RingCentral (RNG) 12 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Ryan Goodman	Director, Investor Relations
Vlad Shmunis	Founder, Chairman and CEO
Dave Sipes	Chief Operating Officer
Mitesh Dhruv	Chief Financial Officer
Nikolay Beliov	Bank of America Merrill Lynch
George Sutton	Craig-Hallum
Bhavan Suri	William Blair
Terry Tillman	SunTrust
Meta Marshall	Morgan Stanley
Brian Peterson	Raymond James
Samad Samana	Jefferies
Michael Turrin	Deutsche Bank
Sterling Auty	JPMorgan
Will Power	Robert W. Baird
Dmitry Netis	Stephens Inc.
Brian Schwartz	Oppenheimer
Mike Latimore	Northland Capital Markets
Matt Van Vliet	Stifel
Zack Turcotte	Dougherty & Company
Jon Kees	Summit Insights Group
Kash Rangan	Bank of America Merrill Lynch

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. And welcome to RingCentral Fourth 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. to conference like host, to now Goodman. Ryan would turn over the your I ahead. go Please

Ryan Goodman

Investor Good you. XXXX am Director call. quarter welcome earnings I of RingCentral’s Goodman, Thank Ryan And conference afternoon. to Relations. RingCentral’s fourth

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

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

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

Investor retrospective not XXX our under the For is on XXXX, discussed as available the method. as reconciliation the the of deck of guidance, detail posted corresponding certain in We a X, forward-looking GAAP website. non-GAAP financial measure full adopted January slide to in Relations guidance ASC

in indicated with comparisons. is slide turn all to deck. over and that, the me the periods respective follow A reconciliation and call of our are press With Vlad. the results non-GAAP for in year-over-year have We numbers to that provided non-GAAP with release. release otherwise Unless measures comparative earnings let slide of provided GAAP all the XXXX

Vlad Shmunis

figure outstanding was the finish with thank further was we QX. believe quarter momentum Revenue, strong for end year the with and approximately enterprise closed we in to guidance. call. slowdown earnings exceeded RingCentral. performance business am seven in for distance Fourth secured our no a the We deals we an We in also competition. quarter joining from driven conference to Good mid and in eight afternoon record non-GAAP to The our ever channel fourth saw QX, of great partners. year execution the and ourselves market deal number you by continued and quarter momentum all breaking high in margin digit combined announce operating eight TCV our our at TCV that total deals. such excited I of first our

to are seeing enterprises cloud. sizes the of We all moving

me metrics some Let for cover the QX. of key

and guidance million. revenue high our above of year-over-year XX% grew end total to increase range. is First, This $XXX the

our core last from revenue up for XX% legacy in subscription quarter grew the year-over-year, same Second, normalized XX% year. AT&T the base

a now key or it’s and Third, enterprise million outperformance. grew be XX mid-market seats to mid-market business. our business define We annualize This year-over-year $XXX XX% a driver enterprise greater. and of continued as and

TCVs in grew business $XXX,XXX with our Fourth, over contributing $XXX over Our XX% seven-digit defined $XXX to to annual for or million as record deal customers year-over-year the or million. more a with doubled nearly general of revenue number enterprise year-over-year ARR recurrent channel quarter.

four across this is consistent cloud-based our Center cloud cloud. Gartner is global. fleet Communications titled winning Momentum in market. licenses towards is communications by driven a shifting $XX Cloud communications vendors broad This by with for mobile, from the published UCaaS is UCaaS Contact have dollar a seeing in Cloud-Based legacy of and the refocusing that, become premises Both by RingCentral solutions. for recent report billion of served Quadrant states every more and It solutions is base research solutions XXXX. winning cloud is these capabilities the clear be that Magic Unified utilizers, range an and legacy distributed will are It We XXXX, expanding now parameters. in surpasses

leveraging customer portfolio inbound look engagement open demand customer we single RingCentral and Contact launched on our with This integrated seamlessly into the communications continue of Center industry. product customer, the new that for conference to believe platform digital partnership combined announced and At for artificial momentum, the our expansion. in our intelligence adding now based with acquisition To broadening accelerate and interactions. we we and voice we media mobile And voice an announcements. the customer mid-market to real-time blended of product acquisition well-differentiated As enterprise work unified app build customer It and engagement key One, strong force our service engagement Engage made optimization, provides on digital application. announced we platform RingCentral and First our to of a innovation and outbound we drive team RingCentral post-call customer we differentiated month messaging, and our cloud. Engage, user engagement transformative Connect Dimelo. November three, includes analytics. in experiences our We is portfolio important Two, last to Connect launched transition will First, for portfolio. three to the new enable customer customers

our commitment ahead XXXX, As to look customer we steadfast. success is to

and We innovate will our continue to rapidly competition. out innovate

our billion with a between exceeding XXXX. industry-leading mode customer in world widening solutions of combined competitors. and gap Our revenue $X communication support goal achieve and We deepening believe are class we in that and cloud our to create us our collaboration well-positioned

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

Dave Sipes

the We great to land and continued was our go-to-market and we are expanding and our enterprise Thank strength strengthen with and rapid a pleased you, quarter of efforts Vlad. our capabilities, product the It pace success business. our in mid-market innovation expand. attribute with

our pushing with and targeted our driving three On success. program. industry areas verticals we are One, direct growing channel, two, front key reach, expanding the ahead three, GTM sales on the focused

XXXX in which An followed expanding news with experience plus international as France second have in First, with media major sales U.K. win, Canada disruptive our events organization. times, of the across Australia. continued throughout This further down with and we past and metro legacy seven-figure with our now win financial direct a customer the a well momentum was intensified we TCV QX and U.K. as force QX their major the enterprise U.S., in new shutting markets, example on-premise system. had

Suite continuity applications in were tolerant, and Google architecture securing win. was mobile Furthermore, other also our cloud critical unique addressing Our and open and Office this highly cloud fault key their distributed integrations with business G needs. Global first in platform

increase seven-figure partners. we with strong our in than growth more of Second, our in coverage new contributed QX. XX% wins in channel the Channel

In re-engagement XXXX. late with announced AT&T addition, we in

We have enablement and initiated other sales training force.

growing XXXX. We forward partnership are encouraged in and to-date with to this look our progress

industries, increased on vertical targeted healthcare FLED we focus our financial, GTM Third, and initially [ph]. at

these more and our seats recent FLED XX,XXX and support our In figure QX cloud XX% we Office in University. An students. the seven TCV fact, staff of of of in example a deals. will largest to had verticals, faculty wins RingCentral and deploy students. messaging XX,XXX our staff faculty, to is team of of selected we our roll-out comprising Columbia in several announcement delever We than for XX,XXX solutions seven-figure each win Columbia

by across communications chosen entire We University to modernizer institution. the Columbia thrilled be as infrastructure are a

In areas availability, collaboration, Office terms integrated platform, of and contact mobility key a product innovation, Global focus high and differentiated center. include

RingCentral Center State the securing new Our RingCentral Warriors. communications, winning beat This critical with Chase out in were high provider platform and in the integrated RingCentral app win of the and cloud arena. is with winning availability the all a unified will the the legacy Golden cloud. example in clear Warriors’ well-known business collaboration capabilities power process. a including

seats expand our Office to number registered rate allow Global to yards. provider continue with was good enterprise our to flows win of of use over will their open improve X,XXX Global example We and total our and XX,XXX to customer and Office to added a quarter efficiency Office, will Copart, Global them approximately online countries options. XX. platform have an countries close A capabilities. certified APIs Global we platform platform app we capabilities our count Last of They Office on in X,XXX is our that bringing to open developers leveraging integrations. of vehicle several The now

as enterprise to across need capabilities EMEA, they Latin locations America. deploy channel Global of to Our and were our partners. was customer us by paramount brought focused national Asia-Pacific in Office This one new

seat with center contact momentum X,XXX software a cloud with securing our applications a also provider. large win We continued strong

XXXX, one X,XXX Dental, seats. in integrations A support the strategy our the had want omni-channel enterprise core capabilities, multiple analytics a on organizations. winning. to to our good In integrate land Last of deployed. QS all customer to I our the update Engage, X,XXX are winning plan on with Dimelo expanse Our end-to-end were a also their applications product working. and largest we acquisition RingCentral to brief late nation’s is seats cloud is based After but example we that not Heartland lease, key and now give beginning QX deployment dental strong expanded of platform.

hard market continued relationship is engagement center to goods channels forward including large XXXX. including expanding relationship Dimelo eight-figure QX contact extending was helping retailer, digital expanded X,XXX able channels our digital our With La with a its was them We in platform their quarter, chat. Dimelo SFR early one GTM momentum portfolio Dimelo. Redoute, In deal large integrated working seat leadership Dimelo strength SFR, consolidate TCV a product their French, with customer happy supporting capabilities, look Redoute now in to apparel transformation. and XXXX customer and this with great France. see in into our began with and a multiple we and XXX-year-old are summary, through seven-digit also to telco La with business in win. Apple first

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

Mitesh Dhruv

over good and our afternoon, our exited rate X%. everyone. was rate was with Thanks, million, and year, was run revenue we XX% another $XXX growth approximately margin of Dave, XXXX the operating good

$XX above of SaaS of a believe and growth rule evaluate million a $XX rule key million, We to strive metric profitable growth high is and We we of across combination sustain. companies the the is will operating bar are to margin. that revenue executing a

million. partner. enterprise, standout ARR mid-market channel financial up up Key continue performance metrics. capped $XXX year-over-year. to strong to quarter for $XXX to Mid-market up ARR drivers contribution with had under year-over-year to $XXX ARR be nearly year-over-year Our with million. key all million, fourth XX% Enterprise and $XXX year enterprise XX% Total grew RingCentral on Office from with and grew strong again and XX% ARR doubled quarter, the million,

record secured deals, of seven-digit a deal. TCV We eight-figure also number one including

year-over-year. are XX% than our average size in growth seeing our are was of the deal the configurations the and In and and This customers This contract. value million $X overall with fact, deals of more longer enterprise impacts our and the are ARR mid-market words, has other in In higher a of wins multiple getting to combination number we increased both highest positive business. expanding. larger expansion wins

saw quarter. from First, we upsell, new of higher over represented existing mix This XX% again strong our bookings performance the new customers. business in yet in

in enterprise small for office mid-market of in churn customer churn, XXXX mix below the and shift the by first in dipped reduction Second, driven churn. was time half towards XX%. churn gross larger a is This business annualized as

In enterprise metric as customers in the introduced metrics, terms enterprise and ARR. greater XXXX with mid-market defined we XXX,XXX of

provide for metric our more based better dollar mid-market. portfolio. Dollar similar a transparency metrics to product they based reflect investors considering expanding are as We

happy to itself. in growth and we channel, our strong are profitable To both, that focused see philosophy, our growth line are in growth to the growth, end, with the our on business. channel Moving we economics on laser

economics, is relates breakeven lower time put, dynamic than offset higher lower an benefit. cost Faster versus longer-term churn we cumulative to and As residual and channel to channel Simply extra see residuals, Channels direct. even favorable after costs. profit. book more delivers cost book of to contribution

forward A the as provide due on we XX%. core and QX normalizes housekeeping outlook. then grew to million. Now able Subscription the grew Total of revenue, be metric, bit to in grew discussed only going for subscription to the financials term and our will revenue. on XXXX revenue briefly XX% I to last the base go subscription revenue will overall AT&T we agreement revised which the legacy through quarter, XX% AT&T $XXX AT&T

revenue point guidance upside. will of year-over-year AT&T on our well as XX.X% of the continue margin by to scale. appropriate. a over Non-GAAP also up year-over-year gross Subscription We operating X.X% to primarily driven continue we color margin was benefit ahead of a over provide was point as up and achieve

turn to outlook. let’s Now, our

For XXXX XX% we XX%. of between annual $XXX expect an million total to revenue $XXX million and to growth be for

across $X.X with to product non-GAAP strong EPS summary, financial XXXX innovation we metrics. finished execution, expect momentum and $X.XX. In of We go-to-market

market on-premises Looking competitors. over ahead, taking are as continue lead we our well legacy from well-positioned extending share to vendors, further cloud as

that We expect to channel product confident and as exceeding vertical we rule tailwinds and we go-to-market in will a million bolstered we footprint billion continue opportunities achieve incremental targeted $X see with a goal by our our the portfolio. programs. AT&T revenue and an With our enterprise re-established expanding Longer customer are expanded engagement both of XXXX. international backdrop $XX and in our term of relationship

to for Q&A. Now, let operator call me turn the the

Operator

of question first Merrill [Operator with Instructions] proceed line your Beliov question. with Bank Lynch. Nikolay America the Please Our comes from of

Nikolay Beliov

Mitesh congratulations Vlad for first Mitesh, you deal into when and and flow results. questions general Hi. look had at and question Dave. on and new in a upsell, you solid Thanks when taking think a the how about for ARR? eight-figure logos it and does I follow-up for my

Mitesh Dhruv

Nikolay. Sure,

it a up question, land new how So and three-part on our and does in then show upsell in happen one ARR. the expand, then logos first what is

So is one, let’s new first with logo. the which start

is is deployment have those when or for When a customer, the X,XXX new you to initial of which an about deploy announced, an very solid with potential the gave multiple overall a commitment prepared we seven-digit Dave from logos, now so deals chance eight we small wins on but the us the where of upsell land logos. expand, is initial was of usually the seats. at Dental, have that the or seats, quarter, go and performance a we X,XXX so consistent his Heartland to TCV news times. when XX,XXX to comes last If the were potential, which look watermark, this it seats high we over the very is -- a subset well new gives best in customer up of remarks that example X%

several So -- how thousand customers hundreds this is just one of of upselling. example are

So upsell, or land the ARR up we that’s provisioned. in only logos that number that, large Nikolay are way at and when deal, lines a it new is ARR and include users we shows the of

up So, showing up in for committed and in less to Columbia than most of ARR of the for value our future. so is X% only opportunity QX ARR example, the deal going be the shows in

Nikolay Beliov

move for it. you deal. when and you, look of enterprise, Vlad medium you And started the enterprise, with Got highlighting quick evolution question would you at a GXK Global RingCentral to small business, be XXXX, large you

If you longer at How sales color here Thank you. Any you it this cycle many me. think customers point. in win terms helpful? could That’s be again. have for GXK of you the will

Vlad Shmunis

Yeah. This is Sipes. Dave

range obviously, we and sell million we year seeing larger the the the into mega we see that the for so months of are move are a or nine and large we how think sales our averaging progression -- XX in enterprise, months of executing, was cycles As to question like and I the -- $X number XX deals this in of area. and cycles pipeline record did timeframe We in quarter. good in that was

Nikolay Beliov

you. Thank

Operator

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

George Sutton

wanted guys. I Mitesh, on question Great a you, the am enterprise I little differently. results. last ask side, to Thank wondering

plan company. relative cloud big begin opportunity seem to enterprise. of hit me understand… the would I stages on are with can do accelerator some you gave metrics going compelling early to on how You Help move how the forward. or enterprise larger to just you this we It wonder that

Mitesh Dhruv

Sure.

George Sutton

there? …sort of trajectory the

Mitesh Dhruv

George. Sure, Yeah.

close you forward-looking Just It’s the $XXX of showed it’s our to to strength. about recap, close And enterprise. -- quarter than business, XXX%. is the million but grew actually at office of really strong ARR, Officer and look it’s if of bookings enterprise mid-market to more XX% indicator,

because if momentum, as did XX%, overall deal deals is, and customers part segment. enterprise based entire we the actually on see is that’s two the $X and signed Part getting the said, extended. and you are up both close you XX So entire double over broad for year this did in one. the value And there the went million click to we a strength see duration Dave larger

So we are the look for there that’s you When the drivers the right. XXXX. on at plan force, sales drivers to sort gas of how the really key for XXXX, backdrop three step is, One here.

four number you XXXX is We at for will one. Part channel, every on-premise, keep on in densifying force our a cloud. two that’s one the there stat regions, that enterprise part by if seat be will the Gartner look the they for seats deploy had key for number deployed sales

impacts now to one players to work expanding a way is that be in EMEA just in consumer is this the cross-sell large changing somewhat port play a -- And U.S., portfolio, our in it third hope RingCentral the with to more like with the in to enterprises Engage going with channel So in now cloud. this the they brands, RingCentral future now we right now -- now large are the the behaved the France predominantly and behavior. given of

plus think, I at the if the efforts -- that’s wins I going with we overall think, to larger think GTM you portfolio, and So, cloud deal doubling with about would XXXX. product the enterprises our down way the and look

George Sutton

Perfect.

you a bit that quantify follow-up duration quick maybe that’s Could the the on a part the expansion, on duration Just there think give I that behind is it? an way of little contract some more keys us to extending, more of impressive commitment indication buyers. a

Mitesh Dhruv

but meaningful, in slight call years average right did plus saw around a and it with uptick. we minus very an not on slight direction hovering two-ish been It’s the uptick, or Yeah. a it go

Operator

question. of Blair. from your Our with line proceed Please Matt Statler next comes with William question

Bhavan Suri

your maybe But guess, there. guess, topline at It’s and Nice with biggest least Congratulations. with as the revenue, off, had ever and guys. I in starting Mitesh again, ahead and the margin, just about in and rule balancing you you of growing you so and Vlad. $XX job And am historically? you level beat you fast philosophy rates expectations investment have with going I drive million, Bhavan of sales you as the just balancing the of and that have of of of potentially could between was consensus. to in follow-up the are with on should obviously. you grow ‘XX marketing philosophy certainly here some I certainly guidance as you profitability. sort touched Dave on certainly, growth and growth are how team’s think Hey, sort

trying been any two think guys Just those you how there’s metrics? and in about to if maybe little in ‘XX and the change about understand philosophy longer

Mitesh Dhruv

Sure, Bhavan.

talk growth the about So in topic our business. let’s SaaS favorite versus margin,

So, chips to for have market taking the cloud is -- did We the our -- did we yeah, RingCentral a we thank have yes, the across did Most strong share providers. you definitely One, so itself is other the end a second reasons. And two for way cloud. Board. of fall up acknowledging. from quarter did coming

a whammy that we we about So call there look it of us flowed I estimates you double beat beat for think street minus And so was or beat, bottomline. and good how through $X XX% it in to the million plus the if at by a way.

this recurring drivers, inherent margin. the where margins think at there first, business drive upsell. you as incremental can the this a a look installed is in SaaS is that at model, of and When inherent churn, based you second, as in look revenue two as the leverage proxy our model, the leverage Now which are model, for XX% being

expansion gross one. customers our are the came definitely for you did you of the we we be change economics and no less for is look Bhavan been perk are going than second if customers growth, show committed saw But so, growth report first these margin bias going have our the we XX% So will existing are I think, and to that from our staying bookings the buy customers, down said, so that’s that from churn seeing And toward some we upsell hitting longer past. to time, churn to more platform with in rule as XX% our more be XX. from it and new be and of showing growth at about dialing

Bhavan Suri

helpful. It’s it. Got it. Got

competition, call. to touched over You so on Mitesh, will turn the it guys the I other on

people, of environment been competitive kind card share sort from have up ShoreTel have comes they you over of sort more been before have taking of said renewal for just you. other to sense any of that’s seen and guess, ShoreTel I an the of but providers, moving such, is You the at you also a disappeared, the and from but enterprise takeaway ShoreTel, the card level, leaving competitive takeaway being the of on-premise or seeing behind. further you primary it is from it, product players feels market still competitor, it fairly mid your of equivalent sort which like more sort who a like Mitel you is inflection largely keep

Just mid-market in environment? and around color both the some enterprise Thank the competitive on you. dynamics

Dave Sipes

few the the on-premise typically This Sipes. market we biggest and Avaya, is cloud market of replacements that the years. talking are Mitel, Yeah. with the ones to see common obviously accelerating, are point the And replace. buy accelerating Gartner The we is vast that and doing next majority from away the are in see will the the we we We people see are moving Cisco, that about the looking that that solutions solutions. over most largest Dave

quarter. typically one of largest key We or $X also replacing. providers deals sustained legacy we has compete rates true well, solutions like uptick that our be against win against will dynamic have and legacy our That those very saw are those players actually deals, million an stayed strong, this those in

momentum stronger over. on buyer cloud a migrate helping that’s functionality and from and of the see us we emphasis a segment market cloud greater So the that

Bhavan Suri

Thank It’s you, awesome. Congrats. guys.

Operator

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

Terry Tillman

numbers the Hey. congrats Good afternoon, gentlemen, outlook. say and and also on the I will

question Dimelo for TCV my how to recent we think, first one model, relates have, deal, could at sound. bad sorry those First, specifically? Looking seeing and throat day acquisitions you this maybe talk be forward kind immaterial you XXXX but revenue going to, two acquisitions Related maybe and but what to initially anyways, Mitesh about, were from it they a contribution Connect of look about maybe as I talk specifically, nine-figure I guidance, to the the to can

Mitesh Dhruv

your voice by Terry, sounds Sure, fantastic, and… way the

Vlad Shmunis

Compared to mine for sure.

Mitesh Dhruv

Yeah.

Terry Tillman

way… the By

Mitesh Dhruv

And look the nine-figure but your acquisitions portfolio and really in deal these due then to it time, to answer broaden First question, of addressable was and technology both so markets. tuck-ins mainly Connect product to Dimelo crack new were or expand our open

to the for and XXXX both for going focus on both products these these the So RingCentrtal is acquisitions platform. be integrating onto

the So revenue contribution insignificant, it’s if dialed in, we you after look consider at very have you especially writedown. what deferred

So there hope long-term Terry, with to more we this take to achieve that is year, term. to integrating long-term, both these investments hope on our these install products products synergies base cross-sell but the longer our

Terry Tillman

last for kind as into incremental installed some an driver cross to efforts or base, just and your GTM I about the about is follow-up what talking to curious Dave the or if all mobile am bringing for Vlad user could you. my really is And that app your conference new move so, for But it we app push together. What if there move upselling them I to of know Mitesh. is for don’t ‘XX? or to relates this Thank year the Okay. any of unified selling of be

Dave Sipes

is Sipes. Yeah. This Dave

unified the app. think with the mobile is question I So that new

see focused and over the that more that’s the and messaging, team experience the seamless are video something couple ability in base we app, quarters. to one experience lot that. pushing of a on a plus are across unified utilize having go, installed next a telephony advantages in mobile We unified We

advantage huge a the becoming across customers adoption application services, that the future that permanent to our We and create it’s for products the customers. other very for and exposure already It greater and we RingCentral. from as moved suite. does see adoption of greater allows do that over good think the I see to have

Terry Tillman

you. Thank

Operator

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

Meta Marshall

Thanks. Congrats guys. Great.

detail First there will just be it, a on or question Columbia helpful, to tied on you use to between threads it a of kind would used Can bit like students of the be a will the maybe it deal. students, little is just detail give class start. for talk how

Dave Sipes

Yeah.

So focused different was different start and the our team something in decision Learning across Management student Integration to messaging platform on, body and to move within we is will departments, a are collaboration these the to key supports the departments capabilities. student key rolling that it up that it core aspect body System that’s the with was RingCentral

that aspect been of important so. that’s So

Meta Marshall

Contact just of Okay. R&D, is talked to Got on center being outfitted, a of it lot First development it. XX And presence then kind used direction kind maybe more of year direction the last countries integration. integrating you international about guys expand contact with and some of

of where you a that going? of Just spend give is direction kind could if

Dave Sipes

Yeah.

Global between we app, product our innovation a to unified everybody side, Dimelo built creating moving is acquisitions the product well and is those the a the Engage is integrations suite with made as aspect on and on as over over there, X,XXX Connect years we So several continue RingCentral First as doubling key platform products, as well year global we these and countries upon unified certified a development, approximately growth with as as continue expand Office apps. on our have of XX grow to are which had for to every now we capabilities open big look emphasis platform

Meta Marshall

guys. Great. Thanks,

Operator

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

Brian Peterson

on and question taking for guys. the Thanks the quarter. Hi, congrats

to in XXXX? growth and So, margin a Mitesh, expansion could wanted you about talk comments just the implications channel on we of your bit, think the the expand about should how channel

Mitesh Dhruv

Brian. Sure,

the about model. and the margin -- shaping then business let’s means then how channel in see of up yeah, for it talk profit and what the we and in about will So, for terms performance we talk penetration ‘XX ‘XX

has been it generally a been it’s of XX% our stellar growing a look us, performing crown for So jewel, business. vector million quarter business, $XXX

channel stages, amazing still, we partners, it’s the in XXXX talk very, look early you So been very versus in to U.S. and And sense. ‘XX, are both internationally if if at the so it’s in that still you

going and So have, the of B and well. there, we that’s be going similar a has approach A, are which is channel part some channel we adding to so playbook key partners is the then partners where our in be serving sort within two-pronged as coverage been densifying ‘XX to also

relates for profit costs as and really economics, always as we Brian, it’s really growth that to and grow to know, Now mantra and profitable look at there. not you all us,

the one, model, is accretive profit payback reasons, run cumulative you and if to dollars there higher business other churn the no direct have the overall the channel and three dollars So incremental and the in through for to the channel. you a marketing through channel spend, for economics is channel sales model -- material the than lower is that faster, is are the

-- to pay So these more offset upfront offset than and channel. for three pay the have we residual the actually vectors we payments have the to costs

and and again, then cherry investment accelerate the us sales channel then, direct to extra which those dollars in So dollars the on the marketing, if for invest growth. free top, does up

accretive think, I channel to here the net-net, stay business. think, to is I So and it’s

Brian Peterson

the any are you on in of or Thanks, opportunities verticals terms just that three you you guys. the more, you proposition there sizes, anything Thanks, vertical is you displacing, Mitesh. just ARPU value can deal are mentioned? it. mentioned, Got who And for share that unique adding one

Dave Sipes

that’s in of our dollar verticals only there wasn’t financial We state our have from previously. to were each continue success in education. it TCV but sort we core and announced Columbia, had deals higher services, verticals, the other higher win, there with we million several a couple healthcare a and local win On education vertical education and of

cooperative agreements buying success will the clinical on help continue to have healthcare. areas within have and in with state such the we successes, healthcare, success continue medical we that us as Nasper in to expansion And municipalities signed add there, many future. and tips had additional additional Dental we on have Heartland Additionally, see

Operator

Samad with line Our of from next question. comes proceed with Samana question your the Please Jefferies.

Samad Samana

if years. I the in was in for favoring fourth quarter in the evening. Good more new quarter-over-quarter like is if renewals. looks seasonality questions. deals one for and few my change change any Hi. quarter this in more for Thanks for or large wondering is of net ARR there seasonality terms Mitesh there you, a strongest a new taking last fourth

as follow-up us a I our think going then help for about to something models Just have we question. forward ARR

Mitesh Dhruv

Yeah.

Samad, at call X% sequentially to look X%. for sequential the between you it office trends If

you at it this look QX X%, under it was year of over this little If was X%. little quarter

but that broad the so though it’s strength pretty of So said, sequentially some fourth pretty strong that for there, that’s it based. and quarter unusual, us driving was not is

Samad Samana

know I then federal maybe are Dave, penetration on forward if you remind for federal just ramping government you we and the couple that represents certified And type or breaking see maybe think us and how should into opportunity XXXX RingCentral going to ARR? there’s press opportunity Could then guys contract vehicles. an remind maybe forward? releases and And we about -- going already week how and Great. us, should it. the or you I a percentage follow-up last what property wanted what highlighting the government of

Dave Sipes

Yeah. us and These the opportunities local. are for early on still state

have this pace. of in through additionally obviously education, had higher a state expand significant We at an K and XX. into see as to ed local in on We success lot opportunity even both that a to get

We our personnel within that sales in on focused area, team have and increased and state local, that our in dedicated staffing area.

an there. opportunity So it’s

follow that something federal then I’d to say that. we don’t see and are this on, as at working this federal a have as state opportunity point, FedRAMP is would government, move be after local far we success we will though, are projecting. yet timeline educating additional and we that As in But

Samad Samana

again very nice and my guys. Great. questions taking quarter for Thanks

Operator

Deutsche next question with proceed your the with Please Michael question. from Bank. line Turrin comes Our of

Michael Turrin

to Could afternoon. wanted Good about and bit I have Thanks. the able you platform now market, are on are well Engage the you spend little to built Contact set talk what complements Center opportunity a as bit about this how that more acquisition. today? into First perhaps the Connect you you how walking as guys. Dimelo bring thinking us through Hi, a time

Dave Sipes

outside to that in Yeah. Center, capability RingCentral class Engage for way The customer digital traditional lines -- the customers have starts ability And the with world with we that the is a is new Contact engagement and the communicating -- bringing or -- allowing penetrating outbound outbound of support world think we solutions workforce capability best-in-class inbound business. brought are and Connect lines say, First little blended of, business consumers class of more marketing new and businesses. customer capability a into sales

prospecting So it the adds organizations to sold the have gets it with. affected as breadth of that we within already the solutions, as well some to buying to companies or additional

Michael Turrin

the margin points Mitesh, XXX one call expectations then have basis basis year. And for XX around past points Thanks. in per you expansion Okay. it to talked maybe in for

initial year have You growth the less and would you to topline toward else implies accelerating slight that Thanks. gave the for there? XXXX there us is for year, this that is maybe the a away that result you touch been anything just given us or of a than next like more than guide take

Mitesh Dhruv

seem look takeaway of at probably nothing last No. you to Michael, there. the read there is Nothing material if too to starting from guide to you for the year, would there, you much if be similar,

I we to is theme, at achieve. rule are of overarching mind, operating business we and where the strive in least think think, margin I we to plus way growth think toward the what need the I the driving that’s XX keep

is points noise will is points, So of and despite taking overall, that I just operating rule a the But it’s XX achieve. basis here expansion to there. expansion it’s basis where -- investments we we two these stay. a to show strive XX to for acquisitions make But, of XX think, think some I think I two margin so despite these on have in we

Michael Turrin

year, the on have strong Congrats in questions. results done the the taking guys. for you Thanks

Operator

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

Sterling Auty

in just bring examples. am those couple Day, trend I you Analyst I think, had and the able the especially vendor on in you the growing share terms opportunities? Back or from some I in guys. pushing to idea a are are wondering further shift, that out Hi that perspective, are resellers the winning of panel more at Thanks. as you you that are of market up other finding displacing remember the obviously customer the am you channel. that Yeah. I competition primary wondering as vendors but this market of are wins, the seeing you

Dave Sipes

of to year-over-year. I think grow we have over in the had continuing success we around lot its XX% a channel, see

a and call built brand deliver retention new We by that the key a upselling reputation we both which on the as of Copart sourced supporting first this a these example, strong well channel existing across new they have and can to that accounts. we in was the activities in by have the the mentioned An we as channel deal last in some selling we customer partner activities and into built brought was secured accounts, just quarter us. the

with it’s the channel. deals confidence showing partner in us largest to that the on So a exists willingness and

about partners to So, strongly with replacement feel we work legacy good our there our position in solutions. of our continue and go-to-market

Sterling Auty

and All Great. would of of follow-up XXXX, now -- are looking size in be, least quantitatively at you where And the sales the qualitatively we end right. the of marketing terms or go-to-market end that we versus then at describe one the of force. can XXXX

mid-market grow So that versus and traditional that of enterprise much much that headcount was and geared how toward specifically segments? how did

Mitesh Dhruv

the are which you I so will what asking. data Sure. some give would help frame you Sterling, frame -- points,

that And look look point investment number quota they all if growth these AR clip because the went at and have lower of we terms some ARR we mid-market our growth If in toward investments you -- in of growth enterprise overall. -- sales of and at from headcount, you overall GTM, mostly maturing the for where these dollars went one. sort the the improvements seen segments growth, force, ramping carrying of so was

So and hitting more reps quota. are are ramped

shy efficiency given are way sales growth think overall seeing. the we are our to growing that’s force of the some we our So of about it, ARR where

Sterling Auty

Thank it. Got you.

Operator

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

Will Power

Great. Thanks. Yeah.

opportunity? back, a Center key piece that like the maybe to it like attributes couple first what of were participating win, messaging I’d are kind missed other piece that let and out displacing there the way looked but this, but coming Were that for start I maybe part was with the that able to a key are questions, RFP stand bidders so sounds cloud you among other Columbia, provider. of on the you as there that, of of final helped an I And back it Just Contact there? is you the sounds love in is you then color me providers process, guess which provide really any step terrific, it maybe to is still on-premise get

Dave Sipes

Yeah. Sure.

for a have couple discussions for we with Columbia, probably years. So, in while of been a

Teachers as the have graduate their So but the College against have -- they we mentioned, solution was main with that. you customer campus and legacy we in running school been a solution probably won market-leading Columbia, legacy against competed

it a the time. is examples it they integrations, of integration, went point, decision, mentioned I the at helping scalability well, of about bulk the and additionally was critical, Google So in the that’s -- earlier, and opportunity platform versus ServiceNow but integration of but as UCaaS point on-prem as the is cloud was with at that smaller win were but there kind this an of LMS through our and but of component Center this Contact

Will Power

just you other the front? mean, question, Okay. on That’s nice growth I like like that I to back too, are were can nice referenced on great. to Board of there you revenue, want color provide in my percent the in feels then And win what the look any international headway second across come you it making U.K., the quarter, international

Dave Sipes

Yeah.

significantly. continue coming it the deals We $X that have our million market has of and out seen grown in to success we have there team and

into success. something and forward. see success now Australia we going The better better France, a than we little So But international so expanding probably of had recognition see the is and that in overall. having revenue have we expansion are we U.K., additional continues grow, to percent are we both opportunity faster

Will Power

Okay. Great. Thanks.

Operator

Netis comes your question next Inc. Our question. with the Instructions] proceed [Operator Dmitry of line with Please from Stephens

Dmitry Netis

just am for Thanks. I revenue guess, wondering guidance about I for QX. subscription

versus quarter, this is $XXX.X strong low $XXX.X the this up plus -- plus acquired, you million. of business for your right, $XXX.X $XXX your the and I that monthly to churn, some run million I quite which was of a annualized if $XXX roll net guide come rate, million business new So recurring million with record million, QX subscription

why is something So and am in decels four the I am XX%? growth your XX% growth I given quarters last this to wondering missing run rate if rate

Mitesh Dhruv

we look, Dmitry, -- we we know know start don’t we we -- to a don’t -- know. Sure. year, what don’t but the good it’s don’t

one think just cautiously time. are We and I step year for at optimistic the a

Dmitry Netis

all? business Anything or counting is the at it not AT&T just to read on AT&T

Mitesh Dhruv

to long-term start optimistic We dialed AT&T, want in, have from there. think term, and I good a relationship that million not or macro Longer for a dialed given the in the much. in we not Dmitry, have AT&T could driver -- to for previous a $XX I ‘XX emerge us think, as But because us cautiously was have for we just just business relationship be us. much be revenue we it’s not

Dmitry Netis

your look bookings margins what for you but with the are kind when tell may can Zoom one the three Fine. guidance will to be, kind for sell you in All entire can gross what I on line Contact. of to And us do not I the gross your margin what bundle, margin you know it, and calibration what’s ‘XX? UCaaS, impact suite the meaning in you gross bundle little video guiding and us the give the Contact, May ask a of commercial percentage of of question, right. all in of products, other include

Dave Sipes

Sure.

You are packing like seven questions in one.

so that’s So on congrats -- that.

don’t So unlike product, separately. separate two or I sell cloud of we They the vendors, our will bundles. in Office so Contact -- are been with try Center Contact along bought don’t it’s some other so we

margins, these secret minus terms in Contact percent gross XX-ish no margins you call in of for your but gross is we margins, the plus put or Center that our gross Contact previous. should which Center, in I’d it’s what and two level do deep think, I or XX% products. range, I at Office margins two, integrate calls the minus with the allude did around with So, to it, that plus margin the if a previous gross you so And range blend be the

So thanks that. for being ahead of

Operator

question Our Schwartz of with the from Brian comes with Please line Oppenheimer. your next question. proceed

Brian Schwartz

there. of congrats I and fiscal maybe David much very you been year. really have for a nice question one I out would just answered Most ask granular my thought but today, on questions Thank Hi. Yeah.

champions this Just you you are and just is, and now on base, that you strength having that buyers on we you I momentum speaking today? enterprise I about The the curious, platform the customer that seeing company. and to within engagement scale but if are customers that of have here more base, think you installed an communications sets where am an are journey are into in off big here in that if new one the are face before, am talked given starting in of business there’s deals different you to the the Thanks. the opportunities ask plus are upsell emerging reason expand you is the based just of the I collaboration with the for buyer platform to kind curious the

Dave Sipes

Yeah.

the more customer see organizations, sell little CIO the as in this gets Center, look of a Engage are with the on little we business involved have -- our these So within customers buyers, becomes as selling we service but we Engage and of line bit procurement and important marketing we with to of sell and and often Connect some in expanded more Connect First, Contact side. a typically do we the organization,

different we those those have across selling success and in deals across cross-sell sell purchase decisions all into some broadening in the those organizations lot a and deals are are -- we we buyers the then of of even products. will one is product then upfront other of overtime the other all work working about, had buyers we as and So we the talked and

Brian Schwartz

David. Thanks,

Operator

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

Mike Latimore

over seat, here, average in percent what’s year per Great. is coming the your and of there? terms bookings ones international been Two the trend last from revenue of quick what

Mitesh Dhruv

a the than no, bookings pretty of the no will it Sure. overall remains the we for but pricing, sub of the overall out. And small was the it part quite, terms break the smaller -- Mike, in International No, take I pie growth specifically don’t business. remains bookings still faster first. piece it’s second our of XX%, overall stable. international, growth then Mitesh. change to

of it remains growth emerging So for us. an vector

Mike Latimore

Great. Thank you.

Mitesh Dhruv

Mike. Thanks,

Operator

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

Matt Van Vliet

Hi. taking for Thanks my question.

of investment little productivity. stand specifically those groups overall a the of vertical quota of how overall additions that’s sales bit a sort in headcount? more the where in selling and some been carrying to guys headcount the just little curve bit is the Are generally curious groups earlier recent been Just since then you on relative a on of they terms

Dave Sipes

Yeah.

So have for those we a been investing verticals while.

because of But we I having of the them. mentioned state, in from That’s education those are financial local the that’s quarter. So increase that’s of not verticals, something and had success the teams, several million those we because driving success new. the and each services, to but seeing wins are dollar productivity healthcare us size

Matt Van Vliet

you. Thank Great.

Operator

proceed Our next with the Company. of comes your question. Dougherty line Zack Please from & question Turcotte with

Zack Turcotte

Hey. Zack Catharine on for Trebnick. Thanks.

and out of is a kind and technology kind year your there seems we been as So at complete conference in now, portfolio do conferences focus like recently other to is recent large acquisitions particularly right customer perspective, from and point and like product Contact of focus engagement it to and Center? platform, your your this Contact on AI you at to user Analytics a relation what’s last Center the have round feel your with product

Dave Sipes

help communication overall in Look, are as all the world-class additional thing can always to solutions in areas, there’s opportunities as and solution create the for believe is across so with bringing is bring to a look technology in these think portfolio. look we to suite the looking we that organizations more important at probably, we we are We customers opportunities. The, our I still continuing our as bring we bar a also experience we user products, innovative us. want very expectations. of products from of a capability, the that across bar both in from from seamless high HA innovation a focus new that user big them and is as platform have expect do that’s so experience, to that a meet as to customers we And that as high well

were the we to working strength be suite. those key on of will things So further the product that

Zack Turcotte

Thanks. Great.

Dave Sipes

Hello?

Mitesh Dhruv

Hey. Operator, next question? for the are you there

Operator

delay. the for apologize I

Summit the question Jon next your Kees line Insights of from Group. comes from with Please question. proceed Our

Jon Kees

squeezing Great. I in. in I here. mine am one for keep me question. Thanks will

into as as especially as the in As expand as markets, brand branding you -- and in can up? well you adjacent, you you is into these especially recognition, expanded with markets, have ramp you new your adjacent expand you efforts about expand your internationally, something that Thanks. to to have portfolio talk XXXX that make --

Dave Sipes

those Hi. will strong a like focused capabilities Dave The to you we build traditional the as And reputation in enterprise as our events, as go we some sure through both also It’s go we markets, well capabilities, are to -- field we marketing as make UK branding in we continue customers as in within across with with markets that and invest we go-to-market. both brand industry into see Sipes. nationally. sure radio additional as the and scale with directly channel the make well

by have in increase areas. proportion done will of as the those we and the continued say, in proportionally overall we same things So at past those would to investments are we grow we kind do. business that that to it continue I have so the

Jon Kees

work. Great. Keep will guys. up stop the Thanks there. I good

Operator

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

Kash Rangan

question. be either growth you. its standpoint on an standpoint from wondering, Street analytical. think point, your very not to I business for just and a But the me. that’s pipeline to at and answers $X when Thanks you be investment the the spectacular approach attrition on happening quarter. expense deals Hey, last keep I mega and ever see of plus are analyst know lowering Congratulations guys. about for Thank question. maintaining Are the your seeing course, for mega from a these taking if the answer of That’s deals you question, I insightful of or an to you Wall that as from look effect find life, inflection certainly these that prior happened it your to was how billion level. the guys in profile? more it’s you you

Dave Sipes

Dave is this Sipes. So,

enterprise. in mid-market have enterprise We into progression smaller into mid-market we larger, this success into had and now as then move had moved as mega we

playbook demonstrating success as are ends segment, with the dedicated be manage continuing the in we done happy of coming we upper managers been our post-sell the to the the the into manner and playbook success down. we other these it’s But we services have we the business and professional the disciplined definitely large have that rest partners. a to opportunities running We and do the segments, we we as are pipeline in been it’s in through same a bring market. migration in markets, additional of see advance to the continued of that customer right and channel customer those have in running are to a selling concert have do mix at Si capabilities in capabilities of

Operator

remarks. reached to have and turn the call the session We end now for will back management the of question-and-answer closing I

Ryan Goodman

in. for No. dialing Thank you all

next Thank you quarter. you. see will We

Operator

conference disconnect you at This concludes participation. may lines for and Thank your today’s your you this time.

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.