RNG - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the RingCentral’s Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Paul Thomas, Senior Director of Investor Relations. ahead. go Please

Paul Thomas

afternoon earnings Good Senior to second RingCentral’s of Thank call. and I XXXX conference Relations. RingCentral’s am quarter Investor you. welcome Paul Director Thomas,

David Shmunis, Joining are Officer. Mitesh Founder, Sipes, Financial Chief Chairman Dhruv, me Chief Operating Vlad and today and Officer; CEO;

followed today format Mitesh, prepared Vlad, Dave remarks Our Q&A. by include and will by

intend differ forward-looking of discussions Exchange statements to by ir.ringcentral.com on to reference and to update a incorporated and contain A statements These today’s assumes call, statements. our to slide the RingCentral website our and uncertainties responses risks Investor earnings RingCentral. discussion. will today’s risks our in or replay Securities is release, Some into periodic made related business of are Actual SEC encourage our filings uncertainties. you materially discussion of this deck, may learn to and results not forward-looking forward-looking about call. visit the I more and our with access our statements. is to at Relations to non-GAAP your no from our obligation to does webcast subject reconciliations, on and comment GAAP reports, Commission questions contained our and

deck a slide certain posted is the corresponding on not non-GAAP Investor For GAAP guidance, reconciliation the financial our forward-looking website. measure detail in available the of guidance in to as Relations discussed

Vlad. Stock bell that, IPO in the to me the Wednesday, Exchange. York the ringing we you In Xth invite over the anniversary be call let tune on Xth by addition, like With at to turn RingCentral’s we’d to closing New celebrating will September of when

Vlad Shmunis

conference joining quarter earnings you our Good afternoon call. thank for and second

public we’re quarterly As celebrating company. our a XXth Paul mentioned, as report today

was momentum our the this We’re proud the This I’ll of quarter. exception. channel business, an and begin in by and We expectations record highlights had unbroken of and stretch. with covering outstanding for meeting quarter. of by our of mid-market led continuing enterprise some was investors’ QX entire no strength exceeding our partners. key

revenues a up second was XX% guidance quarter. grew total high $XXX for increase year-over-year, year-ago in This This the range. to our of is end First, from quarter above the million. the XX%

core XX% AT&T subscription up in Core the from subscription strong quarter Second, continued its business revenue our excluding year-over-year, performance. same last year. grew XX%

enterprise mid-market Third, seats and or showed business year-over-year We This business. is mid-market as million grew greater. and results. now a define enterprise excellent and $XXX XX% XX

$XXX year-over-year. with and or or UK Our now is enterprise over We recurring we deals large business, saw won strong in annual performance It as in defined million. more over grew the $XXX,XXX number customers in Fourth, XXX% revenue ARR, of a France. Europe.

We region. the are momentum we are pleased seeing with the in

continue partners to impressive deliver channel our growth. Finally,

This quarter million. XXX% year-over-year grew business our channel to $XXX over

These to is partners is fixed legacy winning more for of communications, We RingCentral and and the supporting is winning in solutions. winning, choose because locations our voiceonly phone designed Cloud are seeing RingCentral with lead in leadership. our cloud. Cloud investments systems, no well-differentiated longer in that distributed winning modern innovation. focus of because our the of RingCentral, view, relentless drive mobile bolster workforces. meet needs and cloud industry on our is new, capabilities

of strategy. XX Investor purchasing investment decision more capabilities open contact messaging, is much voice data our video, our as customers. platform land-line the center aspect choose replacement. innovation with platform team legacy, critical our We This at our important influenced the Customers Our and that Mobility, in customers. most all than RingCentral recent shared on were resonates of considerations. Day top our

to solutions speak Our industry-leading cloud allow communication numbers re-imagine internal themselves. work-flows. and their completely external and And businesses communications for

communication XXXX, calls the XXX% all party like XX% over grew other modes video healthy a messaging, grew API and at usage voice team in of year-over-year. While year-over-year third

continued. story the quarter This

integrated an the in wins center, wanting mobility, team that open solution platform by again customers more. video, largest and Our offers quarter messaging, contact were influenced

other Officer, will and Sipes more Our Chief my some of to this add color comments. preceding Dave Operating

leadership associations. Our differentiation and technology leading being and is industry similarly recognized by analysts

we of industry several leader recently. press workforce user innovation, Glip a won These by awards open team and As to the its for design, include hub messaging experience well developer as community. recognition ability adoption a we to mentioned as because first technical as communications our our mobile of and digital productivity, serve in platform as release, best-in-class of increase reception recognition

market to of continuing the exceeding rest between XXXX. is and in ahead, well us underpenetrated to $X billion growing are the in large revenue invest the opportunity communications field. and moat achieve a We and With industry of in the RingCentral positioned cloud widen lead goal the our

the for some Dave color, Operating to over will call Sipes. turn Officer, Chief I our Now

David Sipes

you, Thank Vlad.

pleased saw are our of with momentum the We business. quarter and the in the results enterprise and mid-market we

our scale, Our NFL growing well maturity sales In major our growth sales being by is the and Enterprise are across across densify continue we expertise metros expanding our segment as fueled to channels. we as all of or cities our and internationally.

we our point Mitesh mentioned the detail Earlier segment Additionally, later. efficiencies into even will scaling Vlad improving the reasons numerous go are choose more are Enterprise RingCentral. as customers team. that on

the and contact through capabilities secure reach these of mobility, Let ease center, me messaging. like customer walk team integrated video, our deployment, global from win second few that a quarter. highlight wins examples critical just I’ll helped

well continue we referenceable of are key. Enterprise accounts, penetration known As customers

XXXX with their they to across meet its their proven they win all modern-day legacy a won that locations. had workforce Storage were announced were Subsequently, of leadership, second was professionally in largest Storage operator more example, For using U.S. facilities owner properties locations that a system and legacy reliability business. last the the has XX U.S. taken capability Storage, a than system. because the we and of needs XX significant deploy of issues Public Storage strong largest chose Public system to struggling facing with quarter of and of self-storage year to states. using the across industry Space of world’s The locations. operator deploy Public thousands this Public Extra across channel was and X,XXX Storage, Global relationships we self-storage RingCentral recognized months

their Now we compare all a in RingCentral across partner, their and weeks. deployed a RingCentral X,XXX that and just capabilities of two of Using deployment. half locations combination a more key to channel

Another and directly their of platform. Medical Office. a In education, to RingCentral Center. an multi-modal Southern platform When won center and seats Enterprise University. our powerful deployed capabilities. combined deployed electronic where contact our was Contact its example by in APIs, video chose selected RingCentral integrated fully One win RingCentral seats will They of in system. One our medical a primary leader fully RingCentral healthcare record One Medical a for and with integrate communication platform open Office will communications, One Medical, capabilities open With of our Medical they When deal we administrative we care. plans with were technology-enabled significant have have of Hampshire our meetings, over because X,XXX New X,XXX chose

we strong Europe. mentioned, a Vlad in quarter As had

important RingCentral quarter the will the They our professional over and global because Luxfer association reach, U.S., deployed. example, Luxfer total materials company. Holdings, ability UK, of platform Republic. selected and value plus fully services France. this to rapidly. we Europe. Circom Luxfer of have Circom for mobile a million with RingCentral our an television highly first plans won seats $X in of UK global in capabilities Office professional service advanced we our won chose and For unified X,XXX contract public a In to the RingCentral XXX and when seats capabilities. deploy deal over in engineered globally deploy deal Czech

large opportunities. the Our channel partners these contributed the channel This investments in success of is significantly our globe. result a to our across in

For six example, channel wins just won I with of five the partners. were mentioned,

of the land quarter. in deals and cover our expand I’ll Now some

of Contact Internet over up, of had deployed and RingCentral Internet Brands, and a e-commerce longtime Glip been has messaging. online websites, seats a advertising X,XXX Office and RingCentral team broadly First had leader Center RingCentral. our Brands in customer combined

X,XXX This quarter the an to expansion increase agreement they seats. signed deployment to

RingCentral Chilli’s originally Maggiano’s across Brinker their International, restaurants. owners restaurant and is example of Brinker Another locations. deployed Office

retention RingCentral in RingCentral with goes unwavering This Center outstanding and seats Office by now RingCentral. X,XXX their our to as commitment hand Mitesh. to over expansion quarter sales shared from customers, existing had upsell Contact domestically and an their In performance quarter expanded has customer our deployed on wins This results location. by headquarters summary, impressive will Hand success. both be internationally. further we strong and they adding with and Brinker our deployment underpinned significant new

growth doubled pipeline at with Our weighted and with than year-over-year enterprise our more is team. Enterprise growing that strong penetration rapid has continues a sales pace supported along

committed innovation believe the We success us. front we of substantial that market in opportunity we well-positioned win and are to customer are to and

Francisco San I will show, there. our Xrd the for Finally, that held excitement through Annual is us November will ConnectCentral, hope Conference in be User XXth. XXth you join building on

our for Officer, Financial financials, color turn I Chief Mitesh the to will Dhruv. some Now on call the over

Mitesh Dhruv

and Dave, afternoon Thanks, good everyone.

Before begin method. on full XXX RingCentral’s call XXXX our adopted discussing to as you This as deck to as IR results, I’d of Jan supplemental information. ask posted to points the our of like slide the refer We provides today the key under retrospective I website. X, well ASC

year-over-year. from $XXX by business year on in year-over-year the was and our periods In for year-over-year to XX% year We deck. with the non-GAAP financial of Office strong measures $XXX revenue end With enterprise GAAP partners. results. our to led mid-market beat our from Unless that We to $XXX release. for our comparisons. great million, numbers with quarter. high ARR ARR Normalizing up AT&T, press are had the reconciliation XX% to grew a the grew let’s earnings provided the by revenue core metrics grew This performance a XX% second non-GAAP XXXX quarter, million, up indicated, respective the subscription A year-over-year. grew comparative deck million, all Total otherwise with guidance. is of Once and up subscription And have channel follow that, in our ago. move our up release ago. all a slide our key and XX% again, second XX% XX% provided press all slide of to for results supported RingCentral

Our robust $XXX mid-market enterprise of growth business. million. and performance up with again ARR was over led in by was XX% year-over-year, It

this partner of quarter. triple year-over-year. expansion one this these dynamics in once Our were deeper of and line our To were million to over give in their of than $XXX metrics growing the reinforce million grew rapid time continued a to We June, strong, business. over over $XXX our grow represented SaaS second to we more Investor this more of one-time our story. investors efficiently, Channel model. business. business articulated half the ARR Overall, of enterprise top partners core These our focused few channel only we would but elements quarter half was on the from again growth of our digits XXX% business like our philosophy recap At a profitable performance Day with elements QX growth. the model. appreciation is

me economics elements. Let key growth start its and two with

to net retention, first is both customer, SaaS The cost And which acquiring In these existing includes is a second trended customers. of year-over-year. or book. QX, the up key of to the metrics cost upsell

to and is our First, cost our more enterprise reps and reps of improving. continued increasing experienced improve. An number experienced, mid-market business becoming are the enterprise productivity of to book

Second, improving economics of more virtuous line. profitable bottom invest nicely expanding retention to These growth. growth our in net a mid-market us while cycle enterprise year-over-year. drives and This the improved enable

and the basis million and ended Second line quarter and Subscription top margins. margin financials. points $XXX QX. on was was points resulting our in million from strong XXX Moving up QX Total sold XX.X%, an basis G&A. quarter leverage revenue up strong cost revenue in margin of year-over-year to across $XX million. goods was increased Operating cash, We of with year-over-year. The our X.X%, increase $XXX gross to XX% from XXX our

Now to outlook. our let’s turn

our are raising XXXX We guidance.

We of annual be million between subscription to an expect million revenue XX% for and $XXX to growth $XXX XX%.

XXXX base XX% to impact begin Excluding increases as on of XX%. our in The comparisons to the AT&T our expect we impact overall relative normalize. AT&T AT&T, will revenue core grow to subscription growth revenue of and abate

between revenue million $XXX expect million of $XXX of total XX% to an XX%. We for annual and growth

our with points We expect XX is of XXX expansion to margins basis non-GAAP of to delivering consistent operating X.X% X.X%. This of annually. objective

difficult $X.XX and to effects non-GAAP based diluted of and reconciling million to non-GAAP convert, acquired include $X.XX We of because The is remeasurement, EPS EPS, could forecast constant compensation, debt do GAAP of between change. our the amortization of $X.XX to it predict intangibles. shares. to of We not be of any of relating between XX expected currency following: to GAAP $X.XX item on non-GAAP difference a and which significant fully subject EPS amortization is $X.XX stock-based expect discount

the million our annual third Now guidance. In to we XX% expect between third subscription quarter be for XX%. $XXX million for an of quarter, to and $XXX revenue growth

grow We revenue subscription core XX% expect our to to XX%.

revenue We expect between XX% annual expect to million X.X%. an X% and margin operating of non-GAAP of $XXX growth XX%. $XXX total million And for to we

business we terms To size our message summary, the bar intangibles. of diluted million We in do All of our is and Analyst expect sum non-GAAP pleased Day, economics, release rate press between effects of $X.XX bias any to the EPS that are are our to of context, our growth and we our performance deck. include Again, operating our both of total confident forecast of are amortization we that we With and difference revenue expansion. available based the The shares. us opportunity reiterate currency not is that the of growth. details in our margin, debt the EPS of Within remeasurement. given GAAP underlying also fully a with non-GAAP and margin our economics of earnings and our discount compelling delivering which from on In growth. acquired of guidance $X.XX have is Rule expected growth XX, of XX toward ahead on. set compensation, $X.XX operating high deliver stock-based $X.XX amortization of The following: sights is growth $X.XX of of to

while revenue are above we tracking in confident far operator for XX% exceeding this so $X and the billion the this to Q&A. me let With target are call to year exceed XXXX. also fact, a In in that, turn

Operator

Suri Thank time, the we’ll proceed comes Our this Bhavan you. Blair. Please question with with question. line session. a of first William conducting Instructions] from At be your question-and-answer [Operator

Bhavan Suri

job to in here. jump Congratulations, I first just everybody. nice there. touch – wanted Hi, can Mitesh just maybe

– great guys great have sort job had You of the a a up moving you’ve done enterprise.

but maybe talked I much financial Thank market, not more maybe even provided would guess, drove You some, be sort enterprise-based of that? about just any really, really Mitesh, some business. the And more performance, more on a metrics? color little I that you. know metrics, but becoming just you what the enterprise in a helpful. potentially

Mitesh Dhruv

Bhavan. Sure,

triple really million $XXX our the business It – of was it quarter. business. and north digits. represents solid was now And enterprise performed overall mid-market half yes, this So enterprise of they business, driven

in So number a enterprise four of solution these was it And three pretty solid the than mix the now terms performance. a asked. asking I’ll that’s in especially, ago. to say year market a be evaluating channel. coming the all very of or enterprises see phase you is the in things come to their different to is are one mind color least to UCaaS they’re phase And while And next solutions. at very,

one. that’s point So

pull is So now. mode that’s in there. demand It’s the –

we’ve our were and metric, signed given we in this core metric quarters, of a million-dollar not quarter – this TCVs a couple but a not record. is Second a key

in So metric. even know, strong. deals, as was which deal the And largest sign our of QX, actually it And seasonally did this XX signed you surpassed TCV we quarter, in that history RingCentral. we

So you gives color. that some

TCV, Within XX% about new the were deals, deals, of over million X new logos. TCV those

business. new totally So

the is productivity three, point say, itself. number Point I’d that’s two. number So

They We productive. overall being booking itself are more more seeing And channel going our ramped. Their are are experienced up. quotas reps is more.

a product, just are we model deals, we our lastly, a indicative across to And and on-ramps have that’s all communications So the It’s actually as is the multiple how a for Vlad for mentioned, growth. board. can looking sustain costs. helping us, growth which into its as that long-term unified about it’s customers deploy not operating profitable at And company. suite

early net-net, you So there. are in that phases and look, I these to are strong led think, factors the here, four a we performance

Bhavan Suri

[Indiscernible] metrics David. there. you, one Maybe for

one last in for even existing out You of just having quarter, base. sort of, strongest quarters the the called upsell

expansion a and see point you servicing the the Are the customers that product number of it on sort rates of then the The certified you at more customer? of net any and a trend little delivered you you bit. of of upsell like, second that that reduced stack, hey, are bit. that last when continuation how was speaks of new vis-a-vis So IT rate, net sort disparate sense as sort sort department a at upside touched like of look quarter, look is one expanded solutions, on much redemption driven upsell started I the the of dollar of and new in this

David Sipes

upsell new locations internationally we’ve retail the expansion and organization coming like sometimes the center across Brinker, product a of and U.S. headquarter then addition and the seen And example, with see, done places location. expand – both an additionally, locations see mix. in contact come We’ve will strongly We their where back divisions. other across for across you start then also into adding suite from in seats with out expansion

or And so business. we’re as just affect with in get we that the larger we the across initially expand seeing a enterprise, multiple get opportunity organization. more as into and division creates the that it’s product then certain upsell across dimensions And it

Bhavan Suri

That’s job. my Congratulations, you Thank taking for good Got helpful. it. questions.

Operator

with comes Bank question question. from of next the your Our of proceed line with America. Beliov Nikolay Please

Nikolay Beliov

my Hey provided and onetime Day. results. guys, thanks the prepared questions good in Mitesh, Analyst about congratulations you talking remarks, metrics on your for continued taking were at

quarter going trend those to the new how seems and least Can and bookings was provide bookings at XQ. exiting, in bookings are terms please us strong translate has very some those – nicely growth, I to future qualitatively accelerated into you guess, net of color on revenue? be of One accelerated which

Mitesh Dhruv

Nikolay. Sure,

metrics but note we a bookings Analyst because onetime over provide give move lumpy. rev timing of as And at bookings basis volatile. cycle. at rec, a on revenue, that a a did important longer the quarterly investors new period an to rec, as And – our the this basically There’s metrics causes underlying They these are segment, time lumpiness not our So the that yes, to are business drivers. look toward the Day of enterprise appreciation deployment of in linearity. to rev net it’s we

have and answer said, did subscription itself the your it’s XX%, sustained important bookings it our that And see up XX%. you actually can about quarter most from basis. quarter, strong so results look on of revenue, this which to we very, at ago to question, very of a That core year a in a was revenue, manifest of

And ARR. So you you to you long-term point are long-term be-all, which see most business, the driver we is I’d the did if – for point you metric, – the end-all, in at or I the is or sustainable that. acceleration would if looking metrics which steady

Our XX% XX% did steady almost Office ARR grow the business. mostly And quarter, office last at represents this of from quarter.

think, you about to time led So the pleased are for saw I business. to think, overall, translate this I ARR, growth bookings office. And with we very the XX% which

Nikolay Beliov

in follow-up, user? revenue context, that seeing you per a you as as And trend upmarket, ARPU guys average go in are what

Mitesh Dhruv

Nikolay. Sure,

compression we So steady there giving seeing noise some ARPU And all there’s out we there’s away are segments. are not deals, that. price hold in despite our seeing people are and that

able points integration provide the of that differentiation fact our a that phenomenon to provide Our are is with different ARPU platform. a we lot overall steady, and the to of is basically customers holding and

So not we yet. seeing are that

So holding steady. is our APRU

Nikolay Beliov

Thank you.

Operator

line your comes Our of proceed Please Craig-Hallum. next from Sutton George with question. with the question

George Sutton

out Can it wins. called to that’s your and in direct embryonic strategy, terms bit both specifically encouraged you Europe? talk And Thank an you. you of was about opportunity. with me channel little I attractive go-to-market seems in some a Europe that

David Sipes

Sure.

Dave We continue this is to – Sipes.

invest to deals. the Europe brought – into quarters, TCV across into – has UK – million-dollar aggressively continue four Europe now and multiple brought the We and last the We France. over has

that. win And in quarter. UK in CIRCOM France this to enterprise We growth some on with expanded region saw the teams So across we’ve in capitalize our and had that. Luxfer we’ve the and consistency the

George Sutton

to when in – things One call some with video. four didn’t of of become these to your this is if as the Zoom more I’m starts the And kind prominent, more three out of – we we to should would quarters of was hear about deals you start that XG a relationship, differentiator think curious forward differentiator?

Vlad Shmunis

Yes, very multipart Vlad. question. a is to This interesting mean, I it’s see. question we’ll George. Hi, Look, have Yes. here.

do environments, know, and lower-bandwidth call Zoom’s particularly becoming as an anything emerging in web video leader but and the you in, They So Wi-Fi. strong definitely which differentiate conferencing. it,

out So XG Zoom more we’d becomes better once of performance see probably even prevalent.

a when us we’re spot good definitely comes. think we there, its it So in helping

Unidentified Analyst

Okay. Thanks, guys. Nice job.

Vlad Shmunis

you. Thank

Operator

with question with next Tillman your SunTrust. Please Our comes proceed question. Terry the from

Terry Tillman

Paul, Hey, I’ve Hey, two Mitesh Dave, Vlad, there. got guys, and congrats. hope everybody I’ve questions. Yes,

of appreciate on your fact, commentary growth. it notable, question think record couple First was leverage anything terms been to changing look that’s lately. last Just growth? this your more level is, I operating upside just leverage of the value dynamics upside quarters, understand operating notable quarter, balance profitable But Mitesh, or of a in Is dollar more has what’s I for trying of upside been interest the kind at investing in I there if versus upside. in of

Mitesh Dhruv

Terry. Sure,

quarters, been falling And of was across have board. it way. the all quarter a chips very our strong last So the two

which been has – is trend, that seeing. a So which we’re

enterprise Now from the be into it quarter-to-quarter. we and can so segment moving lumpy are mid-market,

are are buying is staying which keep gross coming enterprise the a which expectations of metrics, is So longer, seeing SaaS – book the extrapolating are keep is terms more our this more. profitable customers a growth, of in down key beat. couple Customers in all can we But churn on low, you for key which lower the just on cost note, don’t see trends and serious mid-market of segment. in and of

was more was We the of a it say again. percentage call, than it as but bookings upsell didn’t XX% about Our than new more in XX%.

quarter Quite down the money buyers not to all frankly, able innovation invest and So have we deploy would dynamics, be, given double like to and growth the would there. we thoughtful to these this and in economics in GDM growth a manner. were Terry,

So to growth. said, the towards bend show forward I XXX annually. about think we’ve of That the operating XX discussed way basis to margin is be expansion, will biased going points we

seeing, turning here. that the on of speakers that But remains what given sacred just we’re said, to economics our going So for be – us. going we’re

Terry Tillman

And statistics Okay, of any relates just terms the customers follow-up Thanks you’ve number platform more of past fully are of are is, What again the on average question curious in and uptake, integrations. about platform. net platform my from quarter. integrated in to of great the on And all do right. place innovations, we that leveraging in the API for richness higher in kind and put I’m you see anything retention the workforce. where the job

Vlad Shmunis

thank question, as the with better Vlad far Yes, second of as retention. start here. the I’ll part net you,

choose is two-way enterprise platform a perfect primarily of frankly. customers little to on bit customers of It differentiated. obviously, much bit fully because the improve we that and a the So is is anyways. hard which have by It’s used do street a pretty us, record there platform, a these

As you apps with only provider an we’re know, gallery. scaled-up the

been would think of XX,XXX developers. that with many information I well apps forthcoming hundreds over we’ve have

case, segment of customers. platform and So a as selective, not enterprise none we’re yes, in but a bit churn in gross seeing self the little of the any is, certainly

is level question the of part quarter, first the of sort of penetration. what in on So

as which use, what use, API to as out voice is opposed in digits growing that I is calls shared platform of measured top number our of we by seeing we’re around triple XX growing XX% think the year-over-year. accounts,

the on outplacement platform side. major definitely So,

Operator

your Our DiFucci line John next question. from proceed with Please comes question with with the Jefferies.

John DiFucci

this, it’s like Thank you. the such guys. time, It’s for long consistent. to and it’s a like I’d here, almost comments especially see nice

do. So really hard to that’s

questions, you’re think maybe characteristics metric Dave, Dave Anything to I pipeline’s I the I close can be the you cycle, just these one are of pipeline that size can doubling, curious, share elongated think you to thinking, I any be said that changes customers, you the sales might okay, could or beyond But has think things the or has would larger doubling. doubled the guess, I answer And join think, if person a more we there Mitesh. just even have would into of us year-over-year. doubled? I’m rates. deal than because and with couple that pipeline? that are I been share the moving Vlad

David Sipes

that The mentioned, but early on We require we enterprise, penetrating earlier. have urgent about of talked felt to we selected sales Yes. come a come where us as more the think, now Mitesh UCaaS, to cycles, they’ve too accelerating, and scale coverage the mentioned say they’re I to had space they’ve starting in markets deals, Vlad basis credibility call and as number still we’re the much in have and a as to we those. in and assist if

some like of saw you So several. one of one Storage this Public that was of those – quarter, but it��s

about seeing the kind still I And nine I’d are sales was on enterprise customers six we’re select the market to normal there looking behavior say but if conservative, to of of months cycle ought expansion – be more on as However, to an side. UCaaS.

John DiFucci

Okay.

fully think can reps if update we And you Could right I any are that of sort that? maybe number last think, about think you. contributing you’ve less it’s was where I guess, give that, half Analyst reps now in comparison dedicated is ago even said And – Day enterprise great. curious, increasing in Okay, that said of than Mitesh your were I’m back meaningfully. of I your June at enterprise Thank that of just a better. so believe us since year you for on sort and ramped. wondering getting you indicated, can I you sales

Mitesh Dhruv

Sure, John.

Analyst two months. two less So Day, it’s than months the only been since

about data much not clip the point, have, It’s has slower that reps growth still months. changed in overall at the growth look give another rate is you much sales ARR will if last you I trending which then the is our two we So enterprise rate in since the enterprise. than same. the in But of you saw growth

a sort of gives sense of that productivity So there. you

John DiFucci

you. Nice Thank great. job, guys. Okay,

Operator

question. your Matt with from Our the line next of question Stifel. Van with Vliet proceed comes Please

Matt Van Vliet

versus for if channel hi. to success how new little partners help I bringing from the here expansion Thanks just I on overall. dig much just taking into with RingCentral around us deals Yes, continued of of is in partners. bit And growth maybe success the maybe having guess, more Office wanted a fold channel understand then partners, continued and could really and the my the that investing existing question. you more

David Sipes

it’s Sipes. – – Yes, obviously, XXX% we’re in at the over The channel’s again quarter. the Dave having growing

We record of a bring been it’s in of building sales had quarter. quarter. team. the quarter continue and We well through organizations their a by in penetrated reputation. fabulous our as representatives, partners largest as that we to their So And performance of education some every partners this hundreds our new

finding us, are We’re partners of effect professionally a of our to through deploy why and to implementation of the think And product our snowball professional coming ability because services customers quality are customer partners the are support. why coming, that’s I and these selecting creating us.

Matt Van Vliet

is at efficiency And side? just the as a the Or being on continue channel factor looking then really the influenced the by Is on partners? improvement and your that that overall cost-to-book. trend well of sales improving

Mitesh Dhruv

side get. we acquire is spend lower in really lead The of the down productive. if cost-of-book seeing factors coming the because efficiencies direct is the hotbed customers. marketing don’t you the being to to we these have It’s second again, both more salesforce a are is the of a leads dollars Yes, to cost-of-book channel cost-of-book. part, our And

Matt Van Vliet

Great, All thank right. you.

Mitesh Dhruv

Matt. Thanks,

Operator

question proceed of Bellini with Heather question. from the Sachs. your with Goldman next line Please Our comes

Mark Grant

Heather. This is Thanks. Grant for Mark on

competition, announced on some collaboration in the we saw Just space. recently consolidation

what landscape can as an had to some the the in competitive evolve? wins impacts you you But clearly what think forward and on seeing nice competitive going be generally us the update might the space give you’re in continues You quarter. just

David Sipes

Yes.

couple So the I mean, there. In I position. continue a think, we a market-leading UCaaS things of space, have competitive to

We haven’t in within UCaaS. competitive seen significant changes environment the

selling team bit consistently vendors are that maybe continued services. space, about have the but We quarter. you little win referring And cloud talking base. the have high pure-play been legacy and to consolidation of messaging rates, legacy mentioned, the still in you A

believe different approach and combination we the see where compete communications and messaging Teams with consolidation combining impacting And a UCaaS. as and Some people we’ve as bulk contact with a video business center, in that landscape we up in market. team trying are and the as that’s Microsoft. winning don’t well taken to

Mark Grant

Great. That’s helpful. you. Thank

Operator

with Brian James. with line next Please Peterson comes the from proceed question. your Our question Raymond of

Brian Peterson

My quarter. on strong Thanks. a congratulations

So one for you. Mitesh, maybe

You the hit upmarket a bit. on

that the factors driving You the color mentioned you add improved. improvement? net Any that in on revenue of retention that some can

Mitesh Dhruv

Sure, Brian.

XXX% lower provides are rate, natural three drivers, of one. because churn these number shift feel. net this you’ve I again don’t be metric. – quarter. quarter. annual So metric, to this I the for That’s an to every drivers again, upmarket is is out stable But And It’s terms it tailwind for the the gross mean, our meant to upmarket asked, was, it retention the which higher. that, Number of to over mix, a business exit and give rate, there customer mortality, customers in one it churn in we the since is look, barriers

Second is the and upsell land-and-expand.

in their remarks, initially. Dave were mentioning a deployment As do wall-to-wall really we and don’t Vlad

So where X,XXX to we went Brands of it from users about users. quarter, X,XXX this an gave about example Internet

how really and contact conferencing video cross-sell headquarters see we evolving more of can we is is is more third there’s are installed the quarter, is that. getting that the of we – We solution products selling are you this where Brinker, some center a out Chilis, bucket, sort – owner plays saw Marciano’s deploying in upside for a which base. where, one into And whatnot. deployed which the And them. So Italian the which retention. now, for food net is with

customer these to the So tailwind think, mix, leading three terms in net I retention. is of nice cross-sell, a land-and-expand, very vectors,

Brian Peterson

but that, follow-up relates Mitesh. a is size. that a Storage Public the Obviously, it on to a company just X.X-week for of quicker win, kind have would that’s than a I Maybe deployment, expected lot

As implementation of customers? we the for momentum have these partners, you a lot average in of Thanks, in how channel lot guys should guys. timelines enterprise – a

David Sipes

Yes.

sometimes nine that implementation or normally, major in XX and to the IT months months. in exception which and organization, And we’ll the XX with targets, implementation. see the may with phase can assistance the is six sometimes, occur distributed go organizations, days one enterprise at being of retail, So question

a they they wanted Now with very to situation where in move were Storage, Public quickly.

could we our their – rapidly a they us. out leveraged created entire leveraged they super organization. partner, leveraged we across They So roll quickly our that and model

to target So our of we move most even have the ability than can. faster companies

of And you And performance. see then deploy that where different that’s that what the kind so how and it is globally. very has legacy environment been could

Operator

question. America Bank comes the of proceed Our with your from Rangan Lynch. line Merrill next Kash Please with question of

Kash Rangan

Bank results the so Thank guys Congratulations wonderful Two of twin-pronged broad a the you question. a America. for you. questions, on attack Hi, from much. question enterprise traction. one in Vlad, of

and likes of As so industry, in of and you the a you automation where on UCaaS of leading, got guys our and forth. got and are then so content pocket, the see drop clearly collaboration flag got likes you the you you got pocket pockets pocket, the box you

XX we way today evolution see long. you How the industry, evolve for changes how the work remaining your those work more going we converging is And do the years way words, back years, we to in very what accommodate words these we do years is industry, different tactical As and the gets of done which did from work discrete? next other or back, our XX pretty Do in you, different? see the pockets XX question. X, second probably to be these that

me. practice much. often implementation you but so you With the of pitfalls of this years. That’s it grow Thank scale to dictate the pipeline as you’re avoid your flow quality rise because the systems for planning I’m how large future at implementation, potential of in to the business enterprise, integrator enterprises, curious the

Vlad Shmunis

questions. Yes, wonderful great. No,

evolving, always order be in look, digital well, time, as right? so going it’s how Okay, is as these transformation. this years, It’s so in to far called work

of We’re just a part that.

yes, true. it’s So

a large is really the very you same We of all the in leading it’s it are – of part same like and segment. train. underpenetrated very say, But

part People And devices us apps our provider are, a more, out to their the more we quite work we very few So a its And voice just more. key that of more UCaaS value road. RingCentral is of contact with beginning as cetera, our messaging a differentiates of and fully is value suite as the replacement. and video on voice consolidating where is replacing our There legacy and well in late, would mobile out. their people apps. there to as on get for especially But are importantly only – specifically, lot clearly there are as are of world-class see a are more of It’s And taking wrong. conferencing too. and there and et more. lot we of doing and for playing center, are the working trend RingCentral video, and there less relying been the not cetera. okay? me a systems, as Don’t people plane example, particular differentiator is us, there, is position in services web collaboration actually see as integrated there et And and

the So I think Day things. two we – shared we Analyst at that shared

today. digits. that mentioned earlier a we already this I triple features of non-voice growing in of said Firstly, use RingCentral little is

is out in these growth, that the that voice. While And but that multitude ratio are top XX see the Everyone single a of voice we we XX% also we one and uses accounts, of that use provide, of only still digits. uses have there is modalities growing triple ones not – healthy we other said a growing.

it’s I more would be more say a I in in have messaging. that solution vendor consolidation. can voice, clearly world-class demonstrated one contact in that important, don’t see center will the to very So in and There if going team video, be – necessarily same. we But we’ll provide of know

along just continue those we’ll So lines.

part is the what? of again So the question second

Kash Rangan

The professional services. you… How do

Vlad Shmunis

benefits in is end, to is the the level, a with at And a deploy. with able to brand, major possible Public which, high one it a cloud be legacy to detail, will weeks, Dave Yes. deploy the Global few company, major that provide easier a more in substantially example, short them but for is Storage, not XXXX simply of of the very solution.

is can much for is doing place So self-service need to that them, And we true everything are color. systems more certainly under seeing – definitely as just for need. maybe integrator. but that a we make a as much as not the and is there I’m deployments less possible. no less as there there we’re little sun much add as easy much possible David, saying

David Sipes

Yes.

internal resources countries significantly. resources. services, done We’ve the On in now. XX expanded a that both as partner half as in over we’ve well model We’ve field the half is professional that taken a deployments probably

with to product for this potentially think more we and contact So Pulse pursue. be into I we’ve more our creates deliver larger that And get things system continue there’ll us. products and for to complex integration and been us in to partners partners help center training changes, as enterprise, integrators that opportunities like workflow

Operator

with comes question Meta your with from Our line of Marshall Stanley. next the question. Morgan proceed Please

Yuuji Anderson

partners? additional of newer Or experienced Thanks And Are Sorry. be more Are you your question. the you’re my channel are that, verticals? they trending about Hi, – of on you Are for think some will on some you opportunity them? to the for with it’s similar Yuuji partners? you Anderson seeing how their on been bring with partners? at do how you focusing you that identifying productivity rate channel have seeing comment with taking a Meta. your trending? Could you productivity

David Sipes

and strong. partners is product to And ability educate recently Productivity our partners on year. national on this at swing rapid productivity. some able Yes. seen We’ve sales more to quickly largest also to their We’ve of force they’re high, perform some focused rates. their continue is

last large goal year. this already what partner Our of half has year last their in year did from first exceeded the they

seeing to those existing our ability also new bring productivity fruition. with up partners. We’ve and partners we’re ramp improved onboard to educate, with So and

RingCentral we’ve entire improved for think ecosystem So I our ecosystem, the partners. the

Yuuji Anderson

maybe question. broader Okay. a And market just then

there? In Are new of much. out? broader terms initiatives wins be in changes or Thank it broader customer is you any Or terms commentary inflections helpful. are seeing Like, you aging be equipment of Just any is there. customers? so incremental customer opportunities the you the might cloud seeing would what by

David Sipes

digits penetrated. the that’s single the to Yes. It’s move the category still cloud, digitalization think, cloud, movement of of a and been applications is And all to helping. enterprise I we’re broad the transition this to megatrend

there’s a desire and applications into have suites less the there’s take to a organization the to as So cloud, management-oriented. other long applications their infrastructure business productivity to But all moved ways still and people process-oriented have go. moved being cloud, IT the to get

Yuuji Anderson

much. Thank you so

Operator

comes Our next proceed your question. with of question Sterling from JPMorgan. Auty Please the line with

Sterling Auty

have up-on guys. is Yes, there France to done to Want in kind in UK. follow thanks. And it? I��m of around just terms capitalize you on the those curious, an structural what differences and channel earlier of markets? Hi, question any

David Sipes

U.S. of outside The to be stronger tends the channel

a is direct So importance infrastructure being to we channel and the infrastructure in that channel. built see invest we thing there. of by nice in mix the U.S. The

mix a still those markets, And like those and slant We’re a will than time. organizations – organizations it but workers little of more in channel direct. partners bringing long a those for channel direct channel bringing are are

And so the product. relationship them trusted RingCentral they to a and introducing bring

Sterling Auty

just of being linearity Got it. in four revenue that, more Mitesh, follow-up, days. then that for Noticed you. mix? three the And or, or I on indication an the added perhaps, to one international DSOs think, jumped Is quarter

Mitesh Dhruv

It’s the Sterling. former,

enterprises, be As we more are of tends quarter. [indiscernible] moving a back-end to it is mid-market to – usually the

Sterling Auty

thank you. it, Got

Operator

line Please the Dougherty. question. with Turcotte of with proceed Zach your Our next question comes from

Zach Turcotte

Hey, Catharine Trebnick. on for thanks, guys. Zach

Just of Center. Contact on a quick ones Collaborative couple

channel I’m you contact if of center. of second, First, your partners they in KPIs play related to Thanks. specifically the importance your or role metrics contact have center. just any wondering sales and then And the

David Sipes

largest in our we said, We influencing is it largest deals. XX% over our see Contact center, of deals. in

it’s So initial it and – important the also, as see you into mid-market both move we in It’s enterprise. deal.

there’s deal. products in the center to bring UCaaS leaning starting channels, an not opportunity educating because between the they’re maybe follow-on versus opportunity we’re cross-sell in for see they leaning, initial You’ll that time. it’s over and the deal, – know it us contact deals our if it’s And

Operator

line from Mike proceed Our Latimore Northland Markets. the next Capital of question with question. Please comes your with

Mike Latimore

great quarter. Thanks, Hey, great.

lot replacing the or of you the guess, I here. pipeline? replaced the ones here cloud guess, on-premise systems. some services legacy of you’re increasing telco-based in towards obviously terms two mix Just including I trends of other seeing any are providers,

David Sipes

– suppliers, messaging suppliers – business communications, product we do. we communication replace don’t video we applications, contact and with do categories center services, Telco-based obviously. core the the any services applications, ISP provide the and do business suppliers, We PBX But we as with all of providers. obviously, do UCaaS, don’t with

Mike Latimore

winning opportunity third in I providers, like, other meant, opposed on-premise? are – particular, guess, UCaaS as cloud you’re to – mid-market the Is more providers? replacing parties I kind in that other of you are replace when to seeing you are or providers you UCaaS

David Sipes

the We do math because of systems legacy the have works, displacements way share is providers, numbers but of other vast and cloud the just the replacing today. majority

Mike Latimore

obviously bookings, then of don’t there the growing whether Like And of XX% I guess, general are XX%. this point. international that things, international side of what quickly, from Yes. bookings have percent at of on I ballpark any that’s on a sense market coming the

Mitesh Dhruv

Mike. Sure,

we down and multinationals globe. Australia seats and doubling to global countries. their to is the U.S. is turned across the it on those but of And for on think the then and UK is That’s Office have wherein have, international is more one. angle Global sub-XX% – bigger on So about have it. we the offices the in are now way turn now with deployment and revenue international we GTM And technology

So a it’s to that sort of different international. on spin is XX% more revenue. a bit technically, of of But question less answer than your

Mike Latimore

around give you is largest or this said the had you you think like history company’s I And Can the like that? in anything the deals quarter. in details

Mitesh Dhruv

the around is Details of deal that largest question? history, the

Mike Latimore

Yes.

in quarter You history details in like the the one your or said had around largest that. something you

Mitesh Dhruv

is cycle. the fairly fairly This give – PBX. we cycle which our was quick where it How Public saying large terms one We of with the sales cycle, you was recognition really both the you company ability Dave had seat give ones brand was and we have fell are and not center was count, with quickly. of other of it going the one the reference of the where it’s sales this And because in a It’s some CIOs. Storage, color. contact of deals, I’ll – in but quick one to was sales

the And in right step direction so there. it’s yes,

Mike Latimore

thanks. Yes,

Operator

with question with next question. your Robert Will comes proceed Please W. of Power from Our line the Baird.

Charlie Erlikh

taking targeting for on to the say Erlikh XXXX? to true Could the is way of be customers confident doing near This adopting in bit in for Thanks specifically? more say, cloud meaningful opportunities you some the versus, a you or more guys. those little those start customers now solutions that question. the And less are six a Hey, the about Global would target might talk medium-term? What in you things Charlie or will the Will. Thanks. ago you’re months enterprises full

Vlad Shmunis

which the we take are the were or I’ll last here. We confident. Vlad confident. more of always part hi, Yes, is less question,

in see end tangible on in have every there the points. the for today, regulatory simply are But we fully if. certain enterprise as we up Now why proof far isn’t as Global XXXX believe with maybe eventually regulatory it’s one And seeing cloud, barriers. that not what are And geographies, reason when, exception we no a address the matter barriers, of ground can we Dave the

David Sipes

Global we’re movement definitely, – XXXX better XXXX It’s is and UCaaS. Storage at that seeing now, Yes. look we’re a company. Global seeing Public

dedicated focused So there. that’s sales we one accounts. a on named also We’ve built these team have win

Charlie Erlikh

Great. the guys. on Congrats Thanks, quarter.

Operator

as our as gentlemen, for end well Thank session our you conference. reached and XXXX of have RingCentral’s Ladies question-and-answer Call. joining we the Earnings

disconnect. now may You

RingCentral (RNG) 6 Aug 182018 Q2 Earnings call transcript