RNG - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the RingCentral Second Quarter 2019 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] Please note this conference is being recorded.

I would now like to turn the conference over to your host, Ryan Goodman, Head of Investor Relations. Mr. begin. may you Goodman,

Ryan Goodman

afternoon call. to RingCentral's I Investor Good XXXX Head second earnings Relations. conference am and you. RingCentral's welcome quarter of Thank Ryan Goodman,

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

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

forward-looking and contain statements. materially statements are These Some discussions responses and statements. differ of may to to forward-looking uncertainties. risks our from results our your questions will Actual subject

the and A related by our call. and statements of intend RingCentral uncertainties discussion risks filings update not to does discussion. incorporated to business forward-looking and made our assumes or in on with is and on no reference today's this is Exchange contained into the obligation Securities Commission comment

Investor a to GAAP today's non-GAAP replay our Relations at you slide earnings reports, ir.ringcentral.com to call our to encourage more visit SEC to webcast release, periodic website about access I RingCentral. learn deck, and of reconciliations, our our

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

all all with and year-over-year non-GAAP follow that A reconciliation slide deck. is comparisons. the in of indicated, are our otherwise GAAP Unless results measures non-GAAP release to with provided earnings

With that, let me turn the call over to Vlad.

Vlad Shmunis

lead in our with our all extended leadership enterprise earnings non-GAAP We had service and partners. the strong Mid-market call. our conference a exceeded from a Revenue, $XX and afternoon growth, to quarterly channel communications operating quarter, joining you margin, high-end contributions thank and second second Good of continued and market. billion EPS as we the our for strong guidance. unified the

during market the quarter. of with the seven-figure pleased initiatives, wins TCV early vertical results also again contributed are multiple which targeted our We

which $X regular TCV milestone a company. pleased record of Fortune a XXXX QX. enterprise-wide included with over of software we not year-over-year. XX% key XX number While up quarterly wins a over multi-national closed is in to This we metric, million, I’m full that achieved win note Namely, a footprint a

messages Let key the me cover some QX. of for

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

key continued mid-market year-over-year We more performance. enterprise and business. or to now enterprise $XX,XXX and our to or grew and ARR, be as annual more $XXX,XXX recurring a a $XXX or mid-market XX% million driver is as of with customers grew Second, $XXX define ARR. This XX% Enterprise, defined year-over-year revenue, in million. in

to year-over-year million. Third, our XX% ARR channel $XXX grew

market with technology on-premise More solution. mobile modern the within Cloud replacing unified workforces. gaining in enterprise can the the of of legacy in customers with compete Enterprise especially addressing a communications is needs the momentum, cloud segment. We distributed don’t cloud-based seeing unified transformation and systems and more value are believe

to RingCentral among hold providers. position also a leadership the continues cloud

only innovation, We our have and versus our decade investment in to ourselves to platform, cloud over in establishing commitment with invested believe continual will between moat widen. hundreds of millions other deep continue competitors. a We of our the legacy dollars providers and a gap and

team contact RingCentral’s key an and and voice, center differentiator platform integrated with footprint. strong is video, open our global a mobile-first messaging, solution

in XX countries. Global over solution our provide We Office

developers year-over-year. and to XX% platform over over integrations, Our unique open certified to expand ecosystem now app up continues XX,XXX X,XXX both over

our center enterprise contact differentiated video, grade seeing capabilities team are and on that platform. increasingly voice, messaging, deliver select enterprise a open single we And customers for RingCentral

center in key wins. Of deals influencing team messaging wins our factor also as last XX% a go XX% included TCV about with RingCentral. to large decision quarter, of the cited seven-digit these contact

RingCentral’s announce two further awards I leadership. industry validating addition, In to pleased am

segment The report growth, in Service global American third and enterprise North a XXXX Scorecard leading its consecutive as RingCentral’s IHS for First, the and Markit installed RingCentral expansion, Communications growth year. in ranked mid-market first base. Unified highlighted

Report. Global growth cloud It highlighted included the clear winning flexible & RingCentral innovation is and the new the in RingCentral cloud Radar winning, Sullivan the strengths, RingCentral UCaaS Office, XXXX Frost is Second, which and a is a highest mobility, cloud. number platform. report This ranked for of key and in

We exceeding are of distance achieving in now XXXX. striking billion our within revenue in of goal $X

We More cloud $XX ahead, extend leadership innings our are aim still investment the position with transformation importantly, communications about the continued we of early focus in customer. we journey technology, that. on the are the beyond of relentless and enterprise long-term in a excited With market business billion industry. innovation, sales, to

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

David Sipes

a QX in capabilities. on quarter our GTM both was product mid-market, Thank you, markets and demonstrating the strength Vlad. great enterprise

our contact driving platform APIs, enterprise team for mobility, video, messaging, First, open with and RingCentral. combined global and the to center, reach, integrated voice, market are

customer legacy its the was cycle A system. is ahead replacement software facing platform a Fortune decided great PBX win our example a for of over modernize but contact also with to enterprise-wide push XXXX multi-national unified success and XX,XXX This legacy with company. center, its seat

ServiceNow to with differentiators. Our have Salesforce.com workflow integrations ability Google, and and deep the key custom integrations were

reach Additionally, and portfolio contact our were the our integrated center critical. platform global of

Another photonic laser secure with X,XXX and is and of growing optical global partner. point manufacturer modalities is fast products Their mix workforce and of channel multiple needed example were of using single and applications. a enabling where optical networking with with win on-premise reach won Lumentum, solution. a helped They a an communication which designer application. a over seat global Lumentum was

We of these and user with video, voice, a subsumed all experience unified messaging. for team

we’ve quarters. particularly recent in in in increasing enterprise delivered seeing We’re also markets where industries, traction wins lighthouse traditional

wholesale a needed of XX Wholesale and supply Grocers. seat Company win Waitrose secured is modernize Private from grocery C&S the this in quarter & Partners, multiple a win we last the legacy largest X,XXX with on-premise on quarter’s vendors. XXX U.S. list. company Forbes to at C&S C&S sprawl the equipment Following number

to wholesale and corporate growing its key solution a this workforce. to remote ability win. customer cloud across deliver our Our leverage was The warehouses, offices, unified will a solution mobile-first

initiatives strategic our Second, to key GTM our a success. been have

expand. and services. focus win, our initiative, seat plus We X,XXX continue secured targeted In Higginbotham vertical vertical Company found last we on a legacy company across The and communication win of expansion, providers industry provider Fortune and insurance multiple initiative, with Insurance, to our financial insurance industry modalities. quarter’s with international targeted XXX land a following channel, itself multiple

Our customer of use unified provided speed the of scalability, and that platform deployment, required. ease

continue expand we see from markets, to international strong In contributions channel. and

helping recently global legacy win we that on-premise announce systems global customer modernize seats a to X,XXX brand. to mobile-first pleased well-known solution. lifestyle a for about forward with signed We this their look our and with UK-based We’re

key ago expand a mid-market and first to enterprise deployment. is a continues plus part location example of a a be year this great storage, our strategy. go-to-market secured X,XXX for we and public win A Land of

to pleased optimization that workforce customer solutions. and are We is the now announce center to contact going our deploy

platform. see channels. you U.S. will of use The Engage Let engagement quarter Digital, customer for airlines to in support first update leverage digital RingCentral on largest the Engage engagement is in digital me Engage their excited Digital digital We a give the platform. with our win our we’re secured crew also our brief ways case and use the across regional finding new customers one to This Engage new customer a for U.S. multiple based

their various Netherlands operators. to QX, channels. In We across selected telco in also to the support Digital continue with VodafoneZiggo, success a Digital customers Engage see telco of major digital Engage

to I appointments. to Before me share take turn it a a leadership let Mitesh, over few moment

track look opportunities As into we look in record to for a $X company, executives multi-product the proven the revenue to and first we team past senior the graduate phase next with software. billion a enterprise in with strengthen

pleased XX in created will Sales Vice recent management. of Vice years Marketing I’m at Cloud joins Salesforce.com President, be that product and to His a Chief in most after First, position Officer. included Senior RingCentral Product Will us Will announce roles Cloud. Moxley Executive joining President, newly

a has of and our I’m with SVP side, excited all promoted to oversee global such Carson and lighthouse announce our our was Carson which business. Carson to business Sales RingCentral ARR. sales report I will from that marketing. for also Avaya Columbia of Carson as million Prior of go-to-market has enterprise Waitrose in wins RingCentral, & Partners. VP has role key the to VP continue scratch been Company where $X he over in Sales, securing Hostetter at in to he Carson billion to three account as as built Sales. years the $XXX Field to Enterprise me instrumental of On been been ran

Ryan Ryan EVP and previously who was part be from Sales as and well. nine for RingCentral wish him Company. years, the the over of his family will Azus, family we transitioning of served

In summary, quarter. was a QX great

XXXX momentum, and and we efforts platform Our unified strong are With market leadership our GTM in to driving success enterprise. forward extending look this global in beyond. mid-market and

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

Mitesh Dhruv

good and everyone. afternoon Dave, Thank,

million, are and year-over-year. channel $XXX results and to pleased $XXX partners. XX% key on all RingCentral ARR XX% our up contribution from continue were up We enterprise strong with drivers to XX% $XXX million, year-over-year. ARR Mid-market metrics. be million, grew year-over-year ARR office and mid-market Key with financial enterprise grew up for Total

solid land churn The new of value well yet better Driven churn they bookings our by growth in again we of and existing hit around enterprise with and and office as as a from expand continued In shift market, customers. XX% this continued low focusing new lifetime bookings. lower potential. saw yet record on mid-market again mid-market performance as contributed QX, deliver customer higher enterprise

other quarter record million, up from Total financial at the $XXX settlements Channel XX% in we included performance Up And to had a one-time channel a the to revenue. contribution bookings year-over-year. to significant in strong XX% benefit ARR led to $XXX a and driving channel, revenue came grew small market million, apparent growth. our which in quarter.

were ahead to our revenue was margin with grew EPS and upside. XX% primarily driven by well the revenue Non-GAAP consistent guidance Subscription margin guidance. Subscription non-GAAP of gross XX% both our of $X.XX operating $XXX X.X% million. of

let's to outlook. Now turn

raising XXXX our are We guidance.

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

to We number raising performance results. enterprise we of segment pleased also with the We an are TCV million dollar our plus about witnessed traction optimistic and solid outlook. are EPS a deals $X.XX. $X.XX In in to summary, future record non-GAAP with our and

open Looking provider platform well cloud center integrate with communications of market leading the $XX contact as ahead, and an we messaging global We solutions. UCaaS voice, team and video, a footprint. in a are billion uniquely positioned

taking and solidify we continue to our expect position. vendors competition cloud market leading further from market legacy from share distance We ourselves as further on-premise

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

Operator

conducting At with we Bhavan be your Instructions] William [Operator Blair. question. this will session. from is Our Suri, time, first question a Please question-and-answer proceed

Bhavan Suri

that sort top my first guess both I for of side and taking the questions line for as dollars. Vlad, here. five the I and and to you sort on you you'd think and of nice think in steps David, distance question to do think you my you bigger Where Thanks Company next are? you about guess mix the perspective? a with job, billion of striking like picture about in very years. also through What the to mentioned, is three years live do in leverage five three the Vlad. see set us? next from target share the of What the you

Vlad Shmunis

kind Yes, incredibly much the billion continue start in leading for thank you, market. under this and -- large hi, in we it's this. be very Bhavan, of to Look, and penetrated you playing thank $XX plot of

of we are that. one which goal a is on the dollar nice distance we striking little goal, grow within billion and of be might milestone, clearly as but So, the now

So, are billions to we we hoping continue And portfolio and that, get of somewhat continue We this revolutionary our march, need know, and doubling of as call product future. deepening as but dollars expanding revenue we to our to foresee in do very into companies foreseeable just they leadership. do multiple and on to growth you of continue scale. anything, do going as I know will it, down our on sort product much

if say say, I more and we into been. up may So, as more of have would I right the

Bhavan Suri

Mitesh follow-up here. quick for a mean I

[indiscernible]. strong the deep You [was quarter been [indiscernible] up] than percent guys usual [indiscernible] surprised this was to be raise, actually net consistent, about really have

Just driving clarity love you. Thank there? some there any just were specific upside, drivers

Mitesh Dhruv

Bhavan. Sure,

So just the drivers your to double for the click bid, is question, correct? on right,

Bhavan Suri

go Just ahead.

Mitesh Dhruv

your because Yes, fine. a you little bit came muffled. I make captured in that's wanted to I sure voice

way. color know to about, specifically the you would way. I our add items, quarter our items were specific fall lot or five that some four This But say, a ships did there did fall on of

of one our We have First enterprise XX did number million is the growth. one. TCV, deals, deals, way record quarter, mid-market over that's $X this number flowing a

but in, the deal that, got sizes came deals mid-market enterprise, Within more overall also in and larger. the

customers where trend entire trend a shoot new footprint. we green now deploy new customer seeing. this are are to the more seeing to are We That's comfortable having footprint,

will new that we we it's this last, but are it how -- long witnessing. see a So, if thing

from a is. did a contact contact our XX% center third About The the Channel, record million XX% now so a We We of XX% one way. again driver pull-through, channel quarter-over-quarter, out deals center product And TCV contact pull-through dollar which center. see strong. deals a $X we strong million of quarter. the did didn't did very have go that actually up deals, bookings us. our component. a channel of in Sequentially, key about for was see had was have

but last better perform least the the not than did And expectations. AT&T our

what not, result work not multiple are driver all you a up, needs perfect have we every I you this think given more than but that's drivers at combination. added So, this if as drivers work, time just growth to so and seeing any time

Operator

Raymond comes next with your from Our Please question Brian question. James. proceed Peterson,

Brian Peterson

thanks gentleman the questions. taking and for Hi,

that So seeing of sale changes a maybe big quarter? Any for in on this any just you is deals driving help lot one Dave. cycles? improvement that we're curious announced, And

David Sipes

time, of analysts IHS timeframe. I we we we've are about sales over have coming had Vlad lot say it's to talked varied and we months market. cycles, with did greater the So, & in with our in would lines And X Sullivan. recognition pretty the see Markit getting X Frost deals in recognition got from the but consistent but

leads is sales shorter I cycles. the recognition, And ultimately And that product think superior so that's marketplace. to helping the in in our

Brian Peterson

similar a you this Mitesh, guys. the on that thought efficiency before for maybe the would side Thanks, driving point anything to And process that sales results?

Mitesh Dhruv

sale moving are where efficiency. We cycles and sales a Yes, Dave the sure. longer. I market cycle I said, as mean, up double despite on as saw sales similar sales just very click typically the efficiency

And things offset there able or were two help of we about to impact. some should So, the that three that. with

have enterprise We The do a larger our first percentage of one is. reps ramped.

is overall for productivity that So segment. entire the helping

have Second we is, built brand reversibility. and our

lookalike did luxury a So, following was and customers call where following highlight have did we we lot this had John But also we Waitrose. UK chain, lifestyle Varvatos. GUESS what of the brand grocery we

happen, it to help starts that when So efficiency. does the sales

us invest in say dollars would virtuous those gross up hit more I part, low. to last trends that our greetings the circle, is record together, which churn, our And a three And help churn future. free put to the

Operator

proceed Bank is question with America question. next Kash Our of Lynch. your Please from Rangan, Merrill

Kash Rangan

Thank One Vlad. you and very for Mitesh much. for one

of your have First Can are one $XX for Mitesh. you deals tell us TCV last. million And I a on percentage the you. ARR? what follow-up plus Thank

Mitesh Dhruv

Kash. Sure,

-- So record record -- not the ARR, come is, to are is ARR our that the One way if users the terms two mind. we provisioned. really we you it in

ARR, But this shows means up a a lot will which future last is if contracts say the we So more the deals deal about, look you tech let's from these for there's in there in at, sub ARR. that future announced. Waitrose, three Columbia, and top quarter, show XX% it, commitment up combined large call the only that

number So that sort one. building of block

Building same block also have lot also deals of deal the a large land large These is. expansion number potential. that, like in deals two large that

us So were this in help the new the X deals logos, we then Uber future. potential will bucks, time expansion which in more large XX% with had million over

vectors, will and two of two see there these is visibility So combine that these when phenomenon. the durability growth you lot of a because

Kash Rangan

a rate. you company order multi-product you on Very team sustainability Wonderful. Can growth which is that how of This a got really time that member taught that and your you have large your see a had expands strategy and to be perspective to lens? question because Vlad through back your a your sure SaaS, RingCentral offer for you watch. on that you've agree One And time articulate. of to quarter. congratulations do, with successful in If me and lens, I'm spectacular you. long in fantastic executive gentlemen

Vlad Shmunis

device you any communication, Look, Yes anywhere. that a mode, business that no, is is. excludes mode by so we Thank solution have it -- Kash. any any much defined --

at as we that but cases is solution, as have standalone that also and it to choose we all but part, mode a look know set would functionalities one some to So, together an it product, in bundle our in if you other of any exist already suite best-in-class. deliver integrated may

We obviously know think it's a customers strategy winning for We numbers what themselves. the speak that's want.

which deepening So, our differentiation well. are modalities to frankly, context want we continue of all have messaging the to media. voice, We and as Obviously, these this. the and with we want products across stay

older have well. platform We as

we depth, and at easier depth. anything our and recipe grow, So it market point, widen think Ring do to the a to more customers make We this to for want as we more we an choice we them see want winning over even reaching select have clearly out we else.

Operator

is your with question next from Our Please proceed Samad Samana, question. Jefferies.

Samad Samana

Hi. Good A taking afternoon. questions. couple for if you will me. Thanks allow my

dollars going on curious then on behind product Chief would follow think driver how Product that new innovation if have Mitesh. versus that up you question And or just in spending a there what philosophy for allocating into features? the to the extending of is change R&D are out Maybe terms I Officer, in creating I'm that's Company's you the role? whether any Just additional new

David Sipes

Yes.

and it's Look, what with crossover we driver? to a are have that hopefully more barrier Company by team, driver good for GAAP scale have continues touch Salesforce.com got the level But, a perform, and to on place as the revenue team. has type in company in and very the billion this do of we barrier, team that, space largest that And here we the we'll successful really a is is in and beyond So, to that at the look $X far what's not place, which the very, but we is up look, and us experience to the better people milestone. than soon want

he's And synergies with in the product success Moxley, SaaS led are the space. stories for Marketing particular, both which Cloud Will Cloud, and Sales in

we even the just changed, selecting do myself look, couldn't as the to we're have with continue So do know, situation selection as happier We need you and have this that. again We And what far be market. with executing. and demand. customer just

more more their more and sell Salesforce.com we particular customer-ready just get products. in example and So, to to breakaway from need to better again, efficient. the learn and get need We cloud what enterprise-ready

look I maybe a say So, over would quality but grow, even and better say, quantity, overall and quantity better we for friendliness. quality as so enterprise even readiness more little

Samad Samana

follow-up That's one very just you. helpful Mitesh and for maybe

should of The the on year? take evenly again just seasonality deal more curious, it been ARR in I'm terms spread it there's for but is large context more the added is half and year first congrats strong the just the more? and ARR across if being has about change in new office. Or question in of activity, any the of Thanks my incredibly adding Or both dollars, we contributing of -- quarter. total seasonality? partners the eventually that and especially how that think maybe in

Mitesh Dhruv

Sure, Samad.

So, that's a mean yes, fair look observation. I

we emerge and QX the more getting QX and and bit I are then more skewed, are a little where and saw. we seasonally stronger, starting As seasonality that's QX what enterprise think to and is QX

click, if even within So, that is backend more that's loaded. it an you -- more getting I double and think

half enterprise. the see the full can square we're you -- fair a We're glass should okay. full and is or empty, this we again, half glass getting So half see

stay. And is think so, trend to here this I

Operator

your proceed is Humphrey. SunTrust next Please from Robinson Our Terry question Tillman, with question.

Terry Tillman

have question we quarter of on me beat Mitesh, and gentlemen some Maybe the balance but and this largest gave you then can tell. afternoon did any the at going a revenue showing know to line margin kind Dave. updated beyond terms Good from shifting for bottom first growth as fall was I that least through term, follow-up forward is I just that margins. for can between also longer XXXX, well. ever the on nicely the And dollar the congrats versus in Anything like here guidance, of leverage? think And about, us of or investing balance you

Mitesh Dhruv

Sure, Terry.

it did So very at, line. and top on yes, in we and have this Vlad if to if innings. bottom is, look pretty And the the said, what market you is a out a early zoom you we very, ginormous strong quarter are

costs, our go-to-market in the but buckets growth and and focused growth. but we growth are the to leverage position both on be not at So would maniacally all unless profitable innovation at

you seeing seeing and cost gross and focused customers are see, are we a know stay buying economics, more. channel we customers did We churn sell. our includes So very, we up longer, which of on low, unit are are acquisitions, very was like record as

inherent bottom which beat that XX with of So backdrop, the that's flowed XX% to bucks, in the million saw model, leverage incrementally line. the the you where

Now treat your as long-term for revenue a proxy base for recurring install that margin.

those of XX% given to into points expansion and, economics XX guidance further of operating And unit so dial higher and dollar would of margin rate. revenue fuel be we've our let's that a higher in to kind incremental basis a upside that buyers growth said, redeploy XX but on to the our of margin, growth

Terry Tillman

maybe enterprise. Okay, just Dave, alright. Thanks. a follow-up question And on

highlight Thank also of larger you out and product whether in you. terms or Aside terms further of on hardening persist? the initiatives working embeddable getting of of dial can go-to-market about its side, Or and anything call what a the you selling, seems enterprises more from to for anything to that's the enterprise just just vertical be can adopt? else the in that more product

David Sipes

& core I distinctive one enterprise core of their gets benefits Partners of and is critical workflows really we and for larger advantages, the the XX% mentioned, of a really that continually on contributor platform into and key employees. that's Vlad as Waitrose and platform applications that open key for or mentioned gone accounts And the done integrations as push we've Columbia these year-over-year into Yes, like increase enterprise some think key expansion the us. cited

Vlad Shmunis

from to we on And a and may our just to wanted said position one Will in to This Will a GPO is the the pioneered what sales little excited platform the also best-in-class in and area fortify how also further learnings to Dave be as and to get Moxley, even space. it those back our click to has open are really to how announcement. segment. which force this frankly double I

So, front this roadmap. for our and central is our

Operator

Our next question Turrin, Bank. is your Deutsche question. from with Michael proceed Please

Michael Turrin

and a Thanks for win in expansion, a of big afternoon. you last Mitesh, you terms quarter. good question Waitrose international announced

Westcon also and you is You now us it how able helping overseas. where are help terms out contribution Can to add have business to that is is in frame opportunity of the international you Anything helpful? and tracking today?

Mitesh Dhruv

XX% to opening Sure, business side, us We contact international. is international growth rate be again Its win that omni-channel it this growth Michael. doors us it's dollars and the vector an don't so vector than in did for see so re-place multiple deals growing for Yes growth the saw international interesting sub center. out pulling million space, the We up is us. quarter faster that's announce Netherlands but to where for turning have it's a in the for we rate. still growth from that, one. is Dimelo emerging we did of overall come

but on we announcement have Wescon direct force on B, you are sales internationally. productivity the some to reap both that, channel capitalizing think will saw take force we A. down terms are doubling benefits I the the sales capacity in channel those And the seeing and side. sales where of we doubled trends, It here direct time

tailwind and is be to So, and play yet this at we I a story think beyond. out is international as longer mind in my to going term XXXX look

Michael Turrin

It's great.

like then it's watching. on be revisit of would any industries? yielding, your will just I that far? Dave, across early, And repeatable is fruits. we far? there already vertical know different How grade but low-hanging so still seems you so strategy, And effectiveness plenty learnt playbook be can We how may it's lessons

David Sipes

itself sales I Yes, industry say, in is with that key services cycle XXX had where quarter, brought we effectiveness get such as very We've had and help Last quarter. wins still experts higher but showing this university, a these it's and we early. look-a-like as would Higginbotham win. education in Fortune we our financial

that also help to integration and that specific seeing we're we're to distinguish happen verticals, the So, like product specific opportunities for are offering. and looking Canvas product

So the having go numbers still to think I success and we're seeing opportunity a it in and ways there. long

Operator

Craig-Hallum. Please proceed George with your question. question next Our is from Sutton,

George Sutton

you. Thank

I of crowd get and like on the to results. great congratulate upcoming QX ahead you your First, would

So your wanted to or ask the XX% on messaging team, congratulations. I you XX% just it to not heard wanted specifically, side, question messaging number was either I'm I one and correctly, the mentioned sure focus of teams that deals were XX% influenced by customers explain And growth and offering. is your XX%? how options was you like and versus whether or slack Can it why that the and deploying other result are that?

David Sipes

Yes.

over Columbia messaging. that. user key another across users aspect growth RingCentral example they're The year-over-year. with across see And the momentum, standardizing great a messaging, on also is triple digits So, it and the is telephony we up And that or attributed experience five-zero of or XX% unifying do the was video example app.

existing in for do for usability make to that looking solutions, users And of the and end more them replacing examples productive the they're regard, more effective and in as so, we employees, and see market. the

Operator

Our your next question is from with Goldman Heather Sachs. question. Bellini, proceed Please

Heather Bellini

to you for Mitesh, question. much I one on. wanted of focus the taking Hi, thank great, areas my so

talk And was community. and just deal please. up, seeing as You in ARR us growth could the I website. the you areas, sizes? I higher had How if I about trends, strong a a wanted said on was new of one you growth average a are you're the ramping also strong partner seeing partner partner signing the to on quick focus follow to involved wondering but when they're number

David Sipes

the Yes, that. I'll partner side of take

quarter. very business. very to this kind growing channel as continues continue record a is the and within So in that grow every over to add strong seen partner number our We team XX,XXX quarter, momentum is just getting we're you've of partners And XX% and of of passed strong, channel. partners numbers, awareness team the

good the organizations good continuing getting of of awareness momentum, product there's accounts very penetrating for our it's within a the familiar sellers and with So current really lot offering. the distinction us those and differentiation

Mitesh Dhruv

And Heather hi, Mitesh. it's

Heather Bellini

Mitesh. Hi sorry. Yes,

Mitesh Dhruv

did Just financing as up that that's we business our more and to in being channel vector, sequentially to see the color, quarter-over-quarter. XX% that led sizes are what add average getting deal larger

If partners, you contributing increasingly and larger deals top look at they to deals. are higher channel

have penetration. higher vectors partners channel we seeing and up think more within channel here we the being I So, seen signed partners, then two are

Heather Bellini

on any earlier? then commentary one were change bigger Are just to make customers duration platform? deciding commit the RingCentral the giving up And to TCV quick just you longer follow in you to a to deals seeing commitment they're note to

Mitesh Dhruv

You the deals. the or of TCV one know duration. multi-year the other are pick up margin see way terms Heather, a it's at deals didn't big all in I

So, I read to nothing there. think

Operator

question is Amladi, your with next Please question. Partners. from Our Guggenheim proceed Nandan

Nandan Amladi

So first question Dave. with for Mitesh and I'll up follow

your had that this of said product trending? you customers, expands base historically mix new come is bookings XX% How is as expanded. from customer So, your now also existing and portfolio

Mitesh Dhruv

Sure, Nandan.

business up-sell. XX% said customers, existing we so yes, an of our have do from come about new So, meaning

did uptick quarter with that see slight was in prior a consistent actually. very it This quarters. We

biggest seats. same are the up-sell us trend. the been positive that have a is vain And, for it other driver that, So, trend for seeing was seats, we in is

storage on are in you We examples, are different contact look seeing back which tied again public this is said and centers products at to this multi-product adopting Dave embarking if the being call. customers again strategy where now we this

contact this out the locations then and then we got headquarters quarter the we with storage the got center. Public started

a days, it's that emerging another So for existing growth us. but vector that's trend early

and expansion look part. the one, the part landing if to part you that's at precursor think I is two

landed new on especially help were logo logos our TCV the which seeing should for in the So, XX% future. million new of we getting more million-dollar dollar deals are expansion the

seeing and deployments we ramp So, customers RingCentral. RingCentral their are new to come existing up customers, with

Nandan Amladi

mix should And What go-to-market billion to the and side, business a follow-up again, billion $X sales your $X channel to direct look expect years. from carrier over scales for several we driven Dave, next say the the as like? of on a up

David Sipes

Yes.

continue to we bit channel between at today and into enterprise, so as a direct So, bit tick think we're are that side see a on where we said I up the little do have get today. the from we heavier see we largest we of that little kind channel that could a split expect

Nandan Amladi

And what carrier? is your sorry, the comment on

David Sipes

positive on but some so, mentioned Carriers, as AT&T. Mitesh early days, is it still there performance

think look I within definitely our accounts an additional and accounts expand opportunity So, current we as that's add to overtime.

Operator

next Our your Morgan question. with Please comes Marshall, question from Meta proceed Stanley.

Meta Marshall

seeing some of of the to from what just reads I Thanks, wanted back case that to to the And the you customers, you win it kind airline in that kind dive I regional that of. question kind deeper And just can on bit case? And just you're see mentioned that multiple you with AT&T? as had wanted circling maybe guys. early on the you market Is that the guys. on that something on came of, AT&T what little AT&T, wasn't Engage. it Thanks just use detail that use kind just, is back circle into a second, then of comment any came there? from customer of of expected necessarily to types up thought to who

Mitesh Dhruv

to regional use digital consumers on are messaging Yes, large where tends Digital as customer it corporate, crews utilized use brands as tool. engagement case, with carrier, flight is case the the an the of employee of communication so well and was amongst often be themselves more Engage with that

communicate interesting their as use just organization through that enable way. there the messaging But and was within message they Apple wanted case flight apps crews to such standard the to iBusiness

So creep that time. that's consumer obviously space why see base in may employee the it over new it case. be it's a into And may interesting use a trend, and the we

with to similar AT&T similar and normally what Obviously, AT&T. we question we typically to in newer accounts largest sales is customers. of same past. the what see It on work cycles types AT&T longer with And have the were the

current probably So there. those business we're that mid-market than coming later seeing are the

Operator

Our Kees, question. next question Jonathan your proceed Insights is Summit from with Group. Please

Jonathan Kees

areas. talk to about two for just my thanks Great, taking want I questions.

the First, congratulations quarter. on

the I to enterprise? you meetings. deployed Did in for as to area. you've The of first that first impact That's any the area that? your your any testament already do activations ability the i'm about of of any of execute, want your control terms to your webcam is. actually Did your turn-ons, ask damage with fix sure video

Mitesh Dhruv

And No, that type went have thing. don't we was any very patch or customer XX quick that. with hours happened that within fix of out identified instances and issues

Jonathan Kees

has And of A super. to yours ask. super, want Okay, competitor then second, I CPaaS provider. purchased a

what So part portfolio? that thoughts what integrated you, Yes, for? and customers are that thoughts are on are just market your just curious congratulations. Is of Thank market? which something particular that on as data considered Is CPaaS? your asking that they again a

Vladi Shmunis

Yes, Sure. Vlad great question. look here. No,

as, guns, particular So we that we're going that as our be to to our far thoughts stick just so look, to transaction, need best-in-class. are and

thought CPaaS if, to want So differentiated of know you in way or and if if the pyramid. that us do in consider a were but a we the establish a big we way it top it's we that near to market at and entering would

emotion. having very a don't quite on fantastic is it's of that, very established there different CPaaS tried and sort have results. leader Obviously different well people them take I with think and other Now a said a there head-to-head to market, is

path announcement little SaaS down, differentiation our CPaaS we a bit and are Will salesforce. back to quite SaaS, linked between down do a tripping We of the So, different. doubling on see Moxley and again is bit

that They're leader. in not a They're CPaaS leader SaaS a space.

opposed revenue this the paying enable versus to we is recurrent So, And way a sort on And support other recurrent Ring, we can that paying apps, platform as custom data create where workflows declare, say based to we another like just do as just have model flat to that's cases. our provided difference and use as. lot what well controls of having continue. transactional people is a revenue integrations, here and customer customers by to custom to to create and custom

Operator

Our Richard with question from your & Company. Please is question. proceed next Needham Valera,

Nate Hitchcock

taking Can me afternoon. Valera. This Good Nate Hitchcock alright? you is for question. for my hear you Thank Rich on Hi.

Vlad Shmunis

Yes.

Nate Hitchcock

you. Thank

you spoken have I'm the any do in one wondering if guys experience about then success I quick year-over-year, up. follow change channel have You the channel And compensation dynamics?

David Sipes

in the we channel time. remained standard We that over and see pretty significant in don't and competitive changes compensation

Nate Hitchcock

is not understand helpful, to And that best but to clear as much trying able you are can. there I elaborate

Mitesh Dhruv

No. Mitesh. is This

least seen increase demand channel said, at within competitors think the have band reason the compensation did and good certain other and range we is we really seeing we we the for band still from not really who and to Dave channel. change the but are are what much There I do us. have not play a increase compensation

Nate Hitchcock

up helpful. very regards elaborate any question. you quick landscape to you That's on competitive and much. developments phone? Zoom then changes that that you Can foresee And the Okay. you specifically recently on follow seen Thank have or in in any

David Sipes

you we to landscape, replace competitive any one continue product, Cisco a for the there the to on get or competitive the of say robustness as PBX higher at the tend the Avaya, change new be solution not to by legacy recognized that wouldn't serviced I to the the ability solution and environment. So, end traditionally mentioned is have of in significant

Nate Hitchcock

very you Thank much. Okay. That's Thank you. helpful.

Operator

proceed Baird Robert Will from with Please & your from Our Power is W. Company. question. next question

Will Power

record one commentary kind you the of integration? further that to Is are? up-market, point the of product there sneak maybe just color service? factors know be churn back I that mix there. in is to of what of Can in as I the of it low great. quality a would I enterprise Just of how drivers mean Yes, key maybe much Okay, kind try that's move the guess couple cited great. enterprise here. churn enterprise any strength. product of was you coming some to I'll it

David Sipes

all it's think the above, Will. I

lot a on hitting You're key things. of

from service customers, and billing, a managers And enterprise, I other customer augment base. customer to product are the contributing and key we it's durability we with over think evolve fit As everything, of go-to-market all But strong satisfaction we've those product to the from integrations moved into level capabilities, kind continue evolving time. to product enhancements. to obviously, that capabilities. the And to greater success

Will Power

makes that sense. Okay,

Okay, center. other to to want one I back the come just I contact is

also you behind sales just center, the of were driver. call than strength. customers effort of a actively think behind that or the about more for I coming a you in What's that? it? real just putting that you they Maybe past contact some to underpinnings Are talk as of more

David Sipes

We see there's kind buyers typically center largest deals, contact our close latent have UCaaS. to XX% unified across to get to utilizing deals, the as demand solution contact as center, in we And those a and of who it adding be a add-ons public to becomes for they're a center, are we've cycle, centers, continue us. in larger those with opportunity contact and larger bigger move utilize for opportunities, as later buying especially UCaaS. it the But see like enterprises we do storage, into contact later, of

Operator

questions you to may from we that participants address that possible, as one we So question. ask many limit yourself as

and If you be questions you will may time have any additional those permitting, addressed. re-queue questions,

with Our question. next question JP Please comes Auty proceed with from your Morgan. Sterling

Sterling Auty

the very I'm you Thanks. that you replacement center upgrade in did. Hi, wondering, guys. mentioned large was critical contact deal the one that or

most XX of in Looking in a large factor driving move? what of to was what now and terms the trend the you Can they of the TCVs. with the the deals give ahead chose why other deals across at seven-figure us words, So go those sense look in like? make

David Sipes

end-of-life. that of reaching In legacy deals, lot on a solutions are the they're

for don't as for that on-premise key We lifespan are that have going support platform years seeing where like be in almost solutions want just of platform deliverability, equipment and solutions manage platforms some they be and will uptime. the Those responsible have XX they we're those to they're investments for the over where nothing. and dropped deals those the of away time, well feel on another as to kind

future no to longer there's those legacy path a stay So on platforms.

Operator

your question. from Brian with Please is proceed Our Oppenheimer. Schwartz, next question

Koji Ikeda

Schwartz. This Ikeda for for Thanks is Brian Koji taking on question.

one enterprise on XXX the it's segment. from, Just the KAR me for segment,

big that process? that opportunity I Thanks lot and of grew the sales by what done mean, of out my at the TAM. on point? is here some point? Just be in is really enterprise RingCentral organizations incredible. it in taking XXX And RingCentral's Greenfield for top is the enterprise needs about penetration think XX% now a to question. still the is and just during this at this I right at really million, sitting guess, UCaaS really which a there segment evangelism way really there embracing to still are Or operating

Vlad Shmunis

and both. every us Look, to is reference begets here. are and wins. larger them, we wins it's able leads, us. and And these and get it opportunities is case, one market more Vlad more deployments. more to Clearly Clearly in Yes, larger coming of a

So definitely these think there's there. you of that are channel And many if reality about, led. out

TCV additional it's a give So X-digit obviously, for for so not it's partner next every also us metric, large their way and a deal forth. channel into and feather but secure, a deal, time confidence deal, it but and bring in to them we the but call a great we next caps only that's a our sure,

So that it is very much a way. virtuous cycle

educating be already. continue market, all to be the constant footprint. And said only Mitesh to education having to way only within to addressed that And hanging and these frequency. the is lot look greater this some at on and that's greater there continue with So and larger them of us done but clearly still wins us not of that march larger as you expanding continue to There is before quarter-over-quarter-over-quarter, deals, busted. myths the that, for within to still ongoing. you and see are towards just a

next the point product. So again, of is. be a circle. it without And having, virtuous as I this end, it all In we rooted myself mentioning in think really wouldn't the without probably

this We being fundamentally, we rate, long time because success And continue, about momentum are able right our as the addressing right, as very needs. optimistic and very, going place, right to products customer this have that's to are actual future. for

Operator

Capital is question with Mike Markets. next Northland question. Latimore, proceed Our your Please from

Mike Latimore

both? or how of and X,XXX voice Just you PBXs? that of customer, XQs then to revenue little few maybe the sequential what stronger, I seats, a And think, bookings Does questions. seasonally or Fortune growth refer you said, kind said. on are are Mitesh, XX,XXX many clarification the XQs

Mitesh Dhruv

quarter strength. think That's it But at more as look one, bit, is. how does smidge move you loaded little question? doesn't second entire quite what's upon referring a one. was it your first I if move I depending the to the impact trends but much. revenue base, the So, a may the booking Again, backend installed And

Mike Latimore

hub? deal big a On

Mitesh Dhruv

contributors The decision How the and many so XX,XXX. were the the of that seats in CC on deal. is key UC UC CC. UC big process, literally number is bulk the the of hundreds, There on both

Operator

Dougherty question. is your proceed & Company. question Trebnick, from with Catharine Please next Our

Catharine Trebnick

developers this see you. move Thank are to is What And decision and taking recruiting you had number you clarification down was in One you API How the and big question. factor it? have? how question, for when that towards numbers around question how a that to you pretty your my you as is. a many Is given the on a your the open that tool then Thank really do and key RingCentral midmarket? in when a it comes again?

David Sipes

question We certified had app integrations. over XX,XXX first developers of on the was X,XXX point and the platform. It

second The was. question

Vlad Shmunis

driving right. it Yes, good Catharine. key component, answer I How a it's So, I'll think think larger is I deals? that

the As TCO XX% open is there we is component if driven these platform. over at were you open of look for large dollar the deals, said, key differentiator, deals million by platform a a

footprint. integration custom customers, look comfortable them I UC So, larger think when really it's feel to you their the proof future for at key workflow are

Operator

Stifel. from your with Matt Van proceed question question. Please Our next Vliet,

Matt Van Vliet

Yes. in Thanks me here. for fitting

it you growth Where other you start trending? account mix is may the well-developed some you your feel to are bookings quite look be expectations? coverage have developed the in front You like bit of do of Is Or fully that that see strong where mentioned you you and those much do on gain and there. with that at markets? overall ramped direct in higher leverage the do on When and efficiency direct a is headcount line overall sales sales of U.S. market markets.

Mitesh Dhruv

Sure, second I'll take the the question of first. part

So, here. is go to penetration of a just lot I think still the account room

cities, NFL sales We but are our densifying, somewhat covered in all all actively footprint. the we are

a million of at can of penetration lot is, RingCentral amount X fees XXX there So happen. the I there you and it call of is million think seats to XXX if sub look million at that TAM

our pretty been forward. have in we deliberate move So,

is the ramped to how do that ramp. now we and spend headcount don't me want given is will which return, growth? the gains see matured, given productivity typically Where leads We see segment from to which we the see eke the the not question just itself more segment the the money next we out and

So the below you should bookings headcount growth leverage some overall see growth, expect we'll and rate the there. sales

Operator

reached conference. question-and-answer We of and the today's have session, end the this concludes

lines may at participation. time. You Thank disconnect you your this your for

RingCentral (RNG) 29 Jul 192019 Q2 Earnings call transcript