RingCentral’s third quarter results met Wall Street’s revenue expectations but prompted a negative market reaction due to concerns about forward momentum. Management attributed the quarter’s performance to continued growth in its core voice communications platform, increased adoption of AI-driven solutions, and operational discipline. CEO Vlad Shmunis highlighted that “pure AI annual recurring revenue is growing in strong double-digit rate sequentially,” while also noting robust voice usage across healthcare, financial services, retail, and professional services. The company’s efforts to expand margins and reduce stock-based compensation were also emphasized as key contributors.
Is now the time to buy RNG? Find out in our full research report (it’s free for active Edge members).
RingCentral (RNG) Q3 CY2025 Highlights:
- Revenue: $638.7 million vs analyst estimates of $635.6 million (4.9% year-on-year growth, in line)
- Adjusted EPS: $1.13 vs analyst estimates of $1.07 (5.2% beat)
- Adjusted Operating Income: $145.9 million vs analyst estimates of $143.7 million (22.8% margin, 1.5% beat)
- Revenue Guidance for Q4 CY2025 is $622 million at the midpoint, below analyst estimates of $646.7 million
- Management raised its full-year Adjusted EPS guidance to $4.31 at the midpoint, a 1.2% increase
- Operating Margin: 4.8%, up from 0.5% in the same quarter last year
- Annual Recurring Revenue: $2.63 billion vs analyst estimates of $2.63 billion (6% year-on-year growth, in line)
- Billings: $637.7 million at quarter end, up 5% year on year
- Market Capitalization: $2.33 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From RingCentral’s Q3 Earnings Call
- Kasthuri Rangan (Goldman Sachs) asked about the business benefits of RingCentral 3.0 for large enterprise customers. CEO Vlad Shmunis detailed how agentic voice AI enhances customer interactions before, during, and after calls, emphasizing its integration across the entire communications lifecycle.
- Elizabeth Elliott (Morgan Stanley) inquired about the durability and mix of global service provider (GSP) partnerships. Shmunis explained that GSP business is growing faster than the company overall, with predictable recurring revenue and increasing adoption of new AI products like AIR by partners such as AT&T.
- Brian Peterson (Raymond James) questioned the long-term drivers of free cash flow durability. CFO Vaibhav Agarwal pointed to disciplined cost management, improved working capital efficiency, and decreasing stock-based compensation, adding that increasing usage of the platform underpins ongoing margin improvement.
- Sitikantha Panigrahi (Mizuho) followed up on contact center product momentum and capital allocation priorities. Shmunis discussed the renewed NICE partnership and growth in RingCX, while Agarwal reaffirmed the commitment to investing in innovation, paying down debt, and executing share buybacks.
- Ryan MacWilliams (Wells Fargo) asked about RingCentral’s competitive advantages in voice AI versus startups. Shmunis argued that RingCentral’s scale, data, engineering experience, and distribution network are key differentiators that new entrants cannot easily replicate.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the pace of adoption and revenue contribution from new AI-led products, (2) further expansion and integration of the RingCX suite, especially following the CommunityWFM acquisition, and (3) continued improvements in operating margins and free cash flow. Execution on these fronts will provide crucial evidence of RingCentral’s ability to sustain profitable growth amid evolving market conditions.
RingCentral currently trades at $26.93, down from $29.90 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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