Moody's Investors Service confirmed RingCentral, Inc.'s corporate family rating at Ba2 and left the probability of default rating unchanged at Ba2-PD. At the same time, the ratings agency lowered the issuer's senior unsecured notes from Ba3 to B1 and retained the Speculative Grade Liquidity Rating at SGL-1. The outlook on the ratings is stable.
The affirmation of the Ba2 corporate family rating reflects Moody's view of sustained improvement in RingCentral's profitability, a meaningful reduction in gross debt, and stronger free cash flow generation. Moody's reported that adjusted debt-to-EBITDA fell to 3.0x for the 12 months ended March 31, 2026, down from 5.9x at year-end 2024. That improvement was supported by more than $300 million of debt paydown.
Moody's expects leverage to move lower toward the low 2x range by the end of 2026. The agency linked that expectation to RingCentral's plan to use free cash flow to repay debt and to continued expansion of EBITDA margins toward the high-teens percent range.
In contrast to the corporate-level action, Moody's downgraded the company's senior unsecured notes to B1, which sits two notches below the Ba2 corporate family rating. The downgrade reflects the declining proportion of unsecured debt in the company capital structure as management prioritizes the repayment of unsecured obligations, increasing their relative subordination to secured creditors.
Moody's assessment notes RingCentral's scale within the unified communications-as-a-service market, citing annualized recurring revenue in excess of $2.5 billion and expected mid-single-digit percentage growth. The rating rationale also highlights modest leverage, very strong free cash flow generation with free cash flow to debt projected to exceed 50% in 2026, and management's active commitment to reducing gross debt. The company's contact center-as-a-service product, RingCX, is identified as continuing to gain traction.
The SGL-1 liquidity rating was maintained based on expectations of more than $550 million in annual free cash flow over the next two years, coupled with more than $100 million in cash on the balance sheet and an undrawn $305 million revolving credit facility. Moody's also noted that following the March 2026 repayment of convertible notes, RingCentral has no material near-term debt maturities.
Overall, Moody's view combines recognition of the company's progress on profitability and debt reduction with a recalibration of the unsecured debt grade to reflect changing capital structure dynamics as unsecured obligations shrink in importance relative to secured liabilities.
Key context: The ratings actions leave RingCentral with a stable outlook at the corporate level while signaling heightened subordination risk for remaining unsecured noteholders as the company continues to prioritize deleveraging.