RingCentral (RNG) 10 Nov 222022 Q3 Earnings call transcript

Good day. And welcome to the RingCentral Third Quarter 2022 Earnings Conference Call. All participants will be in a 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. to President conference of like Wong, to now Vice RingCentral’s Investor would turn over the Will I Relations. Please go ahead.

Thank RingCentral’s third I And welcome earnings Investor afternoon. RingCentral’s call. of Wong, am you. conference Will President Relations. quarter Good XXXX Vice to

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

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

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

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 fourth Relations A will periodic our may Commission of a and our or forward-looking our filings by XXXX in assumptions is that contained discussions made and 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 responses financial reference and and related our our results obligation on deck. A today’s risks materially to 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 questions 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,

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

for conference year our exceeded thank third guidance of last results metric. despite had revenue XX% afternoon. up an earnings versus above our quarter $XXX was environment. and million. key on a Total every million joining and Good of quarter our We achieved And $XXX We outlook difficult you call. increasingly solid macro these

transformation as a it is we more economic of and are value be timing mission-critical continue to predict serve that their to digital migrate spend will to exact and RingCentral role legacy We the recovery, provide they need While the businesses hard strive confident efforts. playing a an systems cloud. customers rationalize via efficient prominent from as

record XX.X%, year. a last operating up guidance This profit basis of points our XX.X%. delivered quarterly we was XXX versus margin above significantly Additionally, of

operating to margin. path our includes our targeting XXX expansion operating least am least an a prior confident on This Looking operating expanding accelerated us points we in at To this XX% point, results, meaningfully ability margin basis of in XXXX. to at puts which to ahead, I profitability. strong deliver commitment are achieving now open

UCaaS share RingCentral why Now the let me winning the in reasons is market.

because win world’s system. the our of believe we we First, is Innovation we best part cloud phone DNA. have

features integrated world our with targeted CC, developers, type will experience. platform. to contact over telephony to continue use These contact further is our of will investments XXX of and what apps most key for One areas XXX their over innovate private in over ecosystem X,XXX With with AI, customers and includes XX,XXX apps customers to connected pre-built differentiated, and transformation. advanced we make on with integration to the UC add complete every is user and intelligent cloud as such as investments PBX experiences the digital This case. we in pre-built believe We and growth and applications analytics for Salesforce. center an and solution center public proceed most provide enable example and over the they

time, the the receive such assign to from XXth to with make integrations Google, not lead Video call an can with and provider differentiators anywhere customers leader. meetings ServiceNow, that’s scheduled integration lets we in without and goals, activities. to are having become quickly have all. lock our HubSpot, which users world, reliability, off-line and full our login us and XX.XXX% can countries But global allocate other XXX Other including calls all key over availability outstanding features in and other as hundreds Microsoft, in presence well and dispositions, have RingCentral Salesforce. XX consecutive has that able revenue-generating industry advanced multi-call as we also This customer no include helped over they of with Zendesk the integration save as achieved and developed, which Our make quarter, countries. Customers others for reach

range of including our partners Alcatel-Lucent such Atos Mitel, wide a support endpoints, also We from as and Avaya, strategic Enterprise.

mobile our We enables a cloud partners. architecture convergence GSP also fixed integrated IMS key is requirement a have from that that fully some of

because our is partner multiple unmatched Second, ecosystem, and of partners made global service which strategic providers. our win out we of

the of the launching also service us. believe in to market the both I with We BT, Be announce And opportunity Telus details but our globe. over days. large leading ahead the am joint have on offering to ability new more pleased and we Communications, relationship a well such gives businesses. very SMB have leading for not a We proven AT&T, assets be resellers as providers least, to this will upcoming with unrivaled where on-prem world’s as providers, we for lookout as Charter last the us Vodafone. and coming enterprise partner PBX XX,XXX spanning

leader we we in Finally, known a our because industry. as win are

updated in for use Worldwide number cases last Cardinal X, the in Gartner We proud for worldwide ranked with Unified Magic XXXX. Critical report occurring all years XXXX. a Capabilities a recognized row Communications August Unified XXXX a four recognition Service seven RingCentral in are leader the Quadrant one a as as be Gartner to also for for in the Communications being Service,

Group, Tolly and categories. testing in conducted the the of criteria and categories. a in capabilities a closest net RingCentral the analytics XXX% certain quarter, this global feature-by-feature outlined provider certification met leading only specification of third-party four which in XXX% comparison validation of The Additionally, of vendor met XX

from survey double ever. good recognized based reminder place which and Synergy Group more our RingCentral our as is of share calls to phone-over-other that the makers, true with vendors. business XX% companies communication own sizes use and second of use prefer of actively which UCaaS that decision third the clients as external as used recent over to cases key vendor as Big meetings technology this purchase is leaders this Of the ranging market voice highlighted picture of customers recently tools. with Lastly, A across paid base calls. our Research leader in in well, as than note, on is see relevant seats, is XX% and of internal This XX% we remains all a phone.

relines number the seeds many This telephonysis and the to are the be hybrid provider. recently cloud, mobility are and move the at work, of XXX beginning to shift cloud-based or that million single-digit worldwide million just by are megatrends. seats XX desire number the distributed integrated on by journey. the includes a in and expected the UC an of rate. CC of to solutions are to workforces ongoing the a those driven from Synergy of of businesses, concluded a migrated. just when There visible increasing adoption we single comparing to clearly penetration on-prem highlights how and journey in yet cloud are for still early UCCs today are that This are We

margins will to best-in-class by UCaaS laser and innovation profitable have a delivering focused taken Looking we our on our offering Throughout business. investing expand growth. and drive steps remain throughout forward, in efficiencies the year, driving operating we

was their lightly recently priorities decision costs made we understand extremely to better on our decision This this allow not impact more we made and families. agile our While will macro this strategic our and we further our align people workforce, with environment. rationalize and the current to has the be in believe us the difficult

We for work employees. all how would to for hard and not are them. the are We underscore their taking grateful be impacted ease RingCentral we contributions. transition meaningful without help their action to want today where our are we

proud share platform. emerge $X and stronger reiterate want how company well we begins. to two as am revenue from we with are as are I in even I of to a the business now have Finally, recovery economic garage, the unrivaled guys I leading billion recurring an what positioned accomplished, building believe we a

turn call over me Mo. the let Now to

activity despite highlighted multiple solid Thanks, as Vlad. wins. we We backdrop. more a economic deal were execute had million-plus challenging $X solid QX to new results continue by TCV

contact strategic again XX% center partners We rate attach activity good deals. also our saw our from was over large and for

few you recent a our me Let examples give wins. of

First, their a administrators. Mitel. with digital partner the to both UC for win is third-party our chose at newest strategic CC their enterprise-wide benefits and part HealthComp one They be HealthComp communications largest nation’s of RingCentral as partner, of transformation.

determine enabled e-mail, channels, voice to to by in to and social reduced teams, us to currently digital leading which all Relative with idle and money analytics was HealthComp capabilities, calls contact they able And advanced enabling the them SMS integration by chat, which utilize deal. contact does customer we save agent to is center our to helping center, agent, well outreach first to This XX-plus including our teams this as eFax, offer. integrated Our routing addition now importantly, time, voice, and opportunities. HealthComp to win is not also use, in which key available as productivity expand channels.

platform. choose UCaaS see to customers HealthComp and continue CCaaS our like best-in-class to due integrated RingCentral We

are the in catalyst purchasing driving Second, cost environment, current an in savings decisions. important also

created carriers, on Avaya by to a many Multiple sector required IT in were example, operating XXX the disparate Office teams to resulting large in company logistics countries in systems, them consolidate selected costs. ran with years. Cloud help For over Fortune maintain which these over separate higher systems XX also operations RingCentral

University. collaboration reduction equipment sector, all X,XXX a This added last few will a education nearly ownership communication, being of in and the quarters in Midwest RingCentral’s XX%. cloud also total at of by an school to the win many replace and continues that the to win seen including X,XXX quickly we cost of districts I a and and seat over at University the large wins showing Moving thousands while overall across in to infrastructure seat trend with number an have seats enable North universities. the of highlight them outdated wanted Dakota improve

key Avaya and again Now Mitel our and grew be partners, turning also a seats GSP part motion. quarter-over-quarter. to of to continue Both new go-to-market channel strategic partners our sold our

$X expect those opportunities we of we to TCV with On and activity drive also side, time. channel while over continue our and needs providing saw market our and working of Channel depending because translate partners we enjoy the succeed. sales the use and leads channel Also, individual into we are leases partners deals paths deal this record number quarter. help quarterly customer to XX% of to part offer cases, million-plus their business new a them generated tools training to over incremental and flexible on RingCentral

as to with to companies sales Regarding GSP begin and U.S., we Charter. and ahead. continue including excited we ramp Healius, one continue million-plus the Vlad outside ramp we $X landed working multiple stated, beginning We and see coming positive to more healthcare our Australia’s Europe, TCV of in expanding with in finally, in growth, we with expect the quarters are years are as deals Vodafone And leading invest partners, to we internationally.

incrementally as market win note, initial with what the These today. update overall our decisions. provide Now to remained This on and churn levels approvals in customers with additional times for which required you reverted year stronger strong customers, and to Leads the macro ARPU uncertain. overall behavior were has said, pre-COVID QX and stable. quarter also rates an over quarter. last will factors, purchase elongated this the throughout are remained That in we becomes pipeline cycle making anticipate this our let me upmarket before and stable remain seeing dollar resulted sales business We persist purchases. environment less smaller Of $XX. headwinds stable along the that in until

near-term these impacting financial Sonalee more are our how detail outlook. will discuss in trends

quarter summarize, to despite the leading on to a market environment. And the cost focus resonate unmatched solid large our a drive efficient savings continue customers. believe stronger ecosystem that we and importantly, and position partner To forward, underpenetrated, had Looking product, will and puts current profitable opportunity. ability remains we us growth forward going capture our to in with macro

us us Our driving our differentiate growth on profitable sets leading and the product execution to future. well continues for others and up from focus

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

subscriptions the again On XX% Once in the continued our currency XX%. then fourth outlook of basis, will highlights of ARPU the the top gross and our revenue ARPU. our guidance growth offering, pleased am held value across overall Mo. I Thanks, discuss quarter with XX% and key above was outlook a constant our primary over of XX%. steady. provide rose very I all tier to again, revenue results, full quarter QX new and and our business from XX% above third million year. which which and up margins Customers $XXX software year-over-year. of resilience for the Subscription in year-over-year factor were remain metrics. acquisition Subscription were differentiated peers was

ARR. to $X.XX year-over-year basis, XX%. grew to ARR XX% currency On ARR billion. grew constant Moving a

Given the versus strengthening which headwind quarter $XX is the million dollar, to largest particularly of relative this second represented pound, quarter. British currency exposure, the recent a our the

a using currency each day we on As ARR of base adjust the rates quarter. reminder, entire our last

is record on strategy was profit solidly basis our profitability, margin exceeded have XXX This full efficient outlook, last XXX points above that to driving quarter we our the versus Now our prior a basis points XX.X%, and demonstrates margin execute year of consecutive operating our operating third which ability to growth. moving up outlook.

leverage levers. as by was $X seeing workforce. One, to the scale prioritizing to revenue. improvement Two, efficient benefits we more in operating billion productivity and taking four continue and recurring steps the above margin of be Our we labor are are spend of we will main our driven improve further

current rates, is spend ensure procurement have approximately spend. our process, opening difficult as workforce priorities meet discretionary being reduce savings we extremely they to in base to noted well such around hurdle strategic our our as Vlad as program vendors in by consolidating generation aligned all activities are our all made simplify are we cost ensure XX% marketing and judicious with lead across as well Four, Three, drive as his we environment. As functions. the to our to remarks, the rationalizing decision full-time

We We repurchased Now moving of with to our is during the cash quarter of the balance flow. hand. sheet and on of $XXX cash shares This ended million inclusive million quarter. generated $XX to free year-to-date. in flow cash million $XX one-time cash QX actions and relocation of efforts QX. $XX took cash free third-party million and flow includes Note that efficiency related in outflows our we

or items, our million cash be margin free Excluding these year-to-date one-time flow would X%. $XXX of a

Form QX, a During their non-cash related for recent million third given charge refer quarter disclosures. recorded to prepaid public details. Please commissions balance we Avaya XX-Q our additional our $XXX to

to continue the financial will monitor accordingly. Avaya and situation We take actions

sold number the of seats continued As that Mo quarter-over-quarter. to Avaya noted, ACO grow

to what today. turning in Now is This of guidance. the market reflective outlook we see

leads, win churn strong pipeline noted, Overall remain stable. remained As Mo and and also rates stable.

additional initial incrementally in customers for times decisions. deployments. upmarket purchase smaller QX approvals elongated resulted as This making also sales in cycle before However, customers required

segment economic we customers growth more EPS XXX adjusted XX% for of be subscription total of $X.XX. given year-over-year in this are of to which total SMB improvement; XX%; into our growth XX%, this the climate, operating the basis and expect and expect to Note adjusted account, points growth currency, quarter, XX%, $X.XX million expect we for cautious in Taking quarters. reduction XX%; XX% being believe resilient XX%, of landscape to expect proving $XX the we change don’t constant fourth XX% costs, currency, to in revenue to subscription which revenue related to non-GAAP enterprise of charges will non-GAAP we margin reflects current employee benefit to term. current to two million to $XX and next of of constant to While near the of growth to XX% revenue GAAP-only we restructuring expect for is we workforce the severance incur result our revenue actions

XXXX, year we constant growth we of revenue to XX% outlook XX%. expect full for our XX%. reiterating growth the subscriptions For Adjusted of are currency,

constant expect total of XX%. expect we of to revenue XX% for XX%. growth we Adjusted currency, growth Additionally,

Lastly, to prior range we up EPS EPS from QX operating profitability. expect operating points. once Further, margin operating $X.XX have operating XXXX. margins expect again which XX.X% up ability for are of XX.X%, now At an deliver year $X.XX, full improving our from and our $X.XX now up of we with we XX% XXX outlook $XXX. We to our guided of exit the XX%, margin start year-over-year. margin full a of points We to outlook. XXXX year, our non-GAAP margin and and non-GAAP raising XXX is up full of basis we XX.X% Throughout XXXX, consistently of prior for to plan operating basis shown to the year the or of strong of

Looking ahead, basis expand year-over-year least points we in XXXX, accelerates our of operating at at now XX% to a margin. our achieving which expect target to operating path margins least XXX

amount of allocation will expect optionality financial for a while look cash ROI opportunity ahead navigate RingCentral flexibility strong the meaningful profile in addressing flexibility well to delivered. that, investments open to We the This call expand invest placed quarter we March a and questions. converts. make and us With generate let’s we as XXXX environment, of way. the is at grow very to and the forward, and the few of in on we significant have am continuing To to proud increased going flow over years. current to us, the significant next summarize, with I our capital increased including our provide capacity profitability

ahead. Kash Rangan from with first [Operator Instructions] And Please come Goldman go our will question Sachs.

cost trends your is on curious among curious Hey. I base, you am what to a it the so from market if concern of Nice that the been continues There’s enterprise the leverage about there’s and you slowing SMB here. discipline the operating installed operating cetera, how you to your more that on small Thank are in experiencing, cycles side? take much. I very not just the in which the the installed me. that, SMB et base. retention strength of Thank might on I really how to job businesses. am see good get prevail, much. your layoffs, but and you take affect bit concerned appreciate get ecosystem sales That’s

Fantastic Sure. you as Kash, with many Great here. an cycles, SMBs, underestimate have glad to have I [Technical I Difficulty] we out cycles that. started Look, Vlad, question. know, you am through hi. of think, been we resiliency been company. through as that and SMB folks you on. and

We fine. question, much are exposure. your multi-segment, multi-channel, now are wider so SMBs have to But

steady stabilized Difficulty] [Technical Now quarter and be the but Mo you everything is quarter, base, as the will earlier that you let the and wider the detail, I take. provide turbulent I my your saw but has go -- more of think, not the we fraud in in really it I for better first Mo? month now. in tell seems some churn these we -- elevated can to fraud, times,

the small for so for slowdown. thanks a to to to part other showing be terms that as far is of SMB October we even resilient. are continue said, of signs SMB have Kash, continues seen resilience, of what any pretty the net and Vlad it, But stable it’s overall in above XXX% in and retention answer and monitor we remained Yeah. To question. our going

Sonalee, add? to anything you would like

absolutely no in expense SMB just count impact have other of no that that, have debt And change collections a I’d been this from most recent and actually on is either. Yeah. if terms Kash, certainly, quarter quarters also point cash bad the in seen base, to of view, than stronger thing we anything, the say

Next question please, Operator?

next Our will Morgan Marshall Meta from ahead. go with come question Stanley. Please

by you gain the how Thanks. is on of with growth macro leverage I think growth much of should look the operating kind impacted operating that versus Thanks. just about -- of Great. planning all guidance how at you are that appreciate you and how just in showing XXXX in kind on leverage? to gave XXXX, XXXX of objectives we

Really the appreciate question. Meta. Thanks,

clearly, So, XXXX. have out you that to operational leverage call for the we did guided

can you you QX really that a SaaS As when the know, at growth a drive see feel don’t year. inherent $X as point we in plus in the to operational really pointed would terms next it trade-off. I Difficulty] for that’s decide leverage you we typically We What trade-off recurring of of in like say, scale model billion now [Technical we just don’t to, this we guide are revenues.

his we sort talk certain in Mo sales to In elongating the cycles trends, to the script, saw to of terms macro, levels of we did pre-COVID. alluded

approvals certainly seeing We heightened customers. our for and approvals, larger sometimes multiple are

initial some incrementally worse sizes from deployments that and impact smaller And and deal QX. on QX did

It’s in FX bit a you have point impact additional driving X we talk look of is, and look impact, about FX of of in I’d XXX QX points have the year an say also pressure on But if a further this quarter, our did if expansion ahead, what about us heard at We have we and guide. efficient you you basis QX. topline. growth

XXX XX% have guiding are posted alluded that tried margin at time outline We getting to earnings. for of And last least an we to OP we year-over-year that really we a basis you accelerated in QX. path to points now further to

-- So about we of eight further over, basis or will so be of where really basis XXX quarters of will we XXX end a have where a now target we XXXX improvement points on ended laid XXXX. say, and top out points

lot super efficient I out looking my we labor and and more are being spend. around then aspects at benefits margin levers around I called we really, those So also all script, obviously, the think disciplined of of the scale in a getting that are business

really we that next in leverage look kick that really have well. obviously difficult that full-time an in are the we as of extremely QX let XXXX, look fall our made of the see expect decision But flow as we of go, we XX% OP mainly disciplined cash growth also all operational to impact to to -- on will P&L. free did being today, year. You on OP Q margin, we see and And to aspects as headcount

really as So we trade-off. see a don’t it

and the growth efficient way that’s driving are forward. We

next MacWilliams question from go Please ahead. come Our will Barclays. with Ryan

Thanks a see I dollar next for for year improving pleased reiterate would to do Suddenly, like actions and what the from how or you perspective the about could question taking that? to Thanks. restructuring the mean think margins.

Yeah. Thanks for the question, Ryan.

So I in obviously my I the charge charge specific GAAP associated was a think that take million restructuring. result million with a between actions, restructuring of quite so $XX anywhere line and as $XX script, that’s about the we the will below be and only the that

to say spend. in to And headcount of terms would post procurement we have is a points to of the the actions. see [ph] overall action, now also initiatives QX improvement a impact is, for or skill In just rationalizing we of are of And labor those like I and said will margin margin fairly how going improvement. now. think year. about uptick list are on we headcount that working XX There’s really to improvement that, areas significant But fairly XXX overall to basis strong in Meta a marketing, the guided I over big contributor what next from we

throughout million million terms improvement expect the So broad-based be really the action, P&L P&L. $XX charge, obviously, the go of and in across then and from through will benefit year. of will should increasingly the to $XX QX headcount But the you very

Turrin will Michael ahead. question from Please next go with Fargo. come Wells Our

your before you you founded taking like anything quicker some emphasis XXXX. on context here have cycles actions to Vlad, questions. put us prior It investors Appreciate are seen you Thank point cycles? you your based you informing this decision you business margin some and is are But here. Can there changes. process how looks clear. would around the you. playbook Great. making Hey. in The that’s else

and Well, synergy don’t Difficulty] seasons belief go, and Sure. understanding XXXX. come Look, eventually, to clear, but XXXX, to cycles is and my come general prevails. know I prior to some Sure. and we are prior [Technical that go, be --

of very belief We are immune, a are said RingCentral, have matters, not strong we market what Having in real that, a industry, obviously at of we of is okay? do was the are hundreds in a actually the believe core users. need million. sizable businesses for And different Xx count we macro. [Technical we approximately pure of over we very of end player and $X large I paying play thousands shares and user obviously many many, shared largest users. millions a have okay? Difficulty] solving our many end in a that That

So Not that build a major space. okay? that’s anyone else our in can asset, really

what space. our sure make feature to base number our one priority. firstly, to that unrivaled than are security. our FiveX our user our our more check priorities, simply That’s And, unrivaled So we reliability, set continues is, boxes in our reliability, for enjoy including services, absolutely course, where of differentiated people more else anyone

but we will expansion. the time, be cycle at after, another year come will There or life on. up point go will it’s We in a can ahead year this want come also again, that goodness to will some next for that -- believe set be we if end. well And discuss to be Secondly, undoubtedly okay?

this we and with strategy okay? the platform. is just but happening in There our keeping what in lot We a on the innovative your a continue basically, The interesting life analytics. that what and which largely mean efforts. are question? in a lot absolutely over happening mentioned, are respect R&D have is lot So There does our is happening to spared force, is going our And innovation AI. above I announced cutback areas to that has there

integrations Those Gallery. side. apps actually all are on software of R&D we about those, prepackaged our are strengths that’s okay? largest And terms well say UCaaS called you both in API, developer -- specifically the a did I remarks, look used out which in all XX,XXX our those the prepared will differentiators, our we App and ecosystem, as of have is is who on hundreds If sitting of engineers you which think them, what the many in through redoubling number okay, of so as be and

I is repeat. announced integration, life of GTM, And up a obviously cloud think on, contact I MSPs the an if to cable We could okay? with leading We hope you is what, CCaaS Charter phone emphasis not mentioned, area U.S. on with Charter this. be proud now Communications. UCaaS, providers. already I or know look, relationship center better system, That’s cloud for us. -- just definitely will come very, very We goes service Deeper, happier for there or major not, now. of until more one more okay?

would but successful, say, like that. been Vodafone that’s telcos, We quite basically providers, global uniquely successful your BT, service have I AT&T, with

really major is Here, in market. a it’s next adjacent win what

we continue efforts. will So those

We new onboarding there the as PBX digital sitting will through the that enabling $XX transformation, XXX, what is with X% market overall in on-prem sorry, to addressing range, seats -- on-prem will and still is million yet juiciest XXX as which we go continue are and market cloud penetration the about well resellers, continue million. in still

beyond, And us -- certainly growing you So work we and the hands we much more will $X be will for great profitability have fine. it’s effective profitable, scale immediately, I to turning what, tell where that billion, our be in full. XXXX to serious

out come We stronger. provide one, will this

Michael with Bank next from Please Our Funk America. question ahead. of go come will

Yeah. taking tonight. Thanks the for question

more the general funnel tone comment business from quarter. companies. this I think otherwise cycle other heard So and the around actually think don’t in that quarter this constructive is quite I that sales was heard I and bit we the a have did your on surprising.

getting your your relationships? some relationships are as helping partner if just wins through resiliency in maybe an So, with there wondering example you business, if that are partner are the the

it. Thank question. Great Yeah. for very you much

broad out, go-to-market As our proud very are we approach. we of called

those paths to multiple absolutely, the VAR called our wins GSP as have our XX,XXX come multiple out that customers to that the Charter, with group, our as channel partnerships dollar your have well from community, the cloud, we point, providers. it’s joining offering Vlad And strong, whether on-prem that’s plus million articulated are PBX community, partnerships. whether strategic from legacy We yeah,

to for opportunity extremely We cross-segment the all question. exists three those penetrated dimensions market. Thanks this address are across continuing to the that work of lowly in well

with ISI. Levine ahead. Evercore Please Peter question next go Our come will from

taking guys. Yeah. is actually Hi, for This Appreciate Burkly the questions. Peter Levine. Peter you on

right share Just or And risk maybe have curious, you any in the from provisions if to now, contractual you curious at then any in partnership ACO protecting given restructuring situation Avaya? change could place potential financial any Avaya’s control that partnership.

company I of Look, to for Vlad take here. But it an detail. we how Avaya of level, will, provisions have rooting at the continue contractual and the proceeds all Mo stay level. kinds we see to Yeah. Again, going high to high independent and the will are place. just concern. we have But to in say them course, look,

large and just with relationship have the something were that one company rumblings the arrangement a know UC there shareholder there have that working seats in another not forward, reminder, having importantly, -- with they very and from for the were exclusive signed on-prem CC, with moving bought UCaaS customer big Very been heard we they of that offering. are largest last still billion on UCaaS group. for we a That’s we they still and to years a contractually three never have world’s company happens As they the no offering $X.X revenue our not that see effect. we that is of They their sticky their are only supposed the and in they to and are UCaaS been okay? are us, have both fact never what a ACO do is thing. in like

closely we customer in position their installed to we fact XXX are Avaya, that change need approximately place. and are in our unfortunate the RingCentral those is is what of is be, believe are advantageous still to a on-prem support we position there leader endpoints been But to up communications-as-a-service cloud. the the in what grabs. position are while So And is not which also for does this still publicly like understanding working given disclosing Avaya that the our undisputed have unified means with the go where through we arrangement. fact their have believe that event that work multiple difficulties that really including seats, customers largely they under current is the already and would to it survive we base, continue it very very and doesn’t that their in years for the best to much still took million to

all to of QX. I QX that ours, are over on quarter-over-quarter Avaya. clear, difficulties and also QX QX through these okay? mention can we what be published that’s sorry, am not world So of even I grew theirs, But quarter-over-quarter QX, grew over

we So are optimistic, clearly there let’s cautiously is say, Mo? and demand,

just that mean to it have the sequentially you several I grow Avaya quarter-over-quarter last has continued I seats for ACO hit sold quarters. But all. recap, to think

is and there Avaya We tens UCaaS is bright with provider and right of there millions Avaya are that win. a have the we for a compatible ACO spot endpoints. to out of seats only are

for those for to at question. as We they looking customers point the are are choice them. whatever for is migrate the obvious cloud to appropriate the Thanks

go question ahead. Fish Sandler. will James next from Our Piper with come Please

Thanks Hey. the question. for

work see being there? prevent prepaid are to touch the fastest the did want write-down. the did we it I actually or would what side, but XXX be Could Avaya we additionally, prepaid why asking really you rest quarter? a as is that base Just write-down. the here through why commissions would guys XXX guys. the SMB and slowdown I with the on further from left slow a seeing am that in another this Thanks, mid-market commission segment now What enterprise understand And write-down of

first write-down to the will the over question just I will on non-cash take on just I Mo enterprise. and Thanks. then hand Avaya

result it quarter, disclosures from felt mean we do we we $XXX us. doesn’t, way, non-cash and recorded million in was the stepping away related It prudent to that prepaid, public the any of circumstances. their as in their was commitment to in So are charge to a Avaya and

to outlined and quarter actually quarter we quarter on the commercial just took basis, last Vlad you, seats before. this a more As saw -- versus more

an in arrangement, transferring terms still commercial actually are of pace. at accelerated seats we the So

else that me that evaluate this every from and fact so apart color we further will the any in to hard did information on add we we that, do any new asset, as much there. impairment of quarter based on other really do or the and for not case, give it any really testing you to terms write-down, In it’s like any prepay other

with play recently the board second to changed that, while my order To and enterprise pick pre-COVID, million keep are the we that even up and quarter-over-quarter, in in I cycles, deployments earlier, question. what to mean, to in the in within remain of give resembling and $XX did think, about uncertain rates Thanks much that sorry, in the space. is, aligned we as have the enterprise well modestly approved look, am quarter, look, and smaller that predominantly I hit it’s in being sequentially elongated out beyond thing hey, sales that we seeing same continuation have across visibility win pipe as own process I Like dynamic a And the the very that, initial of our part around trends see now. which is mind I the space. strong we One the we I company seeing in then stable, FX is for right on and I of every is question remark enterprise. second hit, which RingCentral, purchase what’s reasons were articulated prepared during due Sonalee and macro. And leads more that remarks, outlined which is

Mizuho. come go Siti Our Please with from next will question Panigrahi ahead.

elongation, slowdown? that see at got just any talked my you slapped in and questions. you little you towards the enterprise dig and end slowdown. And you see question, bit Thanks that a macro QX? Hey. talked for about the to maybe especially close look I quarter, of the that Did want deceleration when deals about growth sales I did you expect taking into to

Okay.

me what address loaded that’s have all second to in mean upmarket quarter certainly prongs as just quarter we been got Generally, more we that the I fourth go So approvers, hit it’s change play might been and is especially into elongated true unlikely for frankly, of That’s a I we one remained. see we that well. additional both as both and in and historically cycle, roll The as factor next. true, one expected back-end do something and into in quarter articulated, quarter, factor that. into have let XXXX the and quarter. sales will things it’s something for we third that deals to

Okay. Thank you very much. next question?

Niknam Matt come Deutsche question with go Our will Please Bank. next ahead. from

seeing about little are whether share and NICE, with are to lower how And just in market? where years updates away, with curious, any then today? I $XX on but are Sonalee, a planning think, the of the question. and of cross-sell are partnership I faring, of for terms but given terms or you share secondly, I end billion upcoming bit the more am you million know this, Thank can Thanks. maybe $XX Hey. billion maturities, roughly but Avaya, alluded taking the in upper you we I $X.XX initial rates know we -- talked that’s can end the on success several how at thoughts addressing just you you in any there

question and Sonalee. turn take to will it Okay. the then NICE I over

about improved it want and allowing up the end employees center-like Difficulty] employees more of for if mid-market to customers wins of a center One the employee you a power our we and to talked by seeing experience of XX% we we will seamlessly of attached UCaaS, think foremost, First things. we contact as of and integrations And to having pretty and plus as to we strong built our of allows we success that there. as buying together, part continuing center I customer-facing largest I contact our [Technical to are platform, the speaks integration really and continued seeing have that is prepared as customer much buy in amazing really see are the largest and transition these because market more CCaaS deals. well remarks, that especially continuing experience products two to integrations ability are see both the technology, attaching say, as that two the in contact deals, think it why part customers behavior And not will. to the back-office built where

me it to Sonalee to with of the second about part over So question. let the that, turn talk

Matt. Yeah. Mo. Thanks, Thanks question, the for

if we in the financial picture will give to cash capital forward. out, going business and It’s that think pointed how two a expansion in -- quite the XXXX one a Today, like years don’t decide about the are will that themselves, that, converts free anything also CFO. -- would them today. is, top March of a one optionality I profile. Of us now, they for I what over are first outlined you And XXXX. of OP particularly pay with happy flow only March they from second get around interest. the due But to margin, we mind financial for the in say about and fund really profile we you actual the of of terms structure drive that really And course, expansion. not of you rightly strengthening is converts, am And flexibility the for today it’s percent always we due as comes will you have address feel terms better because where I the we think them, better we from only zero which and gets

So the thanks question. for

will Please question Tim Horan Oppenheimer. with next go ahead. come Our from

Zoom or Thanks, more Microsoft anyone or guys. aggressive? you or Can Thanks. overall about Are pricing aggressive talk else less environment? the seeing competitive and you getting

question, steady in and remained we a the the quarters very is, staying consistent metric something This have Well, this to I second a has we will win of of question, Tim. over strong said and speaks tell as you our our set remarks, see This strong I as the resilience that that overall I your marketplace. in To have rates given well. three articulated now in What for is and are product the half think row for steady we thanks $XX. to that been prepared Mo. continuing ARPU

would those are you deal we about resulting or the ARPU competition no, seeing in things levels So two Thanks for broadly, together, what think question. is, loss you elevated when of that’s not I degradation. tell any

Please will next Our from Brian with come Peterson Raymond James. go question ahead.

know new all click appreciate just wanted Thanks question I you a especially on double I the could that you about has if of bit has slowed in terms the or bit side in and are seeing base, enterprise with expand open that your guys. commentary, the cycles down on alone net taking more your a Mo, more up what sales on is motion that love Thanks, little the maybe for comments. I’d expand. to not as of I customer into XXXX. well?

bit a from tell XX% approximately I will What that from But net modulates comes new bookings quarter-to-quarter. you question. and acquisition Good our this essentially, XX% is upsell. comes approximately of

few We are with last no the generally over change meaningful quarters. seeing those two things move together

across spending question. people And so expanding I your have articulated, for are what as trends or think Thanks playing as the incremental you cloud thinking to they today. they about the that dollar Board, it’s on-prem out are new from whether about a ship

Stotler Matt from William come Please Blair. will question last go with Our ahead.

kind to plans of would out I continue are coming on Hey, from team. for into your an about down thinking ultimately update percentage a you stock-based be you then where of the like -- had lot quarters. to of love some well percentage to over on actually and the seems just time that of the question. revenue? several settle terms how get get last inbound comp increased the investors you to that for into would it reducing there in a of revenue. We It XXs Thank and as taking

we we for may see as something and want important stock-based higher are will about you year percentage as absolutely aligned virtue that be continue and a as you was of by team. all really something a focused we add to Mo was it that say full employees those gave is on something management should be expect XXX for It incentivize or with is, is -- we a partly that it the elevated so that right, use. percentage it about And start should But shareholders what our revenue. price. the XXXX, comp think point guiding it time revenues number use will if think of reason much you evaluate would a is to comment our in and And have of continue a the been a the we that at grants, we when to spend where stabilize. basis I you But We improvement two. levers over employees. I and manage to is stock out are to of it’s one to Thanks. of

But million at this we an of in this to side you made of year. remarks just secondly, is, times should then, strong the share as over see won’t in And you million We as SBC, buybacks also that terms $XX helps prepared we that that saw this buybacks of step change. flip quarter stabilize. the saw offset a big buyback that time, You as my $XX quarter and well. dilution use -- and improvement did

So I don’t know if you have to anything add, Mo.

No.

it. into we basis nailed the to you year, think points coming about I I improvement. XXX of mean, guided

talked basis closer We expect this second which continue about. question, to trending and XXX do half we to time. enacted that I your that be points, to exiting of line the Sonalee down And over shows the expect to year have

continuing year, while operational have as this retention taken compensation to some actions use a SBC We and key tool.

into years then. to that the point, teens down continue over all would Thanks [ph], backs next able BAU stock of new for that call to expect it, been again as then trending And questions. have stabilize actions to Sonalee’s SaaS the at, take the levels We several I range.

over Turning Operator. back the to

presentation. today. concludes for session, for our which you attending This conference Thank you. also our Thank concludes question-and-answer today’s

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