RNG - Earnings call transcript Q2 2022

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Operator

Hello, and welcome to the RingCentral Second 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 limit yourself to one question. Please note, this event is being recorded. would VP turn of I to conference time, Wong, Will Investor this like the to over At Relations. Please, go ahead.

Will Wong

Thank RingCentral's second I'm and welcome earnings Relations. afternoon, Vice call. Investor RingCentral's Will you. conference Wong, of quarter Good XXXX President to

Shmunis, are and Katibeh, Officer; Chairman and Parekh, Chief Financial Joining President Vlad CEO: Chief and me Founder, today Operating Sonalee Mo Officer.

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

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

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

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

Vlad Shmunis

you our thank call. and everyone, afternoon, for Good quarter earnings conference second Will. joining Thanks,

current a While QX. the from we are not environment, immune strong we macro delivered

total start over seats center contexts. of is driver giving fourth, billion ARR in are ARR base; we contact now than a we points XX.X%, paid a leadership is margin company; more quarterly billion we our of you unique for by our TCV year-over-year. Let to innovations basis $X our and UCaaS, two, five, $X.XX operating key are me and record One, three, a X deals, driven the go-to-market strategies. us; up results now XXX; at XXX record we demonstrate matched These five million growth $X million, product of by quarter the delivered and in plus RingCentral's bringing almost in position

consistent able execution. through these been have milestones was achieve exception. no to We QX

welcome like with more I'd first shortly. her about our call details CFO, who to as you results Sonalee, earnings RingCentral's to will share financial

were Total above and Both first Let and year-over-year, a the year-over-year the on Subscription XX% grew high grew a revenue me you XX% currency constant on constant basis. currency XX% highlights. give revenue XX% X%. margins guidance margins flow with dollar. our XXX of free our above of points stronger expanding end into basis even well guidance, cash a the account year-over-year and were record Operating quarterly taking to XX.X% basis.

expanding Following to our ability results solid sustainable in these deliver margin expansion our in confidence us give QX, margins. while growth

mode platforms; cloud-based the four enterprise-grade adoption work UCaaS with are: purchase a mode provider, the in friend, global which unified well-integrated a a preference any to This anywhere, integrated vast the across opportunity driver and growth for from and remains on and phone; finance; communication of behaviors. worldwide, Mobility meaningful buying enterprise, communications which work consumer megatrends. of RingCentral; cloud-based businesses is of four, need a care, a name creates historical CCaaS that on-prem success solutions believe mobility to a insurance two, from of era, one, health the services, which for cementing is business in in key CIOs single is from communications an includes These three, turn for enable need to drives logistics, as to a consistent by a ongoing for a education, the interactions Voice industries. for grounded Teams Our and such We government in professional date reinforces array hybrid solutions. post-COVID any not the contact Teams few. device center in

these all win in We continue verticals. to

third-party of to makers. decision important customer very Another recently that noted a engaged fun is fact. XX% a survey purchase consider of extremely be to respondents voice extremely engagement. to XX% voice to conduct to important very generation. revenue We've key technology to

to continue trust, corporate of We and partnerships. win our core because values, innovation

customers, for this a uptime, our the of competitive marks key differentiator. trust Third, quarter which is five XXth consecutive nines

our their lease tell for And with communicate to or know we our technology do our we Simply when is need and any to one privacy. is the own. reasons RingCentral everything top customers that dedication treat their picking us of with stakeholders when and to them put, security underpinning that reliability. customers their data customers our data need proven work. Time of again, like customers Our certainty to need will they

trust, end-to-end yesterday, highlights customers, which capabilities our encryption also we our And our commitment are into operate our we communities in. shareholders, Impact portfolio. announce released state-of-the-art we speaking of Report, our people, such to to our the as proud and XXXX We that embed

launched To and hotspot for our want and functionality innovations Second, with innovation. customers Creating in and QX, easier to reach our their salesforce prospects engage to customers. is committed new integrations, making our and RingCentral innovation. few leading enhancements we significant it with need. and customers with of highlight a features that

customers their number the deployments, For These capability. to introduced and across innovative bulk international a make for new employees and Plan Dial easier a enterprises large it we international features globe. Smart management connect

but Avocor, This our allows new And way have welcome with that strategic with had partners we to Avaya's enhanced On Avaya. not Rooms customers commitment office solution. We reiterate unique to partnerships. We like last good and and their UCaaS for partnership the the EPOS. enhance to our Mitel to the least, paved whether and by the world's anywhere, from with to this new RingCentral work also quarter or CEO customer that note, hardware ability Jabra, partners, installed seamless world's integrations move would a remotely. in led leading to base like largest on-prem

and partnership this as customers to still relatively growth transition the on-prem Our contributed journey. in unique global to have cloud we're early our from

improving cash free Looking flow. ahead, stronger we're profitability, strongly focused on growth, and durable

platform that, in team drive we to ahead address to over leading me continuous the the call UCaaS and and untapped Mo Operating us. a With Katibeh. have the large our We our management President of hand let still talented industry's Officer, opportunity place as success Chief

Mo Katibeh

our was quarter close a business our from million. We over and partners. a strong XX Thanks strength to deals with direct with QX Vlad. won TCV of $X

market-leading integrated results operating performed and CC short, continued our with attach offering these we CCaaS well were and growth. the and to driving of increase also very In achieve well. on Our able we while in UCaaS revenue for upmarket margin teams executed UC

that some you megatrends give let Vlad we four outlined. from Now, of examples benefited the me how

to wherever they Companies are and are. First, productive anywhere people from be enabling hybrid RingCentral their them work. work helps

in RingCentral wholesale supply, a As Grocers, C&S US supply selected leader infrastructure. recently an PBX their replace chain solutions and grocery industry example, to Wholesale legacy

features our Second, C&S one first suite the integrate still could offices what country platform, year." whole say. Here's we saw mobility. replace a our research and from the to for in million solutions ever, cloud had with communication $X of we to "As that to our infrastructure, PBX of connect empower employees dozens communicate time RingCentral, save anywhere a we across

their home field. of RingCentral cost able brokerages with ROI in and million truly securely solution And creating a recognize transparent real thousands at brokerage a five office, meaningful that years estate largest by to States structure. allowed in the up seamlessly or $X United over offices calls solution, a savings in other to of selecting of mobility-centric agents, was predictable whether wrap and the back the the the One their via each beyond needed to

other freed IT focus As up a on initiatives. this also bonus, their key to teams

to a Microsoft Third, which be RingCentral. Teams, growth for driver continues

the largest of quarter yet. growth single Second quarter was

Now, key adding center contact part that And a a are are they cost and do an an on which and customers include offer. complete licenses, the or importantly, telephony their adding creates Teams UCaaS to to as identity. of can make suite like any set they or environment. In have their cloud all by X reliability integrated Xs RingCentral. things to require from of incremental outside not EX feature solution footprint, calling customers company. larger when vast EX business service, EX more phone a of even And minority first, Teams This the customers need perspective RingCentral a majority license, plan calls team's any short, feature a richer often who well-integrated opportunity the communication sort still geographical both of RingCentral benefiting to immediate of an and option

vital offered are savings employees will addition home last functionality, customer fully required only would supported reliability the Teams costly in to but Teams the global For a solution, their legacy our network. combining in cloud leveraging want solution. messaging which provider or challenges customer company video, one and using encountered during scalable cloud the Cloud and pandemic, adding options, risk solution reach, And meet reliable a as highly for also systems. center CCaaS market-leading X's less ROI X required voice Avaya compared a not Preferred a in evaluating and the They solution. CCaaS UCaaS different These Office experiences. the currently with office. a Preferred to message was their option several CCaaS to this reduce call, example, innovative cost integrated concluded least, risk that professional UCaaS The customer quarter. they services to features. from customers became reliability of realize and to an issues RingCentral. company broken offering bill quality the telephony and company a provided professional caused significant when that global benefits UCaaS would that communications technology, a upgrade for global highlights a the and use insurance on that the provide is telephony RingCentral of call they more and integrated and app services integrated legacy It that in and allow resources that and insurance, contact purchased single to but

to will claim, insurance the statement while recorded example, with agents For Contact now from RingCentral benefit for ensuring we've to call ability added still leverage that also automated Center, partnerships. have their they to be purposes. the see our a take they we claims and in Net, recordings can and RingCentral continuing four this end-to-end megatrends pipeline compliance the that can for is our that outlined,

key our this Regarding trends three quarter. saw pipeline, we

close sales has trends, expected. times from to First, reverted historical opportunity which cycle we to pre-COVID

an year-over-year. a saw demand, leads Second, increase demonstrating quarter-over-quarter we and in

business Third, remained opportunity size small has for consistent.

larger decisions, the deployments. seeing in behavior. customers customers near-term being ranging their also forces small influencing see clear from across is we offerings, mindful market of buying is verticals However, cautiousness to buying our that is and smaller broader What enterprise on to initial value business of while are focusing all continue from

environment hardware customer and are diverse moving strong their return value of current costs on able on-premise our to for our show also reduce quickly generates XX% on we investment how that RingCentral about UCaaS are a XX%. by part In on by average customers from their closely nine months. vertical solution where at move their with customers. to spend, costs payback of more telecom focused Customers go-to-market the are IT looking As an their many by approach, spend average we an XX%, very MVP to

partnerships. our to Turning

to partners see and with their community. to onboard strategic quarter. remains our our the we also up partners. to GSP add continue Avaya continues consistently base We traction to channel on as to Seats gain growth from are growing our strategic and continue track, growth year-over-year. sequential seats partnerships Mitel another almost XXX% continues from compatibility endpoint

Partners there believe ACO international million continues strategy Avaya's meaningful remain a to customers, differentiated be which Last, an to that is market. of our for opportunity. continue wins the the plus a in our of base. are represent world's part contributing to enterprise go-to-market destination We and $X area as on-premise largest for opportunity installed

we Germany, North recently outside to TCV Vodafone addition launch million-dollar America In launching in and wins with services new closed in geographies. multiple of

unmatched our strong ability customer our because had points We a to with and we continue globally are quarter. to value product, opportunity. of clear summarize, we in To build up and and still efforts ROI. our best-in-class as pain win needs We address motion early the go-to-market

and Sonalee over discuss it our financials to pass to I'll Now guidance.

Sonalee Parekh

CFO. you in scale. a RingCentral, opportunity first some of pleasure to a look met It's compelling and join space, in coming with to in I I chose Mo. to saw at operating call a of here time months. category more forward my on RingCentral's a the Thanks, earnings since I've weeks as May because and high-growth be leader to joined you I join spending

our with Importantly, the RingCentral few opportunity, and market still flow. run margins rate, progress quarters. innings the weeks my with look $X future have companies in I a is in one operating a My RingCentral few is SaaS revenue forward first sharing belief of high-growth you tremendous cash reinforced and of that expanding free early to billion

my includes and CFO, future our QX margin XX%. rose stakeholders, in driving constant was guidance to to cash point include highlights. a strong value Subscription key of be currency, high-end million, key roughly of metrics record while a investing and our operating guidance, top range X.X the that, revenue margin. our be which All shareholders. above will and free employees turn XX%. creating operating subscription priority our we year-over-year will for above QX delivered growth. high-end a growth. for customers, With driving our of let XX% our to profit firmly Adjusted $XXX our quarter. represented the XX% over expanding and impact, focused rose efficient revenue me which on This came in RingCentral's flow, I As our

the and non-GAAP our of year-over-year improvement up was operating quarter, points delivered This our the which above we am As outlook of profitability and I of last was pleased in previous balancing margin highlighted growth we last basis one expansion tenets. meaningfully continued is XXX with XX.X%, core quarter. our XX.X%. particularly

free we hand points and free versus basis cash a $XX the on generated year. This Additionally, quarter of cash X%, of of ended non-GAAP XXX margin represented flow with $XXX million. million last flow cash up

Now let results. drivers around commentary me of share with some key the our you

growth. Firstly,

and well we as value us. the move their upsell to benefited continue higher our During higher strong to seats as customers expand points from into base as with price quarter, skews

Additionally, to and overall to global center we a positioned a integration. as unified contact growth. a is growth for outpacing communications our strong center from given Many CIOs driver want are contact integrated continues solution be us provider, to well buy and our and and single an benefit leading product

north five customer money with productivity. phone ARPUs overall and year-over-year over consistent remained advanced improve We of and buy remained analytics their ARPU the our Importantly, are $XX. center Customers including global see Also, platform message, because AI and in they new value save our acquisition stable integrated video, RingCentral quarter-over-quarter Xs and steady reliability. customers and features, $XX. contact and

over million $XX a have year's saw new been with sequential from million trend. implied $XXX we Adjusted our bookings, would new currency, bookings impact consistent for last stronger the Regarding dollar. and

profitability. Now let turn me to

our margin margins industry-leading starts with subscription XX.X%. gross solid of Our operating

margin improvement in W realizing was core and they return by efficiencies will the a as more hiring prioritizing vendor during insuring driven to meet consolidation disciplined view and innovation investments Additionally, balance of take such investments our sectors. growth well continue criteria. quarter

growth. the opportunities be further aspects Additionally, to drive of efficiencies continued at looking we will business and to evaluate all

of to what turning an market you Now is guidance. we provide the I today. outlook with that will in reflective see

impact customers, year-over-year; pre-COVID the in Regarding sales growth subscription currency, more expect we for into even of this quarter, of Adjusted $X.XX leads sales EPS operating reverting saw quarter. non-GAAP constant increasing key through saw XX% were: of the XX% initial we XX% than well quarter-over-quarter as the expect XX%. of Non-GAAP of norm. Two, stronger a total a as backdrop that expect to backdrop, recognize cycles revenue to to account, margin we three, Mo third as Taking Adjusted ago more we XX% macro current for and three and and dollar. itself These $X.XX companies stated, subscriptions growth months to manifesting currency, Total XX%. for behavior deployments. XX%. of share. what navigating to revenue growth one, to revenue per We from in challenging growth are buying constant XX%. larger XX.X% the three revenue smaller cautious trends of we

full the For top line reiterating year XXXX, our we are guidance.

expect XX% continue of We revenue to growth subscription subscription to to revenue expect constant currency, Adjusted we XX%. for XX% growth of XX%.

total of per growth expect to midpoint. non-GAAP outlook from our to of are And our XX%. to growth share. XX.X%. to This year are outlook $X.XX raising up improvement operating to XX% basis our constant revenue we of On currency, increasing total to from XX%. continue non-GAAP XX% reflects full XX%, expect points range We year-over-year profitability, we to our Adjusted $X.XX of range prior up revenue XXX margin we share, prior per at $X.XX outlook EPS the of $X.XX for

XXX expansion have dollar. the to this We points margin year, despite guided of basis strong

by we to strong Looking at are we of are XX% margin committed operating forward, To reiterating a had achieving summarize, a margin in cash free flow. our execution. expansion marked our ongoing solid target quarter with continued least and growth

We disciplined and to continue we and invest we a current are will to return manner the for in see placed potential navigate environment, growth. where the well highest

and as open let's the and shared questions. Finally, large my I the to for for team front With I'd us during our value believe growth Board and have their few well right our to to to call of profitable sustainable, create ongoing deliver that, and here in a support we stakeholders. opportunity dedication for their RingCentral's to first hard like weeks our work warm thank team welcome as and vision.

Operator

you. Thank

Our Sachs. Goldman first of comes [Operator now from go today Rangan begin Kash will Please Instructions] the question We question-and-answer session ahead.

Kash Rangan

very prolific in Nice you were do incorporating upfront are you bookings. think that Thank good QX and because operating second the -- very is about be see Hi. you ARR in about cetera? level two close have Is ask you What respect of or sizes One, questions. of nice Team's for you channel How with I rates, environment generally et for a deal you to much. caution. you macro metrics improvement and macro in I RingCentral, guys. saw the half some year? did up that, the to smaller assumptions? pick for the it

should congratulations And and of expecting being be to Sonalee, welcome we of seasonality? one we that still for sort So, CFO RingCentral.

how leverage efficiencies looking operating What as should talked you about you've that growth? much. You identified be so business sources model for operating you'd Thank in the future be the the growth. you of are not target while that compromising in things the XX%

Sonalee Parekh

amazing Thanks, Kash, also I'm to leadership very this for remarks. with team. kind extremely to extremely, partnering be the for team, your RingCentral this here question great at excited and be and

billion the there, minimum categories, efficiently. able you there. margin couple you we being efficiencies and OP and expanding all And do look manage guide in evaluating the manage really there's a of And It this a our looked and just exceptional R&D And if at what goodness aspiration fact OP we the being But is, other a you month I so to question, quarter, Maybe second R&D would drive -- what So record total of for my if I we and there drive start just be also we do in efficiency margin. vendor towards to quarter really further profitability. in say and you year second can can that about guiding both deliberate area. mentioned balancing revenue the running margins all three $X around as I scale as the about how row, you your just of can efficiency managed to specifically raised taken from and again, to will is aspects a consolidation. margin marketing, of a the managed my and this rate is comments. business. as And scale appreciate we're great business larger around we that We're where and again, I'll areas into what opening our remarks, quite to higher in the part I we think second also thing OP the And growth more revenue sales also of is us that or marketing such as at to I of as weeks together, OP because whilst in would growth opportunities And XX.X% job, being those I and or see we delivering the and subscription we've a terms quarter run that through we're with lot great -- full is think put whilst pretty how see greater in to as model growth, come well efficiency, seeing our know, company. benefits we deliver see opportunities significantly. revenue operating margin become by as out and that inherent guidance were a actually example, of sales OP come And tell growth. just expect was stronger these and intending add what do drive company, D&A. the you we more

in the one puts guide is and that of larger we our quarter: think takes. reverting slightly and market we're of macro what about from more saw remarks. buying think terms the customers, in when smaller our is In say obviously of initial reflective to deal guide, those today, talks trends talked pre-COVID deployments. was the in that and we includes was you seeing trends and would the there remarks cycles and that current one, prepared Mo several couple with And the I what behavior in there's the that what But backdrop out that I we and in specifically, his sales itself called manifesting the levels; other macro, cautious to about

the one strengthening into of hand, have we we half, is those guidance our about second of say the impact and what I there dollar, which then will in dollar. is also X the we growth against some dollar about, that the trends increase. was revenue of strong if strong and and X of talked other demand from quarter-on-quarter impact. pipe from we to on trends. customers talked would that factor about And balance the points which embedded most just stronger then see the continue And extremely and specifically the increase year-over-year And you our So for

feel product So, easy to for very can that is short strong. CFO, a positive And a what it's we think demand as the payback. because our say switch is to decision I ROI decision with PBX extremely a I cloud an it's from

So, if we're like ever backdrop. feel type more in relevant this than macro of anything we

we today's of we macro. are I the guide, in really add today, what if Mo including So, has don't reflecting terms know to see anything there.

Mo Katibeh

Very answer. to Move question. next on comprehensive

Will Wong

Next question, Operator. please.

Operator

Please of is Tillman from ahead. go Our Securities. Truist next Terry question

Terry Tillman

It's for but you question. one taking two my question, thank Yes, parts.

also, Sonalee to subscription also thanks on the helpful. two-part that's revenue very the for color question. Congrats. And The exit welcome the ARR, RingCentral. ARR,

sounded just million-plus so TCV Mo. for near have though, to or $XX reconcile, is part first it The good pretty million or deals. you still trying productivity, $XX I'm though

ramp the less in Sonalee, is second part maybe clearly or Is to ARR is understand puts kind we of and the smaller? should half partners? exit And subscription I'd with do all love you even XX then little though or revenue of these center it question, it the takes we implications are though is, months. this exit it people of because of you. that next because color bit a initiatives more size at year starting for into seats, of up the the terms of Thank So kind growth just has look channel and some it deployments? see contact XX the they as

Mo Katibeh

Terry. Okay,

a initial articulated, take seeing quarter, terms me first are of punchline customers, larger up I the our were of we in discussed, what cautiousness the year-over-year. let I generally And quarter-over-quarter think degree with as And that going leads and question. half both in smaller is the we of is, deployments. So

contact center. around of tell comment to continuing a you up. go made centers our rate contact that attach You I'll

the really deploying their about I the with then play. in So customer ways, that what's factor in we certainly examples not a just about business, own our with and the own It's on any their impact will, buyers of life. budgets, are of technology, looking is a testing bringing potential that smaller happening at if it spend you various time talking lot to creation seeing value think

And take do the second want you Sonalee, Okay. to half?

Sonalee Parekh

Sure.

wishes So firstly, for as thanks your well. Terry, kind

So, with full specifically we proud will negative really bookings we obviously QX quarter, that for we add to and am as way year. ARR. did we have this to in the FX from quarter. to you really for both But I quarter. impact that guide growth obviously is know, and continue what guided a healthy second achieved and feel confident don't respect the in We the ARR, the impact of XX% in an

answers hopefully, So, that your question.

Will Wong

Operator, next question.

Operator

comes next Craig-Hallum. Sutton George from Our Please of go question ahead.

George Sutton

Thank you.

great well, my as wishes congratulations. Sonalee,

decline, relative how stock new user differently today perhaps a of it as retention hires? are stock curious, compensation you I'm using So and/or to with the

Mo Katibeh

our required. balance and of we healthily we're compensating together, you're that potentially year. talent, And our that by points. a that, space we're of it that continue ensuring SBC team. bring frankly that year-over-year. the and hope bring achieving we've we're Look, is team I They're is what Obviously, think fully time, talent finding I bringing over And revenue this end where to by our a We're employee about this appropriately, discipline engaged strategy. the being we're doing finding frankly, we're guided drive that of is of part that same superstar we exceeding utilizing in embracing comp George, expect even key on stock-based down the path that improve able year-over-year percentage This We're comp expect of it's to to couple base, to going year And Mo. to our this time. Hey, as well we contributors, cetera. well. hundred as down et on basis while find at the the

Operator

Marshall Our next Stanley. from question from Morgan go ahead. is Please Meta

Meta Marshall

much or feature quarter. developing that the center and over would so on to your about how does gave you or Thanks. customers? Thanks change on other your think Mo, addition adding ARPU or on guys just how kind big of of that ARR, contact Vlad think partnering in the expand the sets you to had congrats become the center customers disclosure XX% being business contact kind Maybe you as Great. the organically of versus of ARR just of

Vlad Shmunis

Look, very Yes, reiterated, Meta. is CCaaS the able same obviously. stated of and still unique the And as Hi, provide and important, in we here. center and network. market-leading paper leading MQ on we contact being position on same look UCaaS Yes. to the are

unique just is existing that differentiator, not elsewhere. So a

Now service we buying people as customers -- have people in software the cloud liking behaviors on-prem it. by now Avaya have -- in world. been historically. software themselves the been same vendor are from a from clearly, led days, CC UC the buying are similar the in Historically, And and Cisco and largely repeat seeing

Okay.

top line is so growth wonderful. Now

a be able whole clearly, very, to lift. very the stack, heavy Now it'd nice own be to but it's

best for is be require working, UCaaS best So approach working, continue our industry-leading. seems that and those have in to and of who we and whereby the the strategy will CCaaS, think we unique customers

fact, For called in those customers RingCentral we centers, requirements and, lesser own do, our as a for product have contact Engage. smaller matter with of particular,

that which which called we everything, inContact other has And every has up-and-coming product, does is sorry, voice. something you'll as it. It have But have RingCentral something hearing Engage has solution. but be Omni, -- expect Digital, every and is leaders. a and full-up about bell integrated RingCentral channel Engage more have an Omni, also whistle that, we industry RingCentral called which example, it not for We well as Engage

Operator

Our from ahead. Jefferies. question next Samana is of Samad Please, go

Samad Samana

Hi. Good afternoon.

of Sonalee margins us Just I of the USD guess, to Obviously, a currencies? on wanted couple OpEx see in been in how is remind first, ask versus side. inflect expense you other maybe just to really questions. I much Can the here. great it's

Sonalee Parekh

that I'll here. Sonalee it's question. Samad, Hi, take

and overall smaller it's but much be it a So OpEx hedge of bit is euro obviously mostly a would based. our of to natural a revenues, proportion

the about it's the number. So OpEx that's X% US outside in of

Operator

Please, question is Peter Evercore. ahead. go Levine from of next The

Peter Levine

questions. for Thanks Great. taking my

to welcome team. Sonalee, the

As we you chat compete collaboration voice? and debunk evaluate the to way, And maybe video take kind those larger investments saying like, bigger players on of -- buyers how a Vlad, brand of in sorry, your with in would hear better the the doing space? are the against second, in over kind bundle video some to the that then collaboration RCV priority voice what maybe today side wanting you to or of to to view, elevate, more suite continue collaboration,

Vlad Shmunis

Teams They're pretty Yes. any to there voice multi interactions seem that they largely internal still within doesn't consumer Microsoft providers by cellphones. tend People are their and from trend. call business to tend and phones slowing to that. many conferencing, important. over org, call video at is interactions, of be BXB, down over voice businesses, to many especially not the in interactions yes, or over good now -- both CXB, but all, are consumer

we extremely as other businesses as expansion, called, business a think, as be have important, people, important mentioned, for vast survey are their as our our both well to margin customers of well -- that these voice and are customers, engagement customer as not okay, and I majority So, we saying will and revenue. believe and for we they run

debunk here we're that's a be state now is the this obvious, to call this to to voice – market. So It having stay okay? is it. via how we voice, is continues tremendous So would

the is this and very us, foes in remarks, means which that, for probably communicate. okay? in prepared by very, time our and XG, not leadership People just communicate all in tailwinds time, this they're maintaining friends continue efforts stated wireless, warm we people And science. say I'll last words, they're redoubling I our first the mobility, in by As not not

Operator

McWilliams The next question Please ahead. of Barclays. from is go Ryan

Ryan McWilliams

the taking for question. Thanks

relationships? Just difficulties which any partners significant were RingCentral strategic anticipate Should on partnerships those would financial a you changes has those investment. in the strategic to or made enter acquired,

Vlad Shmunis

assume PBX, obviously, is question turbulent as of, Now Vlad, here. behind we absolutely I the the simply that some majority majority question on-prem both a okay? about Avaya. another have number of responsible is any leading And experiencing times. an [ph] relationships for well There -- people with difficulties. this network. that Look, size can are take GSPs there these your not partner and I unique approach of as will I And player people what close or think, GTM is

will We are, But a continue just me to a let been It more our So and that's want largest on-prem has strong that a They again, more, address been partner. They have success. somebody Avaya what? the which world's want want contributing been contributor. that. it means partner means base more. representative they we more. and we always are also of installed we

We to doing them that. expect continue

fact. investments management remember, to still as a RingCentral We that expect Avaya's unique Cloud that tenants be to only of few understand margin integration. customers endpoints well. both relationship leveraging them. cloud, with Office could that points grow and that extremely center driver and leveraging well very new know be customers mobile They this, we the high-availability very with and need for to a with them they've a RingCentral they days that able on-prem companies I ago. that by have as get that importantly outcomes driver CEO a a their the and to global do announced we the is think profit good continues person in reinvigorating continues we be growth because new customers, appreciate for to still It's have will expect multi-year through relationship accept Alan. solution to simply the that, frankly, -- We're the personal into to incoming Avaya for their And the a data for other positive UCaaS both position

Operator

comes from Please question from ahead. Will Baird. The next go Power

Will Power

the Yeah, thanks for Okay, great. taking question.

question on a factors macro still How FX QX how other I'm macro there is how how terms a guess guess, versus macro? certainly already I couple much is versus seen have I bigger much piece of you in smaller it to Just in the I'm are impacting a slower of But I ARR. seen, you like of deceleration enterprise that. wondering guess, And in growth side is the of a on We've row. a much quarters sounds of on trying what the that that much figure that the among ARR sizes slower already any for QX? -- deal deployments come? versus and more customers maybe your or expectations referenced macro

Mo Katibeh

take one. This Thanks. I'll is Mo. that

here net key the factors. think is I two

was headwind. The is first FX one a

from those up, and the create I the that Sonalee I lead these when day, have of we then quarter. in frankly, Leads end customers, were mean, talked growth up and me together, trends SMB actually degree key a I the things help to And pre-COVID think remain And we the cautiousness especially sorts times. brought creation decisions. buying both put telecom is continues quarter-over-quarter, our the was the that one can I in them for that value while did cycle value three their where called is Sales can ahead so IT to opportunity real, larger we all very opportunity we ones reverting the you're support for norms. that other third saw year-over-year. legacy that times one, some hardware, At of costs, bring the of demonstrate the larger what customers about is one. the consistent, which then size for see

Operator

Niknam go question Bank. Matt from ahead. Deutsche next The comes Please of

Matt Niknam

you question. guys, thank taking Hey for the

Just a quick simple one.

SMB, Thanks. is you're Just mid-market enterprise? how on And this trending seeing? across churn. Any changes and

Mo Katibeh

I'll all in across both segments. sequential Mo, was one. our generally It's quarter-over-quarter and saw take churn, of that true improvement and key year-over-year, that We

Operator

Michael is of Wells next from ahead. The Please go Fargo. question Turrin

Unidentified Analyst

follow-up Hey about on adoption for change might discounts Michael have you that is UCaaS push you. volume-related This market? Thank Austin just I And as guys, dynamics a be -- those competitively broadly, is further Williams any the that, Turrin. up pricing larger SKU potentially in offsetting seen any lower you ask our price premium that to wanted is customers? SKUs? more to [ph] impacting And at just as

Mo Katibeh

This is one. that Mo. I'll on jump

So were were north year-over-year. of reiterate, ARPUs XX. resilient. just quarter-over-quarter, our remain stable They to overall They

To goes New second customer a your company. point, also remains acquisition your and XX%. question, ARPU, which over we're part of to the steady really multi-product

products as that think we're base looking buying the do offering. we As more further go upmarket, And we well as our about SKUs. further both see as we're ARPUs, our customers premium we across SKU and

we integrate bringing As the bit in phone and our together factors rate and to this mentioned And a well healthy those the this increase of to attach heart video the retain. advantage a market dynamic continued expect strong UCaaS seeing drives I value messaging, little all the is of by as solution, leading the of as in become we're ARPUs. contact center. that ago, I and Look, is, think ability competitive we're creating that

Operator

McGinnis next question Taylor Please go ahead. from The comes UBS. from

Taylor McGinnis

Yes. question. much Hi. Thanks so taking my for

play So know here. of that a I FX bit is little at

at So XQ, I to have late out. would quarter. in the seems the guess, of it's look But in tough some I net difference last parse Sonalee, know quarter, that ARR if business new between revenue been you the subscription it

I then, or you're the environment you can a deteriorate there? guide, you on guess, seen what that linearity are we into And assuming to be guide, similar imports things just seeing So have assuming you today are you get clear, comment the worse? in or might or as ahead look that

Sonalee Parekh

the Thanks Taylor. question. for Sure,

of point within two the the guidance in and additional that from factor out my said well it's of And was market the in is FX, trends called FX points QX given QX in is of exaggerated the in a what on is on headwind QX. we've say seeing today, also currently embedded remarks I and in that's prepared that, as you're firstly full would what And as bookings a was the So terms an the in year that that impact more just of right. growth we're guide dollar, dislocation the dollar. to contemplating, one absolutely I and includes the including what stronger what for reflective to XXXX.

for and And So -- recap, seeing adjust an thing impact. between you $XXX would we was million $XXX points. had is impact impact currency. in of impact to over year, other the And the still in just if the QX booking quarter QX stronger. calling one just from spite we're two The had that million QX or of out -- I point say full dollar an

Operator

Please go next VanVliet The Matt ahead. from is BTIG. question of

Matt VanVliet

seek the you partnerships? Yes. a in those recently initial getting continue at you as of Do like how Germany partnerships you the that's Hi. even the Is the as market I How to going light look you other feel and of go each encouraging And guess, the relationships of you're reception you Vodafone out my of expansion Thanks to feeling little all breadth Thanks. partnerships. and taking question. are announced for deal that those the you sort within faster? of, stronger? depth of strategic to expand, forward?

Mo Katibeh

Matt. Thanks,

think well them revenue as as frankly, unlock new in and we're think expect to many unlocking is, the both sales future. global consistent foreseeable So these grow markets see And is heart question it new to year, continuing each and about the seat provider growth. of I the to XXXX, way continue your relationships markets you community, of and service our I the addressable answer will new allowing for I'd revenue-producing as us this GSPs internationally. and of

Operator

of of go question Michael Please Bank The Funk is from America. next ahead.

Michael Funk

Mo, for the for coming One about your I AT&T first and if RingCentral unique PBX. experience point could. questions. the from your part success transition given for Yeah. the point Mo, that of Thank you being from

on transition comment revenue could reported this probably quarter, from technology. legacy that part if your that you think seeking I is business wondering next-generation we’re of Just TBV weaker that

you do So we're you bit. perspective that history, to we're in your what that but a in from in a unpack that results? love there, your Verizon think and I'd Is seeing hear acceleration seeing the lot transition? Obviously,

Mo Katibeh

am and that, on Well, will. will comment use a you CC is do and RingCentral to I something current what Frankly, UCaaS to macro to can't part all I you legacy that to subtending and Businesses to drivers, to results But for it's is I cloud on-prem if given and transition confident to any conversation. a going the at large for is is legacy I see come. to be extremely you're the this that the came throughout as company's think I TAM believe times CCaaS many years years as of factor consistent in of growth that come. called that UC fundamentally tell I last year. not certainly the What well I many environment, We've seats seats why several core look going going out it plays move is are comfortable as ready many, one the and other that question. that's to you appreciate in. that in any

Operator

Matt from of Stotler The Please question is next ahead. William Blair. go

Matt Stotler

ARPU on Hey, Teams. in obviously, team. you guys to success additional assist market Thank you wanted can any forward? provide, alongside Teams terms Any how you Teams installed going Maybe of the about integration are for And kind on thoughts in color of dig environments for think Microsoft the Microsoft specifically, go-to-market the further question. as about updated taking notable with in additional it's to still and whether Teams? Any either just color here? then connected seeing on some with the opportunities of or you portion base think Teams that collaboration and

Mo Katibeh

Very good.

I'll -- order. me let of out that So address slightly

overall with On that I'll quite our ARPU tell our side, is consistent the Teams' and strong. you ARPU ARPU

contact customers meaningful likely couple Teams' of and winning with category which to SKUs larger base. be to By center. tend we geographic functionality, fall a reach premium with more is the of of one attach along market then they just reliability, saw And up Our that reasons year-over-year. key feature the growth and X X's the and that points, more it's reiterate I'd skew thus, into way, we're

MS quarter largest for practice. exciting seen it's Second us. frankly, single the our of that we've quarter growth And individual was Teams with

drivers our will As about we strategy, I ourselves future growth for and success see and it well. them then any on seeing the potential thinking as four execute growing company. how the we're on And of is to going we're in one tell megatrends I comment opportunities market, we're to can't continue and own for the you, that.

Matt Stotler

you. Thank Great.

Operator

for question-and-answer concludes presentation. conference. session as today's well the This you Thank our attending as

now disconnect. may You

RingCentral (RNG) 2 Aug 222022 Q2 Earnings call transcript