RingCentral (RNG) 9 May 232023 Q1 Earnings call transcript

Hello. And welcome to RingCentral’s First Quarter 2023 Earnings Conference Call.

Let me now please turn the call over to Will Wong, Vice President of Investor Relations.

Thank you. Good afternoon. first earnings RingCentral’s call. to welcome quarter conference XXXX And

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

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

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

operations, regarding financial responses to and your will the our company’s are of statements business which are statements and discussion and These and beyond Some risks our future of uncertainties, performance, performance. guarantees of contain outlook. questions to control, forward-looking subject not are some

our Actual this we statements call. and obligation statements results from undertake after may differ forward-looking to materially no update these

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

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

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

With turn that, Vlad. the I will call to over

our is growth and results profitable demonstrate QX year. quarter afternoon strategy had for earnings driving start off. joining healthy, thank the to a first that Good you conference solid call. We paying of our

XX.X%. above and XXX again basis quarterly and grew margin almost billion. grew year-over-year record. $X.X the once end to XX% Operating revenue high of our Total to ARR was This guidance our range $XXX XX% a above also million, rose guidance was points to

year. and the driven more actions discipline, Our when Those focused and we by the position macro last took continued efficiencies environment cost higher of to us stronger the margin emerge actions benefits operational improved was improves.

This includes on laser flow. maintaining and driving increasing macro our control. we continue continued towards to cash disciplined what uncertain, can we While free be approach innovation remains focused the and profitability

color profitability provide will our more shortly. Sonalee on

me have being talk partnerships and cornerstone heard our innovation You of about success. trust, the

achieved availability quarter. With partnerships, partners channel, providers. more our straight As color progress respect and for XX.XXX% the the with on trust, provide will global strategic to we Mo service to XXth

I base. our believe key of customer now innovations will highlight our within accomplishments create innovation opportunities quarter. some and additional proposition will time large this expansion customer increase value our We over these

have Messaging; enables Talk collaboration capabilities with for with RingCentral generation to Embedded our Vodafone commercial on partnership include; RingSense, These first legacy which RingCentral next Push Teams and for Business, voice functionality and RingCentral messaging Frontline Workers, and we released in of combines our which its our application, Video X.X, Sales; RingSense App; Microsoft services. video Teams AI RingCentral platform and for top Overlay, new new

me Let provide now details. more

we experience, First, world brings application. Teams a solution This recently native requiring with X.X. without fully RingCentral’s Microsoft second announced capabilities PBX class a Teams into RingCentral for cloud

integration third-party advanced end and that reliability, glass. entirely renowned capabilities leading XX.XXX% This can means RingCentral’s Teams' industry customers of global enjoy availability, analytics, pane within single now features

distributed a the In UC businesses; four cloud-based and business. single about integrated, hybrid for adoption of provider. ongoing to an I past, solution RingSense. Second, reliance are; mobility These have megatrends shift driving increasing our work; on CC desire and from talked by the workforces;

RingCentral portfolio. is that the With megatrend A AI. emerged truly have AI and capabilities across we is the now that revolutionary entire now to has inject fifth ability RingSense,

world’s largest we of are their one to position unique in the powerful UCaaS insights into providers, a offer customers As our conversations.

teams able AI features offer analysis engagement generated portfolio, we sales this in to be offering and first recommendations. scoring, our Sales, for as RingSense such With will keyword

as Sales, third-party currently conversational sales of RingSense own well as a customers our in with transitioning a beta. from team closed solution it are testing We for intelligence number to

RingCentral for This to two Workers. solution Third is with X.X times workers. talk capabilities of Messaging. new push more line powerful desk-based the Gartner combines and billion number estimates Video than front Frontline workers, RingCentral there are

industries frontline an With and with to available more use any teams. details. back-office solution, front seamlessly workers will RingCentral can standalone our across smart device to MVP. solution a It as provide all today their connect or mobile is beta in Mo and efficiently as either add-on

customers. legacy partnership workforces and Overlay, Vodafone in communications complete And solution Business, the our with messaging enables those as fourth, collaboration customers capabilities and which to serves a future. RingCentral video enables This to RingCentral move stone UCaaS in for for hybrid innovation, stepping

In summary, it and was innovation. a profitability solid quarter across growth,

continue innovate, differentiation. our enhancing to We

are laser of us. cash flow focused We us going and in well robust will is which I free excited opportunity we am for sets expect This so about the front generate also why forward. future the on up efficiency,

turn over me to call detail. let more the in over Now, to the Mo go quarter

win with a five of to main healthy growth purchased portfolio. is three the that quarter, seats and thousand Fortune healthy company Thanks UCaaS An Vlad. of seats reasons. They of solid CCaaS. growth for We across RingCentral had contributing XXX a five thousand this a example selected

their ability into integrate ServiceNow, employees’ seamlessly workflows. deep to into Teams, our Salesforce and key providing and other First, aspects reliability XX.XXX% integrations of

Second, platform. UC our integrated and CC

now manage, in new use revenue potential This customer vendor having of entire to single increased organization results a a and satisfaction communications platform. simplicity the can opportunities. Beyond the single

example, contact local easily rings, certain no can of location be call up For now a number its if branch to the a one forwarded center. at after picks

the is and costs, projecting a of fees. And on save removing standardizing IT, maintenance to finally, platform, telco company dollars millions by shadow single

is our in especially for costs customers, of a environment. today’s Reducing all value proposition key

good core to money. ability within customers see our of continue help our business save traction to because We

published customers together. firm, This return MVP research investment, payback impact Forrester, on economic under six average with a the Center RingCentral total XXX% using recently concluded new seeing report third-party a and a that are of report months. an Contact on of

UCaaS RingCentral together that CCaaS had and three concluded benefits. Forrester using addition, key In

a center. time XX% standalone XX% handling contact First, call was reduced versus for by

IT and center reduced were third, UCaaS by ticket XX%. contact support to tickets time each And close by XX%. internal was reduced Second,

Teams within more which an are year-over-year. for generally available will practice. our to able and Moving be we our better QX, all. provide not user and available on is solution, doubled to today RingCentral business our X.X summer, this in updated Teams even beta that’s Teams seats than In experience With

key services. point. attractive Most given reliability Teams EX sets, are deep retail professional and versus or in customers on our many healthcare, RingCentral feature licenses, Teams users EX Phone including integrations, price a such and facing chose as very advanced verticals Those at all customer

is integrate seamlessly within of and Microsoft existing with We and currently internal a UKG, example, payroll, workflows, communications. HR, experience Teams. RingCentral leading customer For provider using both their their their management enhancing workforce solutions, employee

to market. Now, an let on our update give me go you

Avaya continues line year. emerged of and ago a to few First, their in Also, just days strategic closed in we from a million perform expect the and contribution Mitel in to bankruptcy with partners. latter part the $X ramp expectations QX. transaction TCV

good traction GSP seeing of also one performed of many Charter, our well. partners, are partners. our newest with We

launched also Business geographies. We Vodafone with in European additional

new we to our later in the with expect early AWS year. and is developing well days, Lastly, still on Marketplace be this partnership while AWS,

an help aligned with to channel incentives they represent go-to-market They we our to and value of bring. important is continue and Now, our broaden the that part continue about are Channel us reach. our of XX% ensure base ARR partners. The that

our to launched all RingCentral assistance, enables recently benefit we fact, lifecycle activities and go-to-market for manage which turn Ignite customer sales RingCentral program provides partners all parties. that in without economic In

closed Moving our that deals to to we highlight like partners. with international. I’d two international

communications retailer across European in with solution a The first selected over athletic retail with their is stores RingCentral a stores. them They help France. streamline X,XXX to

purchased and voice, to capabilities. the or of button, all securely our without communicate through members and They additional video messaging front-line This with new easily seats talk allow of hardware. also will store to thousands push MVP a added and push

that recently a value to is and Video was other a provide thousand RingCentral and a Messaging and than selected power win video large a in basis. more demonstrated and regional can messaging on the standalone body This RingCentral to provide government users. The organization XX great Europe

sales current decisions receive the remains have of scrutiny seeing approval. additional internal The year demand layers as trends with the to environment. last Also, customer Lastly, macro significant the remain versus to over I quarters. and cycles consistent buying want been few continue last discuss we elevated

are within also base as counts. seeing have employee their our rationalized upsell existing less and We customers slowed hiring

remain flow and rates remains demonstrating for on-prem lead win stable demand continued conversion. cloud strong, consistently However, to

the With call turn to that, financials. let me our discuss to over Sonalee

outlook and revenue business XX% will from then our Thanks Subscriptions quarter full $XXX rose above revenue second first On was basis, up a year-over-year. provide of constant for discuss Mo. range. I guidance currency our year-over-year the quarter the and million and subscriptions XX% highlights year.

XX%. rose versus basis, billion. XX% On $X.X rose currency last ARR constant ARR a to year

business to to expect half enterprise to subscription is XXXX. This continue We ARR growth being more growth revenue weighted. outpace due back in our

Moving results, to otherwise be noted. profitability. I unless non-GAAP to will referring

Our solid, was subscription gross our XX.X%. $XX, strong ARPU margin. gross supporting was again resilient margin and Overall at above

XXX rose and basis last XXX sales with quarterly to progress scale. last down was free notably marketing, versus to best-in-class QX XX.X%, year most year. The driving good our efficiencies by cash on our was points demonstrated flow the generated across versus driven path record. margin another increase basis and in Operating business, profitability which commensurate points

vendor our cash improvement one-time flow, year. cash cost which related improvements customer free strong includes The expect roughly in collections throughout flow the we QX and restructuring focus to activity, $X $XX XXXX, efficiencies driving management conversion and free on is continued to million we Regarding to million acquisition, of generated items. leading continued

us cash maturities. generation investments, that focus importantly, evaluating organic debt allocation our Our free allows repurchasing on strategy employ dynamic growing addressing flow a and shares, to convertible and includes capital inorganic

Regarding how flow our we options of our us provides address terms debt, cash in convertible free many maturities. our

priority a and and and they until and are carry years both percent two XXXX, me coupon three not converts due us XXXX a still for years two our top personally. While out, for zero are respectively,

months X current our on structure, expect leverage will for our and the XX, which less XXXX, be capital our assuming continue we December than will twelve net debt times outlook to EBITDA net trailing to XXXX ending improve. Based

to we a Given attractive the deleveraging convertible have of choices believe outstanding profile, our maturities. we address number

guidance. to turning Now,

While we early our in we still the QX year. revenue outperformed outlook, are

revenue margin EPS uncertainty, our we expect; second Given subscriptions this growth operating XXXX, XX% $X.XX. total of of account, the quarter XX%; to to XX%; are and we in non-GAAP the macro of of remaining for guidance. non-GAAP into XX.X%; $X.XX prudent of growth revenue Taking

year of the XX% XXXX, up XX% of of at revenue revenue least subscriptions at XX.X%. from of prior expect; non-GAAP our margin operating total XX%; to outlook growth to up we XX%; For growth XX%, from XX.X%, full now least

grow XX%, $X.XX of EPS of up prior to our Based $X.XX, on to the at revenue from midpoint operating XX%. outlook from expect guidance, Non-GAAP to profit up least we our of least $X.XX. dollars $X.XX at

guidance exceeded both top We In and summary, on quarter. QX was bottomline. a solid

to We well on with the our the increased continue despite see laser profitability positions growth macro us leading opportunity, growth backdrop. for differentiated product, current believe and and We market business focus healthy in our success. continued a balancing

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

with Instructions] Thank ahead. [Operator you question very from The today Jefferies. much. Please go comes Samad first Samana

direct is do that how continue it customers Good Vlad, them a innovation. how And acquire I taking add you that to the just value Thanks attract as of new for was do the about you should to and you or as platform? see products we to number upsell cross-sell you. a think maybe whether afternoon. more for stable Good am or my about curious, drive Hi. see you way I easier features monetization maybe questions. to to those talked increased RingCentral more products, to do ARPU results. think a expand Just make those there’s this about customers? opportunity ways will see curious, or and

Great it’s Hi, it Yeah. both Samad. question. of bit and a Look, depends.

is So, RingSense, that or it. when is see It be AI you driver a how our growth the example, monetized at look separately. entering into will AI absolutely we for space,

working it and want to general, an solutions. is out aimed also UC that. it that also point way like CCaaS, RingCentral other be in I with is but general to designed a CC could in be frankly, even our product, to to not standalone and UCaaS, we customers, only that a a existing add-on it or purpose customers It

separate whole it you When be own to or customers. it’s in and stand right, frontline again, at added workers its push its can own a look with to talk, can on SKU

clear exciting, When super you is overlay, where work areas the yeah? PBX outside our in to look showing actually really time the are this Because at cloud. our core first that’s in on we traction of

will, the video customers go something, whole and in customer the separate A, integrate or as migration path okay? once ahead overlay So we it those to good? our its they monetizable providers in own the to on-prem Am right, with as cloud, messaging, point but easier and an this, can think is presents I legacy believe, opportunity with and embrace for want experience missing experience for augment -- well up you sets whole a

a bit is and that, value, am any we RingCentral said for or both having far answer. what But forward. we least, step major the our not again, call short Teams Teams sorry, So, do, a of is look, the last and X.X., by oh, work anything major, look, that’s I

Teams' much We at market if operate pane believe we It’s that -- loud Teams, to today customers, universe. this the single glass. have a is the integration heard they they the we seamless from that the completely standardized have they best within experience. would and simply, have point, on prefer in in of Teams What clear,

all does integration. have do is a not know, really this viable call UCaaS But we as very close a, Teams solution, fully and we it,

So we had before, we really us believe feel good -- Teams push and far the position were technology-wise. well look, ahead This with competition. will of market, business us we but we

doors us. for will absolutely open it Again, new

believe revenue definitely just driver we experience. customers, Teams' provide but to our stickiness -- is a will it be existing forward, it’s better will So because moving much a also

question Moffett. with next Please ahead. Auty Sterling The go from comes

if to you. give much guys. are can convertible proactive it, with what don’t how just are Hi, discussion in you well just managing some I want the to too you and specifics. wondered that most maybe layer going anything handle around how go maybe Thanks. through? options debt, obvious for one into terms of you timing Thank Yeah. your as that the want be of the you get around to But could be deeper as to managing you

thanks for Thanks, and question. Sonalee here Sterling. Hey. It’s the

for specific management in remarks, focus very this I for my as prepared us As and said is a team a personally. me

would away. points So I make without much a giving too couple of

One is along seen print, with several cash a XXX growing next we that basis points nearly free operating flow have years. by would also cash quarterly the we flow. free over delivered today’s record expect And on you year-over-year, to expanding generate in margin

free including $XX in we about of flow. cash million quarter done several million we Within So and was when free address to the cash clearly flow $X comes was are that, options restructuring have the not and that yet charges it to convert.

-- the cash generating throughout So organically, again, will the one we you is will see year. improved using are which that

A. Secondly, conditions. have and through a of we we you decide may delayed terms market to in That’s remember, which last XXXX quarter, November depending on will if when a announced opportunistic facility, to draw we on us $XXX million be that, Term of available Loan draw and we

profile, and about with example, enterprises EBITDA we will financial how we options for are available our But other as you to and agencies, the think rating driving have look profile if at us. ourselves think such financing about you

debt is conventional if percent. so the coupon we zero which on debt desire. dream. Today, a to the have we will access CFO’s more convertible So markets, tap That’s we can

the current. capital allocation So converts to balance the addressing other we we priorities, convert but will not will with allow go

next go is Siti Panigrahi Please Mizuho. The ahead. question with from

for taking flow. good Thanks on expansion even margin see want I side, And question. just to profitability the definitely that on my to Sonalee. cash progress focus It’s

cash could next cutting cost talk some drivers years? reduction that further How other is about for benefiting of How and the and margin few you understand or some sustainable there did quarters we conversion? I and you and expansion from that? So earlier. the of you flow progress driving are headcount think the announce the But should also about

second and to question It hit very your the the off bat. Sure, am come. going part of I to I And am sustainable, right again, repeat, more going Siti. is just to there’s

not done yet. are We

this You the improvement saw year-over-year XXX basis point quarter.

But year. our raised the know full guidance we you OP for also that margin

QX. least We are least and XX% margins now at in targeting at very at exiting much operating XX.X% still

the is quarter. going are get only not the better current of here. So actions did last we some to in flow year, actions you end at through take difficult numbers Yes, the sustainable, seeing from that it it’s

I shine continuing think potential we cost at business the the productivity and and driving to something Mo of through of to really investing are of is starting model we This on our about have workforce and customer our is the talk and acquisition. in the scale past an heard focus optimizing really and down area that you still I in. that’s profit are

finance might payment many to company many, from scaled side efficiency you, Another just running. you actions we give we as quickly the had processes project We and grew as a in the personal did. understand procurement from example manual procurement will that that around as are is for I

at millions, that initiative And a team, finance we within processes saving software one will of a are finance. the just my and moment, automate these initiative that alone procurement lot implementing within be will single-digit that high

inherent the the also in There’s business. operating leverage

We on ROI are higher programs. focusing

We investing are prioritizing how our dollars. when we where are really and

actively workforce. managing are We the

up geos opening are in So and cost making Charlotte, Belmont. Dallas in that hires hubs lower includes which incremental versus

my incremental would the am Any example, hires on hires side not in be lower I in of geos. making team, those new cost For in finance Belmont.

and bit efficiencies Mo that we are how will then side. doing looking talk very with on at But drive we work much we a savings. incremental what we partners the little probably And channel about pay and are further those will our how and partners

partners nuts overall soup a in take sale to on process. the As really larger role

every contracts, practice. out everything vendor get best where really vendor the are bidding consolidation we management to to then, best-in-class contract, And reviewing our finally, rationalizing licenses,

also a profitability flow. this and on in And normalized on double share quarter we a I sustainability year $XXX $XXX free you just last do would will from thing I because pushing point million cash of to to want at by XXXX of fiscal strong one make the generation level shared last free million XXXX by that least cash end. We flow were

we gives flexibility confident flow now cash level flow than free end of level around of addressing convertible can fiscal of cost-efficient XXXX. year cash generation of in this achieve and manner. free this am a our allocation, lot I a And earlier us much debt capital generation importantly,

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

is on of Great. adds? quarter greatest just the of if that upside incremental could to was of of of just down that slightly better Thanks. that to see pricing It kind appeared lower some the better I the saw you that kind with churn, kind mid-market you wanted break renewals, source ARR growth. is that the

trying see is in that just So expected. than came a churn to bit little less

Just Thanks. kind context of that on any be helpful? details would

Yeah. Meta. Thanks,

think off addressing is net big I will for by I management So team. just which start focus this again retention, a

So we came within annualized above percentage produced And a XXX%. churn stable that, on on net in at basis, a retention, basis. percentage remains we churn so

churn stable What a will mean we out churn, is, are within I on focused overall stable churn base actively it. but on larger actually call higher and does Again, dollar plan.

invested is analytics as year and so customer laps. COVID this big in a as CSM, renewal success in area have We this

that, say in we saw enterprise. due What I mostly the is some we that would macro was pressure in to and believe upsell

So you call spot. right was that bright SMB to out a are absolutely

that material business. dynamics change saw to we So in no the

and on bit on in in add just to given we much the a that And maintaining some of rationalize are want terms area. customers they investing are enterprise to actively taking headcount focused are again, seeing the SMB. that may internally. logos, actions very we But within are strength Mo the seats, starting

Yeah.

in of at day Sonalee I you the nailed it strength end think SMB. the

that market churn seeing Acquisition pointed continuing Sonalee are stable strong. the us. the It’s then, utilized have as that as our Board across And to factors we broadly well guide well. stabilize. we was for about and think do as go-forward these We are out,

comes question with next from The ahead. go Koontz Ryan Needham. Please

that. was a for Connect X.X interested the see chance to really in had your wanted Thanks I ask the about question. at and environment. Teams' I Enterprise I to

impact Ring UCaaS Teams. due Teams that on solution Teams your sure into terms of you heard on to app as appreciate seeing to that that’s in Thank We wonder opportunities opportunity macro upside the any are the have color to versus anecdotally your any But are I also general. I sell you. inside really sell slowing. I own Phone in turnkey am if that?

prepared out Teams will, Thanks, Ryan, for have seeing by with as demos. you our growth X.X business, year-over-year. we growth if are our in and checking we remarks, Right strong and coming over -- the XXX% thanks said seat our now

opportunity Teams what to base are as X.X versus As offer experience in we with think our is drive competitors and the improved pointed Teams' a in through what what already X.X, product, about we it out, offering. a is an market traction Vlad significantly substantial fairly frankly, really other

targeting Teams of this users constitute a are majority our Teams the EX BAU process, there there. really don’t if directly vast license about customers are motion, about into is motion that users we discovery are And the and and plays our of solutions using that will, EX today. where you And what sales our Phone have out the part to as they talking

they us legacy valuable offering tell they degree a to an them to degree are that to contact integrations, user, and pivot and to we value of at able Are we And of our solution? then life. customer into our the Teams on are the Teams they well, that center and may Some bring the frankly, the one needs a user are all that a benefits integrate price. as simple that then analytics, that on-prem CCaaS,

a users of there’s number today. to material fairly question, simply answer there So your out Teams

We growth for as gets solution. opportunity with and X.X only it better a continue forward to see that moving key our us

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

Congrats on guys. quarter, the strong

that guys. you back know gives growth the in seeing in that that, top So confidence the the on in funnel. delta that the up year? the funnel there. revenue and of wanted are I in the ARR guys was Enterprise What start Thanks, half growth just top you the of of enterprise will mentioned you I the enterprise to step

it. Thanks for question, Appreciate the Brian.

flow strong. the of lead the seeing I ago, still few we a strength quite are broad top as funnel, mentioned about And As the our minutes acquisition across is Board. think we

obviously in macro the two play sides the dynamic our quite coin impacting driven of the are same The by upsell-down-sell, enterprise that’s business. and environment, is

so with the longer. enterprise, this obviously, into and it, the set will to sell one, our a improves, takes our macro then bit organically, traditional little and as And ability product improve two,

But the as will, a well along think standalone articulated, sell that opportunities, about strategy, you with as cross-sell, UCaaS products go wedge innovations an new become and new you Vlad new through ability as they our solutions acquisition the to it. these of as upsell if and then pull CCaaS

are those out. So are for question. Thanks dynamics the the that playing

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

cadence Hey, driving or spillover was obviously, I bookings the you any guess, guys. on just any enterprise? off am then and course one I question. quarter, maybe March of can Thanks there more relative curious what’s there talk the am for comment specifically, if on the the resiliency I follow-up about drop midsize quick can and Thanks. into April? relative to over taking in And wondering just you if very small the just business just ARR, of resilient.

Sonalee first will just question may Matt, on hand the of take I -- specifically then SMB. Mo on Hey, over and here. the I to Sure. part

it So know, you the as some think don’t in I terms on worth we on environment, current linearity guide bookings, of giving in bookings, but you color. is specifically

bookings. speak month, won’t by more specifically see but we month I back-end-loaded did much yes,

for growth to quarter and being some or bookings growth we full year last as have of you know, be still that quarter. the for share ARR around the And color lion’s given higher the was than this we case. expect March total guided revenue So

to And loaded. more as bookings you know, back-end tend enterprise be anyway

environment. seeing the that are in of trend we So current more

trends. who hand the SMB can just I So to over will on to Mo talk

Yeah.

for So question. the thanks

you that about year. opportunity times dynamics, cycle the vis-à-vis As still close elongated we articulated see last QX cycle continuing of time think to are we to

good our you SMB we talked we we that frankly, faster. was, quarter opportunity and to out marketing that the that And organization our about obviously, about out. rationalize efficacy of motion for historically the going to during marketing by that gen very brand that have Space, is to as one are think played significantly Now were playing SMB/SOHO the and demand us execution of improve dynamics is going spend, close

to With the drive That able is the market and were you seeing the are quickly numbers pipeline pipeline. for fairly to that question. more put closes of that they up. Thanks less, down we one in the the able reasons strength were

comes ahead. next Please Evercore go The from Peter Levine with question ISI.

pricing quantify exclude you mean would Thank an there center question. kind from -- called if guess, that second, is, you and Avaya out from Was my the from Thank half, was? maybe reemerging then impact you you number? if guess there they UCaaS contact some maybe Mo were Yeah. above bankruptcy, for Maybe first so, of impact you. to in that like taking the can then channel. was seen $XX certainly, I Yeah. impact core you for when bankruptcy, looks have I ARPU you you And what were one and million. I in Can maybe what dissect

Thanks for the question, Peter.

May. look, very bankruptcy Avaya, at a of they So to talk emerged about few beginning the days ago just from

part said we expecting latter contribution ramp the restructuring their have year, before, we that tied to will in them. of behind putting this As are obviously, the

Avaya as We that are the cetera. cetera, including comfortable as building we to well that commitment contact we going quarter, motions minimum go-to-market integrations, are legacy volumes of center, et us that to enablement last we et about achieve the provisions tied the in new talked contractual that wholesale, integrations to additional have are allow place

degree well. that there’s frankly, in to to as those the commitments, are if able And mechanisms place not they happens, to are achieve we address comfortable that that then ever that

over it I ARPU. turn to will Sonalee, about that, to with So, you talk

for Thanks the Yeah. question, Peter.

trend we there. and basis am run stable at was as ARPU on and happy say look know, to that a and So the business disclose I the blended you

ARPU As higher a you know, ARPU, than UCaaS. significantly CCaaS has higher

was but some But there even to the very and are from relative to very, of CCaaS, was be mild. but in take was little bit There when some number CCS softness very they weakness within clear, out you overall of very it’s And stable marginal. ARPU, of UCaaS that FX, holding a was steady. it range. Overall, was actually, stable the a generally

Yeah. Spot on. Yeah.

change. material no And

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

specific Hi. Mike. environment up. great This this the the is or Matt to you saw holding broadly you hear on Thanks weakness that strength call Can is quarter? demand It’s taking for out in any question. incremental for verticals

Yeah. for question. Thanks the Matt

that call As ties really relative a.k.a., companies previous we to customers. verticals that sell back in that consumer, verticals business we seeing are the areas talked end their are about quarters, service or strength what to as have consumers we on very to and focused

are services, public financial because services professional solid, that service the really, meaningful provide Those got to us happy between we are value opportunity et et reliability, rock areas healthcare, and the provide, customers because that doing well frankly, So be generally cetera, UCaaS the difference and uptime, retail, has cetera. services, still driving as the revenue, verticals we are ahead. look that it’s really for voice

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

follow-up based question. taking for one for Sonalee Mo, something on mentioned the it’s Maybe just Thanks and this maybe everybody. a Hi, but earlier.

specifically partners and was talked some around and shipping last efficiency we And those improvement about quarter initiatives incentive relationships. structures so

early of level the with on update indications an those productivity the of and then any give are seeing you at of impact changes maybe Just kind partners relationships? on on the acceptance

to made. our we we partnerships see not impact good. did any year-over-year that tied changes relative Broadly, the Very have to

and am a as are remain them, they partners last have to large longer sorry, quarter, be with compensated base I We no are going to disclosed As are exclusive. and last continue seats they ALE we year, Atos sold. on-prem

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concludes call that And our all. for you today. Thank

disconnect. now may You