RingCentral raised its fiscal 2026 forecasts after third-quarter results exceeded analyst expectations. Adjusted earnings reached $1.33 per share, compared with the $1.28 analyst estimate. Revenue totaled $676.04 million, exceeding the consensus forecast of $667.04 million. AI products generated annual recurring revenue above $400 million. RingCentral targets stronger growth in 2027.
RingCentral reduced gross debt to less than $1 billion earlier than scheduled. Free cash flow rose 21% to $157 million, prompting RingCentral to increase its full-year forecast to approximately $625 million. RingCentral repaid debt exceeding $110 million. RingCentral bought back shares worth $18 million. RingCentral paid a dividend of $0.125 per share.
RingCentral increased its fiscal 2026 adjusted earnings forecast to $5.07 to $5.12 per share from $4.96 to $5.10, against consensus of $5.04. RingCentral raised its full-year revenue forecast to $2,650 million to $2,657 million from $2,635 million to $2,646 million, above consensus of $2,641 million. RingCentral increased its subscription revenue forecast to between $2,563 million and $2,569 million. RingCentral forecasts a full-year non-GAAP operating margin between 24.0% and 24.2%. RingCentral forecasts a full-year GAAP operating margin between 9.2% and 9.6%.
RingCentral forecasts fourth-quarter subscription revenue between $653 million and $659 million. RingCentral projects fourth-quarter adjusted earnings of $1.32 to $1.37 per share, against the $1.35 consensus estimate. RingCentral forecasts fourth-quarter revenue between $673 million and $680 million, exceeding the $672.51 million analyst estimate. Management aims to bring stock-based compensation to between 3% and 4% of revenue over time. RingCentral plans to combine investment in AI and revenue growth with stricter cost controls and increased cash generation.
Needham analyst Joshua Reilly kept a Buy rating and increased the RingCentral price target from $85 to $110. Reilly cited strong adoption of AI by existing customers and new customer wins during the third quarter of 2026. Reilly sees additional growth potential during the second half of 2027 as renewal-related pressures ease and AI adoption quickens. Reilly believes investors underestimate the resilience of RingCentral's business. Reilly expects revenue growth to strengthen in 2027 despite conservative initial estimates.
Morgan Stanley analyst Elizabeth Porter retained an Equal-Weight rating and increased the RingCentral price target from $41 to $91. Porter said third-quarter results exceeded expectations, with subscription revenue growth accelerating for a third consecutive quarter. Porter also cited wider AI adoption and profitability above expectations. However, Porter sees little room for further valuation expansion because RingCentral shares trade at a premium to peers. Porter expects additional upside to depend largely on higher earnings estimates, leaving risks and potential returns balanced.
Porter increased the fiscal 2026 revenue estimate by approximately 0.5%. Porter raised the fiscal 2027 revenue estimate by about 0.4%. Improved fiscal 2026 profitability also increased fiscal 2027 projections. Porter increased free cash flow estimates by approximately 1% for fiscal 2026. Porter increased free cash flow estimates by approximately 3% for fiscal 2027.
RingCentral shares rose on Friday following the third-quarter results and increases in analyst price targets. Benzinga Pro data showed RingCentral shares trading at $86.06, an increase of 8.36%, at publication on Friday.
RingCentral Raises 2026 Forecasts, Targets Stronger 2027 Growth Amid AI Expansion
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Summary
RingCentral raised 2026 revenue forecasts to $2,650–2,657 million as AI products hit over $400 million in annual recurring revenue. Q3 results showed adjusted earnings of $1.33 per share and revenue of $676.04 million, beating expectations. The company improved its market outlook for 2027 and cut gross debt below $1 billion. Analysts from Needham and Morgan Stanley raised price targets, citing strong performance and a positive fear and greed index shift.
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