RingCentral (RNG) 15 Feb 232022 Q4 Earnings call transcript

Good afternoon, and welcome to the RingCentral Fourth 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.

I would now like to turn the conference over to Will Wong. ahead. go Please

afternoon, full Good Wong, to fourth RingCentral's of Thank XXXX and earnings and year Relations. Will conference quarter Investor you. welcome call. VP I'm

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

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

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

not discussion performance Some your these subject will These our are call. some we to of statements and company's performance. of questions and uncertainties, future may are statements no our contain beyond are Actual to responses the of obligation after forward‐looking regarding our business statements which undertake to and forward-looking and control this update statements risks guarantees operations, differ and financial results materially outlook. from

discussion please release. and related as of the uncertainties Securities as the Exchange and the For our with in earnings today’s to a contained well refer complete filings risks business, Commission, our to information

Unless of otherwise in non‐GAAP GAAP measures indicated, is non‐GAAP release results all earnings with provided our to the comparisons. A slide follow with and are year-over-year all deck. reconciliation that

of deck posted forward‐looking on guidance, in to certain GAAP slide the not non‐GAAP corresponding measure website. the our For is a the reconciliation in guidance financial Relations discussed available detail as Investor

Vlad. over call that, to I’ll the turn With

of allowed has of model year a business conference stickiness once proud RingCentral. macroeconomic our afternoon very achieved XXXX Good deliver I you on to Thanks Will. team again and and customer The milestone guidance. what strength challenging quarter joining and our thank for against our base resilience backdrop. of call. fourth us our for was a our earnings am

annual few a One, revenue. $X.X year the with you we billion give XXXX. regarding finished recurring facts of me Let

is of XX% greater recurring billion versus XXX We points companies SaaS up subscription a we exited with provider. still million ARR makes are CCaaS in most XX%, a year. business, And $X importantly, margin Three, global us and approximately only of further which over position. one Two, believe four, product top revenue a over gross a the over X with $X.XX cementing than which we contact center market now of we margins. operating is last technology, year ten invested and pure-play our basis billion leadership $XXX record now

companies to culture. XX executive a FiveX. included such strength us AWS, from we going notch strength, be employer received We as as and brand from and talent among And the RingCentral for workplace best awards. to women, team, NVIDIA XXXX, to diversity, attracted Google, Adobe, senior and top over were world-class honored build company allowed companies in This

costs, continued we in margin growth this expect strong solid Building improving customer foundation, expansion. operating on resulting acquisition and

cash success. remind flow, our We made revenue combined us shortly. outlook All percent basis a SBC continued XXX puts results Mo before with towards way facility, our Sonalee do, our But and of well new they provide our and detail addressing main outstanding credit let our about on of more us will me the drivers converts. improvement you expect which, this forward. have also significant to points on of as significantly this stronger XXXX path by progress we in down free going a puts in and area driving almost

It partnerships. comes trust, innovation to and our values: down corporate

anyone, and to actively mission anywhere our differentiator external quarter using base, communications RingCentral for of to is see XX.XXX% with single both QX with XXth at over be in of it continues our industry. This service to connect XX% customers of because a internal API our uptime. we for And month. calls time. each them. and positive be often marked and us them our any in is important RingCentral consecutive critical factor Trust. billions we customers, can select They the as trusted the most First, for Reliability with

also data Trust and means privacy security.

video. our support critical expanded information It continue we our includes now area ability to given we encryption the its to for and and keep this giving are messaging quarter, customers This phone, invest in will to safe. and security priorities, end‐to‐end beyond Privacy important leadership top maintain criticality customers.

enterprises we RingCentral dual is new now there was the distributed to which of that built and communications namely on more workforces, the potentially is leveraged Second, emerging a megatrends AI. megatrend for mobility of worldwide. effectiveness improve even disruptive, innovation. And

recently one the solutions. of deploy of public, the of to AI first the are language power model captured large broader in proud imagination these types we of the our to has been While have industry

leveraging of how are we use and AI more and communications cancellation, to intelligent, We meeting time enhance our and transcriptions, examples real just backgrounds, experiences echo effective. summaries are virtual make Noise reduction, to a productivity. highlights seamless, few users’ further AI

in AI portfolio. our invest to continue will we across forward, Moving

leverage Supervisors, improve new for the that of to see AI for for us workers. and front-line improve our and will products collaboration Agents productivity of efficiency workers, Center You launching Contact the knowledge efficacy improve

We AI. Stay in expect for age XXXX. these new the investments will tuned of exciting further throughout cement our leadership product position announcements

Ray revamped new workflows, includes requirements, digital data added of engagement tools and partners channels for additional device-as-a-service, support of unique third-party Outside key center, of AI, our Act delivering integrations to to LinkedIn Vodafone introduction integrations of privacy GSP browser on Charter, platform new we’ve for and like RingCentral EU in features our BAUM’S This like simplify to for into enablement compliance, customer hundreds Contact the resource XX-plus expansion customer example. Firefox, XXXX. Center, advanced a

partnerships. finally, And

recognizable for businesses to strategy most partnering enterprises and worldwide. We world’s our to create with are brands additional the of value committed

like important our unique success. Mo Vodafone AT&T, double me been BT, will a couple recent let click, number Our of partnerships companies strategy. a are remain others of with have of meaningful our an part share Partnerships highlights. but driver and and

sell will with AWS today’s purchase Center with hybrid technologies partnership for communications agreement, Marketplace. be to AWS announcement business a from relationship, workforce. important This marks product, AWS. new RingCentral work the whereby will customers together solutions an launching AWS the deliver Contact directly our directly that and of multi-year and and are will improve MVP and new to Under we this beginning First, strategic able we innovations RingCentral new

addition, lead financial and as activities sector, RingCentral joint core well AWS and will In together. in public for work develop retail, to vertical and together solutions healthcare, deliver education in promotion as such invest marketing, generation businesses as and industries services,

extremely this We and cannot about strategic relationship are to excited started. new get wait

on-prem Cloud improved and an to solution to exclusive best agreement of extended by expanded world’s yesterday strategic Avaya, terms. this partnership remains Avaya’s users, UCaaS Office to Avaya RingCentral customers. the to hold announced positioned Avaya Also, remain Avaya Unified our the base with to multi-tenanted and base we migrate with we significantly cloud. largest Communications continues

still where product, ahead, of we fit, on-prem importantly, migrated to seats Looking us. right are and partnerships have people that to is are untapped product and day. that be large, of capture millions market of front have to tremendous still the in win every we and most the hundreds there opportunity There is this

today. turn what Mo we let the detail that, to market seeing more in me the in are to discuss over call With

Vlad. Thanks

land over continue our contact driven continued to logo Upmarket robust. rate grew which average. to demonstrating and was the current both expand, execute new by delivered in acquisition results XXX%, above was environment. Also, our retention center, the in We part solid ability within strength well again and net in and QX company our

center Service with all Our a Capabilities contact center report, experiences. reason And Worldwide differentiated brings for of unique, as first the case In sizes use and XX ranked together the leading Gartner XXXX benefits of tightly CC. Unified integrated that UC UC in other Communications why integrated is Critical the ahead contact functionality world’s the with latest customers vendors. RingCentral

agent First, the KPIs changing to seamless access volumes employees for other instantly. offers Pulse, across and the Performance performance simple the and Management interaction, using to technology. Contact supervisors, interaction context for our agents, supervisors to alerts our our and performance messaging agent non-contact This two, integrated to solution, for provides real react allows center Center ability share time on business solution

end-to-end get implementation, seamless integrated also billing, and with customers Our experience an faster support.

the there in Vlad selling we actively mentioned, of verticals millions geographies As hundreds seats in and are are today. that of

to financial real-time customer education operate. is the professional interaction essential ability where to retail, mission services, services, We to critical and healthcare, are as such industries

U.S., For wins such of priorities reducing healthcare because example, Aspen coordination Health patient Dental, Plan compliance, were service the Washington friction. HIPAA efficiency as and dental care They Community TCV course, of all and them and selected address one we Viva Health in increasing of key organizations the for plus largest engagement, million this staff $X RingCentral quarter.

the healthcare, Teams in clearly Our us helping factor a also differentiation win but is ecosystem. within not just in driving

capabilities. Teams and We because users unmatched with critical of mission our are successful

uptime, of of to box and the XX.XXX% offer and analytics we First, PSTN countries, XX reporting. over out native

integrations penetration applications deep specific growth digit fourth center into numerous, and core third, our solution technology as Google, we has and in our ServiceNow. and the many such have their as And also capabilities triple vertical Salesforce Teams of This both and the well SMS enable customers to in need that base. of contact resulted native we integrations do as quarter job. Second, increasing leading

an as see to for continue opportunity We growth. future this

to pleased commitments Cloud agreement, moving expanded Now, drive better Avaya aligned new and now Avaya, seat Office. to to with migration On a includes are the intended minimum structure we partnerships. and which extended accelerated incentive

after Avaya recapitalization. see finalizes to expect We focus ACO their selling in renewed

We to will the Cloud and Avaya positioned Communications on-premises expect to RingCentral, Avaya for destination Avaya Office based every emerge better migrate largest the UCaaS customer. stronger by installed world’s best Unified

our continue we to Regarding strategic Mitel, strong traction into we since entered see

growth of with partnership sales sequential XXXX. every XXXX, in in November seat new quarter

partners expand addition by integral Leads partners, success, addressable customer broad channel our be and providing partners our over In our increased XX% our distribution and helping with us generated GSP strategic base. year-over-year us QX. to channel in to to our continue

and of Channel product partners pick us. working RingCentral because our leading to of continue with ease

to continue prior look the and such number the partners of On partners GSP International, with triple deals to almost forward Charter to QX new $X versus the traction continued Vodafone. continue growth, of as year. and million in drive we we ramp TCV stable gain plus Our

to in the we what turning field. seeing are Now

Our rates strong. versus was to be QX continue pipeline win and year, and our up last steady

However, size continue the current timing in versus both times opportunities enhancing but elongated QX. remain environment. impacted Cycles environment them to their we money understand initial down year, save be are Customers conversion with and the to deal able last also year-over-year this headwinds. communications these macro and while how of remain to deployment sizes by channels, versus continues

being come, XXXX realized more we actions efficiency can as year-over-year And in we the a is our there QX. fully year. be improvement took activities. of is revenue in control What more as expense Sales the to percent of go-to-market and marketing in demonstrated impact efficient solid this will

our make go-to-market efficient to We going actions executed more have also forward. on additional

allowing one, This upfront across for sellers marketing improve functions top rates, our includes: economics conversion evolving direct three, partners and better to costs performers parties; investing to and sales leads, also spend, partnerships has two, a cost. and earn on front line improved all while far support sales in which reducing thus at in disciplined overall lowering lower four, our more; with to yielded be while capacity; commissions continuing

In environment. continue current summary, we to the in execute well

customers their money help to has efficiency ability changed. Our not increasing while save

We aspects to more improve, go-to-market for as growth well conditions forward. at up look ensure are are continuing we possible to for our setting when efficient us going of profitable macro as all

Sonalee pass I’ll outlook. our financials over business and to discuss Now it to

Thanks, Mo.

wanted outlook, we to I Before reflect on performance our I what discuss XXXX and

XXXX. in achieved

we companies scale and profitability goals subscription said, our $X our a macro XXXX business model among clearly gross XX%. as we of challenging in power ARR demonstrated in billion at and SaaS Vlad We of group exceeded solidly over against over As dynamic margins are the backdrop. a select with of

profitable are company a enter significantly we XXXX. We more as

with once to acquisition and performance. above Now, new subscriptions holding constant up of and QX a both On UCaaS XX% overall steady ARPU year-over-year. and was was CCaaS, revenue revenue year-over-year line $XXX our with again guidance XX% stable turning $XX. rose million currency range. basis, ARPU our Subscriptions in across

cost unit attractive economics ARPU improves. Importantly, customer generated acquisition is new as being more customer at

Moving to profitability.

marketing. record over up was points non-GAAP set of Our by driven another basis generated across operating the and quarterly year-over-year, most efficiencies business, and sales notably margin XX% XXX in

to XX%. up XX% was Total revenue basis, moving XXXX. total year billion billion was revenue $X.XX rose constant currency of up Subscriptions On On a year-over-year. currency year-over-year. constant Now, $X.XX of rose a year-over-year. revenue basis, XX% subscriptions full revenue XX%

Our ability sticky product continues that to highly deliver by subscription a gross clearly generate is base to our customer margins, differentiated industry-leading valued which

at XX.X% in XXXX. came in

a on and Moving up $X.X to of ARR. We XX% delivered ARR, XX% billion year-over-year

constant currency basis.

ARR. $XXX business represents CCaaS million Our approximately now of

on updates provide will our next we CCaaS update forward, ARR QXXX. basis, Going semi-annual the on in with a

for an profit profit up to our which with profitability. In year-over-year, rose We basis XXXX, margin in come. XXX have XX% operating expanding more resulted foundation year-over-year, XX.X%, over dollars also points the set of operating

sheet. the share approximately full Now $XXX $XXX $XX of turning repurchase XXXX new, to December QX, announcing bringing we million. our This is with We inclusive million of XX, authorization in million balance cash shares through year approved, Today of million. XXXX. ended $XXX board total are to for repurchased a

flow. Moving to free cash

customer. that to in As These by typical margin. differences a very is XX-month margin and period result the margin result Thus commissions over cash of six our over flow in flow payments in delta between the free and between customer operating our our five points industry, non-GAAP ROI a typically timing margin commissions are trails attractive free operating cash points. investments, upfront life

XXXX, generated from relocation flow This roughly three vendors free year cash terms costs, a a payments. $XX renegotiating of margin full third-party related X%. to the the point impact linearity of vendor we of with or includes For restructuring, million, items and

to productivity expansion flow cash in efficiency across XXXX disciplined meaningful will result driving in beyond. Our the free and business and approach

two with our with free free We shareholders. cash over the converts The flow invest to provides doubling flow cash next free to we our growth XXXX. and growth normalized, targeting flexibility in flow project us unlevered capital address XXXX for XXXX cash to are return growth, the robust years,

a we acting joint with Delayed million as credit Fargo a lead and JPMorgan year, On America to of Draw this A consisting have facility point, bookrunners of into a and I’m revolver joint bookrunner. announce Term Bank million million $XXX excited $XXX and Loan and entered that $XXX Wells five arrangers as

conditions proceeds strategy for and A the had drawn cash retiring focus revolver to saw strong Term capital generation, Loan the from from our We profile, next market of participation testament months. are demand driving growth, a leading opportunity efficient of attractive do of time very Term to present debt. Use If may convertible for which an management. flow free nine disciplined financial purposes, Loan A institutions, the including on at strong corporate facility robust any so, the over financial and be and is strengthening general

growth not Now for the see macro assume outlook XX%. turning XX% $X.XX. EPS into reflective we to first quarter improvement the is of of to Total operating margin current of non-GAAP of revenue to XXXX, It to any Taking guidance. of This conditions. we growth expect in what and today. subscriptions XX%, XX% revenue XX.X% non-GAAP this to account market of does $X.XX

of grow to XXXX, For least least at $X.XX. of Non-GAAP our revenue versus XX%. expect XX% of the revenue non-GAAP profit $X.XX of to dollars the growth margin last midpoint Based and growth year. full to XX% Total year XX%. we basis to we expect guidance, at up XXX operating EPS at XX% on points least XX%, revenue profit operating subscriptions of

be expanding will our profit we we as in operating drive and cost structure while durable forward, managing disciplined ARPU look growth we As margins. protecting our

XXX margin basis a factors. recurring and improvement will Two, to as which expect four One, improving be our leverage Our as billion continue than by scale XXXX. by points compensation, above productivity revenue we we This efficient further more main stock-based more in operating percentage workforce. improve includes of operating of in revenues. year-over-year spend labor $X the to driven

of in will the Following continue XXXX XXX XXXX, labor two, to basis historical one, our we compensation, discipline trend at and an prices. given: beyond applies stock-based improvement also almost issuing point believe shares on impact this

meaningfully further years. sales multiyear improve the go-to-market cost will the SBC next and two and lower of productivity as new which We Three, partner economics, percentage to of are over driving a transformation customers. marketing lower acquiring a revenue committed to

deliver least will ago, within greater Four, XXXX, continued business. at commitment savings. backdrop. vendor In margin. as quarters operating year levers macro a a our summary, flow. towards and difficult XX% Two In rationalization to These key we reiterated was cash procurement which are growth will expansion margin despite and execution growing solid drive drive a XXXX drive we free the healthy meaningful of significant efficiency we achieving

major Since this To profit XXXX then, least operating have announce to in that exit path to this are a with at margin. achieving proud we the hit milestones we we expect goal. end, XX% to

laser-focused foundation delivering We we have built a value remain strong on and our stakeholders. to

With that, call let’s the open for questions.

[Operator from Instructions] Samad Please Our question comes Samana Jefferies. first with go ahead.

maybe overall, you care evening the ways next I think How disclosures first room you. one, free to free only guess for cash redeploying and think that good improve. about Hey, XX appreciate, between of we about should now I over just I and guess that that months strategy my facility the we for taking flow? leverage. using cash should and think questions. other have of take around, how all and and the using converts, capital enhanced when management thanks the there the detail I that the conversion the then flow buyback about the to Sonalee is for

some of your have previously structure that that commissions Now with a you the better partnerships? prepaid

for Yes, announced the facility we question, And yes, the credit Samad. very, excited that we thanks are about today. very

outlined million And profitability would and a what term our markets. $XXX say million revenue allows convertible – all is $XXX us forms just to Loan of A. $XXX not so accessing I that’s So million for $XXX revolver loan consider Term you profile and that million financing, really we and debt

say best that market debt portion for very A demand attractive those very terms the an to the Term so. opportunity us us if that transaction reduce convertible a attractive of would strong. Loan for maturities, was to believe really present option we And the conditions and and retire And provides I our were do

we’ll on decision converts, nine a market A Loan that be plan months the closely the so. make next have on no and whether not Term immediate to retire watching We to draw but over or the or

grow next significantly us in we the of optionality you leverage decide lot a few refinance years. down And that in multiple with And and how significantly share our invest organic drive buybacks. we that, But then How of growth? our within presents say over as again, own terms plan EBITDA to we to will convertibles?

improvement cash take So, focused as the but and It view at as will also capital very are, driving free moment forms, three dynamic. firmly policy really our I margin allocation all we flow. on

And in free prepared the to cash over expecting to heard two, we’re XXXX. terms of period flow relationship double the you my remarks, of between the XXXX

a However, still about margin with delta as flow OP is many and SaaS as will see you free five businesses. and point typical between the cash case

renegotiation enough of in that terms delta. difference that but really significant terms wouldn’t of of the helpful the make terms In is narrowing a driving margin, partnership, of it in

that say now, purposes, for your answers would margin for So cash Hopefully OP flow. expect that and I question? continue to modeling between free delta

it itself, on be then about but that between the the ended have that subscription just is ended do business And ended we a how there up as two curious, maybe expected ARR does. of It slower And guidance those for, company how end fourth the then about being and it then have there any base Just we where that? quarter or should new Is think a will be ARR math really thinking in forward things? you I some an and business? and XXXX this is the the combination in in the subscription I all, kind XXXX. about and for could of business about doesn’t different uptick revenue? maybe of expected for where think churn where reconcile, the And follow-up. just suggests revenue churn versus to how XXXX I’m but offset just in

color may I so Yes, and question. hand Mo business. over ARR, let I comments don’t provide given typically some to for some why guide around but don’t your to the then start We me

growth say shown we in above XXXX, and for And new will I is, directionally adding a for rate for factor a would are in we in ARR expect growth revenue at to revenue XX% XXXX. what So, XXXX would new to we that you where be We’ve net healthy guide XX% guided and of does we total bookings bookings. XXXX.

some now And the there are, as as gets it and larger obviously revenue our And even forecasting and most being we’re and to upmarket it’s stable as thing as we we are downsell be is more given the we’ve ARR more if churn growth also gets what base bookings, in larger, from directionally total I of on growing environment, the and more But well. year. assumed a conservative would the we’re in terms macro, important your prudent. growth, above number, as back-end-loaded current current takes that churn of is it perspective think expect that the for percentage, puts

in but the queue, to Really progress helpful. the margin I’ll hop the Thanks on great see back guys. expansion. all

Samad. Thanks,

The is next Sterling Please ahead. go from SVB. question with Auty

to ask the on thanks. Yes, wanted two extension Hi guys. questions I with Avaya.

per The or the first would But kind up which them sell ability revenue amount that side, that the a flip you diminished. you talk imagine seat one benefit imagine in contribution can of How get, of about level? operating gets the I to get I impact at direct opening you the on is wholesale that for the margin does method.

agreement Avaya. with we’re Yes, excited the new question. about the very for Thanks

recapitalization We key of into expect Avaya on Cloud their Office their and of stronger emerge as to selling as market. them part the be offerings one focused

the you And seat doing As of we’re product two the one, reasons one to including why have as we’re work that because excited their sell key arrangement. go-to-market about motions we’re commitments of ability say, new think as part introducing, is direct. the minimum we we now and the

expecting, the of accretive and seats minimum of or and the them move something to function it base years. is them, a to go we’re economics in their simply that should There’s Relative be getting the to the them becomes the larger world’s that from coming actually commits to direct current on-premise selling of potentially and what a quarters economics then cloud. we we economics, lot volumes at incentive for expect more them actively existing, look largest the

answers hopefully, that your So question.

does. It

through that EBIT both? the package feet would minimums, that’s be, that follow-up the I handcuffs or kind coming or revenue at minimums the one on the to guaranteed line, those of Just fire is guess, the, a get what’s company a accretion And line bankruptcy, paid? the the it’s

question. Great

So it’s much on EBIT/contribution side, accretive. very the margin what I sure tell you is, for yes,

about As yes, the are revenue, be function able becomes the that you direct top-line, to the accretive it really Then base have less think the largest In it a of volumes sold. that that and motion, base. top certainly there degree as they on world’s is a are but to actively line well. monetize could

then of to achieve piece minimum to contractual the And address well. to that those, place mechanisms then to degree, in allow that we place that question, your final to comfortable the And achieve we’re commitment us will that able we’re there’s the the not have as volumes. in provisions

question is Goldman next The from Kash Sachs. with go Rangan ahead. Please

commission the could previously compensated? the you not partnership be sharing there you And see super levers, work laser-focused between nice can wants are one to of et Vlad, expenses, whoever you’re for getting all Mo on or talk or like It Good kinds operational very get the AWS AWS to all that maybe What two will two salespeople with of you that organizations? AWS see on it. how about segments specific improvements. of Will to looks does top-line the this that. this cetera. Hi, address you addressed? think you market

is which the with how And much if as to the by much. things so yourself? are the is this your follow-up, with a new trend, or to a look really It’s decline you Thank fourth do activity January subscription ahead that, And February get But you going a little of want you business? business how in better, at you partnership quarter the bit consistent following net AWS generating of XX%, a but out. as are don’t XX%, the to about months be lead guidance? some uncovering of how panned rough respect result the pipeline guidance. and looking I guess new seeing of math, implied I Because your in are of

Kash, thanks Hi, No, here. Yes. for the Vlad compliment here.

the the AWS. more the This skewing please. more so But is that now for We with sales just take forces can flow. first tell enterprise. companies part some Look, in me has works Let be for it the working that have announced. obviously deal we're where question, you first active their together. are most time, this early already of I anyway. already and upmarket, Obviously, it good it's quite deal been begun will seems seeing

I entire available remarks noted, We prepared think, marketplace. that in be will the in also our portfolio our

we But inclusive. of sales the again, be more as maybe expect you see And as for second this can upmarket So concentration. the direct to far Mo, efforts, would I more the question. take part

Yes. Absolutely.

sellers our if question. back what's not really And on this is build be a will, gotten us part was just has your that be then that and there Service very to B, a which Yes, our to able the Kash, A. how So quota them, one that. commissions of compensated about we're by you interested is, will guidance, is something product. Unified that currently Communications Considering in selling in their excited as AWS no opportunity. retire to is new it to

with think I that trends we final we the Then what are the so consistent of what asked XQ thing you in are XQ seeing seeing saw in that far overall. we're terms and in XQ, was in

multifaceted Kash, your believe we let there's us please missed, answered anything know. So question. But I we if

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

and helpful. the efficiency see just putting you've that of your you're due just you're in changes of given could Understanding just product? customer made you cuts. contact sense those some give target some they kind that was how given a then question, conservatism of contact versus cuts their own that you Thanks. seeing environment but your kind the AWS Great. discussion outlook, second have versus as how already conservatism That of center And of of kind guess I maybe was Thanks. kind between just that mentioned if to just much what maybe needing the product to of kind own be more would that a just their product, market. of was the center

in what Hi, see in answer taking account just a Meta, of it. guide, has so and into we the question, current certainly degree macro in yes, first which we to market your prudence today are in our the

We think didn't macro. really worth actions as that point. improvement I cuts our one would a sort I around guide, and there what sales well, terms And of around in of made improving the sales, cuts the we more any are make any of think and question reiterating, the and productive I in the in but we not motion, say important took, the being I of whether this factors is factoring in quarter that's your and to productivity they covered and in front-line really we think is partly it's last the were we

And then which, will some those program me, of our it of to that and be P&L way. see kinds with things rationalization, wouldn't margin and the come vendor things, you'll savings, growth with be subsequent the any improvement, through correlated quarters other levers and around procurement in spend

terms we our very much of is guidance see So factoring what macro in today. in

when would add I is of we and us. be something for And guiding is evaluate sort are that's to going other disciplined that thing deals, principle that the we

are above we subscription gross defend ARPUs them why XX%. our margins still that's $XX above So our are able why to and healthily keep and

only call the would be I would that factor other So out.

section your of to then question. the and Meta, answer good. AWS Very

going and by that course, their their more integrated give marketplace of the customers addresses are which own buying have their sellers, market-leading and the the will tightly First, of the giving adding CC trends AWS, continue of the to together, is a offer one quarters. solutions simply choice. advantage few solution addition to AWS to calling that we've for many well. But UC to solutions needs as they organizations that center that been looking us they're quite are of contact at RingCentral's and MVP customers a key of out

marketplace, And from and it UC arrangement products RingCentral then being and service half will of that AWS other not AWS provider. This while the your proactively two receiving commissions AWS via the for one sales does the from And UC reps. sold marketplace MVP second exist the second then another ways, on to today the available are UC via one of solution is AWS vendors reps think any for. selling be question, as other sole AWS in

with question The Please Raymond Peterson is from ahead. next Brian go James.

for thanks taking the questions. Hi,

I a really improvements So CAC. been high-level question that you to help go-to-market. the you a was significant and really provide the on And ethos, maybe We've guys past, way emphasized. channel for scale. it's the seen believe in have had in partnership this in guys

channel lever this and do as with profile So a to go-to-market direct the margin like change? understand using about going of I'd motion, of versus kind indirect we forward? relationships kind new does or profitability that love And how think

a great question. It's

respond me let points. So with to that key couple of a

continues what Mitel extended. We're with is agreement with provider many to partner. unmatched one enhanced, strategy still The seeing is We recognizable the expanded, et that, our addressable first now with reach markets. providers, committed that our cetera. a we're of service PBX motion relationships. The to us know providers, partnering service strong brands across hyperscalers, be we're happy world's most very into gives Avaya legacy

Atos terms motions. or solid into now and products. to have to not I'm get migrations We to every modifications part of leading cloud of we And that the details arrangements our able nonexclusive you ALE we've and other of then that, advise were have have helping relative intention I that will at terms the the the what with drive Alcatel-Lucent terms, changes been of new to looking go-to-market tell these made Sonalee have said, the business. Atos And communications our as economic and Atos than on with as ALE, arrangements I those various believe Enterprise. aspect and of that we to is,

profitable base, And then as we have to both of using goal activity. I building Sonalee is the to channel commission the to direct what performers more. not growth. costs some across deal made costs of evermore is any driven last part brought that as our it drive of the at on down your question, and our that the the VAR these that while has of And over the well upfront ecosystem top channel the broader and commission material our months, direct sales, sort to levers earlier also all change sales call comments same today, the few across the overarching allowing ability to And last say time make will

Backe question Strecker ahead. with from is next go Please The Wolfe.

for you question. just I for guide? margin then the operating an quick hear Can within Thanks XXXX, seat about we clarification. growth rate missed you’re mentioned a taking our Hi. exit I thinking about just how that. believe and ARPU contemplated versus And growth

that would So helpful. very give Thank that could if you. again, you just be

Sure.

your So I’ll seat then and to part with off hand how in and correlated over second start Mo to the around I’ll guide. it’s growth of question, the

correctly. heard So yes, you that

And at guiding least heard for full operating are year correctly, are of the operating XX%. margins we we to expect XX%. to you exit So at margins and of QX targeting least with me XXXX

will medium-term ago, are guide, that least to So today quarters gave and at, at you may that XX%. we happy very exit recall two now tell we we XX% you QX XXXX

of portion to And profitable has the this stable to not years seeing competitive end ARPU for talk our the one we’re mantra of goes your At frankly, growth. ARPU I our remained day then mean, that impact at about now pressures last ARPU. And the question, building above back and of overall $XX. guiding our to the two on

tied in we’re into ARR We aspects. of XXXX are above are growth deals each our one our we being grow disciplined, those are revenue that profitable expecting entering that will and to

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

This Hi. Bullock the is momentum. question. Thanks Funk. is business on Mike for My Matt question around for

the of for growth. into a about sales XQ, sizes deployment So conservatism in guide couple but smaller down cycle a clearly, We’ve some built now. quarters obviously, step elongation, for some talked

trends first customer so behavior curious seen on if Just any within you’ve seen quarter stabilize. far the you’ve you. Thank of kind

question. quarter. remarks, I we’re is seeing trends elongated. in cycles so sales during prepared Thanks in quarter the my similar remain versus saw for far what very net as And mentioned And fourth first the we there

the size and high QX. improvement. seasonal churn, seen that did have true of We on trends of is see initial from in And but improving perspective, QX year-over-year deployments decline a usually our XXXX, we QX throughout a year-over-year. churn to sequentially degree was

is Please ahead. go Ryan Barclays. MacWilliams question with next from The

to taking Are opportunity. deals? Microsoft is you get the this for contact question. seeing Like Teams into customers? And the Thanks your touch that this partnership? it center when include channel? your larger through We’ll Thanks. Microsoft wins helping more does also And on is you helping pull

there. as to in in product about point. customers Teams prepared we the And purchasing skew UC it second Teams the good. part our triple-digit the Very becomes unique seeing That of into Microsoft to are to yes, really of we practice. capabilities, power UC my integrated I offering the question, seeing mentioned inherent growth your skewing who the definitely things, remarks, your are it’s two Yes, Microsoft upmarket the an are of those to value products. And CC and our FiveXs, CC is upmarket and together. And and our

seeing of a teams. into strong Microsoft contact selling we’re We very are when attach center rate

ahead. Securities. next go question The is Please with Truist Terry Tillman from

Sonalee. Mo questions. my Two quick Thanks for and Hi, taking Vlad, questions.

more a it of that ARR though, then dynamics contact terms weigh that side? contact to first about is Or PBX is different, business. I And resilient? you’re of Then the on on center these anything the center is of one type follow-up. And is side. continued the the talking Mo, The side, in mean, seeing same on there activity? dynamics you’re that about the some have I have

are is ARR one think we the five CCaaS million, of frankly, largest the planet. us our is which, seeing CCaaS as that positions amazing players pretty on we approximately now Well, and $XXX

average the as growth well. market and the seeing are We above growth the above well trend company

are deals, attached some a deals, And of at XX% rate the that over they’re get market-leading consistent trend tightly market-leading – of the the customers our $X product of and in the day, when to it think for UC number UC CC buyer differentiations from call to end seeing our integrated we’re community, quarters. it speaks unique I attach will, and larger Relative fairly rate, of it together. if this our the the be you and CC for on million product looking plus they purchasing capabilities

Please go George with is Craig-Hallum. from The ahead. Sutton question next

Avaya Thank Avaya at you. it to accelerate assume something will to Is seen? the that that – feel bankruptcy from and historically could you Relative premise move have customers is discomfort migration? logical some customers

best Vlad [ph]. migrating base destination destination wanted opinion, cloud of go world’s firmly no Yes. or customer bankrupt Look, I Avaya think concurs, absolute today remain to the actually again. Avaya we and for we one But largest here. – are we their the

have We the integrations.

well support, endpoint have have relationships, and have process We the we sales we channel oiled.

seats many have already remind of to hundreds agreement. the everyone, under original Just thousands of moved many,

for We companies, new a accelerate, continue And structure. hopefully at expect it’s both and customers. least but for this to a most win-win but continue importantly, a with for it’s win

with you one Avaya about This sure, a long. bankruptcy also customer. this there deal no no think is if for to it, I’m why bankrupt pre-pack. one And if expecting an wants too last is provider to a, a But, is

I and way, the By But and better We’re attorney, debt with much going think a that bankruptcy process that look, short simulations pre-pack. this relatively to a the cetera. be a entity painless company obviously. a substantially I’m will it’s part balance et of relatively is sheet, coverage, reemerge. stronger not And generally that are stronger

on-prem you’re a want go it’s go? So going where you you If are on-prem. if customer hard to – really to to from frankly, to go

the You backdrop. not where up. we might say, good RingCentral really the UCaaS integrations which to feel to Why leader, So differentiated we We has have really, ended given feel and of well really assets absolute is with which as go these all cloud I go and Avaya? cloud. the to good

tens brings. what be many ready of on-prem the and with I think the seats they particular, millions future feel in Avaya, Again, see migrated. to of same, we’ll

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

Thanks Hi for question. taking the everyone.

me. for two Just

With business and to of changing talked that think, what on business both of what forward? about RingCentral, implications the I there being are expect going Mitel, the agreement. you for sold think one, Mo, you the So you historically versus trajectory basis absolute about that of an Atos kind terms the

converts. then the is And second question the on

kind the of those Thank of that in that? debt should terms associated for you. are facility of you expect – you you for pull we facility? in expense What what interest waiting trigger what terms with need Just the now that. to on can you then credit that leverage And have

Very good.

every over Mitel XXXX and sequential turn Mitel, is So, then growth it Sonalee. They I’ll start one to solidly the with partner. seat contributed in quarter. important Atos an

you what agreement Atos will millions are as and be them time and combine, to they and discussions. doesn’t Mitel’s final see is our know. far tell. exclusive provider, of on-prem to will that We’ll we happens currently there seats UCaaS Nothing change there. it in then As do fact place If continue in stated, Mitel to convert, are the as be for

to just X%. current the obviously, question interest on our convert is answer paying at convert, your So

is really the we, are it looking down structured So versus And discount converts about team, that’s something comes this We management do our that and financing that evaluate. to at that to to between anything trading currently continue the pressing as to have market go don’t thing conditions delayed and X% the will trade-off the and facility on. obviously we that feel any draw the great we aspect need immediately, it. have that

we of flexibility there. And the over increases as our optionality next of quarters, only optionality couple and So, significantly EBITDA there. we grow have like feel from we lot a

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

at for The Hey, thanks, guide appreciate you least margin fitting me XX%. in.

talking it’s from XX% does the about XXX last up it. quarter. step Sonalee, attached an a or you’re higher to basis have points It than more big

to speak it is to So just How growth would optimizations the seeing can you higher? versus side? how on what up number drive cost tied that much ends you’re of additional

Yes.

ends guiding. we’re growth would be then to incremental I if up where look, would So better, being say that

does in So deterioration that we improvement we gave the any is not guide the guide today. matter. And guide any embed for consistent as said, the incorporate revenue the macro on with the or or margin that

actions that’s of points three about labor last terms took of In you given we the year, margin drivers, expansion. the know, the as savings,

then And acquisition from of then customer optimizing will spend the remainder that’s rationalization in and come suppliers. and spend, third-party

top XXXX a to expect the moment. we expect dollars that’s year-over-year XX% operating and we for then on achieved And again increase XX%. up just operating I’ll around year. the this be have we going in at project reiterate operating ultimately, very procurement that be XX%, that on big at to XQ of do dollars over profit But profit We XXXX margin least once

ended points basis year. QX we above XXX where this that’s So

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

now may You disconnect.