RNG - Earnings call transcript Q4 2020

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Operator

Greetings. Welcome to RingCentral's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to our host, Ryan Goodman, Head of Investor Relations.

You may begin.

Ryan Goodman

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

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

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

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

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

Vlad Shmunis

of welcome Good I with our for call conference thank afternoon Arne start newest States board of is Prior service, Arne. School his Education. earnings Arne member, Welcome, Arne Secretary of quarter this Harris for a joining Chicago to fourth government warm you and the and former like years, University was Chicago Public he to federal Policy. our fellow to Schools senior at call. Secretary is CEO would United Public of a Duncan. a currently eight

planning at RingCentral. businesses being year. how for a for With the a and are some environment. work are to foreseeable changing global fundamentally home hybrid now preparing is in pandemic Now vaccine office a was operate. The distributed, for future. XXXX They workers the businesses some many transformational

billion, XXXX. XX% XXXX, any turning partner new device, cloud-based, organizations Gartner, by mode. of to partners, According Businesses are $XXX million, RingCentral Total by purchased year-over-year a a As to productively digital to communications cloud-based employees results. critical. with RingCentral XX% from revenue enabling strong demand companies of communications year-over-year and and XX% solutions. $X.X delivered points norm, unified business TCV in will this acceleration is to key from anywhere cloud-based new wins, $X number customer growing a evident any essential will on up and partners record and up as become this We transition increasingly Avaya, of from in peers an million sequentially. is adapt over transformation Enabling standout from strong our to two QX to AT&T more Atos. This led of are three of grew in we by and trusted acceleration communications to their in to anywhere, transformation engage our Office This grew had work sequentially. platform. be customers, ARR the points communications licenses contributions an XX% XX% sequentially

the most for free, to addition from unlimited recent we Smart or help in Glip, of communicate and the any confident their Phone And departments our As worldwide. of cloud we anywhere. Video even Please solution, and differentiated Meeting beyond, needs more RingCentral yourself. the XXXX enterprises enable mode, individual we communications are call These for to MVP, center solutions. Video us to we businesses now on it, of address experience contact glip.com receptivity opportunity can to together device, market it with look and Message to range business the or increasingly size our as full any in visit

important is user leading It all nines UCaaS or trusted which Office, world global class open reliability, offers experience, differentiators. Video solution. and RingCentral Our five solution, Phone of seamlessly Message an enterprise a coverage, global, grade, believe proven, carrier competitive platform, MVP we an integrated are multi-mode

as again Service, year Magic in sixth as report leader We Quadrant be the row. are once worldwide Gartner a a the in for also Communications for proud a Unified to latest recognized

all platform, solution. framework standard is strengths PBX new the industry In proprietary report. Unified recently on of Critical use have cloud a for addition, WebRTC modern worldwide, as cases numerous enhancements. added MVP Video the with RingCentral a Service Video, Gartner built we our core Capabilities component RingCentral industry the RingCentral ranked all Communications highest leading XXXX Leveraging of of five in our

rapid We continue pace. at here a innovate to

course and technology capabilities AI-powered sentiment emotional multi-speaker RingCentral intelligence. to cloud recognition certain we recently the in transition Some conversational And embed Video we we provide pioneer a DeepAffects such differentiator global RingCentral applications. portfolio. RingCentral's is will single after CCaaS virtual This Embeddable Glip, capabilities, to reliability our rooms. DeepAffects, team include with Glip this before, enabling third-party is available as available of developers the captions, with to Meeting footprint. free us at video and closed meetings help called recent a website. an company virtual quickly businesses video introduced enhancements identification. communications no cost. users into UCaaS with introduced Video all this mode a QX, persistent messaging Earlier through other of our meetings. seamlessly smart glip.com RingCentral solutions, RingCentral of enable solution integrated month, for unlimited provides solution assets backgrounds, carrier-grade Video with To camera communications platform of solutions And quality, Smart Video for new provides waiting in RingCentral business during important and RingCentral acquired support, product today. and security, our solutions all Complementing from This meeting

Vodafone a full combines center integrated from new key And, well-differentiated We focused communications Vodafone finding We're in help over these On years, largest customers Engage. COVID-XX to platform. the and cloud NGO solutions. included partner. a Engage displaced portfolio believes Contact provider. major contact offer to to RingCentral's single is particularly X,XXX innovative and TCV our winning offer Office warm native of are cloud over QX, efficiently wins seeing over through new, leverage that for operator recent Europe. I'd newest XX% in on find CCaaS mobile XX will the Vodafone global a be customer RingCentral that to This user of the people solutions. in for by in solutions conclusion, partnerships. fixed have to installed as including extend of with CCaaS engagement Vodafone strong, ways our the million RingCentral trends of power past leading RingCentral center Business our will markets. my strong proud employment. choosing In customers. Business' we will RingCentral base lead UCaaS note, customer with we've of Business several many bring win wins multiple RingCentral cloud adoption was UCaaS industry-leading network RingCentral like million $X welcome also

of BT, Business. channel, gives preferred years, potential a worldwide. strategic provider Avaya, XXX and the past RingCentral Enterprise, Vodafone established go-to-market access Telus UCaaS a and partnerships. This million is ecosystem for direct, us Alcatel-Lucent users Atos, have over several to AT&T, lead now Over unique we

position details GTM expansion solutions and some humbled on Chief find turn cloud our for to President in are years additional grateful and now committed the Anand innovation ourselves class I to will call continue communications world come. and are we our to rapid unique delivering that, progress With and for Operating this We Eswaran, achievements. to pace recent of a Officer, driving to over and

Anand Eswaran

across install solid segments. based board. in performance. Operationally, high QX communications was cloud an Both cloud-based Good customer communications priority our quarter contributed wins are integrated portfolio new demand Modern solutions and Vlad. a growth sizes. all becoming we everyone. level solutions. the companies top you, And of ARR to across are customer all a seeing was customer strong Thank afternoon of unified for expansions engagement of the outstanding and

a be journey key cloud. their in partner to privileged the are We to

are our and growing the customer operations effectively We continue base. scaling rapidly innovating and to meet needs we our platform of

industry throughout We the Chief people. Officer, Natarajan, Privacy leadership new Bishop, Officer, Paola Chief Engineering, technology our Information leaders invaluable share Kumar, appointed and and Zeni. EVP First, team Hinton, Chief Security of Marketing Products highlights: Digital bring me some year. These expertise. strengthened Officer, further Officer, We Matthew Jaya Let Chief our Nat Heather and operational a

year-over-year in a success. increased our Second, XX% of our to expand channel million. our to channel our channel partners, key community, In the $XXX QX, driver we continue upmarket ARR presence

our Third, provider partners. service

partnerships. and positive industry provider seeing with We lead leaders momentum and are We offer AT&T like expanded relationships a service for our BT. became

we excited with partners. also Enterprise Atos expanded track on in rollout partner. new geographies. Alcatel-Lucent as Vodafone are In for QX, strategic launch. a Fourth QX several our to We a strategic is and our Business Avaya welcome

million traction, with growing results. go partners record million And traction, million early driver QX, to seeing in Fifth, of we are deals, over market XX% wins key QX. contributing plus up number our product with was plus our upmarket portfolio sequentially. wins $X strong two $XX We multiple plus TCV $X strategic proven with a along TCV signed a TCV in QX large our of finally, our

Our UCaaS differentiator. solutions is integrated portfolio key CCaaS of a and

ahead, from solutions we meeting integrated reimagining environment. smarter persistent a with for in collaboration video work anywhere messaging RingCentral are and Glip, with Looking team

QX TCV detail. contributed will of some into mix the customers CCaaS wins, of I upsell the to Channel customers. the wins existing $X dive million now with over new three exceptional begin of quarters me UCaaS with both and contributions Let a across channel. and plus

on countries wins global can systems communications specialized With RingCentral, platform. with single customer over plus the X,XXX staffing a channel a from manage cloud this firm. in a aging reliable, QX customer replace This users needed its across of was XX marquee to Fortune One global on-premise platform. XXX highly now

As for with providers, strong results we another new had and exciting quarter service partnerships.

This Business. well Vodafone CCaaS opportunity platform, portfolio reach an and First, international Vodafone on user deliver as mobile further a will leading based as of our partnership to scale co-branded provides communications base. a cloud-based new Business complementary our service our solutions. RingCentral enterprise MVP to go-to-market

AT&T, see solution. For solid their UCaaS lead we as continue momentum to

We opportunity large traction to are like Education partnership broaden are our increased State the with at and excited verticals customers. seeing customers and new Local in

BT, their a provider, of in lead had For the quarter on UCaaS heels strong becoming QX. we UCaaS

As expanded our five in with in me launching We European for new let the rollout, countries partnerships, Avaya. strategic QX. start ACO

includes Microsoft particular seeing multiple diversified vendor. user a This geographies, customers Routing in sizes, with enterprise across adoption a are of segment. plus X,XXX strength win all with large insurance Direct in our We

with we've US, early Since running. August, ground well. and strong expanded in deal growth we've pipeline With transaction count, launch seat hit is the volume UK also the momentum are in initial Atos, and The We Australia. European to the encouraged size. growing

countries. have of in its Office for are employees their RingCentral excited We implementation XX to XX,XXX Atos Unify also by plus own begin over

QX, customer XXX As working drove a UCaaS with communications provider. required reliable, anywhere, financial FINRA-compliant platform highly and from services our CCaaS won a integrated during strong This the system. of businesses quarter. Fortune customer wins we solutions embrace trusted, In deal a

and expertise differentiators system X,XXX market Our in were deep key user win. enterprise phone integrations vertical cloud this

bigger footprint not also our a expand with other have to time opportunity for products. users, We only but over

Contact cloud in including XXX solutions. our We platform. saw in center over Engage XX% for wins million was of strength quarter contact TCV wins included our center also in the nearly our native RingCentral QX contact with $X plus center

seeing customers. are with positive We existing momentum

and Enterprise numerous industry organization. enables least, Direct and partners of added with and solutions count capabilities portfolio expand technology land for UCaaS the We For joined a the Avaya accolades Last, throughout long-standing the I through diversity, and Glip technology talent strengthened and Alcatel-Lucent a ability results and top IT so which example, Office Routing new customer, practices and Forward, and but CXOs Path provider year. to in leadership, Microsoft to We key Office illustrate proud XXXX. deepened larger with Vodafone including a for CCaaS six and of our like and XX added leadership of ago RingCentral and and Best Atos and our launched tripled Unify to Engage Wins strong Teams Cloud these its for Voice little Places Business. RingCentral significant team opportunity over ahead medical XXX. our demonstrate new Cloud customers. PBX broke RingCentral RingCentral product had we our with consistent not We've Work. the We've the culture, year we I'm Video, and of delivered for a accomplishments top integration. seat Glassdoor

to humbled journey. We and that, will discipline. strong and part Mitesh a Financial the Officer, our to clear grateful with turn over I I'm Dhruv. execute to Chief With of be vision incredibly continue this call

Mitesh Dhruv

margin Non-GAAP XX, executing several XX demonstrating X.X%; strong and fronts. and the points consecutive that performance performance, Rule financial highlighted. operating year and the capped year-over-year a by financial our Subscriptions driven growth. years, XXXX with of significant grew good a milestone Vlad surpassed QX tailwinds for standout been XX% afternoon improved we've Anand RingCentral. revenue Anand was and Thanks key billion, above year $X profitable for for on a everyone. to the of basis many

contributions Here's of end Non-GAAP guidance $X.X operating RingCentral grew end XX% XX%, high billion growing over dollars. improved mindshare, to ARR our was To favorable our economics. Total a we X.X% revenue robust to at ARR with of our new yet of Subscriptions $X.X momentum XXX margin quick non-GAAP both Office year-over-year end, grew that strong margin customer XX%, and snapshot. dollars. in grew as the as QX. flow the XX% and from over sequentially. billion cash RingCentral's existing guidance. partnerships bps customers, at trends new high above These free about reflect well saw again unit logo

three represented over value First, look new has the And existing and things of there: stack ability enterprises never logos been to new land business MVP validate their bookings. transform the Our traction Cloud. communications to strength customers our to platform Office entire our as of better, key with upsell XX%

year. the Second, and year trends verticals a third, churn by in COVID hit low those exiting impacted stabilized record most earlier in the

As and begin to contributions Avaya are pleased partnerships, ramp. we see our they as to from Atos to

results are seeing from AT&T. partners, We notably also strong from carrier most our

XXXX, opportunities. as global a Looking ecosystem facet our all have our segments, healthy growth ahead sales pipeline of we in each is providing across

Vodafone from expect users beyond layer and Business. more strong from And come Enterprise As more year, throughout contributions. partners we incremental online XXXX, our the we'll growth like on Alcatel-Lucent partners

outlook numbers. structural the XXXX Year. confident New that, these momentum With the we tailwinds, into in feel With the

total We XX%. revenue expect to growth of XX%

between as revenue first the XX% with XXXX. second to in we and subscriptions of linearity half expect similar revenue XX%, half the growth saw We

XX% We to expect In we expect non-GAAP XXXX and margin operating XX.X%. RingCentral. $X.XX year $X.XX. non-GAAP was truly for summary, between EPS transformational a And, of

catalysts we was for added New started year, the contribute, global logo to is up, strong, we've to future partnerships portfolio expansion base new churn improve product have and our momentum the throughout expanded growth. picking within continued

our technology long-term unique durable with partnerships, distribution positions moat, combined a moat growth. for Our differentiated with us

us. pipeline to will in this large product and quota us opportunity resources. drive enable ahead to capture R&D, continue innovation growth and We invest carrying of to partnerships, further build This

a market operator $XX very We let for that, Q&A. billion addressable believe XXXX With plus could year in exciting the the RingCentral. we are to ahead thrive this me ability and call in our confident turn be to for

Operator

with [Operator Instructions] from your make question not mute. please with proceed sure and Brian, is Raymond line Peterson your our Brian first is question. James. Please on

Brian Peterson

sounds figure little of kind like Just of way a know Is unpack deals. on any seven to bit? lot that contributing you It there factors of I the enterprise mentioned number a record there. there were strength,

Mitesh Dhruv

take Sure, I'll Brian. that.

million here. some on give deals color more $X I'll the TCV financial So

did sequentially. was banner on You're we wins. million a right the TCV It XX% up $X have year

I'll squeeze able three-dimensions also some is one provide the product over I'll We is two came What color of quality on themselves the deals Brian. One deals motion do were on to where or on go-to-market in $XX the two- million. the and some then deal color from.

duration. for deals getting themselves, larger and The Vlad, longer total On million. the it the million deals are committing are QX $X you a wins on booked $XXX value can larger, go was quarter. mute? to getting itself was are we've On TCV the record customers over deals

So it XX%. us for this was up and unprecedented was

the all wins very channel million came based. All really Three from go-to-market from and good broad partners A's. we factor, Avaya, On representations. representation We AT&T. quarters it three like the had was $X of had also the Atos, had

from good We all About the overall higher just move I Net, so deals coming contact if you also in of the on verticals in healthcare this mean all lifetime you on deals through. targeted XX% if wins really facets net had GTM financial, like they're now side. million about over so included and center $X education, pull we're clocking verticals. and and product our element, product value half to a from pull our together. were

Some established factors also still some that are but ramping.

Brian Peterson

and color, Mitesh that. on That's congrats great

follow-up. So maybe a

strength the about adoption in terms how there in Thanks guys. curve the I made we of be with I'll curious tipping markets. all relative internationally kind a paint last brush. lot for have you've hard seen demand markets the But you've international it's over some Is what to investments guys these think the to know signals that of US? You months and a should And XX of seen of broad point? a

Anand Eswaran

This great Anand. question. take I'll is a that's that. No,

in multiple I question, of had terms of well percent right of Avaya, if look You're one the added look inline of both I that and with growth We've international quarters in geographies Atos. your revenue. and at we've if as international QX in in at terms stronger

exactly expected the because to facets in expansion. through progress as we is partners significant So contributing our we're layering primarily international all many growth of

Brian Peterson

Great, thank you.

Operator

Suri question proceed Please with next question. from Bhavan is Blair. our with And William your

Bhavan Suri

forward. question, $X the million you and was gave is just follow-up number the now but great looking the just color to previous deal then phenomenal. I Congrats, want obviously in

ranges So you what if what's of that guides could A you how about are for I'd initially, are three think the to love maybe you're about I'd the What cloud, move etc. think the that. us in higher from partners. Help one given given to to four Mitesh you not have historically. that the gave partnership, guide tailwinds that be it's you and guide the love behind understand tailwinds unpack building and Vodafone, in the Obviously, the potentially the to natural building upside? of understand BT that?

Mitesh Dhruv

on request to different [Indiscernible] locations, I because go just everybody Can mute Bhavan. on mute? we're

So yes.

bottoms Bhavan, our motions. trends marry quickly perspective So I'll Ryan. are then can we and then good various the a go-to-market annual we you? in from what then [ph] on Thank an below witnessed the one we click so is or you some on take extrapolation those what we'll itself. punch up give is planning And planning? hit line Bhavan, not? that's one process two the Ryan, How we it two do color of our view product From I'll planning do will inputs you, it combined we baking

you strategic So a for of as year, view of from business priorities communication that throughout It's and structural the we it's raised last the a elements more change, trends purchase a COVID year. layouts definitely solution. saw said point

[technical enterprises strong, we incremental was metrics difficulty] and the retention and gear. progressed high as logos churn new kicking year in improvement on throughout Our

trends little seeing. we're that So

we Now looking aspects. at up XXXX, evaluated bottoms multiple

channel motion Glip, First A Office, and on and we service also then the the contact go-to-market the on side go-to-market video product providers center. direct messaging layered for

take call top up, trends usually down it our for and as two approach a bottoms guidance. these and always to XXXX, we combining usual. So prudent Even

and Alcatel-Lucent six ramp. to ramp minimal It So assumed Atos will we've ramp we've for about date. launch as they'll from Avaya to and baked a take nine and Vodafone in reasonable the for contributions months

more So a for of it's XXXX driver us.

So we just good in what early the I we we're really about you and with it out, trends mean QX feel visibility hand if seeing here. the overall saw

Bhavan Suri

maybe helpful you. and maybe here. Got That's one, Anand to

a the about investments strategically RCO, perspective made Along product solid service time. You respective the right benefits CPaaS kind of you've UCaaS full UCaaS you the the right to guys contact I of a or bulk integrated a a on it's of kind about see primary functionality importance have customers of voice focus your I'd offerings. this strategically? some CPaaS understand core just love do Thus competitors to you with Thanks. of ability guess differentiate today? have offering. Do center offered I But you set CPaaS part of functionality messaging. to APIs from you in them now of having ownership? capabilities, added think have as the purchases some to think of think as that how competitive full what from some love would

Anand Eswaran

a great actually. that's question So

say, element I Phone, that would Video focus same which bringing deep So is our it. contact across to remains Message center, with UCaaS AI the integration core basically

so remains acquisitions that out strategy. Vlad and saw which the core You called these

we're used cases. comes through, open absolutely demand customer specific when Now to CPaaS exploring

cases us that's talked do SMS specific with a about that's we used and saw driven. volume customer that basically quarter. But very You high

we're that's time. So [technical down the same consistent difficulty] and is going strategy

Bhavan Suri

and guys, Thank and candor consistent. you. the great color the job. appreciate I Anand, What really Thanks just a again

Operator

And with our with JPMorgan. proceed your Auty next question question. is from Please Sterling

Sterling Auty

guys. Thanks

for like with I think it a issues because audio you Darth while, the sounded on got Vader was us. call the

in? all they of ramped of quarter and a in ramp us partnerships you added Avaya. fully the terms compete five what these big at geographies additional Mitesh, number fourth geographies off how the So anticipate be a maybe understand the geographies to that and want quarter to Help with sense? give you through can would You us the of will partners

Mitesh Dhruv

Alcatel. in Yes, countries, now. XX will three XX is and right partners Alcatel countries XX launch coming and Avaya, got in Atos XX, is We've on. Atos in sure. Avaya strategic

the at addressable the be If able address the next opportunity of lot this of market to have, of a you couple and we'll in years. look the size market we

don't I where can after the terms of going dearth of because think seats attack geographies what most biggest be any So and of the the in first going seats there's we these to we're are.

feel the I can it Alcatel-Lucent that, really them is is I is as providing nicely, I So these driver. overtime and year Atos to throughout off think Avaya good One keep as and of you mentioned and earlier incremental XXXX is a think start partnerships contributions done. will don't ramping on going of to be one thing

So continual they years several benefit provide to you come. for a

the about way that's we So these partnerships. think

Sterling Auty

then and one good Sounds follow-up.

of In in quarter. terms Avaya the the wins

You size the And to of think are is of cap is resonate Avaya? your specifically mentioned spot? win. forward you the heading terms sweet a moving Where to seat you the organization where in there on X,XXX product the going

Anand Eswaran

take that. me question, let great a That's

see all across we you So the Avaya are things, their fundamentals couple that are team we is, what where in the I firing said sweet cylinders. of all hitting So spot? channels feel

like expansions, of broadly So ACO. transactions, for the saw We we and which that's good financial expansion. We on layer last had that's XX customer countries in the closed expansion now [ph] geo that's manufacturing. that's with see and seat fact services we bit large that verticals also line geo and saw the deals specific a traction is actually online

and expand everywhere what it's Avaya. our it's we see I actually as broad, relationship broad strength see we So would with

Sterling Auty

Got you. it, thank

Operator

is from And Terry Tillman Please our question. with proceed Truist next with Securities. question your

Terry Tillman

There's of Mitesh, it basically question nothing Maybe is chapters you. book been lot over ramped revenue. from to a overtime well because this for XX% of AT&T

and XXXX still that specifically the of teens around what percentage AT&T the XXXX of tailwind we then ago that couple going do in of But started from at In to fact, relationship. of on look perspective would in some headwind to was revenue. a a with but how lower into AT&T love a of is, trend I dynamics terms kind it think in years though it as I get

Mitesh Dhruv

chapters Sure, will Terry. are story now. in you chapter AT&T greatest I book right being phrased is loved There I it. of the the way lot say and written the

But headwind tongue-in-cheek if course was in memory here. hop of growth. AT&T five-point to you ago the of lane. years couple We did So trough about at back

Now fast of packages was best with are up dissipating. are XXXX market forward strong. In relationship the and our XXXX new history and launched we've new year fact contributions the AT&T to with in like of recently and verticals our SLED. bookings underway to new open the end board, in market the these across headwinds down one up have

don't with answer beyond that, XXXX it headwind to wrap looking AT&T our relationship your I'll be growth. this for to So we new overall by this expanded question, expect And new to markets. relationship with a anymore saying

than go around we I be the of think in business definitely the next couple years AT&T had. could - become larger a previous

Terry Tillman

don't comp like and going usually the to dynamics stock stock or ask but comp of it some talk I you just Can quickly looks significant double. the to great about it's hear. about congrats? that's causing That's describe again,

Mitesh Dhruv

would for I increase. comp reasons main three stock say Yes, stock two Terry. thanks or there the comp Sure, are

was us is, hiring multi-billion I team. the one opportunity is strengthening did mention that seasoned Anand a company. become bench. The not we too a being just market executive to The first to up large C-suite scale for

one. hiring that. C several of that's part executives suite there, We've we're So so hired ahead

overall our and RingCentral people vision. which is are increase great Second is, to place is, work headcount seeing our a

third puts we're look shares. stock in adding is the net if reason we're the stock headcount the great adding in business in cap comp, Net, while having also and second said on count, is one, million of with increase pressure you good. the increase Right course about price. the that and the price X.X all normal headcount the stock for that's so it's Terry. the It So dilution the market of at share

had going dilution the to there's than in So be previous we've years. lower

So if all best we our elements, the and reduce combined we to of team for to get get talented dilution shareholders. get we'll hire top

a there. think it's - win win I So

Operator

question. with from with our And Sutton question is next Craig-Hallum. George your Please proceed

George Sutton

job best and ever I've it the positive, so was a that into stock Taking congratulations. comp Mitesh large heard. turning

Mitesh Dhruv

[indiscernible]. George

George Sutton

to completely not the I additional a additional that at to to the considering partners here look we your a look transformational which Are offerings year and in looking going we that look judging from pipeline right was now. we wonder, at XXXX if ways I offerings. all going platform on see full forward today? we that I new expand we agree when you're wanted might at the partners? see year Are be

Anand Eswaran

I'll take that.

this. about talked partnerships. always RingCentral's is basis we've of think I So success the on founded

constantly we expect looking and wealth partnerships So GSPs. partners and you dimensions, all that strategics, relationship health to with which our partners, our expand can our are our through across and is thinking our

is absolutely are something which focused that on. So we

George Sutton

Got you. One other thing relative.

Microsoft I you more seeing on little if in of direct on you're Microsoft up win. brought opportunity. could that detail You out a go what routing wondered a

Anand Eswaran

think when see, about so I different Yes, in it I ways. of Microsoft, three think literally

The reflected is are see solution, Vlad about first and the out, is single the message, expanding we And because, you large we're year innovation deal in the wins. row day, a in in our We called the like integrating one reason Magic is which what phone, leader UCaaS sixth moat where now still really feel every the video Quadrant good you Ring about which see is right? for it's Gartner. across the with

So UCaaS we feel about the good very solution.

the because they've in routing leverage with plus best cloud as on still opportunity the we large the shop, I'd the unique it, of contact is XX% CCaaS a The is integration then the Microsoft play. deal win where business made the CCaaS. mentioned and customers is are talk second to But teams, mean, actually our deep a And Mitesh you standardize the that's comes differentiator. seeing I are forms, integration which things And RingCentral, and with very is their talked about. core of to of direct in out have hence, that's who call with routing example is through where Microsoft big teams final wins the direct thing I it them we the center teams traction. gives with the one decision just thing routing is in direct over would had such we X,XXX

feel work with and very good when integrate as we with teams we good we actually feel we So it can when just and well. compete, really

George Sutton

guys. thanks Great,

Operator

due And question. limit yourself the limit of question to question question. time, only interest Securities. anyone ask next who's Turrin Michael And proceed one the with only Again time, from our to to is your with of to do we Fargo please one interest question. yourself please asking with the Wells Please

Michael Turrin

up We out the terms outlook year Is likes like contribution in both strategic likely framing helpful? contributions you and add long? XX% QX. initial be coming in you to there in anything for model. had back differ our you're here those are Avaya Anything this in terms calling Mitesh, to XXXX anything growth can of might sounds the embedded find picked there to partnerships go of in add Atos to can that from and of QX ARR is

Mitesh Dhruv

really Avaya. quarter-over-quarter pleased way had It's multiple and blueprint serve million QX, with Also will we Avaya cross double have ARR was with well lift did strong Avaya a to as in both We're across companies every and working been been the partnerships. with with reality. partnerships chip strong we dollars for deals from a and progress but our really future making board saw extremely heavy we a it's It's sales there. accelerate. very there. functional contribution

Atos start. times one More now In ecosystem. is is in are we offered is a The the We're companies three international partner coming in XXXX. for product quarter-over-quarter. XX in activating again of partners Countries which to The countries coming. great first are the had Atos QX, number now. QX off

will start So to size is that Michael penetration of so opportunity with the and low. level we but overall note, rates incrementally key XXXX Atos add being the think in we I things are to the growth the to on think

I think rate beat this these drum will solid be partnerships. years to grow to opportunity a come to multi-year with provide us a for at for an

Michael Turrin

Thanks Great, guys. that's all clear.

Operator

And question with proceed is Meta Marshall your our from with Stanley. Please next question. Morgan

Meta Marshall

obviously kind of they you're and Maybe kind products of continued video thinking well being the home center of as platform customers of video RingCentral be of success success engaged just about the just of our the just the transitioning kind status relationship home-grown question grown as kind have inContact on existing either contact developed. that of any product recent Zoom as given

Anand Eswaran

Meta, this Good is question. that. Anand. take I'll

you quarter. question asked. good last the from start Engage me a let So was

well. Our partnership with continues inContact that is really strong and as

no change in strategy. So

big closely inContact. embedded They're contact while on work with was Engage. we large where continue wins We part our of progress TCV center make to

we've your second and student video default had good the good question new of now Right every part RCV. we've feedback. on Now traction which Zoom was got and who and acquire customer central we

the RCV of them not we're integrated getting with through experience migration video and well on post the getting very right the journey phone across base, strongly process that of on. we're but going we're them because platform It's tightly and As is as a installed now. customers message, our our for benefit resonating

Meta Marshall

for as migration you timeline a would that when there expect far to as complete? be that Is

Anand Eswaran

No, the timeline process and journey the pretty is strong. but

Meta Marshall

thanks. Great,

Operator

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

Samad Samana

out had I'm actually at look dollars on back maybe percentage of about dollars the ARR shift added that years. were think might partner was fourth of for forward and even that looking I contribution to channel was have couple curious of was ARR ARR. driven strong added percentage the a if Mitesh, in the total particularly that net we quarter just anything contribution lower channel mixed in It percentage there of has the smallest the last how a going should direct several the channel? from as quarters just

Mitesh Dhruv

the really enterprise really strong was and direct particularly was QX everything in So strong.

mix at rate the is you the driven the again components the right and overall. If by channel the channel for look growth both

rate XX%-ish. the growth So the strong. line enterprise about of channel with It's look think tracking growth of But you rate. overall at in the was overall I if Samad very

call out. really So there to nothing was

working In momentum of channel we're as we're and number can underway terms partners signing of the increased on, we're that's close the well. initiatives fact, of in faster channel deal some seeing where help we

nothing more there. to read So

Samad Samana

to you've helpful? XX opportunity, be been or it's one extent from engagement I hear or Anand an or trends customers I give strength. you for but Glip early early know maybe there take data activity just conversion? reads the exciting calling given on share was will or download and out anything just you any around just Great, Pro, it's direct worth only seen that days are

Anand Eswaran

we good and precise Samad other to share to too is days progress any be any or early, question. expected Well, details? and It trends too as early is it XX is the

Samad Samana

to Great strong go you. Thanks to congrats taking finish my and guys XXXX. on questions

Operator

And your with our is question James Piper next Please proceed question. Sandler. Fish from with

James Fish

Xx really, with a thousand Was seats it few the roll the for heard that You initial You to But to that upsell next that entities. they and obviously highlighted XX,XXX even Atos Is impressive to but enterprise? just addition more only employees' this kind the wins very looking terms point than of up number departmental overall. two? about obviously of the a we're extended to of impressive it we cost. more over year large broader in at have

trying just to win So to the just two to is next additional and the we understand, year it adds. expect should initial see

Anand Eswaran

Not was UCaaS pretty I and at had. good we of it really, a seats going as wins healthy and It forward well. look was record as we the number pretty of TCV plus it actually if I and just so mix actually dollars thought million healthy at look CCaaS was

good that called So as where had upsell up fairly you I'm sure as not from. Mitesh a also We've well. pick out

not getting has into So as installed. seats expansion bearing which fruit just but we've motion new very which customers as affected is reaching well. in we're back also the upsell our in And we're good well

deals the the Frost so large of and pretty share, good So feel good just seats just of also across it. for published about But and RingCentral of as progress terms this them. in across & users well, in they growth of their we terms XXXX just we not Sullivan where in report see seats. number of users not highest also but terms for all out called seats as them

James Fish

Thank you.

Operator

question Ryan Securities. Koontz is proceed your with Rosenblatt from next with Please question. Our

Ryan Koontz

think any mix to margins? consider headwind we model we the channel should about on operating As gross increasing or Thanks. overtime, the

Mitesh Dhruv

in right. motions. the fact not would partners we upfront you for don't - they're to as accretive the as cost accretive because motion, these sales No, The strategic channel get and marketing themselves economics to relatively -channel unit pay an it's

be channel the takes slightly the as at overtime accretive it for would neutral share model. neutral So best or or

Operator

next our from your question. with And Will question Power Please proceed is Baird. with

Charlie Erlikh

Thanks. environment on is Charlie This I'll just results. the quick any for of the one, pricing wondering lower just strong I'm on taking pricing you some coming of a competitors really Erlikh question. for lot seeing. point. ask With maybe Thanks if the at changes, seeing at Will. you're actually on price and Congrats environment maybe bit if in you're would anything. the at comment all, the market

Mitesh Dhruv

I'll change. same lot kind the see, sort trends so no change whole of the the a Yes, we across Not take year, that of of see Mitesh. we material be so

Operator

Our Valera next Needham. question. Please Rich from with question proceed is with your

Rich Valera

performance. SMB you. that fact levels. the on and quarter-over-quarter to a rate. to improving due another was SMB pre-COVID I churn, that Thank growth was saw was just acceleration in nice back like Question factor Looked you the if in wonder churn SMB

Mitesh Dhruv

a the to four the I under it's are out. SMB three there happening of say There or cover trends Rich, will call couple good out call on on the maybe side. things SMB. are

more the with The traction e-commerce is, pulling and first thing self-service up motion is which motion accelerating we're which seeing SMB our of growth. the strong that's is

we're from the Second branding our getting one efforts. is recent benefit

now we So for the have Glip optionality well. Pro as

does no to or We're halo third churn People side. is an productive. there on-premise stabilized. I to retention churn cloud there and almost year. the out, as one It grinding the SMB over improvement churn And getting the SMB overall see really you fall on the in It well driver called going throughout COVID in deploying the the better that through to I equipment, definitely think SMB are world side. right. So only from at pre-COVID one on as a this kept stay in net level

helps the that first. space SMB definitely think So I

Operator

next Matt with question VanVliet from proceed your our question. And is Please BTIG. with

Matt VanVliet

of the some you now. growth the of kind or of a at which of is of geographies you number presume sort of you're these within picture kind ones. if But terms about bigger feel further bunch from partnerships of do little those of kind well through for year? partners move the with I potential organic guess a along How of penetrated of bigger mentioned system. I entire an countries in within as how wondering you Avaya standpoint bigger much across update partnerships their is you these in have the that overall number

Anand Eswaran

you're I'll the of give the assuming first subjective their talking is, I'm color and partners, Avaya which partnerships and right? like Atos part about

Matt VanVliet

Yes.

Anand Eswaran

the we Yes, in on, their now. every country as countries and are bring activate of so partner all it. in to we we exist look basically those as able mean as I bring at we who channel

operate on the countries We the XXs have activated somewhere almost we in in. Avaya partners in

countries and Atos As the we're activated Mitesh and enable is ACO XX now is countries. train we those build jointly. We've working countries. Avaya now good in available is and available XX in with of in said to about and now, feel percentage pipe really partners

Matt VanVliet

thank you. Great

Operator

next Panigrahi is Siti Our proceed your question. from with question Mizuho. Please with

Siti Panigrahi

XXXX into question in SMB questions earlier But expect Mitesh Most asked. follow-up of we saw your to trend kind similar growth. QX? have of what's SMB terms my the Should expectation a of we that just baked the in

Mitesh Dhruv

that to to teens. like lower was used It's teens. now mid-to-high internally model it It we always high SMB mid-to-high look call now. Yes, mid-teens SMB, teens

I level model. reasonable to think the that's

come, just know You SMBs never easy go. easy

rate So I is more way call dial think high growth teens in a to prudent expectations in XXXX. like it

Operator

question. our Catharine Trebnick Please from is And next your proceed with Colliers. with question

Catharine Trebnick

you quarter. on for a me sneaking thank Well, Congratulations in. good

you're relationship moving capabilities with in into like have though directly a Could back what's inContact between is you this it you're a inContact. go does seem said you versus And contact say parse center, where perhaps into your bit center. even you the would still Because gap and to and the and tight you inContact contact little Engage? So internal yourselves deeper Engage? the earlier using

trying just versus to use So one and parse you capabilities where the you. Thank other. I'm the

Anand Eswaran

take the of size time. at say on would It I of number the the That bit the will customer have also at. and Catharine, a essentially, agents a on hopefully, depends of with use depends, customer looking XX,XXX-foot it the level, we'll on follow-up specific a they which one, want. is you cases that.

to together of all that with. which understand us in comes help lead So product we

see really - further and again, and saying strong back with I'll part said to I it our go again, huge that. inContact momentum strengthening, As is of we as partnership

Engage specific momentum cases, see smaller well. customers in also use in pick up We as

with with it's our board directly customers across channel. So the also it's working and our - literally

Operator

Our your Please question. question Matt is next from with proceed with Bank. Deutsche Niknam

Matt Niknam

during the Just have share a the fourth deals $X been some size color million color the good quarter of deal, follow-up on trending you far on can got thus Any quarter. those so in terms we how XQ? in Thanks.

Mitesh Dhruv

that. Let me answer

quarter. is We broaden in QX I are strong the out just seasonally is question That It's the would still XQ. strongest here. a say What quarter. I'll said,

at look trends our you in If early trends are we trends seeing continue QX, of seeing, the are we QX QX into overall.

Operator

lines And your you this session also for participation. conference we today's time. you your this may the concludes Thank end of and the and have disconnect question-and-answer reached at

RingCentral (RNG) 17 Feb 212020 Q4 Earnings call transcript