RingCentral, Inc. (NYSE:RNG) shares are trading higher on Friday after the company reported strong third-quarter results and several analysts raised their price forecasts.
Earnings Snapshot: AI Revenue Surpasses $400 Million
Adjusted EPS of $1.33 beat analyst estimates of $1.28, while revenue of $676.04 million topped the consensus forecast of $667.04 million.
AI products exceeded $400 million in annual recurring revenue (ARR), while gross debt fell below $1 billion ahead of schedule.
Free cash flow increased 21% to $157 million, prompting RingCentral to raise its full-year outlook to approximately $625 million. The company repaid more than $110 million in debt, repurchased $18 million in shares and paid a $0.125-per-share dividend.
RingCentral Raises FY2026 Guidance
RingCentral raised its fiscal 2026 adjusted EPS guidance to $5.07–$5.12 from $4.96–$5.10, compared with the analyst consensus of $5.04.
The company also increased its full-year revenue outlook to $2.65 billion–$2.657 billion from $2.635 billion–$2.646 billion, above the $2.641 billion consensus estimate.
Subscription revenue guidance was raised to $2.563 billion–$2.569 billion. RingCentral expects a non-GAAP operating margin of 24.0%–24.2% and a GAAP operating margin of 9.2%–9.6% for the year.
Fourth-Quarter Revenue and EPS Outlook
For the fourth quarter, RingCentral expects subscription revenue of $653 million–$659 million.
Adjusted EPS is projected at $1.32–$1.37, compared with the analyst consensus of $1.35. Revenue is expected to reach $673 million–$680 million, above the $672.51 million estimate.
Management is targeting stock-based compensation of 3%–4% of revenue over time. The company plans to balance investment in AI and revenue growth with tighter cost controls and stronger cash generation.
Analyst Boosts Forecast
Needham analyst Joshua Reilly maintained a Buy rating on RingCentral and raised his price forecast to $110 from $85.
Reilly cited strong AI adoption among existing customers and new customer wins in the third quarter of 2026. He sees further growth potential in the second half of 2027 as renewal-related headwinds fade and AI adoption accelerates.
The analyst believes investors are underestimating RingCentral’s business resilience and expects revenue growth to improve in 2027, despite conservative initial estimates.
Morgan Stanley analyst Elizabeth Porter maintained an Equal-Weight rating and raised her price forecast to $91 from $41.
Porter said RingCentral delivered a stronger-than-expected third quarter, with subscription revenue growth accelerating for the third consecutive quarter, broader AI adoption and better-than-expected profitability.
However, she sees limited scope for further valuation expansion given the stock’s premium to peers. Further upside will likely depend on upward earnings revisions, leaving a balanced risk-reward outlook.
Porter raised her fiscal 2026 revenue estimate by approximately 0.5% and her fiscal 2027 estimate by about 0.4%. Improved fiscal 2026 profitability also lifted fiscal 2027 projections, with free cash flow estimates increasing approximately 1% for fiscal 2026 and 3% for fiscal 2027.
RNG Stock Price Activity: RingCentral shares are trading higher by 8.36% at $86.06 at the time of publication on Friday, according to Benzinga Pro data.
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