RNG - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to the RingCentral Third Quarter 2019 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. It's now my pleasure to introduce your host, Ryan Goodman, Investor Relations for RingCentral.

ahead. go please Ryan,

Ryan Goodman

afternoon call. to RingCentral's I Investor Good XXXX Head third 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

with forward-looking and contain statements. business statements to Securities RingCentral is contained materially statements are made on intend These to Some discussions responses in and statements. the differ our by not of of today's discussion does Exchange our filings incorporated may and to this discussion. to A forward-looking call. reference update uncertainties. and into the risks risks is our or from forward-looking related Commission results our your questions on obligation will no assumes uncertainties Actual subject and comment and

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

our website. with reconciliation For earnings GAAP certain posted with available measures Relations is a forward-looking release of slide Unless otherwise discussed in non-GAAP results that A provided slide as indicated, and non-GAAP year-over-year measure all the non-GAAP comparisons. all follow detail in in not on are to the our of is GAAP financial deck the guidance guidance Investor corresponding deck. reconciliation to the

over With that Vlad. to call let turn the me

Vladimir Shmunis

an outstanding multiple third conference you our We quarter delivered and fronts. thank afternoon Good on earnings for joining quarter call.

expanded to our pleased announce we we're today relationship with have AT&T. First, that

were announced regulatory in timely Avaya and early the the last deal approvals week, announced that we on October, closed. as basis we a gets partnership necessary obtained Second,

condition. On industry

-- the year year in third fifth Communications-as-a-Service, Quadrant for a in for Magic row, leader Gartner Worldwide RingCentral report. positioned the as the Unified a For

TCV readiness to to only cloud. consistent embrace wins. $X industry This a and validates QX, had leadership momentum typically and the to well there. to see level position RingCentral's in also innovation, is to is the front, business which enterprise the these but not good record speaks cloud On going execution especially million-plus our of shift the we and All and slower speak

I Revenue will enterprise, QX now continue the to guidance. results. mid-market, drivers high non-GAAP and of review and exceeded EPS channels. Key end be our

strength across As healthcare, we financial vertical also we market, expand our metrics on contact QX in were for solid targeted continued as Key positive are initiatives and results services, our focused seeing center. education, as with well board. market the

grew or to more revenues grew XX% high our enterprise continues revenue, Channel million $XXX recurring with $XXX This business. XX% ARR, year-over-year Enterprise, million. or in is million. over in mid-market year-over-year a performance. as define XX% $XXX,XXX as Total ARR grew guidance the end to key $XXX or a is annual our more above ARR. driver now $XXX to year-over-year year range. year grew Mid-market defined to customers XX% and of million. enterprise We $XX,XXX and and a is of and increase be This

vertical We saw come XX% over are markets. seeing up of breadth our $X across million our traction TCV vertical In QX, of from pick a targeted we wins industries.

continues As providers. leading to the our believe enterprise communication a through positioned customer cloud go among with position we well transformation, cloud are leadership we digital hold RingCentral solutions.

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

we by announcements that success platform, GTM ways solution to be this agreement, our recently mentioned relationship Office@Hand, Earlier that we broader with that a for powered bring expanding key afternoon, this our lead markets. we're had we AT&T AT&T. we're the Under significantly On will expand solution earlier, AT&T. two RingCentral, for with and our opportunities. to announced UCaaS We're leading as look our pleased with seeing constantly I note,

that jointly In for will experience. addition, AT&T's develop customer AT&T global RingCentral capabilities and integrate and further will technologies overall better with network

platform. partnership UCaaS RingCentral's Avaya strengths strategic month solution strong which market new leading each Avaya global by RingCentral presence Last exclusive company, of UCaaS introduce be with Avaya. aligning capabilities we which worldwide a will announced RingCentral, marketed and sold agreement Avaya, by a will in between RingCentral the and leverages Office This respective Avaya's and go-to-market solution, and Cloud

We and while major and saves Avaya. building from customers, continue TCO usability, predictable with portfolio the their instant overall [ph], and they and Customers a benefit should attractive needs RingCentral revenue benefit of a economics. should be this to improved partnership to opportunity partners, for as customers, partners now represents able will satisfy evolving better believe of course recurrence functionality,

positive. channel overwhelmingly been following and announcement of partners We feedback have number spoken this with a has

As week. I transaction this noted, last closed

year. We to Cloud deliver in solution, work to as which will QX begin now ship a next expect the we to Avaya

leadership, As as the Quadrant for Magic in once report. are our Gartner Communications-as-a-Service, Unified innovation to leader a we proud a testament to Worldwide recognized again be

the row fifth For in furthest for Leaders was completeness quadrant. year a of positioned in RingCentral vision

in disruption, another further innings of UCaaS never with still has the a of further the $XX excited in and cloud. quarter Our is validates that transformation. evidenced seven-digit cloud we're that in very the winning ripe as the With It on cloud and market, in winning is wins more us. for clear the record is early are been for billion we market RingCentral execution position our numerous opportunities leadership fronts TCV by front

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

David Sipes

a strong again enterprise quarter and Thank strength by QX Vlad. was mid-market you. in driven markets.

on to capabilities. win We continue superior GTM based and product our

$X open a XX% platform differentiator. TCV platform unified global strong as QX, integrates our million footprint open our cited voice, resonating enterprise an of messaging team our and large with In First, key with which customers. is wins video, and over platform

has developers. certified over XX,XXX X,XXX ecosystem and integrations open now nearly Our platform

Additionally, over wins as these team factor. XX% messaging another cited integrated of influencing

X,XXX manage success Company, of also quickly A communities win in the example and to contact management global on claim centers depend of deployment. outsourcing mission Crawford and restore and the claims they've their world, enhance to their great provider seat with nearly Global their call UCaaS independent as be world's ability center our RingCentral good intake platform-driving expand now solution. RingCentral to businesses, around & lives, initial publicly-listed our achieving added of and is the land example solutions, largest, with is managed This customer can which Office a

over stores. communications that users is are stated apparel and integrated This its enhanced that an accessories replace a They leveraging level seeing fashion our Topic communication retail team platform they messaging, retail mobile-first distribution easy-to-manage, solution wanted team across video centers, and customer systems team Hot Topic, provided Hot was RingCentral looking underway, Another great collaboration Meetings. chain. voice, already win offices, where a capabilities. and to customer is on-premise XXX and corporate unified using of deployment an With legacy messaging

customer administration, transitioning single in vendors of differentiators Canada. important RingCentral multi large sprawl platform. to than win. wanted and scalable consolidate locations over more this to of RingCentral's a cloud-based Staples Another in deployment, across ease driving X,XXX-seat platform Staples were a strong app XXX of analytics Customers to also plus and interest and are product education. seeing our in X Henry vertically-focused Canvas TCV financial million services we're integrations, our showing our vertical Smarsh success on Building many in initiatives strengths, wins. GTM Jack with in including is targeted

industries. TCV vertical come As our of from our Vlad targeted million-dollar mentioned, we wins saw over XX%

Pacific we healthcare, the since a QX, support adopted with organizations. single built In meetings. with RingCentral Contact for aligning RingCentral of great X,XXX Dental approximately Pacific on calling, seats customer Services, relationship first years over on platform to across UCaaS messaging, and and the two Dental strong one UCaaS signed leading ramped ago dental Center. country's adoption a with Contact Center and In has

win already Crawford. I financial also with credit strong We're In finding services, traction unions. with our highlighted

win university For University deploy also and example, This for Queens to replacement XX Credit on-premise both center. an Charlotte. ONE, diverse needs. the meet education, to its RingCentral including a credit over in contact at union Union UCaaS success will Illinois-based increasingly of locations, see system help We're higher continuing an was with

on voice last with customer Center RingCentral inContact; acquisition First Engage portfolio. a success Dimelo and our for engagement Engage Digital, This voice of acquisition provide now update used used year; and Voice Contact based Connect our seeing the and for outbound blended for year. digital based inbound channels our on NICE on on me earlier Let based we used are consists brief this

and global its Engage reliability a to solution Immediate over XXX-seat the their testing over This provider. These equipment. We a Voice. with A with decision prior has QX a support. for customer large Office compared becoming customer win from RingCentral will the Digital A France. large engagement move of increasingly Contact a customer customers RingCentral large been now pleased are secured to and and was the for car Voice's out Immediate and RingCentral testament an XXX we engagement to Credit to In Center Engage was for satisfaction. UK, wins Engage in leverage Renault improvements Contact biomedical customer We're all global manufacturer communication increases key RingCentral a existing Renault factor with Center superior other seats of a agency. the in are collections itself in workforce. switch market. Credit productivity Recovery, streamline single recent was platform This key rolling win and drives for customer portfolio needs. able interaction to use customer QX, signed Engage Group, a across RingCentral win to outbound example internal its external also Digital with RingCentral's manufacturer. Spain, social important up with Recovery's as QX announce win channels major

a momentum into remainder and In We year was great XXXX. this look driving summary, forward of to through QX positive the quarter. the

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

Mitesh Dhruv

and Thanks, everyone. good Dave, afternoon,

mid-market pleased $XXX achieved with be million, and and number metrics. underlying continue date. RingCentral to contribution from Mid-market are resulted sequentially. accounting seven-digit million, up results key the logos where TCV enterprise as all in to year-over-year. financial as momentum Total improved with and for XX% Office upsell by drivers our This up for to of trends XX% ARR grew $XXX grew ARR partners. a million, mix These and highest is bookings customers in grew up year-over-year. enterprise strong channel We strength $XXX ARR year-over-year we record to XX% driven well on which deals new to mid-market enterprise Key

Higher up-market expand mixed lower potential. our growth and greater is a positive from given value churn profitable better lifetime indicator land of and

came XX% over of also for for million, our up XX% quarter. delivered TCV accounted it in and at $XXX ARR solid million-dollar another As Channel channel, wins. year-over-year,

we financial expect growth. which Overall, with help Cloud We leading top have broaden and network by line. delivery, we Avaya Office global expanded channel SYNNEX, fuel upon ConvergeOne, to future led Fujitsu, performance partner to to RingCentral, both Avaya's Westcon, strong on our quarter, bottom with continue the channel the network. to and in relationships and will up-market access And

to $XXX XXXX XX% our margin guidance above operating was Total the X.X%. non-GAAP XX% grew high the and revenue range driven of outlook. On was $XXX EPS revenue grew to upside. primarily revenue million. margin full Subscription by of $X.XX million non-GAAP XX% subscription year and gross Non-GAAP to the was end

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

EPS are We our also $X.XX. non-GAAP to raising

our the solution. expect like partnerships expanded Building AT&T on recent with with long-term for UCaaS that Now news strategic AT&T. RingCentral new we is additional discuss I a is to our drivers Starting performance. to now first, two our making which lead together, successes our relationship latest be strong would

to speaking COO, Sipes, pleased relationship. continued Business We Summit successes this Officer Chief together. Pacewicz, AT&T tomorrow are this look in at Product and Dave expanded AT&T's very will about be of Dallas forward decision with Business Roman Annual and

agreement will go-to-market vector We provide our to expanded incremental are confident an that motion. the

to the RingCentral's which As significant technology last closed this capabilities opportunity, the transaction It leading Avaya, platform. strengths go-to-market new is UCaaS with a of combines week. global Avaya's

a product towards QX in working diligently are year. next launch We

additional provide about excited partnerships AT&T growth. will believe are Avaya long-term We to and our durability and the both

in industry. communications RingCentral enterprise is of at digital forefront the transformation the enabling

commitment a industry innovation with leaders in vast unwavering long-term for RingCentral UCaaS off. Our as to is solution clearly their go-to-market investment capabilities customers. paying are leading Longstanding selecting now

ability long-term of to With on cloud. these the in execute on-premise more communications converting our tailwinds, ever confident we the are vision business than to

With call to Q&A. the operator for the that turn let me

Operator

Our Thank first conducting you. coming We'll be Instructions] Robinson now from from Tillman [Operator is SunTrust question-and-answer. a Humphrey. today question Terry

Your line is live. now

Terry Tillman

can me? Hey, you hear

Vladimir Shmunis

Yes, yes we can.

Terry Tillman

to I with questions that And the question the the way. or be of the for could a guess want around related AT&T. We is or either first, Dave trying how Vlad Dave, growth then Well, be to understand get on material we and okay. standard, Avaya Yes, you. terms first quarter. I opportunity guess just question first job or impact. follow-up now XXXX. nice for lot of And the for from incrementally in I into timing going really to I impactful as out of get framing these of Thank just developments Mitesh. investors to is had a move Vlad

David Sipes

which have. And and to changed level level the both since we've the in satisfaction Well, with testament a off launching and we'd be where significant security and think these that's of to I a large is cloud. more a driven that footprint innovation product And we to success Avaya rapid as with the on-prem continue ability to past that for at been where we've placed account. their required we're high expansion of on we it's base Avaya field of as QX. customer to a into as in the our level offer, move relaunch, last. deliver playing had in see AT&T, from offering installed along AT&T, see opportunities with this is the the lead --

Terry Tillman

Okay. some you next I relates an showing starting two as this balancing ongoing investing of act particularly this to opportunities but you versus how some, growth of weighing might need new of follow-up us leverage? just those think factors, Thank into of about you. question, some maybe these with as with just, though. growth look guess just leverage, terms Mitesh, give where in versus update operating the kind a we're to year for to invest areas yes, changing anything balancing showing all it

Mitesh Dhruv

as then cover bottom and Avaya we Look, AT&T, we'll very it XXXX. line, Terry. top launch are giving line and visibility some in two in about so said, both is optimistic going and to Sure, Dave -- ACO into Avaya flavors, first

GTM So, is you look, Many QX contribution the of and way the year. if going expect ramp recurring look going in nature towards to is business launch the in revenue XXXX. to of And of model, in ACO we the end that earnest next after given at of written quarter. and be in your tactically going impact have guidance have the you But thinking about beyond, that from of this more next give towards and then to one XXXX seasonality careful specific on to the you next QX we'll of -- QX. of and about more models,

on more line. top So that's the

the it seeing terms you all of book, at economics, economics churn, of we it unit be In margin, pillars if be SaaS model, upsell. are cost solid be look our to look, across it unit three

R&D, profitable some AT&T, Terry, by expand like growth operating points. margin so basis will into with successful. with as along and And innovation, when with dollars we'll and year to plus grab into toward have that a make you mentioned, about we go-to-market, you philosophy, this phenomenon land XX opportunity, with Avaya it our the consistent to a bias that sticking make reinvesting growth Avaya be have But investments will of

be So to the are QX. note again -- payroll taxes tactical seasonality on some from mindful of QX because QX and one there reset, the whatnot, in model,

even AT&T So Avaya growth us, dollars with same, growth future of and make profitable reinvesting fuel more and more more the the to from that, growth overall, successful.

Terry Tillman

Thank you.

Operator

you. Thank

of Merrill question coming today next America from is from Beliov Nikolay Bank Our Lynch.

live. Your line is now

Nikolay Beliov

the the this the Maybe the first you've done drivers questions you Mitesh, can believe Hi. led in that to is might for you. the question beat my quarter. adding the Thanks beat. if unpack congrats my taking and for on largest be I quarter.

the X%, done by least think at recently. I ever I think you largest or you've beat

Mitesh Dhruv

you, Nikolay. Thank Yes.

beat. -- get with You can away get all the can carried we largest

was So -- board, thank specific you click four way But for on across the was double the I'll compliment frame quarter. or it there. quarter for drivers the quarter, and the the the I'll strong five

up. new some drivers, that came drivers usual Some

one We a over was seasonally so first deals quarter, this and this million The is did the logo is see. strength. to have unusual typically slower quarter, $XX new that

were the new logos. of deals the net deals, Within XX% top top

further seeds So That's expand. land that future and one.

the mid-market larger there. you enterprise at strength, look did the sizes deal If overall and get

its So digits. Center. It the had grew Contact that's point Center number strongest two. Number best quarter. Contact triple three, bookings quarter,

We for start And was And consistent a a is QX, say quarter deals to in been came for so would is million-dollar That's it revenue XX% the the saw faster channels. dollars. record us. us. channel. one fourth pull-through I leading the from driver to more linearity. of last And a our

the vectors these all did five upside. or contribute to So four

good multiple any about you and written at If us this, vectors in for you've enhance here, layering the vector we like every This at needs up time not lot time, have durability AT&T, put work Avaya of feel numbers. every excited the model And about to Nikolay, for a look point long-term of we time on them growth given new and business worked. drivers story. the to will which future

Nikolay Beliov

I in so Thank against user Vlad. from Zoom model they're the If Phone question pretty looking The looks UCaaS, and to good, have than much a international they about you lower was disrupter just Zoom you go-to-market how wondering do product spent you, at become And presence at at and Phone? a guys. your price now a year Phone. a point and going space, a time Zoom conference in Vlad, opinion strategies defend or like in Mitesh. business for on your some weeks few presumably disrupter the I ago.

Vladimir Shmunis

Yes.

product. on things. from It some what be continues you in international international, including I'm Zoom now, as other and ask general, Zoom see is probably expert happens let's a Zoom. we in to year. But RingCentral. a the Look, generation firstly, A itself anything Phone see lacking Now, should year look, much on as more so okay, customer, it first know. you about

and a continue we'll own. side, have well. side So as at millions product We've of hold we of that strongly We'll voice the feel, we've invested, have for video believe talked we hundreds our this upon before. have dollars it on and and decade plus, Zoom think partnering hundreds been the with obviously about moat we we differentiated a competitive wide further on

one to We've very product. sun competition. and against you what So the to a own and intend here was the it I been as than for competition have is state our obvious, say, room We this same. large in know. to holding already more we any space market, probably more And do going under the all

Nikolay Beliov

Got you. Thank it.

Operator

you. Thank

Our next from question today Sterling coming is Morgan. from Auty JP

Your line is now live.

Sterling Auty

guys. Yes, Hi, thanks.

who AT&T So us lead not AT&T where that offering? to of on front, can of going the kind just And solution preferred UCaaS any now there replacing? be tell parts was the you the is you're you're

David Sipes

a had past, becoming bulk and across sell lead focusing of solutions We're the rapid they're they've on at Office@Hand to business. other offer They're many innovation. the the really and segments. in nature point this cloud And the verticals the and due

in I into being in and an and footprint relationships they've relationships their go-to-market systems. into integrations it's it think at and partners continue expansion as to and throughout, technology and definitely been good our work on is network them So with And offered we greater their the been how invest processes we've AT&T. that to really shows able our

Sterling Auty

there that would deal about not but EPS to thing Is one if deal way struck the fourth there to may be the immediately quarter to When probably have been higher? Mitesh, And some the just for imagine mind deal-related Avaya that any think needs it even I one quarter the EPS you I you. not look great. launch. because guidance, to first Avaya at be guidance had cost, follow-up, for been that or then right, the for is quantify All comes prepare

Mitesh Dhruv

that with Yes, EPS Avaya fair it Terry's it precisely, strong question expansion it our subsuming I exactly Avaya's year also investments. had that our will mentioning the consistent would despite that we profitable been and of been to not it's that to philosophy favorable in of economically And is, guide, points. said, XX we unit higher, Avaya with very earlier, Sterling, investments quantify, as but for have XXXX, it's it's investments was been growth economics. to given how And even will I in higher, subsume our are we have would for say and basis hard to stick all so this

Sterling Auty

you. Thank sense. makes That

David Sipes

Thank you, Sterling.

Operator

Thank you.

question Our Peterson James. coming Brian from is Raymond next from

is now line live. Your

Brian Peterson

gentlemen. Hi, congrats And on quarter. the

wanted to execution, the which hit impressive. So new business on has been

how can cycles sales Mitesh, efficiencies in have the change marketing this on share any and quarter? anything curious, sales trended, those Just you

David Sipes

consistent take and more that. opportunities. have we continue the Sales part of I'll cycles first throughout, to been see just

second think the what's I I'll let answer business that's driving part. forward. the Mitesh

Mitesh Dhruv

question Your sales efficiency? around

Brian Peterson

Yes, right. that's Yes,

Mitesh Dhruv

year-over-year our On longer. sales if our slightly look and Yes. two typically is marketing sales this up-market cycles by are where you is efficiencies, move And at to despite marketing sales efficiency impacted three numbers, and the better trends. getting

being overall segment. of one the The ramp first the

As segments that's so mature, there is productivity one. gains to be had,

sales and Second from like is from longest in are a cycle. it's enterprise the retail high-end we vertical seeing where, to some the and brand products we recognition, like have Contact reps, financials. higher gains we we sell which given efficiency a is productivity But especially our segment there that more Center developed have markets some seeing ramped again, are

that So helps.

AT&T, which is our a cost is has third and the speak helps efficiency. book so like to of marketing AT&T. gem lower hidden sales one, much which And Avaya, upfront,

And fuel it save three together, so dollars future all us you if for helps these growth. trends put to more profit

Brian Peterson

follow-up us And but your revenue one measure variability can maybe at of understand and business payment tracking you. Mitesh. look terms, for how this how Thanks, you as it. in fundamentals that's some a Deferred quarter? Thanks, has help the RPO tracked Got guys. you

Mitesh Dhruv

it customers give payment or customers as are for payments contracts. look us. take has impact And monthly for you of moving sure. the Most But profile, more that customers monthly impacted to if of choose annual opting choice an payments. at variability multi-year a our for terms revenues We customer deferred overall have does revenue gets deferred Yes, Brian. Sure, Yes. by quarter-to-quarter.

does metric, a the ARR volatility look XX% that you this RPO, give the us. future Company, if results grew So and RPO backlog for some eliminate XXX into does the the and of glimpse new of about at

backlog that healthy very some should into and the a it's provide visibility future. So

Operator

you. Thank

Our is from Goldman Sachs. from Heather coming next question Bellini

Your line is live. now

Mark Grant

on terms partnerships. Mark This is in just unit thanks. these economics Heather. to the of Mitesh, Yes, for Grant bit a talk little maybe about

You an changes through customers over to the mentioned margin going one enterprise well. advantage own the to bringing through to of And those is Avaya cost kind the is platform as seven-figure through typically enterprise Is lifetime about over upfront can those customer? particularly or and see book that factors lower those presumably you're what and time? over that you AT&T you Any why there your in you a in impact the are in RingCentral direct big-ops others? or in the a talk But RingCentral just competition, seeing Thanks. customers any then that an choosing of be on similar deals. key to on quick

Mitesh Dhruv

first on the let competition. and I'll the take one I'll Yes, answer the second part Dave

the profile In the higher upfront economics, also of margin unit hang partnerships churn profile second book, the is you of terms customers. even basis because like overall to to one. the on of only the the channel of And paid book cost the partners channel get lower AT&T, Avaya because cost better a long-term is Mark, on have lower, partners, residual is as is not these

partnerships. or profit also are margin, value lifetime the lifetime these look dollars for if you at So higher the

two-pronged with a So Dave direct and us to the I'll win-win let a indirect the approach have of for answer it's competition one. side. sort

David Sipes

the the another for capabilities additionally were in ability capabilities, question to obviously million-dollar all It unparalleled the TCV contact why enterprise over selecting rate, messaging, their capabilities. across to goes very large for customers than our And strong our us. deals. multinational our choosing large customers a corporation deals see think attach one continue I platform. XX% global across especially give mentioned more platform capabilities was platform center on our that XX% are us open We to bring

as really in we across both choosing as are capabilities, intent and all those us from traction strong to usage accounts. enterprises well So those buy an see a

Mark Grant

That's you. very Thank helpful.

Operator

you. Thank

George Our next from from Craig-Hallum. coming question is Sutton

line live. now is Your

George Sutton

Thank you.

like congratulated I quarter congratulate your last a I'd QX results as you think Today analyst. I results. to you on forward-thinking QX your on

from from positive you've Avaya more the granularity to hearing you give about channel? overwhelmingly to you can So just wanted what feedback channel gotten move, the as to ask the that the relative you're us

David Sipes

and excited that channel of new a we're of much migration allows product taps Avaya ACO, the overall It with, The with that advantages opportunity enabling capability Avaya into is some customers. and about larger of bringing legacy into the that utilize that we the vector as through that help RCO product that's installed another large whether directly. base this can ACO to see still or the cloud, make channel migration, Phones through

George Sutton

to percentage about AT&T, relative percentage understand follow-up lead trying talk see opportunity, benefit? incremental a what the Just you and As you leads have today? of the could to the what might the you might been before seeing

David Sipes

think core you account a across verticals their this as do all but with the to ability cell exactly, and don't significant I expansion broadly I'm Yes. that going I to see quantify segments AT&T. with work in

George Sutton

Thanks, guys. Okay.

Operator

you. Thank

is Samana from next Our Samad question from Jefferies. coming

now is line live. Your

Samad Samana

some international both think with forward, XQ And performance how color standalone a international I Avaya working well? now and my taking lot should Thanks be Maybe the have going and in really international side first, Hi, us few follow-up. quarters has some Can past about about more wins questions. then afternoon. that as on in talked and a picking the on RingCentral on for good seems up. we to notable maybe you give the basis

Mitesh Dhruv

International, it's -- Samad, hey, no, Mitesh. it's

So, doors other new contact Dimelo multiple clip. see one a healthy social of is win helping We is our saw renowned and in profiles sector a Dimelo look, is all two or a that Renault, media very countries. international open good It's a we a our contribution. close million-dollar did ARR, we it's is level to growing of international -- see things well with we as its to did We standardize And XX% manufacturer, car at deals keep now actually alongside amount are helping on investing. a in starting is which on centers. now

trend that but up. time seeding trees to are more there are pick we which starting reps we seeding we grow traction, some are growth to metaphorically, this future seeing So will take with And is growth there. internationally,

dial overall, sort So very Avaya of us. on that with it on be a And think its layer important I could complementary think if of it's emerging vector. top international future footprint, a I you for

Samad Samana

the Great. clarification had it's wanted And linearity get question Mitesh, to in X% -- revenue about because the because mentioned gotten XQ investors, just on guide, and some that XQ drove then and earlier, I've just I plus you the how quarter-over-quarter. from I

had XQ uplifts usually. guys You have stronger

of XQ some So guidance. the maybe XQ the seasonality in for into the some of in revenue the did the changing seasonality clarification. linearity impact Thanks

Mitesh Dhruv

changes, think, No, not the was Sure. XQ expense XQ. I at no of Samad.

I good the feel about very I given. quarter. And XQ very think we we heading feel into about good the think we've guidance

Samad Samana

great on congrats and thanks Great, quarter. a

Mitesh Dhruv

Thank you.

Operator

you. Thank

Our Nandan is next coming Partners. question Amladi Guggenheim from from

Your line now is live.

Nandan Amladi

my taking for Thanks question. afternoon. Good

you versus mix strategy the in you about the XX segment? you relates What land over Mitesh, large Can targeted as talked logos. that think about seeing of also were So them new deals? you're it seven-digit and talk deals these with upsells, typical mentioned, particularly new is logos the seven-figure XX% expand but TCV verticals, I to

Mitesh Dhruv

Yes. Sure, Nandan.

consistently also cross-sell above is there we this. two impacting we which but So seeing was bookings from seats events actually are upsells from only positive or sequentially, key existing saw are not were seeing even that this from quarter, we are new uptick the One And customers products. a trend. are upsell an and XX%

or Pacific $X his dental then gave prepared contact in and went example offices, this to as which and So started where believe -- is of remarks, center. it million headquarters, fifth not, it actually, for corporate Dental Pacific an the Dental, deal now Dave,

of power so the we future land in, typically and wall go because for expand when that's to trend. your we wall That's one does So don't go help visibility. it

is reverse sold, second seeing cross to is But the sides. Pacific going Dental sold both the and we're a saw that's cross-sell Crawford mean by your and center UCaaS in in started in I of is time, like like then customers UC. from also lending customers example. we And which sides reverse contact contact a cross which sort word, if this then both space What center,

are So logos the our million-dollar precursor, question, you logos, of all XX% in strength were the expansion to new those lead actually or two we precursor or on But as this should net your deals which new along. and the that hit future is are new trends of Nandan, helping. go logos help as

Nandan Amladi

quarter But the to and mix, being would past relate slower quarter a that you, for context that XX% how history your future? third logo in of new does expectations the for

Mitesh Dhruv

been that XX%, high it's XX% range. No, Yes. trending around pretty same

typically temper to try don't I every were it's in quarter every be but saying, hey -- this, see always think going even is expectations though we strength seasonal I slower. we guys, to quarter like So QX did --

it quarters. was with consistent previous very So

Nandan Amladi

Thank you.

Mitesh Dhruv

Thank you, Nandan.

Operator

Thank you.

Our Stanley. Marshall Morgan question from from next is Meta coming

live. is Your line now

Meta Marshall

second, RingCentral, just in this Thanks. been the Since kind or of ACO selling SME customer I already were guys. mentioned Avaya from get with to just they there? Thanks, sell just and one kind announced? or RingCentral customers or wait just what has ACO continue time any maybe gotten are then two you for to Great. AT&T, product of traction enterprise And of is whether makeup wanted overall sense them kind would you've customers you on quarter the who where a feedback to of period seeing partners

David Sipes

equalize launching And great Avaya. time. question see a board our your customer equal that of where comfortable maybe to size while that was And should But think sales part since ours. again seen the with Yes. mix On provide bit to I over a re-launch, size AT&T, customer Can restate a pretty of you the second take will cycles mature. sizes this it because just historically a ... to smaller customer we've expansion their

Meta Marshall

on the partners the so already partners sold RingCentral. channel that just are So Avaya overlapping, already that

David Sipes

So representing they'll be the to both both ACO and in in able forward, RCO representing one RingCentral sell RCO. and ACO, going Avaya products,

Operator

you. Thank

next is Robert from Power coming from Our Baird. Will question W.

now Your live. line is

Will Power

Great.

guess, have you focus Okay, AT&T, David, guess the Are covering to that kind solutions might are might and what deployments those solutions sensing enterprise if moving their past? thanks. bigger think about there. here on may open quick I maybe on in I the congratulations a forward? you had they instead used hybrid opportunity Could they've centers just Yes, of expansion. the all, historically you have big been hosted using more solution part historical Cisco AT&T think cloud of be opportunity own at I be using follow-up a of they shift Cisco. a the that

David Sipes

Yes. and able the there is And security features you so to that in meld platform think And solution. high cloud their I and even moving we've And customers as in solutions bring of with capabilities get key other meeting as is, to are think today. see direction. them. they they customers you very are enterprise level the rapid innovation for aspects requirements well certain to for why they're sell that been that advantages critical change those But I do a that open the that want

Will Power

marketing from get a and required that Okay. all costs are or way? help there other up in And any you rolling investments to bigger

David Sipes

account. is So already a the current thing NICE

have that I But we in incremental expansion think be size opportunity. already So with a team There it's of an will the dedicated. team. incremental

Mitesh Dhruv

contemplated we've it's the given. all in And guidance

Will Power

Great.

thank you. Okay,

Operator

Ladies and interest forward. that you in you. from this we of time, ask point Thank the ask one question gentlemen, please

Our coming Blair. William from question Suri is next Bhavan from

Your line live. now is

Matthew Pfau

results question. Pfau and Bhavan. Hey, thanks my for for on Matt Great it's taking

here. color. So love I I'll some to international guess my partnerships question choose Would get

EU. how the and representative in love lot out a the the expanding internationally? Thanks. AT&T, how rolling provide UK UK there? details talked can you You some I And about color Avaya. partnership, this is for the your in about on would to overall Westcon get strategy of that's mostly Any

David Sipes

Thanks.

on of SYNNEX part and rollout question in we're did So early was Westcon, as announcement obviously. Westcon a we with still that there

relationship. So that's new a

a relation announced. had that with was We also ConvergeOne

across part and So of partners. multiple to we we And continue think and with important globally expand it's enterprise internationally our domestically. both customers, partners those delivering

Operator

Thank you.

question Schwartz Brian Oppenheimer. coming from from Our is next

is now line live. Your

Brian Schwartz

about for Yes, quarter. for Either the my our the or and the business question. in Thanks Dave Mitesh strength on hi. context taking

size is driven driven by being doing the that the it's if that being in you're of the volume more more of Just strength quarter, wondering by deals deals are closing? or that of if Thanks. the guys you

David Sipes

you it's a have customers, is both. for into greater needs get as there been larger both size, think I to the propensity driven

with strong own those relationship from cross our familiarity products So there. Dental and also those There's with see our center. selling Pacific just strength into customers moving product contact traditional greater a in saw see longer we products we sales, as sales a team like we

So it market I in think seeing today. from multiple the factors we're

Operator

you. Thank

Markets. Mike Our Capital from from Latimore next coming question is Northland

now Your live. is line

Michael Latimore

Yes.

the on touching portfolio engagement again. customer Just

category you're that on point? in the your of this XX% over bookings that engagement or bookings sort of of total any give the XX% the are across over seeing So sort Can bookings color of you at of sort portfolio? just magnitude

Mitesh Dhruv

Engagement the as Dimelo portfolio? in

Michael Latimore

Contact yes, Center, Dimelo -- all Just ...

Mitesh Dhruv

and about a it's Overall, percentage. Mike, overall of Yes. ARR higher XX%-ish is bookings

Operator

Thank you.

question Matt Vliet next from coming is van Stifel. Our from

Your line is now live.

Matthew van Vliet

for strategy use maybe guess evolve? to recent going is success? to there taking looking guess direct still you're other as of partners my higher forward, you're sales involved right there And build integrally that the strategy, question. as same Yes. Thanks I -- selling now at or the are that the I given there the a partners vertical verticals any mix out you identified channel you've look

David Sipes

to the channel selling So the rest business. of the strategy utilizes also similar vertical

channel business. see role partners that do we important an playing in driving So

services, against resourcing healthcare, financial dedicated have We and (inaudible).

to verticals those examples. continue continue retail core successful technology other those the resources. along and of our those obviously in we'll that. are others are like path But targeting Right now current We with now, teams. dedicated very growing we're for We grow also are

Operator

you. Thank

is question now Rich Needham. from next your line coming from live. And Our is Valera

Richard Valera

the you that of A or what you be you. product technological that additional that might any follow-up color take growth on on give Can on business? developments Thank making impact AT&T. you and what types of might enhancements the may us on have

David Sipes

we a there product all across our of reaching specializations do. is In number verticals,

that Given both their and ways our those in focused gives integrate specific of doing advantage have us to to markets. mobility vertical integrations as world-class SKUs those bear on things creating also bringing network. open our well platform, an we of finding with that We're

Operator

you. Thank

Our coming from & next question Company. Trebnick Catharine today Dougherty from is

line now is live. Your

Catharine Trebnick

and with Are with to with the BT Yes. AT&T looking Thank products? maybe taking deeper do your you you you've done question. thing Awesome Thanks. for or quarter. my Bell going as Canada same

David Sipes

to Our current BT, accounts Center with and we -- Contact additional are recently. BT introduced products we've and continue TELUS like

look introduced So as opportunities to creates accounts. into to segment. those. full portfolio those their we each corporate also grow of that bring within into With And we've recently additional that continues our do BT,

accounts. all at of So there is those incremental opportunities, course, we're that pursuing

Operator

Thank you.

coming Rosenblatt Koontz question next is Ryan Our from from Securities.

now Your line live. is

Ryan Koontz

shed on? you light Wondered guys. working on Hi, something any Verizon if the Is account that thanks, opportunity. you're could

David Sipes

discuss Not a we prospective don't current so accounts. account,

Operator

that our That conclude concludes and session. also Thank you. does gentlemen, Ladies teleconference. question-and-answer our

at your today. a You thank We line wonderful time participation have and may you disconnect your for this day.

RingCentral (RNG) 5 Nov 192019 Q3 Earnings call transcript