Key Takeaways:
- AI Transformation: RingCentral’s new AI products (AIR, AVA, ACE) are on track to exceed $100 million in ARR by year-end 2025.
- Price Projection: Based on current execution, RNG stock could reach $34 by December 2027.
- Potential Gains: This target implies a total return of 15.5% from the current price of $29.56.
- Annual Return: Investors could see roughly 8% growth over the next 1.9 years.
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RingCentral (RNG) delivered a solid third quarter in 2025, with 6% subscription revenue growth and expanding margins that reached a record 22.8%.
CEO Vlad Shmunis highlighted the company’s evolution into what he calls “RingCentral 3.0” — a transition from traditional cloud communications to AI-powered intelligent business communications.
- The company raised its full-year free cash flow guidance to over $525 million, representing more than 30% year-over-year growth.
- Voice usage on the platform is growing in double digits, processing tens of billions of minutes annually across more than 500,000 businesses.
- The company’s AI product portfolio is gaining significant traction.
- RingCentral AI Receptionist (AIR) now has over 5,800 paying customers, up 80% quarter over quarter.
- The newly announced AI Virtual Assistant (AVA) and AI Conversation Expert (ACE) complete a comprehensive suite that addresses customer interactions before, during, and after calls.
- Management expects these new AI products to exceed $100 million in ARR by year-end 2025, with over 50% of the company’s $250 million annual R&D spend now dedicated to innovation.
- The company’s contact center solution, RingCX, is also showing strong momentum with double-digit sequential growth and representing nearly half of all deals over $1 million in total contract value.
- Free cash flow improvements are particularly impressive. The company generated $130 million in Q3 alone and expects full-year free cash flow per share of approximately $5.70, up 35% year-over-year.
- This performance stems from disciplined cost management, offshore hiring, vendor consolidation, and increased internal AI usage.
RingCentral also reduced its stock-based compensation to 11% of revenue in 2025, an improvement of 350 basis points year-over-year, while bringing the fully diluted share count back to 2020 levels through buybacks.
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What the Model Says for RingCentral Stock
We analyzed RingCentral as it transformed from a UCaaS leader into a multi-product AI communications platform.
The company benefits from mission-critical voice infrastructure combined with new AI capabilities that expand its addressable market.
Voice remains the dominant communication channel for business-to-consumer interactions, particularly in key verticals such as healthcare, financial services, retail, and professional services, which together represent over half of RingCentral’s business.
This foundation positions the company uniquely to deploy AI agents at the first point of contact between businesses and consumers.
The global service provider (GSP) channel, which includes partnerships with AT&T, now represents over $1 billion in ARR and is growing at double-digit rates. AT&T recently began offering AIR to customers, expanding RingCentral’s reach.
These partnerships demonstrate strong unit economics with breakeven achieved in under 18 months.
Using a forecast of 4.4% annual revenue growth and 23.4% operating margins, our model projects the stock will rise to $34 within 1.9 years.
This assumes a 6.3x price-to-earnings multiple, which represents slight compression from the current NTM P/E of 6.4x but remains well below historical averages of 48.6x (five-year) and 129.3x (ten-year).
The conservative multiple reflects near-term uncertainty around AI product adoption rates and competitive dynamics in the UCaaS market.
However, as RingCentral demonstrates consistent execution on its AI roadmap and converts platform usage growth into revenue acceleration, the company should command a premium valuation relative to traditional communications providers.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for RNG stock:
1. Revenue Growth: 4.4%
RingCentral’s growth centers on durable voice demand plus new AI product adoption.
The company delivered 6% subscription revenue growth in Q3 with momentum continuing across both core and new products.
Voice usage on the platform is increasing faster than revenue, providing confidence in sustainable growth as AI products scale beyond the $100 million ARR milestone.
2. Operating margins: 23.4%
Management has expanded operating margins by 180 basis points year-over-year to reach 22.8% in Q3.
This performance reflects operational efficiency through hiring discipline, increased offshore staffing, vendor consolidation, and internal AI deployment.
The company expects continued margin expansion as recurring revenues scale faster than costs.
3. Exit P/E Multiple: 6.3x
The market currently values RingCentral at 6.4x NTM earnings. We assume the P/E remains relatively stable at 6.3x over our forecast period.
While this seems low compared to historical averages, it reflects market skepticism around AI monetization timelines.
As the company proves out AI product-market fit and demonstrates revenue acceleration, there is significant upside potential for multiple expansion.
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What Happens If Things Go Better or Worse?
Communications companies face technology transitions and competitive pressures. Here’s how RingCentral stock might perform under different scenarios through December 2029:
- Low Case: If revenue growth slows to 4.4% and net income margins compress to 15.8%, investors still see an 8.9% total return (2.2% annually).
- Mid Case: With 4.9% growth and 16.8% margins, we expect a total return of 33.9% (7.8% annually).
- High Case: If AI product adoption accelerates, driving 5.4% revenue growth while RingCentral maintains 17.5% margins, returns could hit 60.1% total (12.9% annually).
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The range reflects execution on AI product adoption, success in converting voice usage growth to revenue, and the company’s ability to maintain margin expansion while investing in innovation.
In the low case, AI products see slower-than-expected uptake, or competitive pressure intensifies.
In the high case, the comprehensive AIR-AVA-ACE suite drives accelerated wins across both direct and GSP channels while usage-based pricing models unlock additional revenue streams.
How Much Upside Does RingCentral Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
