RingCentral's AI line doubled while its CEO says AI barely touches his network

On October 22, after the close, RingCentral▲+3.69% — RingCentral, up 3.69 percent today reported its best quarter in years ¹². Revenue of $676 million beat estimates, adjusted EPS of $1.33 topped the $1.27 expected, operating margin hit a record 24.7%, and free cash flow of $157 million rose 21% ¹². The stock jumped the next morning and three banks more than doubled their price targets↗: UBS to $105 from $45, Morgan Stanley▲+2.56% — Morgan Stanley, up 2.56 percent today to $91 from $41, Jefferies▲+2.02% — Jefferies, up 2.02 percent today to $75 from $40 ²³. Every one of them kept a neutral rating.

The AI number doing the lifting

The line bulls cite is CFO Vaibhav Agarwal's: recurring revenue from customers on a paid AI product topped $400 million, about 15% of ARR, doubled year over year ¹. The AI receptionist alone has more than 22,000 customers, nearly 4x in a year ¹. Guidance went up across the board, to $2.650 to $2.657 billion of revenue and $620 to $630 million of free cash flow for 2026 ¹².

What the network says

On the same call, founder-CEO Vlad Shmunis sized his own platform: roughly 40 billion minutes, 14 billion calls and 4 billion texts a year ¹. Traffic growth, he said, has been "strong but linear," and "overall penetration of AI and AI-answered calls on our network is still very, very small percentage-wise↗" ¹. Paid AI ARR doubling reads as explosive until you note it is growing, as Agarwal put it, off a smaller base than the subscription business ¹.

The filings back the CEO's word over the tape's excitement↗. Ten quarters of revenue show a straight line from $593 million to $676 million, steady 5% growth with no AI kink ⁴. The stock re-rated on a doubling off a thin slice of a 6% grower ⁴.

The contract nobody can price

Buried in the call, an analyst asked why the NICE contact-center partnership extension ran only one year. Shmunis first denied a one-year term had ever been disclosed, then said multiple years remain and the deal "could continue being extended as it has been for the last 12 years" ¹. A 12-year relationship anchoring the contact-center economics, and the market apparently cannot tell how firm its term is ¹³. With no 2027 guidance offered, that contract is the money question behind a stock at $83.39↗, up 189% this year ¹³.

Watch the Q4 print, due early next year, for whether AI pushes total growth past 6% ². Until then, the targets have doubled and the network has not moved.