attributing it to the leverage in a scalable high recurring revenue model, coupled with disciplined hiring and vendor consolidation.
RingCentral’s substantial investments in AI are augmenting this momentum. The number of customers using at least one paid AI product has now doubled year over year, constituting over 10% of its clientele. These AI product users demonstrate higher average revenue per user and a net retention rate above 100%. Their AI portfolio centers on three main products: AIR, ACE, and AIR Pro, each delivering notable client success stories in various sectors such as healthcare and automotive services.
RingCentral’s proactive strides in AI have resulted in an increasing share of its research and development (R&D) budget funneled into enriching its AI offerings, with more than $250 million earmarked annually.
Furthermore, RingCentral unveiled new products in the quarter, including a Customer Engagement Bundle integrating with Microsoft Teams, which added over 5,000 customers. Additional innovations involved extended global SMS support and enterprise branded calling, amongst others.
The company’s strategic positioning of AI alongside human interaction forms a key differentiator. CEO Vladimir Shmunis elaborated on their hybrid AI-and-human model as providing a distinct advantage. RingCentral is gaining authority in this expanding market, made possible by a seamless integration that does not rely on third-party resources.
Looking ahead, RingCentral projects continued strong performance with Q2 and full-year revenue and EPS predictions revised upwards. This strategic foresight aligns with the vision to bolster its position even further in the AI-driven communication landscape, promising fruitful outcomes both financially and technologically.
