RNG - Earnings call transcript Q1 2022

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Operator

Good afternoon, and welcome to the RingCentral First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Will Wong, Head of Investor Relations. ahead. go Please

Will Wong

afternoon, Earnings Good of to First RingCentral's Relations. Thank Call. and I'm XXXX Conference Head Will Quarter you. welcome Wong, Investor RingCentral's

Joining Agarwal, Interim and Financial Officer. Founder, and Vlad Operating Chief me Katibeh, Chief Vaibhav Mo President Chairman and Officer; today are CEO; Shmunis,

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

the at call, We that will website our investor which can also you relations have section a slide presentation Financial find under with ir.ringcentral.com. on today’s Results available coincide

or GAAP on of is our with replay in to webcast non-GAAP does our Please A with access related periodic and about our to and call, statements. update Investor deck, today’s reports, our of comparisons. to in reference the differ release non-GAAP and RingCentral. questions visit discussion. follow release, learn XXXX Some and outlook. and the more a Exchange all is Securities discussions contained your slide of GAAP this risks Actual deck. by including outlook assumes our to our reconciliations, that uncertainties. discussion measures otherwise results will comment responses to statements, and slide filings not looking business results and Relations no and website These our materially uncertainties with contain that are earnings the to SEC Commission to our subject into statements RingCentral our financial today's our on forward-looking statements full reconciliation year-over-year and forward A to and call. forward-looking assumptions risks our underlying incorporated second intend non-GAAP of are is quarter Unless from all obligation made indicated, earnings provided year may

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

Vlad Shmunis

Will. I people our We're you and afternoon, horrific unfolds. facing by for the conference earnings the shocked call. to as Good Ukraine. want today's place the see everyone, local to call joining challenges Thanks, dreadful in taking acknowledging the thank situation start events first quarter first

company, and As efforts. we proud local to support a are humanitarian relief

matching are $X We calls million we've we're enabling a up phone perspective, to employee matched date. services. and donations to customers $XXX,XXX all to Ukraine business already our for RingCentral X using From

to we to and crisis hope people very As disaster shocking you heart. and unspeakable to shift humanitarian this my to may know, send close I'd affected. rapid a thoughts is our and our this end We to With for prayers that, business. like people our the

Parekh, First, to Sonalee I give new our a to as warm Officer. Financial want Chief welcome

HP CFO us this Corporate and starting Sonalee from will later joins of She well full Investor be Technology where the Communications month. for she was company. Head Group of Development entire Relations as HPE's time Enterprise, as

next I others. appointing marketing, Sonalee valuable alongside senior and media is product, contributions we Mo’s ensured new XX and selfless sales, also corporate in Goldman period. industries, brings that expanded years and our In and not as Chief people including to growth. joined technology, human the experience Katibeh, like to in Operating and Chief responsibilities we the scale Vaibhav global performance. include I strong during meaningful for delighted a first leadership approach. share will impact at President to RingCentral, our Operating customer Mo would his Sachs, has brings am with His also a outstanding Agarwal experience. Barclays, over Officer. transition and and since customer dedication thank the seasoned that CFO. Officer, partner and his did strategy, leadership interim will Sonalee of to of the Vaibhav beat to we Mo miss stage position including are be Mo of resources the as executive sincerely company outstanding roles had a executive company our role telecommunications & he driving a QX Jefferies

billion Now our benefits start year. the very clearly delivered XX% growth a to cash our and QX, was million. to we QX total scale. million $XXX our In We Top up to model operating increased points revenue operating of a This to million, million, to of in $XX,XXX significantly track solid to profitability our robust, the ARR year-over-year. turning year. $X to had clear revenue continue includes Total the testament flow revenue $X well to ARR $X.X results. guidance XX% billion, $XXX above this growth are XX% Enterprise line XX% our guidance QX. $XXX Notably, margins, We and grow of expanded year-over-year on had over basis is ARR, free of year-over-year and high as both X.X%. expanded $XXX at was end achieve We of business, XX% above rapidly. business last grew even exit revenue billion. demonstrating strong and inherent good which margins generating a XX.X%, Mid-market significantly or inherent we in year. XXX from Subscriptions increased to more to customers the up

you give success. corporate core secret are our me values. on on of built comprise Let trust, why It's we a the our partnerships, and innovation winning? X which tip So factors:

to. privacy. Simply consecutive everything only to our five I security and XX is customers' data And announce competitors data put, dedication which trust, most we a do own. uptime, of achieved that our like to Xs First, have now proud is we our we treat can that am underpinning our standard quarters aspire of

state-of-the-art also capabilities portfolio. embed into our We entering as such encryption

our easy the strategy for innovation set and products customer. advantage. invest Our making easy and which easy manage We is to alike, a use is heavily key competitive up, partners focused into to to businesses on

up product market today. and our people introduced in feature Beta, is on seamlessly web new we QX, summaries, catch capabilities, available new and simplest the RingCentral meetings the AI-based Summaries, Meeting arguably to with category-defining a hot-linked highlights short-term in Webinar that video keywords. Also Insights and As a helps integrated

We're on valued AT&T, Verizon, And count come. Deutsche partnerships. names as our added to others Avaya, Now part BT, such of more and Mitel, QX, we Vodafone Telekom, to the in fortunate partners. with as many Frontier also

are accretive partnerships Mo Our Vaibhav go profitability. and on growth this. to our and deeper will

creates mega of ongoing to by the for mobility enterprise, mode, semantic communications as the contact trends UCaaS that that any communications for growth any cloud-based anywhere; work the give three, device, these cloud-based see on turn to solution and business. are in well-integrated provider. long-term solutions; each in prospects confidence positive and Looking in four, and CIOs expand enterprise-grade need long-term megatrends need the Microsoft the work a for center Teams how forward, an worldwide for the opportunity that a in of unified we reinforces single drives meaningful from from evolve continued X RingCentral. CCaaS era, a are: will businesses from in our These one, which driver post-COVID which on of integrated global preference us adoption Mo for solutions platforms; two, hybrid enable

now quarters execution sets start excited straight opportunity of With growth. leaders management XX the and of seasoned solid momentum. to drive we to our with a the by next and at market and The right XXXX key strong of large go-to-market we're us delivered team helm, skill in X stage now our innovation have strengths and differentiator. ahead have and are the is performance, Sonalee We driven focused Mo

position are we focused our With very optimistic ahead, let our and me leadership revenue the sustainable firmly over most cash Looking and stronger profitability partnerships for growth, that, hand on UCaaS about call future great importantly, I our in Katibeh. and unique Officer, flows. Chief the Mo people, Operating to President With durable RingCentral. am

Mo Katibeh

Thank you, Vlad.

she's going also more execute like as on growth First, amazing of be you and strong that, our to give With partner I on let our to results. we me Sonalee. sustainable detail an welcome delivering I'd strategy profitability. know

of a drivers CIO Microsoft hybrid As megatrends are provider. mobility, preference communications see Vlad growth and from single and unified Teams to to we key stated, center long-term RingCentral: work, X cloud-based for adoption contact that evolve

Let these allow on each us to win. me the RingCentral and differentiate that capabilities items and key of go deeper

Cloud And legacy employees it with happen numerous A platform. onto and as And their being It's the RingCentral Avaya more services Suffolk and buildings Office significant social of mobile solution. else than community are overall that RingCentral phones on-premise half of computers on connect strategic traction a hybrid. that in approximately a hybrid the clearly selected with modern any is are be transformation of across people departments hybrid. ROI, This devices, mobile complementing our both world, an police meaningful their for given York to solution and good outpacing legacy to delivered broadly, and RingCentral example County consolidated phone personal in to seeing than digital use a the XXX as beneficiary their employees on systems our County proof desktop growth point day. of preferred is a and the devices of Suffolk is way, X,XXX being and State. clear we a First, here a locations testament across enabler cost more project stay. partnerships, as that well New to everywhere more

we region Also, that choice entire their we or SCM affected great a capability management vertical, why? RingCentral required workforce. mobile. systems communicate their how industry-leading victims is that solution of network used The Video to a a claims SCM help local wireless getting service, by. growth give numbers office quickly are whether modalities, our area key they that them they is to replace The and differentiated every on RingCentral close select across provide from disjointed on the devices, all largest workforce they a Across let of the regional internally example RingCentral Insurance using they're Second, customers go. SCM native the spin reassure driver employees. in needed legacy is seeing phones allowed SCM were for being including to want This capabilities customers with SCM's And for for or both Services, in ability distributed cloud-based any with Canada's was a reliance A modern mobile-centric to independent someone mobile disaster. that firm. how up by increasing solution.

even significant to key not suite sort a large EX growth any The immediate any a service, business on as And adding minority complete an a creates licenses, of first, often offer. they which make five see well-integrated of to incremental plan contact their communication things that well, cloud license, an the more we Xs which opportunity or outside Teams, the footprint, larger feature This like a opportunity Teams they telephony phone of majority require And solution importantly, are to RingCentral. richer EX UCaaS reliability, options, can still of set, who RingCentral an calling RingCentral. or EX company. for Teams by part Microsoft geographical of have customers as customers include incremental Third, calls all do integrated identity. center need

healthcare illustrate me to recent this. Let wins you give X

a The locations. their large embedded first dialer across integration organization, is who dental XXX services purchased

based single features a on Our human-assisted deep win such to allowed as appearance which was incremental call on key customer employee deliver productivity. analytics, ability device to gauge and our the routing, multiline

year-over-year dynamically spreadsheet healthcare on-call or for Xs The very The workforce agents. capabilities revenue to to The each that healthy nursing queuing and augmented management reliability who call fully capabilities. our the creating and customer scheduling five of of Teams able is call the second a a integrated custom ARPUs. their recruiting due large automate their enterprise-grade and here in by track RingCentral and firm, queues staff is our and historically hours. support scenario staffing net importance is XXX% manage used was process RingCentral with up after to Teams

using are to integrated in purchased integration were future our combining fully market-leading is at but are growth This deployments a seeing because going integrated Teams CCaaS This on-prem deeper on attach emerging add deal continued Systems, solution. our Ryder currently average MVP integrated size UCaaS XX% A the our vendor. an into our great remote as their existing only the a not Microsoft so to single Ryder and to year-over-year. transfer insights at bill. any solution, integrated proof RingCentral as of across facilities UC unified CC with transportation center By a their provide contact historically, company. customers, metrics who CCaaS. end-to-end training call and least, an Fortune contact for And center do practice. capabilities capture agents its and fourth can other with employees be a Please increasing is largest in leading event for details. times, logistics company XXX center a megatrend customer, and Ryder and rates one offering directory, center expanded single significantly XX% and cost platform to we allowed We hosting least from click. tuned existing and Consequently, for the of to Ryder is noncontact easily entire last point to business. matters stay the reduce market-leading recently calls was RingCentral performance UCaaS and near and a well

these wanted give channel. to on an on I our also building partnerships Now megatrends, update and

from up channel generation had in partners. quarter, the our record quarter-over-quarter, we pipeline outstanding XX% sequential First, almost increases including

to the and this with only up increased way. on on to RingCentral, of we my Mitel at with international and from first for wholesale even meaningful Second, quarter-over-quarter launched team. for conviction XX% international XX% on Mitel showed is and the In customer has Europe Avaya was market, this. our program progress the capitalize RingCentral and partners, across segments product enablement materially of confidence opportunity and closing, my all regions America. our our In the a of ramping endpoints continues expected, our portfolio our be only originally RingCentral. leading RingCentral full is XQ, North before time than of revenues outside strategic coming And faster

is business world-class inherently a market We underpenetrated model have product, and a profitable. large that a

with operational and Vaibhav With to expansion the excellence. driving both to and now will over We financials. margin are growth turn on the I that, discipline call focused laser now cover

Vaibhav Agarwal

Non-GAAP quarter and reflecting free This XXX good Mo, above X.X%, afternoon. up the and corresponding in ended strong basis Subscriptions XXX XX% delivered million. start in of points, we you, year. increase with a points well of $XXX an All above a of QX the the cash us and end higher cash And of Thank XX.X%, million was free QX grew solid came year. margin XX% was flow Rule cash of To guidance. last key to we $XX cash increase free of a high XX. from of flow putting growth, revenue generated metrics basis operating expansion year-over-year, year-over-year. non-GAAP flow represented in profitability margin of summarize, margin the generation.

opportunity. this to durable as committed We we growth are profitable capture massive market

underlying provide growth. drivers me let Now you with the key of

account platform traction. First, year-over-year as remains of Enterprise our demand These to year ago. $XXX customers XX% business, customers, of for cloud-based or strong. Enterprise points with defined a communications upmarket our over more up customers from $XXX,XXX XX% ARR, for increased million. X

center. contact Second,

strong Our with be offering UCaaS industry-leading differentiator. to of CCaaS integrated industry-leading unique deeply a continues

is of existing seeing our We now and new are and ARR bundled customers. Contact with XX% over wins center is our business accretive both to growth.

Enterprise still and in to innings, Alcatel-Lucent our partnerships. continue Atos Third, strategic Mitel With very ramp. Avaya, early

that partnerships. of first on basis approximately we a we our into already investments X million our across we note do strategic seats While do This to a ROI to expect positive is share, value X.X achieved be we a metric lifetime a not this relationships. initial relative consistently the milestone

dynamics, our we seeing better metrics going strategic partnerships reported providing cases, metrics will up, in current now and to are of As services our deliver spirit that total are this ramping with our to working aligning customers. ARR we with market are In the segment partners our channel be forward. many

we a well XXX to competitive which also by is driven message, turn a over margin Overall, XX%. last, points acquisition new Now through the initiatives offerings, our into remained the value This were stable a year-over-year expect seamlessly-integrated gross future. across CCaaS that by the we industry-leading, enterprise-grade customer remained steady profitability. quarter-over-quarter And advantage of as ARPUs north in Subscription to in $XX. by video of created and and range of $XX. let's efficiencies is to ARPUs at basis and margins phone stable Operating expanded drove wide and company. note, ARPU XX.X%

innovation scale. expansion company the flow our cash our leverage demonstrated QX, while in the to sustainable increases, from and we allows free strategic as us economics experienced forces, profitability delivering better in can mix customer acquisition marketing unit margin expand. highly than continue As their and invest to partners installed model costs. we This as and from sales the will lower The average inherent Further, are growth partners in leverage drives as customer these investments bases.

In higher a LTV and factors and addition, These value. their focus customer in result result churn in lower relationships upmarket CAC to ratio. higher long-standing lifetime

Now turning the XXXX. to guidance for year full

at of prior growth growth We raising for outlook XX%. revenue versus our midpoint the subscriptions to XX% outlook are our

This growth legacy an for for revenue XX% our mobile while accounting We applications, total are phones. demand maintaining year-over-year. in demand of and in increasing shifts softphone XX% to factors desk for

$X.XX XXX Xx increasing margin a which points represents prior are growth. represents our our a $X.XX of EPS increase we This non-GAAP free focused driving outlook are We outlook, durable flow year-over-year our our and non-GAAP margin outlook had to XX.X%, with and strong raising operating In of than along we to on summary, outlook and $X.XX. $X.XX, quarter prior cash basis more growth up from expansion. to to from are operating profitable

like levers, partnering Sonalee become personal company the incremental and the immensely the fulfilling that, I With CFO months. a let's the as to It forward scale interim and and look Q&A. open company last experience, call been level. with and to to next X a we and growth. with we ahead, On over rewarding has and for incredible and Mo profitable the scale opportunity Board to have to multibillion-dollar the multiple we believe to drivers Looking growth for will thank note, margin that I serve Vlad would a

Operator

question Kash first Sachs. with from Our Goldman Rangan Instructions] comes [Operator

Kash Rangan

are I XXX% also it Can you think couldn't the you've fantastic bit the And megatrends that year. was just their increasingly a as to great little purchased the of ARPU a the to start whereby Microsoft more. like I stable. a practice. a Mo trends Besides Microsoft. you thrown eye-popping EX augment talked have capabilities? little RingCentral very in see And And just was that elaborate but you Microsoft the number looking trend, and but customers to provider behind notice, Vlad understand, specialist about wanted and bit? your growth that, one wanted I a help Mo, bundle get see that are to congratulations on this Do to to an to trends that XXX%

think that south, I certainly job was there. one Vlad, of be a talking fear you're going there a to good And you going stability not is but forgotten. about did for the course,

you management you With the the all from should think strategies, team? finance, do to in you've the the from changes a be together going really brought go-to-market, -- company. tremendous expecting expecting some on gel or experienced How your management new board executives should changes what team changes from outside be we are it's

Vlad Shmunis

since look, Mo predict good. the far, so hey, hard it the future. joining yes, to guess so it's take I so to addressed I I'll We me. Well, in say had would Kash, second Well, But you question January.

good. As and quarter. it. turbulence should you there as say, with with as experienced so few so can lot Mo you a do of advertised, I see, the in a QX. know, to has fantastic we've a quite had concerns were far We some And

aligned never team. matters, better that it and confidence really from President promotion the specifically, of management themselves. numbers. the results what is of now his -- of like raised is absolutely experienced seeing management don't Sonalee, bring you discipline they to This billion never are virtually? stint -- is in, for cash But And A why of and you we the under with I particular, numbers stats now, will the all macro many bringing to our were expect emerge you events we new recent we generation. implement. of with profitable And deserved, a be Mo did that and we'll some talk the should layer with work, all very But aligned and team; some, tell Because further will you is amount surface. growth. of it's for her should flow nice management and we're have see aside, and Sonalee, we lot our is tremendous with to can Sonalee, both $X true delivering well a the to see sure, the Mo my Goldman. importantly, type free a CFO. talent In next if close And of year for is both speak about profitability this and I more a to the are of company culture firstly, both example. and that last with which the -- culture tangible discipline what and outlook fully have she Well, systemic. in record is he understanding as know adding. maybe stronger what which Again, be virtually limit with you just don't You The even our extremely believe, the we are her in of past. certainly, that, results of

I obey of notes some your So co-workers from there. congratulatory some getting

couldn't very the tell importantly, fix, finance entire our in you process. deeply be joining management both more and was if interview the team month. tires or involved So will, this I to I can entire sourcing but org you and she'll later that excited, be in yes,

winner. have unanimous understand also our here. was the Sonalee converged she stars so I had options,

and a new aside strong it's excited and RingCentral, that And rate, $X still growth. more very little happy. caveat run So we billion business that's more be with for profitable couldn't is beginning the certainly, a it

So spot. I a in think we're good

started full customers, enterprise. much you to with EX, maybe stab your traction, it component. it’s question realize don't well, as It's what, Teams to need add. we a quick has $XX from the of do packaging who great are Microsoft since in You let the as even I forget good because limitations not to because have an availability, Microsoft take a best has but EX, get completely not the a it's PBX. success think what have Mo cloud as boxes, size, situation features being calling they the absolutely missing EX of know have a telephony to and get required really and don't offer. missing is phone don't and the are certainly at that at and simply -- realize, add-on But of look, you look, Teams most not with And all everything to -- X.X can There having what? features And where road us aside in again, the viable And not product, with me a a simply they really here, especially EX you a is on please to PBX They check check, even but reason Xs weaker have SLA is just the the competitive it's version. portion. pay, five SLA by X.Xx the I'm that

one. So that's

look a expanded many at just have vastly how geographical it, We countries vastly, Mo, area. coverage we XX?

Mo Katibeh

XX additional countries.

Vlad Shmunis

Okay. Which matters.

If about throw get drama. no or have you you case. the importantly, enterprise countries and carrier, in okay, any pay not you those be it's need PBX still also But to most an single cloud of which remember, And to EX, you in a even underlying it's XX then the for. Again, have communications, thing the don't you it's about choke. one don't need simply to any viable. is very free countries, reliability, to happen still for in

is quality like to, complain have a somebody. who you're poor unless in is Verizon to these issue, RingCentral, you vendor call, if or an it issues Microsoft there So it is going end-to-end or

think a this it's we that again, flow, it's channel. a not why Teams, is So

growth. size tremendous think now. even we've I we business had meaningful a mentioned It's

We both. say will we to be at opens integration, simply set out world's reasons, only drivers disclosing have best point, this to sizable the That opportunities one but of to the growth routing at dialer, are the let's vendor provide just stronger what point. which, do up we direct we a for of And competitive eventually Teams tremendous was support and for number, is embedded this really already us. our between this amount

penetration, we towards competitors at And there. left of quoted are Mo? have tell already, that their some So a okay? of you juice Teams our least lot I can that

Mo Katibeh

hit if Vlad, the chat I Kash, you to any I you question? Why on to And we it. with you have all move have think of don't next later. follow-ups,

Operator

from Terry Tillman is question with Truist. next The

Terry Tillman

Vlad Yes. from you are on a roll. me well. as Congrats certainly And

You crushed there. hi, Vaibhav answers and to And Mo, it with those congrats and Sonalee.

quick for I Mo, the be time to effect go-to-market X probably had excellence quickly. always Just make and questions. more on fruit or areas you, low-hanging that you've can first belt some company, an the guess, at here going your there's under operational side you

rough And impact? where could So what on And misunderstood then just you to touch early an has And most shares able I on do a follow-up quick about of is part question anything for the the Xx on in been been terms ARR. obviously are story? you've have you second of Office that is sales market think then the 'XX. the But Vaibhav had software. for

Mo Katibeh

good, Very Terry.

the jump I'm quarter. first X So relative let and of things to proud in me that quite say

first illustrative the record strong. the being increase we're seeing customer The saw we a that in providing it come And in product power channel. as of we're we the of from pipe from demand foundational and articulated, time one, just channel, any the it's

that the scenes, seeing teams to lot imagine was that can and work of behind by come really channel and good enjoy our life. drive go so to there sales operational And a you really

of key X one do that The efficiencies across driving to whole our think points One the XXX the are is it is second year quarter the expansion hiring, one we of the that way how how for the was And really accomplish we our areas that that. headcount? obviously in and boiled our people, we've second saw The down representative margin guidance basis relative raised to about do our we how thinking we we're one for And had And give think the lifting the building we're as and our about our guidance the managing I that well. how and spend? a program Vlad the made third we sustainability chain for ecosystem. that about points second think And you supply year, question about then then vendor clearly, as are the of confidence you is how really this should organization. on Vaibhav?

Terry Tillman

it think It where do given the misunderstood, is compared Well, growth. question. most trading? tough just to It's multiple what it's was was a is such a stock low you

how curious again, a So question, tough but respond? you'd

Mo Katibeh

we a heart of is huge that the with to it go or terms us. $XX. today going of to made deck, going growth PBX happening win big that -- is misunderstood is your been this that other part key one, bit XXX% it, legacy most after. think arguably Those the the product articulated, the that by Terry, into [X] that then has of seats XXX% And selling a Teams of And our X a But vector it, we've We're hit but market in year-over-year. and the I a in win over across revenue explicitly come alongside to is growth -- us route lot seeing is customers often and them we're how and that little piece flesh to are Teams as is and market, part a is opportunity respond Kash I what's frankly, acquisition for a Vlad essentially a reference And quarter-over-quarter, as quarter, get, it to that is I'd it and is for is of a that the slide the I is customers questions that of our it. It Part think so customers seen think stable a to for ARPU is huge ARPU. is look, a we're questions and in also ago. importantly, that and it. out. the quarter-over-quarter. a fairly and ARPU this of I stable year-over-year a And of in of ARPU us getting Vaibhav kind included most above new new that company with biggest base that

Terry Tillman

here And wonderful. Vaibhav. real That's just then quick for

going should we of it the quarter new are rest business all the seasonality they for you Or year? each higher about progress you point In the add terms the of think given the anything we ARR have as things seasonality ramp kind this of of of at on? the should net through this year, office

Vaibhav Agarwal

environment Office a Look, specifically what bookings. of the would of kind quarter. Thanks, you that ARR. is million I guide we question. is Yes. looks we very ARR in had dollar Pipeline bookings We some healthy we point to U.S. about of get the don't $XXX generated healthy. during as remains very, the But which for tell X overall, But mid-XXs, have growing QX. We good Terry, really into about good. effects quarter, X. or did demand strengthening is the

we've in feel overall, are of what terms and margins. very revenue we So and where guided about operating good

Vlad Shmunis

Let here. few words me a just add

there are on rest call high a the the hit Because useful people and maybe quite some the think it fantastic think folks things I of we realize. at of might a what's the I Look, level, X don't on misunderstood find but you asked question as that well. highlights. about

So going their basically, at part, lower you prices the in quoting not they're like entire PBX larger, And your package. hey, the okay, yes. And fallacy related. cloud, it and that. and they Microsoft, your -- are that and look than you is are is they're Zoom to yours, your hold, phone, And not competitors as the have

this of package the integrations cloud with global partner-ready similarly very Zoom, look And with of versus If offering not. on are we because, larger We numbers, invoice. call the UCaaS without you growth featured, competitive, and MQ again, the single that in message, you video, MVP, message, to tons of we the a no on apples-to-apples, video, eroding as entire it's a -- second of on is cases, compare certainly much Xs, it's posting our but preference at forget own nice center at secret. why a that single and It five and side have holding very heavy tons do we a the any when quite fully these contact least and as priced elsewhere. our phone, CCaaS between others just it's exist keep PBX pricing is only ARPU, a does leading we -- vendor phone And there still lift plus MQ is very the available keep the world's the the company, companies. one, and phone well Gartner not not leading okay? from what bit related And have we , simply today only not people little are Gartner integration video, message, tend to

prices. There from real case partnership we And very in there go went one IP all tons is are able this no we is fully you differentiated, that's longevity ones And basis, winning with our Our we reasonable is frankly, in now easy been it including I over point, frankly, None of not and inContact. there. of functional us our close high-end continue in some of not the blended competitors to a there okay? It's ARPU sizes, contact that real context as if IP can to sides integration look $XX. replicate. lets else. is solution shared there. So an well, of offer there NICE think none anything large is replicated. And that's center is is at because has again, But mentioned both enterprises, as what fairly still in blended on done the

or feel, people our we're with RIA comfortable these at will ARPU And level stay without losing Our margin. with this the level that ability additional acquisition our is new thing hoping what the same disclosures, profitability comfortable ARPU is call this continue more and same. and that growing incrementally -- to at it is let's now

Operator

Raymond next Brian with is The Peterson Instructions] from James. question [Operator

Brian Peterson

focus, the between to what growing start. make is wanted at just during I and ARR. bookings enterprise the the I difference become we I quarter. I on the know as of everything the or I follow not as Terry's sure an outpace up trending you Because grow So ARR But average. implemented bookings . kind And than know metrics rest on to wanted understood faster question And maybe to ARR same those look the shouldn't that's Does is of like thing. guys is so what growth? ARR

Vaibhav Agarwal

Yes.

question, Brian. for So the thanks

are is as of quarter-on-quarter. continuing mature is metric ARR mid-XXs. a as company, a growing we we the at and look, that we And look ARR in to bookings So add kind internally. grow And

had continue we as a going a we $XXX growth million strong. which anything growing to mentioned, pretty add? company. I as ARR like was to and layer quarter, that's to booking So Mo, in grow what's the mid-XXs, on

Mo Katibeh

our hit guiding revenue healthy margin is course, all we're getting very think us We're add why thing this guide bookings, at on of us which that scale. only ensuring is the both of and time I'd a of balancing way we're seeing the we have of I The that profitability, $XXX same the to on we're both. you're about is, delivering million had our

Operator

The Samana Jefferies. next with question Samad is from

Samad Samana

maybe wanted So the guidance Vaibhav, actually ask the I the -- roll beat board. just and slightly to I subscription if revised think beat guidance the then don't just you -- about on full versus management's it's revenue guidance,

about just that methodology? Just the a difference So guidance? that's how Or that's I'm just something in conservatism more we guidance macro think putting if uncertainty? curious if there's should with

Vaibhav Agarwal

Yes. question. you, Samad, Thank for the

on a It's we in and we through with from million from and guidance strengthening, $X we subscription have have revenue perspective, the beat subs, did from between are the flow revenue So the did flowing we around, the FX -- the subscription did QX did it, that year some line. $XX full rates call dollar QX million. the on side, impacts

the that something that's into guidance. we So factored

Operator

question next Morgan Stanley. is Marshall from with Meta The

Meta Marshall

XX% were of to think kind last to ramp that into of there noted Great. Do drive Or efforts XX% kind you channel that, X I just that of dive over noting those relationships? the the months quarter-on-quarter of particular on of uptick? is channel. partnerships, increase kind maturing wanted in you kind Avaya in and the any

Mo Katibeh

What partnerships we've with as to Hello are plans sales got marketing and and to strong organic to that front increase as Avaya. quarter-over-quarter call customers them that it, particularly actively of partners, customers as you issued have have cloud. the there, the our ramp in with message that I'll yet move those each a may well out, with know disclosing not of them we seats. XXX our growth pleased to decision go to Meta. the PBX X heart is are made them, that's from that both is also the that pointed going legacy designed tell that you million RFPs capture that are key Mitel. the I'm was programs put it did look, And the reasons, right? come from the need for a it's customers There's we're start Between just in we're out seats And of huge where there, have. over product we us base allowing at seeing these for these out partnerships. and and to account they that confidence terms And we the of

their partnerships of to how over we're long-standing Second, marketing time. you going continuing unit that hit sales periodic and on being third and give company the teams the to relationships the updates really they're drive to our economics throwing those know company seats going these off. that partners one Vaibhav of that economics. overall is are deals, are our structure that then they're adoption leverage and they and have number on And able customers. And experienced about the to We accretive this, means with the

Operator

The next Matt is from with William question Stotler Blair.

Matthew Stotler

follow-up maybe on OneCloud think morning bit I expanding not pointed. entire the they We that just that their co-selling with a portfolio. center more Avaya little I'll Microsoft contact saw Microsoft to just also their relationship but a and ask relationship announced were include this

opportunity see any go-to-market for product, that, potential can for Avaya And there? for co-selling in implies then confirmation terms the So of an includes that I that share thoughts relationship in with what on relationship you future? What the Cloud Office? wanted expanded to the that Microsoft

Mo Katibeh

companies' certainly comment announcements. on other can't We

will back our on a as that, their they the our you that direct currently section customers with They've this business, see a it that's lot focused. PBX CCaaS to That's where is, partnership to continuing outside questions at got on bit earlier, to. think solution the is What move and to a tell I And basis. where articulated have we're need of relationship cloud, and We Avaya and revenue that's focused own is which bookings to I both in of quarter-over-quarter boils the think, with on of I seat it, that to a Avaya legacy a morning new we increases heart Avaya. of Microsoft. little down

Vaibhav Agarwal

go The ahead next -- sorry. I'm question

Matthew Stotler

No, bit going the about on I'm we quite relationships talked go-to-market obviously, Microsoft speculate can't a or any MS Teams I earlier, very partnerships say, excited practice I either. with and was or we're myself. other so repeat sorry, I about to But future won't that

Operator

Matthew The with Niknam Bank. from next question Deutsche is

Matthew Niknam

talk business about small, midsized enterprise? how churn between trended you and cohorts Can across

Vaibhav Agarwal

Yes.

and Matt, that stable trended year-over-year. true line as well. quarter-over-quarter, was segments was across the in And churn, overall So

kind So of outline. kind no to of material trends

think the at you a the I one. example, from net been an is, than call retention XXXX look look as cohorts, cohort it, previous every net retention better north cohort when standpoint, When we at has of the XXX%. subsequent

So there. trends healthy net retention

Operator

is George question from next The Craig Hallum. with Sutton

George Sutton

untapped your sets? from many how relatively proxy, out Using Frontiers, Mitels how many Frontier with as there a remain customer perspective

Mo Katibeh

partner your To our strong broadly, our the seeing foreseeable Thanks GSPs, And heart we're get future. is growth the welcome continue the they This Last integrate of relationships we're These providers. quarter. go market. only I'd that year GSPs, to cycle we have to service are you is are the XX, relationships global from the I'll going tell producing to Frontier service first, new together, sales it. seat and us that then product addressable in the for question. and take for those unlock Mo. and revenue and of you is, when to contracts, the of markets provider off here's with do for you latest excited think meaningful sellers the one. way I'll What into them actually you were and you of with the go because products contracted you build enable about you the your between question, your year, ended that X revenue XX

at X contracted of relationships. going about we're expecting So XX end to XX revenue. contracted, have producing We're that the year this

about continue at new year, in be grow later that, well net are can going to to is as And that 'XX revenue. then both of X more. producing here going the next are as and The So to a point revenue-producing year X time. meaningful we GSPs talk this

Operator

The McGinnis next question from with is UBS. Taylor

Taylor McGinnis

touch I guidance there. and margins on wanted raise operating the to

If in the at it QX, and of R&D was leverage. you coming from line leverage terms look the G&A like most of looks

So how full I increase about year, see to that. model? earlier raise to some the think that talk guess and when for coming about on you I know, Mo, and relation just of Can the should where about had commentary we most the that you like from we in think

Mo Katibeh

asking marketing X so areas You're tell relative quarter it. G&A great actually Thanks and sales for that all the -- question. What R&D, going to improvements you I'll saw and is to we on. those in that focused

strong of those of actually that marketplace. in RingCentral future. industry know On invest as will same more the awareness the it to win the our win driving S&M side, it of revenue drive organic we take part rates quite We more with businesses of in and more are some the savings and growth broader were able aware RingCentral rates that become in as and

general year, And and how do you then think areas focused anything supply and is ecosystem we add? any we're efficiencies. dynamic. there. hiring same we spend the discipline at to that's look you Vaibhav, drive not we And vendor about as chain continue happened think one It's about we being item so those do P&L. and rationalize we do on program how And can savings the think as there. want on, to where what excellence that rest about of which and third, go focused This then our operational drive key X how the and about about our headcount, line of is our

Vaibhav Agarwal

No, I covered think you it.

Operator

question The with Peter from Evercore. is next Levine

Peter Levine

term leverage that like you where can kind you on the in think partner in You of prepared the led walk or versus do direct? what terms it deal model -- contribution profitability, you about the a think longer deal guess I like And quantify addressed as margin remarks, looks incremental through we of but us comes from?

Vaibhav Agarwal

the for you Thank question. Yes.

when we our is to for paying highest book cost are to we gen the our direct, various the follows: way deal through the book sales think for the motion as about think lead the is go-to-market and I So a because force.

in So partner we we paying sale fronts. it's kind their we strategic the getting for of book, paying are channel take the the partners as we our end-to-end share, leverage utilize to motions. are even as for motion only wins. X of And our of -- marketing are partner-led the partners, forces upfront to more the One and accretive on cost able terms is sales

it a get incentivized drives long-standing have with lower on they And lifetime the we values. because that cost on these higher to customers, these in stay efficiencies book. the partners of is the are hand, relationships lower and So other for customers churn had then and platform, there results

partner-led of So compared kind together, when sum are better of put the on the to parts the incrementally CAC ratios direct on overall you motions the LTV the to when -- the business.

Operator

with question Fargo. is The next Turrin Wells from Michael

Unidentified Analyst

partners This is well? from [Austin about those is seats just the Mitel I think have Turrin. you touch should And the GSP color on those wanted contributions the versus a partners. XXX,XXX from can any How added there follow-up, XAs? on as we to for Michael Williams] as account of the on seat in those of how provide to the mix context

Mo Katibeh

Okay.

earlier, Mitel. Vaibhav seat actually articulated So the excludes Austin count that

X relationships. it's the first So only from

those we that But is I'd about question. of relationships. back And the of the on what earlier the I disclose -- to go we get GSP So part I your then side, love think over relationships that is on answers line that GSP that comments, first which rest just of my don't Thanks I XX% the they number is seats sight revenue, well. come stacking the growth this a have not incremental time. as and And year, for board we of they're but think of question. that producing as actively the start minimum for as from into

Operator

be Alex Research. from Wolfe with Zukin will question last The

Alex Zukin

versus added on last Is is currency? were QX the at year-over-year that at just basis just pretty I'm that of the year. the can else's gross margin that someone stabilizes net Again, to of? that of a get want look trying of you calculation on And Is something delayed -- down to doing you it's the I I on a recognition? understanding. there? where I a they question, Is get a I'm look ARR. better on margins, could to And ARR we that just think -- new sense GAAP just then should just kind driver in on gross business comment sequentially if I and maybe standpoint, be significantly if down what's mindful comment if

Mo Katibeh

good, Very to it half Alex. take Vaibhav. hand then I'll the first off and

to back million. a ago, quarter, is I about little come what articulated $XXX bookings So good which I'll a bit

very look it's x really, almost business, QX ensuring always last as about our bookings you a of revenue we're the as and If line about number years management's lowest us quarter. as And the that's in Xx seeing And if of focus that way. how think is we prior margin We now. the about that doing our profitable that's both the seasonally managing where quarter at about top to want business, why and both guide new it margin? is driving you talk right our top line rest then of the year. of well line. we're versus And year you're And Vaibhav, disciplined want for guidance the accelerating and drive up to last bottom gross growth

Vaibhav Agarwal

Yes.

there when gross on side, guys the multiple look kind the there. you are non-GAAP So good at gross of margin margins,

we Mitel intangibles And costs, base, things costs last video and CloudLink the are From our over we the we with upgrading perspective, are we product, native are As from scale. quarter. compensation getting the efficiencies. to the acquired fixed we get GAAP are that X and we scale, technology generally, a spreading And amortization. exclude stock-based a wider

gross running think the I of technology down impact are through, driving that the margins. we is that in full quarter of amortization that getting that's GAAP the

Operator

question-and-answer the has also presentation. concludes attending you concluded. for Thank session, This now conference today's our and

may disconnect. You now

RingCentral (RNG) 10 May 222022 Q1 Earnings call transcript