Mizuho raised its price target on RingCentral shares to $32 from $27 on Thursday but kept its Neutral recommendation, reflecting adjustments to the company's financial model as it shifts toward a slower growth profile and aims for higher operating leverage.
RingCentral reported fourth-quarter revenue that increased 5% year-over-year, with subscription revenue up 6% year-over-year. Both top-line measures were in line with consensus estimates. The company delivered earnings per share of $1.18, beating the consensus figure of $1.13.
With a market capitalization of approximately $2.52 billion, RingCentral carries a strong financial health rating from the platform analysis cited by the company, characterized as "GREAT."
Looking ahead, RingCentral issued guidance for 2026 that anticipates subscription revenue growth in the range of 4.5% to 5.5%. The company also projects operating margin expansion of roughly 75 basis points at the midpoint of that range, targeting an operating margin between 23.0% and 23.5% for 2026. Management reported that GAAP operating margin was about 5% in 2025 and expects it to approximately double in 2026, with a longer-term ambition of reaching an operating margin near 20% within three to four years. Management cited a reduction in stock-based compensation as a contributor to the anticipated margin gains.
To return capital to shareholders, the company increased its share repurchase authorization by $250 million, bringing the total buyback capacity to roughly $500 million, and introduced a quarterly cash dividend of $0.075 per share. Management activity has included active share repurchases, and the company's fair value analysis on the platform indicates the stock appears undervalued at current levels.
Mizuho said the company is transitioning its financial framework to better reflect a lower-growth, higher-margin operating profile while continuing to invest in product innovation and new offerings.
Corporate governance and board composition changed recently as RingCentral appointed Mahmoud ElAssir, currently Chief Technology Officer at UnitedHealth Group, to its board of directors effective immediately. Shareholders at the 2025 annual meeting elected six directors, including ElAssir, to serve through the 2026 annual meeting and approved the company’s auditor and executive compensation arrangements.
In addition to governance moves, RingCentral will be added to the S&P SmallCap 600 index prior to the market open on February 12, replacing Hillenbrand Inc. following Hillenbrand’s acquisition by Lone Star Funds. Inclusion in the index is a notable change in market positioning and could increase the company’s visibility with some institutional investors.
These updates collectively reflect a phase of financial model transition, targeted margin improvement and a clearer focus on shareholder returns, accompanied by recent leadership and indexation changes that reshape the company’s market profile.