This article first appeared on GuruFocus .
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Total Revenue:$2.52 billion for 2025, up 4.8% year-over-year.
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Subscription Revenue:$2.43 billion for 2025, up 5.6% year-over-year.
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Free Cash Flow:Over $0.5 billion for 2025, up 32% year-over-year.
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Free Cash Flow Per Share:$5.81 for 2025, up 36% year-over-year.
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GAAP Operating Margin:Nearly 5% for 2025, expected to double in 2026.
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Non-GAAP Operating Margin:22.5% for 2025, up 150 basis points year-over-year.
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GAAP EPS:$0.48 for 2025.
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Non-GAAP EPS:$4.36 for 2025, up 18% year-over-year.
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Subscription Gross Margin:80.5% for 2025.
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ARR from New Products:$100 million in 2025.
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AI ARR Growth:Pure AI ARR almost tripled year-over-year.
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RCAI Utilizing Customers:Approaching 10% of overall ARR, more than doubled year-over-year.
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Quarterly Dividend:First-ever dividend of $0.075 per share announced.
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Share Repurchase:Approximately 5 million shares repurchased for $135 million in Q4 2025.
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Debt Reduction:Reduced debt by more than $275 million in 2025.
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2026 Revenue Guidance:Subscription revenue growth of 4.5% to 5.5%, total revenue growth of 4% to 5%.
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2026 Free Cash Flow Guidance:$580 million to $600 million, up 11% at the midpoint.
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2026 Non-GAAP EPS Guidance:$4.76 to $4.97, up 11% at the midpoint.
Release Date: February 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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RingCentral Inc ( NYSE:RNG ) reported a strong Q4, capping a solid 2025 with total revenue growth of nearly 5% and subscription revenue growth of over 5.5%.
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The company generated record free cash flow of more than $0.5 billion, up 32% compared to 2024, translating to over $5.80 of free cash flow per share.
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RingCentral Inc ( NYSE:RNG ) achieved a full year of positive GAAP operating margin, reaching nearly 5% in 2025, with expectations to approximately double in 2026.
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The company announced its first-ever quarterly dividend of $0.075 per share, reflecting confidence in its financial performance and future prospects.
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RingCentral Inc ( NYSE:RNG ) is making significant strides in AI, with pure AI ARR revenues almost tripling year-over-year, contributing to a $100 million ARR from new products in 2025.
Negative Points
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Despite strong financial performance, RingCentral Inc ( NYSE:RNG ) faces pricing pressure in the enterprise segment, particularly with COVID-era contracts still impacting pricing dynamics.
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The company is experiencing more pricing pressure in the enterprise segment compared to SMB, which could affect future revenue growth.
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RingCentral Inc ( NYSE:RNG ) has a significant debt maturity of $609 million convertible due in March 2026, which it plans to refinance using its undrawn credit facility.
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The company is still working towards reducing its stock-based compensation (SBC) as a percentage of revenue, with a target of reaching 3% to 4% over the next 3 to 4 years.
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RingCentral Inc ( NYSE:RNG ) is facing challenges in maintaining high net retention rates across all customer segments, with enterprise customers showing more pricing sensitivity.
Q & A Highlights
Q: Congrats on the above consensus free cash flow outlook for 2026. What are your capital allocation priorities for 2026 and beyond, especially regarding debt payback or dividends? A: Vaibhav Agarwal, Chief Transformation Officer, Deputy CFO: We are proud of our free cash flow growth, reaching $590 million at the midpoint for 2026. Our priorities include investing in business growth, reducing leverage to achieve investment-grade credit rating, and returning capital through buybacks and dividends. We plan to reduce gross debt to $1 billion by the end of 2026 and have announced our first quarterly dividend, reflecting confidence in our business and strong free cash flows.
Q: How would you characterize the demand environment across enterprise, mid-market, and SMB segments? A: Vladimir Shmunis, CEO: Demand remains strong across all segments, with new logos and upsells performing well. We see more pricing pressure in the enterprise segment compared to SMB, where contracts are shorter. Small business is growing in double digits, and our combined revenue from small business and global service providers is over $1.1 billion, growing in double digits.
Q: Could you talk about the levers for profitability expansion, and where do you see stock-based compensation (SBC) heading in the next few years? A: Vaibhav Agarwal, Chief Transformation Officer, Deputy CFO: We have doubled operating margins over the last three years and are guiding for further expansion. This comes from strong gross margins, disciplined spending, and operating leverage. We are reducing SBC, aiming for 3% to 4% of revenue in the next 3 to 4 years. Our focus is on balancing margin expansion with reinvestment in innovation and growth.
Q: How are you seeing the uptake of AI across different go-to-market channels and customer segments? A: Kira Makagon, President, COO: AI uptake is strong across segments, with AIR seeing good adoption among smaller customers due to ease of setup. AVA is popular with mid-sized customers, and ACE is used widely for post-call analysis. Our AI products are being adopted by global service providers like AT&T and TELUS, showing consistent demand across channels.
Q: With the integration of OpenAI's voice model, what enhancements does it bring to RingCentral's platform? A: Kira Makagon, President, COO: We utilize models that optimize accuracy and latency for specific transactions. The platform is model agnostic, allowing us to use various models as needed. OpenAI's 5.2 model shows good results, and we continuously test and apply the best models for real-time and post-processing transactions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
