Core Insights - RingCentral reported revenue of $644.03 million for Q4 2025, a year-over-year increase of 4.8% and an EPS of $1.18 compared to $0.98 a year ago, exceeding the Zacks Consensus Estimate of $642.29 million by 0.27% [1] - The company delivered an EPS surprise of 3.69%, with the consensus EPS estimate being $1.14 [1] Financial Performance Metrics - Gross Margin - Non-GAAP Other was reported at -10.6%, below the four-analyst average estimate of -9.5% [4] - Gross Margin - Non-GAAP Subscriptions was 80.4%, slightly below the four-analyst average estimate of 80.6% [4] - Subscription revenues reached $622.22 million, surpassing the four-analyst average estimate of $621.84 million, reflecting a year-over-year change of 5.5% [4] - Revenues from Other segments were $21.82 million, exceeding the average estimate of $20.44 million, but showing a year-over-year decline of 12.2% [4] Stock Performance - Shares of RingCentral have returned 14.1% over the past month, contrasting with the Zacks S&P 500 composite's decline of 0.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - RingCentral (RNG) reported quarterly earnings of $1.18 per share, exceeding the Zacks Consensus Estimate of $1.14 per share, and up from $0.98 per share a year ago [1] - The company achieved a revenue of $644.03 million for the quarter, surpassing the Zacks Consensus Estimate by 0.27%, compared to $614.51 million in the same quarter last year [3] Earnings Performance - The earnings surprise for the quarter was +3.69%, and the company has surpassed consensus EPS estimates in all four of the last quarters [2] - RingCentral's shares have increased by approximately 2.4% since the beginning of the year, outperforming the S&P 500's gain of 0.5% [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.07 on revenues of $639.58 million, and for the current fiscal year, it is $4.69 on revenues of $2.62 billion [8] - The estimate revisions trend for RingCentral was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [7] Industry Context - The Internet - Software and Services industry, to which RingCentral belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Comparatively, Globant (GLOB), another company in the same industry, is expected to report a year-over-year earnings decline of 12% in its upcoming results [10]

Financial Data and Key Metrics Changes - Total revenue for 2025 grew nearly 5% to $2.52 billion, with subscription revenue increasing just over 5.5% to $2.43 billion [5][27] - Record free cash flow of more than $500 million was achieved, up 32% versus 2024, translating to over $5.80 of free cash flow per share [5][28] - GAAP operating margin reached nearly 5% in 2025, with expectations to double in 2026, targeting approximately 20% GAAP operating margin in the next three to four years [7][30] - Non-GAAP operating margin improved to 22.8% in Q4, up more than 140 basis points year-over-year [26] Business Line Data and Key Metrics Changes - Subscription revenue in Q4 was $622 million, up 5.5% year-over-year, while total revenue was $644 million, up 4.8% [25] - RCAI-utilizing customers, those using at least one AI product, now account for nearly 10% of overall ARR, more than doubling year-over-year [25][11] - AIR, the AI receptionist, saw customer count reach 8,300, up 44% sequentially, indicating strong demand [15] - ACE, the AI conversation expert, exceeded 4,800 customers, up 144% year-over-year, showcasing the growing adoption of AI products [16] Market Data and Key Metrics Changes - Demand remains strong across all customer segments, with small business and global service provider business growing in double digits [45] - The combined revenue from small business and global service providers is over $1.1 billion, performing well above the Rule of 40 [45] - Pricing pressure is more pronounced in the enterprise segment compared to SMB, but small business growth has accelerated year-over-year [45] Company Strategy and Development Direction - The company is focused on transforming into a leading agentic voice AI platform, with significant investments in AI-led products [9][12] - A quarterly dividend of $0.075 per share was announced, marking a strategic enhancement to the capital return strategy [7][24] - The company aims to reduce stock-based compensation (SBC) to 3%-4% of annual revenue over the next three to four years [6][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's future, highlighting strong financial performance and a robust market position [23][24] - The ongoing investment in AI is expected to drive long-term growth and enhance customer value [11][12] - Management anticipates that the headwinds from COVID-lapping contracts will subside, entering 2027 with a clean slate [45] Other Important Information - The company reduced debt by more than $275 million, ending the year at 1.7x net leverage [28][29] - New equity grants declined by 36% to approximately $160 million, contributing to a reduction in SBC as a percentage of revenue [28] Q&A Session Summary Question: What are the capital allocation priorities for 2026 and beyond? - The company plans to invest over $250 million in R&D, primarily for AI-led products, while also focusing on reducing leverage and returning capital through buybacks and dividends [38][40] Question: How is demand characterized across different customer segments? - Demand is strong across all segments, with small business growth accelerating and enterprise facing some pricing pressure [45] Question: What levers are being used to improve profitability? - Profitability improvements are driven by strong gross margins, disciplined spending, and operational leverage [51][52] Question: What is the average contract value for AI customers? - AI-related customers are showing significantly better retention and higher average revenue per user (ARPU) compared to non-AI customers [55][58] Question: How is the partner program adjusted for AI priorities? - The partner program is focused on key verticals like healthcare and financial services, with strong uptake of AI products among partners [70][71]

Financial Data and Key Metrics Changes - Total revenue for 2025 grew nearly 5% to $2.52 billion, with subscription revenue increasing just over 5.5% to $2.43 billion [5][27] - Record free cash flow of more than $500 million was achieved, up 32% versus 2024, translating to over $5.80 of free cash flow per share [5][24] - GAAP operating margin reached nearly 5% in 2025, with expectations to double in 2026 and target approximately 20% in the next 3-4 years [7][30] - Non-GAAP operating margin improved to 22.5%, with a significant increase in free cash flow per share by 36% to $5.81 [26][28] Business Line Data and Key Metrics Changes - Subscription revenue in Q4 was $622 million, up 5.5% year-over-year, while total revenue was $644 million, up 4.8% [25] - The number of customers utilizing at least one AI product has more than doubled year-over-year, now approaching 10% of overall ARR [11][25] - AIR, the AI receptionist, saw customer count reach 8,300, up 44% sequentially, indicating strong demand [15] - The AI product suite, including AIR, AVA, and ACE, is driving higher usage and retention among customers [14][19] Market Data and Key Metrics Changes - Demand remains strong across all customer segments, with small business and global service provider segments growing in double digits [45] - The enterprise segment is experiencing more pricing pressure compared to SMB, but overall performance remains robust [45] - RCAI-utilizing customers are showing significantly better average revenue per user (ARPU) and net retention rates exceeding 100% [11][25] Company Strategy and Development Direction - The company is focused on transforming into a leading agentic voice AI platform, leveraging its cloud-native communications infrastructure [9][12] - A commitment to invest over $250 million annually in innovation, primarily directed towards AI-led products [29] - The introduction of a quarterly dividend of $0.075 per share reflects confidence in future cash flows and business growth [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2026 and beyond, highlighting the strong position in a growing market and the positive impact of AI on performance [23][29] - The company aims to reduce stock-based compensation (SBC) to 3%-4% of revenue over the next 3-4 years, enhancing profitability [6][30] - The outlook includes expectations for continued revenue growth and improved operating margins, with a focus on sustainable long-term value creation [30][32] Other Important Information - The company has reduced debt by more than $275 million, ending the year with a net leverage of 1.7x [28][29] - A new Customer Engagement Bundle (CEB) was introduced, quickly gaining traction with over 1,000 customers [19] - The company plans to report on progress with RCAI-utilizing customers periodically, shifting from cohort-based metrics [25] Q&A Session Summary Question: Capital allocation priorities for 2026 - Management highlighted the focus on investing in business growth, reducing leverage, and returning capital through buybacks and dividends [38][40] Question: Demand environment across customer segments - Demand remains strong across all segments, with small businesses growing in double digits, while enterprise faces pricing pressures [45] Question: Profitability levers for margin expansion - Management discussed strong gross margins, disciplined spending, and operational leverage as key factors driving profitability [50][52] Question: Average contract value and ARPU for AI customers - AI-related customers are showing better retention and higher ARPU, contributing significantly to overall revenue [55][58] Question: Uptake of AI across go-to-market channels - Uptake of AI products is strong across segments, with specific success noted in small businesses due to ease of setup [63][64] Question: Adjustments to the partner program for AI priorities - The partner program is being aligned with AI priorities, focusing on key verticals such as healthcare and financial services [70][71]

RingCentral (NYSE:RNG) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Speaker6Good afternoon, and welcome to the RingCentral Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw your question, pleas ...

Voice of Your Business ©2026 RingCentral 1 Safe Harbor and Non-GAAP Measures Non-GAAP free cash flow is defined as GAAP net cash provided by operating activities adjusted for capital expenditures including purchases of property and equipment and capitalized internal-use software. We believe information regarding Non-GAAP free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash. Non-GAAP free cash flow margin is defined as Non-GAAP f ...

Exhibit 99.1 RingCentral Announces Fourth Quarter and Fiscal Year 2025 Results Total revenue at $2.5 billion, up 5% Operating cash flow of $617 million, up 28% YoY; free cash flow of $530 million, up 32% YoY Initiates quarterly cash dividend of $0.075 per share Increases share repurchase authorization to $500 million "Our 2025 results reflect disciplined execution across growth, profitability, and capital allocation. We expanded GAAP operating margin to 4.8% and non-GAAP operating margin to 22.5%, generated ...

Core Viewpoint - Purcell & Lefkowitz LLP is investigating RingCentral, Inc. to determine if its directors breached fiduciary duties related to recent corporate actions [1] Group 1 - The investigation is on behalf of RingCentral's shareholders [1] - Shareholders interested in more information about their rights and options can contact the law firm [1] Group 2 - Purcell & Lefkowitz LLP specializes in representing shareholders affected by securities fraud and corporate misconduct [2] - The firm emphasizes that prior results do not guarantee similar outcomes [2]

Group 1 - The core viewpoint of the article highlights that almost every software company, including RingCentral, is rebranding itself as an AI company, reflecting a significant trend in the industry [1] - RingCentral is recognized for its contact center solutions and tools aimed at enhancing employee and customer experiences, indicating its focus on improving service delivery through technology [1] Group 2 - The author, Gary Alexander, has extensive experience in covering technology companies and has served as an adviser to startups, which provides valuable insights into current industry themes [1] - The article is published on Seeking Alpha, a platform known for its diverse range of contributors, including both professional and individual investors [3]

Group 1 - The core viewpoint of the article highlights that almost every software company, including RingCentral, is rebranding itself as an AI company, reflecting a significant trend in the industry [1] - RingCentral is recognized for its contact center solutions and tools aimed at enhancing employee and customer experiences, indicating its focus on improving service delivery through technology [1] Group 2 - The author, Gary Alexander, has extensive experience in covering technology companies and has served as an adviser to startups, which adds credibility to the insights shared in the article [1] - The article is published on Seeking Alpha, a platform known for providing investment insights, and the author has been a contributor since 2017, suggesting a long-standing engagement with market analysis [1]