RNG - Earnings call transcript Q2 2020

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Operator

Greetings, and welcome to the RingCentral Second Quarter 2020 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 that this conference is being recorded. I would now turn the conference over to your host, Mr. Investor of Head Goodman, Relations. Ryan Thank you.

begin. may You

Ryan Goodman

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

are Officer, and Dhruv, CEO, today Joining Chairman, Officer. Mitesh Shmunis, and Operating President Chief and me Chief Anand Vlad Eswaran, Financial Founder,

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

is webcast that business will full reference differ Some visit our risks well particular, non-GAAP earnings of more deck. several to of release our business today's outlook. to and is I Actual about incorporated discussion. our on including the learn all our statements, our continue In to release, contained will contain The update of website forward-looking currently consumers or COVID-XX at on and subject is and are response our discussions our as RingCentral. today's a slide statements ir.RingCentral.com comparisons. our our and of call, related taken replay governments, call. by A and results business intend depend of with the outlook follow year-over-year not Securities is time. reconciliations, SEC quarter obligation with These otherwise filings and and statements. this by made in into the to our slide are year our and does our Unless impacted GAAP measures at to actions that reconciliation businesses responses continued pandemic, results impact as Relations assumptions extent the RingCentral comment to remain non-GAAP this uncertainties. severity, pandemic. earnings extent forward-looking the all financial to with to discussion of the on reports, uncertain uncertainties A underlying by periodic in materially being indicated, and your questions its duration and forward-looking the to XXXX pandemic, non-GAAP and which deck, third Investor of encourage to our evolve GAAP including and Commission assumes risks statements you all from to and may access in no factors, Exchange provided on

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

Vlad Shmunis

of business of health. work channel and conference business second any now environment. this We and enterprise-proven, now thank from the mid-market, Good hope afternoon has migration or results over on contributions decade all We sizes and and work strong and partners. we is Phone, The of speak earnings partners, any Cloud platforms our from Video communications quarter, peers are global customers, created anywhere productively trusted benefit for companies a a our challenges now platform. Message has communications to We with transformative require from quarter adapt MVP, impact is uniquely become and you and as in safe from having transformation on how communications with mode. delivered you priority global, in themselves. all enabling a meet continue strong second to call. for good operate enterprise anywhere, RingCentral unified our embarked these positioned device, joining a ago. on future. The pandemic a journey where to in demands cloud and as of Businesses solutions businesses of can employees unprecedented

expansion First, we Atos. with some key of me recent our partnership events: highlight announced Let an strategic

by Office Avaya, global of out roll a RingCentral. announced with Cloud together Avaya further we Second,

offering, which last RCV been Third, talk in our we that were to quarter saw to about most in named we later. RingCentral we good early biggest the and us Forbes world. lastly, humbled companies April. the more valuable the learn And We’ll launched XXXX putting new list, alongside has this on uptake Global

across Key and wins As and revenue healthcare, the multiple a to to high-end of mid-market, non-GAAP million. delivered a our services, EPS increase record range. of international performance, XX% revenue our Several exceeded metrics financial to our in grew targeted our QX were financial included education, and wins. quarter. of continue also drivers $XXX This wins TCV board. figure above and number and guidance these seven guidance. We of channel. is verticals Key be enterprise, for the large Total year-over-year this is solid were

look of with is ahead. $X.X portfolio. Importantly, note, ARR, to billion. UCaaS growth strong on-premise difference integrator grew by results to the of of leading driven higher Atos provider The by in or opportunity be UCaaS the was announced believe part our adoption our total apps sale Unify, revenue, announced to We strong of We the of ARR further revenue overall is validate in in Communications, On platform annual expanding relative forward QX RingCentral Digital users base their and momentum recently new relationship that This system exclusive a Unify. on building as market presence devices. opportunity Atos to we earlier installed growth to in year-over-year XX between formerly Atos Siemens global higher addition desktop is million Germany. this acquired market. RingCentral the the to in XX% Europe, will that and Workplace Approximately XXXX. the reach recurring maximize as Enterprise industry RingCentral XX%

RingCentral XX Office Atos reseller Unify’s install its and the to has together. last sell has Atos during more accelerated Importantly, a address or base few efforts now saw channel RingCentral, pent-up to months, and new trained by the outreach Unify UO. partners demand than

Italy, Germany, Austria, Ireland, be with by and the in Netherlands, Spain, U.S., live These Belgium, the end France, to expect year. UK, We UO countries XX Australia. of include

as Unify. Atos to start will a We base will Unify Atos Office X,XXX-strong are UO over also to formerly division, employee the its Atos entire solution. of deploying XXX,XXX customer later Atos direct of expand base UCC to with their employees. the to UO excited welcome

of Avaya, the enablement pleased with joint to of partners in virus. In channel on-boarded. and As a the progress urgent ACO, UK There highly large spread example There by that RingCentral’s and COVID-XX quite solution this wins multiple open the leveraged out or weeks. is early important building, use platform, platform case, and rolled critical Government’s six thousands Tracing with win large control books. on the approximately users was Programme of to the efforts BPO to API even was we over will the our in for was Australia, customer In a large migration and supports make Several are cloud Cloud the and several June, already UK. Avaya tools first X,XXX of based large seamless joint June, launched An channel moving now ACO also Canada, Office, this robust released additional pipeline forward which the deals new selection of are a customers. on features in and were partnership. more joint migration

any we only from from with Video rooted by Phone, our these on Message anywhere via in mode, and growth and quarter. course, during in minutes triple is growth MVP, platform that productive end, video stay any to comprehensive leading, MVP communicate businesses success digit mobile saw quarter It platform. To double-digit enabling messaging or is these device, our voice our in can their employees and trying times. partnerships great over Of that

trying June, important of positive, launch platform This RingCentral we its been of global power in the RingCentral Video the accounts spaces, release Speaking be initial or April. launch of announced which quickly in we meeting able evolving and proud assist the in of over Video, video, Rooms. conference to extends Office since been fight customer even to times. the against have Overall, RingCentral RCV Video. remain Video, on our very new are XX,XXX RingCentral to has the enabled open, we with Feedback already the pandemic. and in standards-based Building has RingCentral rooms beginning and successful paid RingCentral these of reception

partners solutions of open any RingCentral committed communicate win becoming APIs are ecosystem, and to always the reseller productively continue the in and like RingCentral collaborate has to from with workforces of thousands continuity. a with been platform, tracers of is the has platform order, a now combined business no new necessity. solution major that mode, communications to anywhere and rapidly our It summary, for now contact is cloud. win, enterprise longer on our enabled hard Virginia cloud via embedded any impact capabilities mobile-first evolving pandemic. And, have. confident for global well-proven West our deploy with Our will world is State to RingCentral rapidly MVP In will integration institutions reduce to device, continue our to strategic and enabling to the With the anywhere. we communications working nice a from

Now, turn call I Anand Chief President the to over and Operating our Eswaran. Officer, will

Anand Eswaran

QX Good Operationally, Thank you, afternoon Vlad. was a quarter. very everyone. strong

multi-year higher the cloud-based business is laying thriving our of The phase sustainable demand are growth. foundation We is the the for solutions for business and next than communications ever.

saw QX requiring much our In professional of strength enabled Our a other customers segments initiatives. number figure accomplished a organizations. number quarter new history. seven and than services broad and without open, to our platform any enterprise was add record physical There for TCV we segment, MVP this integrated in in more Interestingly, us the was sales across travel of wins. important

a center We figure which of in portfolio, our was wins. our also included contact strong for seven had half very quarter approximately

success. million. Our $XXX role channel Channel year-over-year plays XX% in strong our ARR a to increased

to our us we will a especially targeted markets. four focus needs even Ps’ people, strong in we processes, the to become As enable grow expanding partners. multi-billion-dollar company, efforts foundational vertical These and better, to on our continue serve products, customers’ revenue are

more Let me some detail. share

Cloud launched I by First, remains teams we was happened our Avaya, development together of Rooms, area, RingCentral RingCentral that most in innovation velocity with products our with of working principle. subsequent launched would expansion. highlight Video, also with international this Avaya We the innovation RingCentral Office first to remotely. and like and

attracting that survey people People strong our diverse Aggarwal, a recently it to note, leaders so and Vlad of congratulations recently. Second, for we management we organizations. top front incredible the annual Chief vital management is like Comparably CEOs On hearty in retaining named continued to our team. our team for apriority Officer, Best talent Diversity, and Sorgen, announced on to including Attracting pool the the being amongst Chief and long-term Revenue and for who talent, XX,XXX industry two and have Gunjan CEOs success, Women top Phil covering the expand amongst our for is Officer,

customer predict making foundation will for AI and and to a enhanced and as automate value Machine Regarding our we Learning progress to great digitize to better apply to scale. business customers. operations, are us processes, needs process end-to-end This our enable deliver proactive and and

let’s Now partners. talk

First, Atos, details Vlad strategic the capture and scale the our and shared further ahead. which on helps reach massive to opportunity front Avaya with partner global us

to channel partner we continue renewed momentum our led finally, Second, to see in by invest And our AT&T. our continue performance strong partnerships, service from we provider also with ecosystem.

launched we of the our to in quarter This figure seven the our wins program quarter. customers. partners their sales to with Overall, enables new During entire Partner the XX% IGNITE! partners own contributed cycle a Program. over

Let me a a systems. Marvell Technology, examples. communications in life their a semiconductor global Marvell scalable reliable, of global win great marquee platform on-premise One with a to to legacy bring company. customer a replace and QX them leading highly example needed is few channel

integrations spread Our across mobile-first user including were global enterprise with and coverage, India differentiators and important China. countries, this other platform, XX-plus win XXXX-plus securing our in solutions

contact needed with notable solution. is RingCentral tightly an XXX-plus They companies. print channel center with Contact the cloud-based seats. Another Center custom win user This of UCaaS and combined win a communications integrated one largest apparel was overXXX

across verticals. our an with is large a a due tens our with had to added services. COVID, workforce. behavioral is opportunities our where we compelling by as RingCentral X,XXX QX. expand saw is new great the during users seven U.S. This win at X,XXX In their to renowned to better upsell RingCentral still increasingly desktop XX% us. healthcare operationalize university roll a continue potential university expanded In important we thousands users important deployment across of their users this customer using unified positive of country. RingCentral accelerated is engagement. at to In several an a QX, leading emerging the of figure of phones, U.S. usage across we are motions, Office cycle indicator of ahead globally There extended we use versus of distributed better This they apps market As finding of to opportunities they provider healthcare, communications higher of user go their which business platform education, out a example additional

to school X,XXX implementation private has across we In countries services, secured addition, ensure the large In been a a upcoming for the financial seamless year. accelerated with equity win firm. continuity XX user

were this our platform capabilities, customer, reach service differentiators. key rich global competitive For security, and quality,

Engage Finally, last win an a Digital year, transportation we air large highlighted company. with

in top a the the This year, a the culture. demonstrated trifecta; the from past to us. face platform of our the extended with the journey. and to little transform I embracing RingCentral It communications now. RingCentral strong they I helping more increasingly RingCentral’s I great home. their value our their am all became at by full position for our be every part Over to to people, our customer by phase Company. digital with opportunity is users. over we their Company’s transformation Today, am core ahead UCaaS first, total enterprise Office the the QX, months cloud transformations and our consolidated In value have have a to first, agents. urgent to RingCentral address of is growth workforce and processes, With of our CCaaS on be vision, next a RingCentral solutions platform. moving scale. of solution, the we the products, are transformation customer’s saw needs work to been a the the people-centric business humbled of part incredible innovation, Then, of COVID-XX with in portfolio. to X,XXX see for point the expanded priority enhanced focus large to And of we excited partners, RingCentral global digital commitment customers a meet footprint finally, of XX the six in

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

Mitesh Dhruv

on Thanks Anand and fronts. multiple was QX afternoon good everyone. solid a quarter

RingCentral solution First, billion our the for for flagship year-over-year. ARR first grew $X time, and UCaaS Office, surpassed XX%

with market margin XX% our is growth. overall solid, an our overall a year the testament execution. of grew to opportunity revenue subscription along consistent demonstrating and profitable Second, year over over XX%, This operating large

good long-term opportunity. seven-figure for was transition we is larger Unify, existing winning Fourth, $XXXK in boding are well from of as and a partnerships. anywhere enterprise exclusivity off deals, to we further Mid-market Businesses global product how or expanding ARR, is are Third, turning to another our RingCentral a up to this as in workforces customers UCaaS strong demonstrating which customers our with the Atos defined customers, record XX% strength demand ACO number ARR the and for with announced bookings TCV quarter with Environment. new a finally, Underpinning $XX,XXX complementing more XX%. they work start, with COVID had the was And over growth more strong enterprise environment. reach, or in up sequentially. from ARR enterprise our

base, for customer in than quarter small travel overall higher retail, at improved businesses levels. installed less and account rates churn. verticals saw like of overall progressed, as mentioned But the hospitality existing on base in our to not our let’s relates historical consistently, on that to we that XX% our outlook. As QX move With the although XXXX footing, May solid churn still

prudent continue remainder with assumptions the encouraged the are crisis of year. recent for this make environment, in we trends, to but We the

predictable guidance. QX's to plan. recurring confident and model, outperformance revenue raising executing our highly are Given feel in We our annual our we

onto specifics. Now,

subscriptions to expect revenue from XX% growth XX% up of previously. We XX%,

laptop desktop growth revenue from non-recurring to and engagement X%m customer reflecting apps devices. other mobile XX%, to expect on of phones We RingCentral shift

previously. XX% to XX% XX% We of expect to revenue XX%, up total from growth

behind We We up we from This structural is stronger possible, advantage happens to the quickly systems this for the UCaaS global shown is expect and be communications that us, a previously. from market $X.XX normal pandemic be $X.XX will believe the non-GAAP $X.XX than past of RingCentral trend. and enterprise interest summary, strongly cloud-first, to $X.XX, includes ever. a to as to RingCentral $X.XX on-premise positioned of the for saw COVID and that between be the when which Even businesses. adoption In of inflection impact catalyst demand we hope EPS new lower provided no as for return, income. point take needs has as inadequate expect is have

We a as have product, go-to-market global velocity, well and an industry-leading steadfast to commitment as innovation a diversified reach.

reach UCaaS this with momentum in our scale AT&T, of incremental Atos we to us billion-plus with further ability layers $XX are our Our Avaya, in add progress long-term that market. and growth. market expansion to profitable confident lead with With and backdrop, enables

Of without customers. partners employees, and course, this committed amazing loyal be possible would not our

So, turn to the them. all With a call operator of the for thank huge that, you to let Q&A. me

Operator

a question. from Thank first you. and this Raymond gentlemen, [Operator Our at Brian Instructions] answer your James. session. with be Ladies conducting time, we'll and comes state Please question question Peterson

Brian Peterson

Thanks strong and congrats a gentlemen, quarter. on really

So Mitesh, I'll start you. maybe with

But we're off to Given a well. of the as we actually impact, return line being kind of used seeing bottom revenue saw that. big large that

maybe So beyond? us how guys thinking margin you're and forward going gross as balance head about cash understand into XXXX the help you

Mitesh Dhruv

quarter you, progress. the Yes. Thank Brian. Yes, did

handily. dominoes we quarter A of did initially the As lot than progress quarter. way The throughout you did the the quarter our fall better expected did there. saw, pretty beat

So, yes, you're right.

by that line. fell revenue million. million subscription to about then a $X the see bottom did the we So $XX And of

we really And speaks you So in leverage margin unit is to towards inherent unit will profitable of flavor strong for been very revenue XX% growth. very model promised this base Brian and that margin points very, we executing, of growth our a XX there. upside focus which But through we and and margin basis on go-to-market have a meanwhile, have innovation revenue incremental we so expansion where can deploy as close the tweak to stay proxy similar the for this way flow you. possibly the we the XX% to recurring will be the from for really is again, to going expansion disciplined is economics, business the for margin, economics have the to installed been as XX

Brian Peterson

follow with you engage and perspective few I RingCentral for gave you far? how in but guess Vlad. so I Mitesh, quarters curious some Thanks partners Video, know maybe Understood. RCV. your I'm a on up

Mitesh Dhruv

Brian. Yes,

with RCV. one has to in robust. be quarter Progress early. So, clear, It's still been we're quite

now. We’re accounts actually point. are number good using accounts bank of new at around this And most a It's on XX,XXX seeing customers RCV. now RCV

the first As customer by we overall still so we from making working to that's is migrate matures. when stated, and very RCV product, launched the base Meetings, expand another the we migrate this positive plan. provider to good very the which so And But decision is so on we RingCentral are time, product easy decision over far, to performing as hard well. powered then

Operator

Thank you.

comes Our next with from question question. state Bhavan Please William your Blair. Suri

Bhavan Suri

done questions, Mitesh. two first for lot takes have here. of I maybe puts Mitesh, and a you've

You've growth XXX,XXX. over star got really

churn You’ve improving. got

can sort takes follow-up. the and the as quarter the of quick you outperformance? quarter? the And I’d highlight understand Just takes love drove I’ve to got and the a of through puts puts and

Mitesh Dhruv

sure Yes, Bhavan.

So, I of points. three a kind there maybe two couple things, of would say

very the quarter, the So start new we let's so logo on top. on saw -- the

trend across logo. see did we on board the So, new

If growth look is at the XX% we enterprise what you saw. segment, sequential

that's for I'd TCV XX% getting point deal that strength are one saw duration. really we two, one. the longer are logos, new customers adopting X And a the actually the sort third good itself Even is, from So, videos larger. of size offer to of say but Point in on it’s there. million, came

or on two momentum. points deal are those So, three the

well, lot at look are channel ARR. grew we the strength XX% partners a we of the it, as which go-to-market you from of If side seeing

a you look the UCaaS I would to if trends, just takeaways there customers So combined you long-term comfortable if during at couple with at One for is this these commitment are all, say. environment. takeaways, of are

and becoming not that's demand year initial the third the a stays, seen RingCentral. positive there buying modeling for structural is, QX that demand panic when for dimension, be the And could se be you're Second in the COVID that hey, us then point fear is was least seeing. per And have just We two. is at the can

lot to customers definitely are much lifetime learn value adding potential higher a and with of expand. We

Bhavan Suri

calls question to it’d Friday et the And at all my Anand, CAC is at late announced integration last by cetera. features in revisited Teams. Microsoft you, already a don't Vlad, maybe LTV week They the they're that. you around, definitely. for of a great some carrier be and distributing of with suspending of their some point, also the be Obviously, core or enterprise? maybe want end high the in to study that But carriers announced around second managing

Microsoft view from RingCentral as sort RingCentral the team. they're for of it view sure but Microsoft near I'm what do massive partnership term. division think a stepping or I don't from months? long term competing not about I the positive, you with and of that means care honestly, you back if over about and the all carriers so perspective, X And X think But Anand, next a what you guys announced how Vlad, the

Anand Eswaran

go Vlad ahead.

Vlad Shmunis

-- that being Video me hey, Obviously We very, system. long-term MVP, level, from would we for the of can feel look, equation. the high pick very, And very at system obviously, towards Phone we're partner think settle a Microsoft Microsoft communications this us. strong from strong customers’ do do be -- especially Anand, side bringing Yes, so No on-prem our up, this. cloud. Bhavan. and Look, a strategic the complementary Yes, level let moving still Message strengths to is have we're high We

Bhavan Suri

there, We really good That really there, strength clear? of kind to pushed right, right. a be saw

Vlad Shmunis

in to talk so a But very, need are. strong auto and the on them can But less their strong and I'm again, And outside RingCentral, very still to Well, with goals from what from what right? Microsoft we no. messaging strategy saying with directly you particular. tell

how have have Anand, us, it, for for anything will So, well. a this? to we’ll it see. at a the But mean, to positive, take it's customer add you high level, for to as exactly positive seems market the it

Anand Eswaran

the Vlad. Vlad but details, talk are I should for it you’ve No, recording It gives with we the all mean, -- wide guys us, system it's depth industry. the enterprise that them. top very teams simple and of extending for was The doing to what partnering one said, feature phone on more mode you their we’re is best in said video as of customers it, further are of systems. to great. Microsoft, access we And already our investing

feel So about net-net, we this. good

Operator

comes Our of Nikolay from Merrill next with America Beliov Bank question Lynch. Please question. state your

Nikolay Beliov

is the words question around Congress rest in for QX conservative of bit first than forecast guide the our was little maybe results a a My more Mitesh. XQ. also with on noticed the Mitesh, line results the And XQ came for here, pipeline. and and the year pointed I few that Microsoft

you're if the quarter? that conservative bit walk what through year in what to more or little you're or you a pipeline can seeing in be last churn wondering, trends cause Just us the seeing, new business this

Mitesh Dhruv

let's Yes, the Sure, start sure top. from so Nikolay.

to is you've the lockdown So better the assumption -- experienced QX, for large than what we assumption macro extent overall and get what in right, made continue. the that does significantly a not does

that's So overall assumption. thematic the

and expansion Now, people not contrary sales that's you we half prudent assumed you’ve things. What of better that for take, team always two, the the conversion QX. in pointed in close we on back better, where below see pipeline, the opens out Hopefully, world but given we made if our retention. have point out or we pipeline, are saw assumed guidance, that our more saw rate. and But churn making the as one. of does assumption. lower is force And do for assumptions rates the on conservative as a you sales exiting this trend and net this did it you we'll point the a so than couple quite improve. for we increased We than also asked click up do take our productivity now, assumptions QX, We've

guiding about to way and executing are about really So, think our we feel we good guidance. we the

Nikolay Beliov

And yourbusiness the Vlad of can the Avaya? the for Avaya base Atos book versus comparing us And general you of compare to the quality guys in business? follow-up the and and and contrast to secondly, help Anand, install cost Atos rest in versus

Vlad Shmunis

take users. Okay, the let me users The part look, question. quality, first of maybe are

know about thing can opposed how more So, one customers channel. of I is through don't you as engagement was the is, quality. to their are the say Atos many But direct

think it's that perhaps, an one get motion, -- to know but be so it maybe motion shorter don’t those would So, can customers. I easier somewhat to a

theme keeping too users their a to here cloud international, that would there most in are opportunity Atos did complementary as at course, be with Of both time. were course on-prem to see to as the steps extra existing is of the dispersion same while in is Avaya's many affiliation. who don’t that when And brand Germany well key in the do we a to be Atos’s traditional particular. and there in a Avaya converging Avaya Europe, customers if entirely cases, we have much users, Again, not And mostly to deciding with both this company. of base. I use say, geographical is very customers we've and still U.S.-centric But as the evaluating announced, it it seemed

that from it perspective, So can to and seems numbers. very very, complementary. some if Anand add be Mitesh And

Mitesh Dhruv

take I that. will

Anand Eswaran

okay. Yes,

Mitesh Dhruv

the think Nikolay, when that's Thank distribution part, at right you. key on I book, partnerships. all to Look, for these these look engines, No, cost we

the alongside vector or higher on sales the We're lifetime the the seeing Our marketing. book lower Because don't Actually, not coin to keep a higher have only value. other the -- cost books, but we initial is channels because also that, the spend to upfront is hang are are of partners and customers. other side lower to value. incentivized these costs lifetime to

two-pronged there. I it's approach think So, a

Operator

Thank you.

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

Sterling Auty

guys. Hi, thanks. Yes,

fully for our the you you contributions deployment larger for complete. brand where performance the with wondering ramp deceleration more tools help channel we wanted to whether RingCentral mentioned happy to migrations are in that even there's on Avaya. check looking be things But trainings a typically, just success all over bigger like story, a So the you're should of partnerships? still and on In you are from words, milestones couple of other are

Anand Eswaran

take can I that. Yes.

So actually was scripts. -- Avaya the in you the so delivered imagine at as can for actually QX, even QX, done. we migration in a we we've more automation migrations been on partnership before But while,

think the So journey. internationally we about we across more feel as of a I launched and And Canada, with launched in Europe in X.X. it and then working that I We a product sort launched ACU we Avaya that, pretty HX. deployed migration standpoint, broadly it. mean, fully part from scripts UK, it's go, saw Australia good you have

So that's a journey.

Sterling Auty

And for Mitesh you. it. follow-up one Got maybe

Looking you now, how permanently seeing you're have on on market that to now? motions success go in you motion that of to the maybe be you savings have hold at to etcetera setup the to much the How able in travel, will market gotten from go the COVID-XX? have post-COVID much you given

Mitesh Dhruv

lot Yes. exact spend, we No, not you a do events, events, just quantify we hard employee discretionary but but the have although customer have exactly of I think it's for numbers, travel events. to

and repurposed getting R&D are those of go-to-market. All for

at to going look to tighten spend, Of all for this yes, the make mean, and is be all we a companies discretionary course COVID, call belt. wakeup I sure

is see discipline we'll amount going a on. more think, And fair of forward. So go to going leverage I some

Operator

Securities. your question next state comes Please with Tillman from question. Terry [Truis] Our

Unidentified Analyst

question the guess first maybe I is.

have And ARR what relates been have opportunity the to next this or year it as into to learnings? some months this do driving the of you just And with see As opportunity then playing out you're year early a I Avaya, compared how follow-up. ago? further actually

Anand Eswaran

part I'll second of it. first answer Yes. I'll the the let take Mitesh part, and

early several quarter, as we progress deals very The part, on-boarded a we've retail, higher-end and We healthy price made. wins broad. first plus little the partners. XXXX BPO So in feels QX We've and as which is the had have it's space. large manufacturing, in good

it broad So of vertical sort landscape.

good the Mitesh, to financials. the for to are and fundamentals second the half add as year all the it on the So, half well. second let I'll be continues as expected you

Mitesh Dhruv

expectations. a the and expectations. marvelous Yes, there is CFO for from job now trying Anand you, great doing Thank setting temporary

says, start he business continue move the dollar of contributions contribution this this of to terms for needle terms take quite in what it -- so the and change XXXX. hold material in in we good are the are to to of take billion are revenue expect expectations for a look in doesn't in the Now, quarter year do this the no ramps then start QX we and quarter,

Unidentified Analyst

And Mitesh, layers phrase of prepared this I I in think growth. your like remarks,

these opportunities. to So kind And more of help as all AT&T, How of growth on X I'm move year? little confluence catalysts catalysts? or questions do it about we Avaya, we ENGAGE, forgetting But do others? relates profiles into whether some integration, curious investors of Teams about sure frame the XX a bit lots it of ask they're because of Microsoft these maybe is next than them. this I'm all Just stand out those Atos,

Mitesh Dhruv

Yes, no, very. I'd say it's a

money. catalysts is call And one two are we can Both have going catalysts expansion let partnerships. to ramp this it, number I bucket year. say of summarize number is, on, multiple buckets. but Bucket if starting in strategic do So, two these in

for of bookings office look from segment. you look if the markets, XX% enterprise, and at So of if move market mid that our the came over you booking at

I By of win RingCentral have up tell from announced Atos. evaluating will unpredictable, the a deals XXX,XXX-seat also anywhere large I is size for deals that to in are more the from but you work that. customers We you environment. tell signing we will pipeline. these

is, to these lump in is mean installed two expansion, diversification of I together our acquisition. It reach acquisition. cost does of that's our market. a base. cost there one play which partnership. asked bucket one, Nikolay the expansion second let's So, international about AT&T, number one. That's more secondary broad two lower Avaya, in Atos, up is And And the the expanding PBX

for So we're I thinking organic about think these long-term distribution are the And two layers it's big way an businesses this of us. or the growth. strategy

out So individual and a way the be hard I partnership, going we time. to pieces this will you forward, on did for ACO to break give it's each going for every color me but

Operator

your question. question Sutton next Craig-Hallum. comes Please Our from with George state

George Sutton

through and wanted you a of opportunity, international as sense around of both bit the the strategic Can little to How helpful I kind through growth growth opportunity? you traditional to own partners be a would at your give understand. working are more are? And of outside these growing duration what of the the U.S. you expand is think see I a you us means? with organic you're planning world. channel spoke either list that of partners where expansion obviously to

Anand Eswaran

It's a that. take great I'll question.

sales partnership. joined vector not Europe, we the play building we will growth expanding where a Unify continue UK now Atos in first Australia, right a we already But in is France up well place the as So do well. our see and have in. and and vector which And But from hard the been internationally. partnerships. come reach we strategic pipe and of primary traditionally there has that to direct big presence makes That's our difference a also

George Sutton

I'm you with curious, distribution have the Atos the of the AT&T's and clearly a side advantage. distribution world, on and Avayas

to lot product we talked the Vlad’s think challenged trying you has platform And explain is for what everyone how on years, about a competitive out are get clients product have could, to I your advantages you a unique of if from where a by trying capabilities, you Wondering, in on define integrated the delivery investing perspective. world side? a everyone. advances

Anand Eswaran

to want you take Vlad, in.

while So is getting Vlad on.

I it. would this broadly We for So, this is how us. at put look

coming Message it First, modes Video the different is the old together. of Phone, platform

the feature adding phone on critical For this level is system the enterprise and best-in-class. we are of depth mission

user we unified I on at is work experience of for as application second us. product elements is The differentiator like doing a on it, the are security, major look

the Again, Xs thing, call we geographic is standpoint, huge a have out and fourth just is, footprint. around just fact quarters have now. on I'd moat a thing, where The footprint makes international And we offices available there's the from wide and few it. difference. been X again, would massive global the it I a a works call natively reliability out of trust third for and that security The a is

their product with that that, well. to together work as what quickly to the these to make products, make very works create they come sure our quickly also are requirements, all security joint of our to is So, partners which meet clearly can stringent of differentiated. But ability on top

better then as make the together partnerships, than icing on these come things the to those most. distribution these finally So, models work cake

Vlad Shmunis

with Anand, to just have differentiated kind the saying, with platform. some is Yes. Well, But Video out full the today, it, deemphasizing if time, be double outside I’ll you similar add the only part, hold. took George well, others, hey, but we they're Message let of I click. that, there statement just Look, of believe you vision that. latest if provider that but seems other me voice said news, firstly, was remember do Friday for understand and Microsoft, and Phone, encompassing we we would a they it the saying. what

a on Clearly, do for are the side. we So, we that have strongest in on differentiated approach the getting keeps And phone today us. modalities. these system

We very you with now order Our kind not wins it and lead just that. at are tell with know Avaya, we're digital hard with where all gaps. you and can Atos call efforts. in testimony Do to yet, I underestimate AT&T, here close of but to working what to our order our

will messaging And world it will and is be our good incrementally a getting class product. be pretty better well. as So,

long get We get distinct far that to being towards point have of ways well it’s already day advantage do commoditized. there. equal and often the you're as where the things being end should ever from these net-net, they but So we might at either But signed We will our field. entire we the -- against being now, in now. helped, issue not day more one, we as lose of access. comparison but certainly have things from biggest way head-to-head now our is or not Remember, and than equal win all that till compete

the have in Atos also those people that banking with quite we're not that's like already whatever to Anand innovation And And turnkey, much the custom cases and we’re far think where should it are office is lot win deeper mentioned, Avaya, especially much AT&T, migration partnerships more don't people much like on. be harder scenario, like table. back we to of make goes as Avaya. effort so table. integrations, at endpoint was even I specifically find the a where more making part with good support, people Again, for a So what with with these it of streamlined. to we And example, tools tools, bit a so

too we lot on there’s a So good. think and it's going

yes, feel very So, good we about strategically. that

Operator

from Michael next with state question Our your comes Turrin Fargo. Instructions] question. Wells [Operator Please

Michael Turrin

maybe multiple multiple surprised than factors bit times and key metrics, across it looks of again, Is picked through you’re like that some us of the here? strength others Can driving steam talk uptick? a ARR Mitesh, SMB, referenced little a the one showing it I even some you key growth up here. mean, you've more that

Mitesh Dhruv

see I click are new no, trends it's think in hood. pick a as observation, this Yes, happening it to, We for of SMB well time, below good I you. the were Yes. things If couple in Michael. logos. did A especially under

resonating. is brand Our

in We’re And spending new these we marketing. acquiring in e-commerce. money happening of is seeing what's strong logos actually evidence are less

I helping XX-ish and So going the SMB target I e-commerce. the is But to being boggy think percent indicate to trends overall and, of forward, LTV. are seeing but CAC the self-serve combination or actually near-term our of in is space, we these steam trends lower that think two course, about three right some in

Operator

Our Samana comes from Please Jefferies. next Samad question state with your question.

Samad Samana

for taking next thanks question. Hi, my good after, the

just I I So follow guess to on up Atos wanted partnership. the

those ACO the the Thanks Atos? that those real is are -- that Or Mitesh, following you to are plus guys If if partnership. made And ramp XXXX you question. want those the extend expansions. with six-month in were that partnership think at for them significant on? those you in you about and already then in pipeline curious ramped announced taking have of pipeline, get deal the already a that proof were partnerships initially maybe $XXX,XXX I'm before a points my seat this the of pretty what period and them beginning the

Anand Eswaran

second the half, thankfully with the and delegate Mitesh. I'll start question first I’ll part of then the

as we're immediately, workplace digital half portfolio hugely. saw the first resonating with COVID vey well. could the And customers this few happen difference their one selling Atos the then and at traction part the sales of across to the unified months So, is the the and by forces, the was the just, message mean they -- partnership, a of base first so joint

enterprise how portfolio rest I to the those only and and makes get the this. guess This transition to So, that then traction happened. COVID that's sense Mitesh, customers and both of I'll came together. this you. off extension

Mitesh Dhruv

Yes. Hey, Samad Samana.

I actually. mixed that scale budget think second yes, the is a the scale, And So, it's part correct.

some the partnerships. getting We're these have We in pipe. with more

a virtuous for So, to spin here. I circle us it's think up starting

Operator

Our question? question your comes from Baird. state W. Will Power Robert with Please

Will Power

just could of as with more center, about a key demand. larger your want opposed a the partnering of going kind you've of I sure contact just to that do wonder, make being the a capabilities X% on talk maybe Obviously, the roadmap your of lot for need the organically seeing just but position come bring and done over comments with the I some roughly little you in digital contact more forward and in demand to do deals. to time? house if side, on others of part back generally, that you to bit to Yes, earlier characterize you're there

Anand Eswaran

Digital want a strongly, our question. it's contract as within good been. Engage it And we and RCO Yes, to partnership has remains, as say obviously, Engage ever don't platforms. investing integrating strong are I I mean in Voice

had guys. efforts So side, there. at as Capital But as UCaaS already shared year, you on Arch product like, sales have simple things we last you the the with look have we and the win

basically an deploy solution. now, up a but on we are strong just them, CCaaS they’re not So picking UCaaS basis, also deploy seeing on accelerated needing

So saw then footprint deals that's and of thing. you that's where it our UCaaS Arch comes partnership RCO voice the our to the capabilities, the together integration, also a Capital key percentage of quality extended why because the about of routing the inContact a center That's all platform, contacts where large become deals, CCaaS. large makes

good I CCaaS Going and forward, looking UCaaS companies well we feel think are decisions, at are we poised. and

Operator

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

Meta Marshall

customers would noted still on throughout some of you’ve your quarter, a but have a question Maybe it’s that the -- I you’re improved just are guess stressed. how conditions that little

reducing contract to Thanks. accommodating with caused pauses are payment is any change Or forward them or you seat structures? So it counts?

Anand Eswaran

Hi, Meta.

true. So, yes, are both

as are customer payment approach June number the couple subsiding accommodating two April more Trend get is, and things, for trends. then this a We in payment so deferrals. in and in one customer's did see in -- of May deferrals. We saying

reserves So, the to one. we’re getting is you've It's enough them, the taken accommodating we're then and counterintuitive. interesting exposure. an appropriate And books, for cover in bit actually a part the seeing second

one that long-term for headwinds structural are you upfront customers as deferred in see signing where doesn't seen that some prepay. longer you growth That's have revenue. bode well duration We would up contract, are annual expect UCaaS. customers But paying for not in of for the fact, which you

accounted is guidance. So, we’re And seeing this those that's in the -- we've how two trends.

Operator

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

Kash Rangan

model will How a cetera? you How in video? value long-term, I'm perspective. ARPU, Zoom business it is there super have guys Just But certainly have Slack very on if does which agree does you so a uptick, the thoughts the play the Thank this you marketplace. unlike that high-level proposition, change et because long-term? have how in retention the change subscriber a as of unique or customer you much. wondering, lifetime and

Anand Eswaran

the thanks that Yes, let and effect there. for take cameo surprise Kash, me

So if you look at the way, unit economics, right.

is and and on, said churn partnerships. things. in two by One second two product my you if Once driven One is intervention. and you and it's So, net video layer the upsell things mind. look, second you is is

product let's video the or take So itself. first

with MVP, to our churn, platform of which in exit be a tell the so lifetime were value. put expanding and more would make to inhibitor which an it barriers churn, we're stickier, that does base Given reduce

means partners part and lower again, cost And so customers. with on churn hanging are more that's keep the upsells lifetime of less customers, higher So these Part that and to get acquisition partnership, these one. two to retention, again, value. their to because incentivized

long-term to trending our sustainable we higher be you together, of these currently long-term, trends. have, If all up it economic two are than going because margins package

Operator

state next question/ Company. Please Our Needham question comes with from & Rich Valera your

Rich Valera

that last if there. bookings but you color might were Thank they AT&T, Questions XXXX, were any from about you're to there's or specific which Wondering momentum how headwind, there, couple there's you in seeing to like they your neutral, rate? when fairly I AT&T given can on on sounds and anything perhaps tailwind you. believe build to a add growth transitioning become willing a said quarter-over-quarter? quarter-over-quarter overall gains AT&T continues you trended you quarters And if say

Anand Eswaran

it you've give if time. that. Thanks, -- Rich. to I'll every be once, got metric to Street, classic you again, for single giving in take prepared Again, Wall a

to, quarter, we last So, bookings in what increase did see both continue. saw see the I quarter trends And we Again, strong will AT&T. say, as did yes, you participation. this in did so seller

as not of and that. is well. offsetting to you And are guidance, I year start play, an of And this headwind install Rich, supposed for less think We but to We it because the there. be churning some to base, up quite were as we're AT&T initially now XXXX. year. turning called to the a some seeing market overall seeing still going traction and in it market relates to SMB bookings dissipate the This overall it's growth our be

Operator

today's All parties concludes and Have conference. day. Ladies that gentlemen, you. may a disconnect. Thank great

RingCentral (RNG) 3 Aug 202020 Q2 Earnings call transcript