RingCentral (RNG) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $644.2 million, up 5.3% year-over-year, with subscription revenue at $623 million, up 6% year-over-year, and ARR from AI-utilizing customers more than doubling year-over-year.

• Record GAAP operating margin of 7.8% and non-GAAP operating margin of 22.9%, both improved year-over-year; GAAP EPS improved to $0.35 from $(0.11), non-GAAP EPS rose to $1.20 from $1.00.

• Net income was $30.6 million, a turnaround from a net loss of $10.3 million in Q1 2025, reflecting improved operational efficiency and cost controls.

• AI product adoption is strong, with ARR from paid AI products now exceeding 10% of total ARR, doubling year-over-year, and driving higher ARPU and retention.

• Launched new AI-powered products, continued R&D investment over $250 million planned for 2026, and expanded global messaging capabilities.

Financial highlights

• Gross profit increased to $464.8 million, with gross margin stable at 72% year-over-year; subscription gross margin remained above 80%.

• Adjusted EBITDA was $170 million (26.3% of revenue), up from $155 million (25.3%) year-over-year.

• Free cash flow for Q1 was $141 million, up 8% year-over-year; free cash flow per share was $1.62, up 15.4%.

• Share-based compensation expense decreased to $54.7 million, representing 8.9% of revenue, down from 13.1% a year ago.

• Net cash from operating activities was $164 million (25.5% of revenue), up 9.6% year-over-year.

Outlook and guidance

• Full-year 2026 guidance raised: total revenue $2.62–$2.64 billion, subscription revenue $2.54–$2.56 billion, non-GAAP operating margin 23.3%–23.7%, free cash flow $590–$605 million, non-GAAP EPS $4.85–$5.01.

• Q2 2026 guidance: total revenue $648–$653 million; subscription revenue $628–$633 million; non-GAAP operating margin 23.0–23.2%; non-GAAP EPS $1.15–$1.17.

• Management expects continued revenue growth, margin expansion, and strong free cash flow generation, supported by operational efficiencies and AI product monetization.

• Macroeconomic uncertainty and customer buying behavior remain key variables for future performance.

• Non-GAAP EPS guidance raised to $4.85–$5.01, up 13% year-over-year.