RingCentral Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

RingCentral RNG reported third-quarter 2025 non-GAAP earnings of $1.13 per share, surpassing the Zacks Consensus Estimate by 4.63% and increasing 18.9% year over year.

Total revenues of $638.7 million beat the consensus mark by 0.29% and increased 4.9% year over year. A robust product portfolio and strong subscription revenues drove the upside.

RNG’s Quarterly Details

Software subscription revenues (96.4% of total revenues) increased 5.6% year over year to $615.8 million, beating the Zacks Consensus Estimate by 0.04%. 

Other revenues (3.6% of total revenues) decreased 11.5% year over year to $22.8 million, beating the Zacks Consensus Estimate by 9.79%.

Ringcentral, Inc. Price, Consensus and EPS Surprise

Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote

Annualized Exit Monthly Recurring Subscriptions (ARR) increased 6% year over year to $2.63 billion, driven by strong demand for AI-powered multi-product offerings.

Enterprise ARR increased 3% year over year to $1.107 billion in the reported quarter.

RingCentral’s Operating Details

Third-quarter 2025 non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter to 77.6%.

On a non-GAAP basis, research and development expenses decreased 0.7% year over year to $61.9 million. 

Sales and marketing expenses increased 1.1% year over year to $240 million. General and administrative expenses rose 17% year over year to $47.5 million in the reported quarter.

On a non-GAAP basis, operating income was $145.9 million, up 14.1% year over year. The operating margin expanded 180 bps from the year-ago quarter to 22.8%.

The non-GAAP EBITDA margin was 26.3%, expanding 180 bps year over year.

RNG’s Balance Sheet & Cash Flow Details

As of Sept. 30, 2025 cash and cash equivalents were $145.3 million compared with $168 million as of June 30, 2025.

Cash flow from operations was $151 million in the third quarter of 2025 compared with $167 million in the second quarter of 2025.

In the third quarter of 2025, RNG bought shares worth $117 million. The current remaining repurchase authorization is $384 million.

The non-GAAP free cash flow was $129.5 million compared with $144.3 million in the previous quarter. The non-GAAP cash flow margin was 20.3% in the third quarter.

RNG Initiates Q4 & 2025 Guidance

For the fourth quarter of 2025, RingCentral expects revenues in the range of $638-$646 million, indicating year-over-year growth of 3.9-5.2%.

Subscription revenues are expected to be in the range of $618-$626 million, indicating year-over-year growth of 4.8-6.2%. 

The non-GAAP operating margin is expected to be 22.8% in the fourth quarter of 2025. Earnings are expected to be in the range of $1.12-$1.15 per share.

The share-based compensation is anticipated to be in the range of $64-$69 million in the fourth quarter of 2025.

For 2025, RingCentral projects year-over-year revenue growth of 4.5%-5% on a reported basis. On a year-over-year basis, Subscriptions revenue growth is expected to be between 5.5% and 6%. 

The non-GAAP operating margin is expected to be 22.5%, up 150 basis points year over year.

Non-GAAP earnings for 2025 are expected to be in the range of $4.29-$4.33 per share, and share-based compensation is likely to be between $275 and $280 million.

Zacks Rank & Stocks to Consider

RingCentral currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are StoneCo STNE, Fair Isaac FICO and Analog Devices ADI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo is set to report third-quarter 2025 results on Nov. 06. StoneCo shares have gained 138.6% year to date.

Fair Isaac is slated to report fourth-quarter fiscal 2025 results on Nov. 05. Fair Isaac shares have plunged 17.1% year to date.

Analog Devices is set to report fiscal fourth-quarter 2025 results on Nov. 25. ADI shares have gained 9.9% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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