Awesome. Hello, everyone, and thanks so much for attending the UBS Tech and AI Conference. My name's Taylor McGinnis. For any of those in the audience that are unfamiliar, I cover the mid-cap application and SaaS area here at UBS. And so with this session, we have RingCentral. So we have RingCentral's CEO, Vlad. We have the new CFO, Abhey. And then we have Deputy CFO, Vaibhav. So thank you all for coming. Thanks for joining us. Of course. This should be a good session. And just so everyone knows in the audience, to the extent that you wanna ask a question, I'll make sure to save some room, at the end. You should have a QR code in front of you, so you just hit that QR code and send it in. So with that, maybe let's dive right in. So I think a good place to start is a lot of investors are really keen on demand trends and what you guys are seeing. So, Vlad, just curious, what are you seeing in the environment? You guys have had subscription revenue growth that has been pretty stable, right? So how much of that is execution, right, versus something that you're seeing with your customers in particular? Yeah. No, it's been all right. Look, firstly, there is a market, you know? Whatever execution you have, if there is no market, you're not gonna grow. Market remains very large. It remains under-penetrated. And execution-wise, we remain to be leading in voice. Voice continues to be the preferred means of communications, in spite of some rhetoric to the contrary. But, in particular, any B2C communications is continues to be voice-based. If you can think of major verticals, you can think of healthcare, financial services, retail, real estate, SLED, you know, government states-type stuff. That's all through voice. Whenever the regular people get to call their provider, they call their provider, you know? They don't video their provider. They don't necessarily text their provider. And, we continue to be the leader in voice only. Now, with that backdrop, we have transitioned from a single-product company to a multi-product company. In particular, we've added Contact Center. That is a major growth vertical in SaaS, right? We've added various AI components, bots, upfront. But very importantly, a little bit more mature for us is RingSense, our quality management solution, which is native in-house. And these are all growth drivers for us. So now, overlay on top of this, the fact that the economy seems to have stabilized, maybe some early optimism, so we expect it will have a positive impact on our very wide base, both from small business to larger enterprises as people start expanding again. So, we're pretty optimistic. Perfect. And I was gonna save this question till later, but just because you mentioned your guys' leadership on the voice side, I think, you know, there's a lot of conversation around Contact Centers and AI and a lot of momentum and interest around that. But I'd be curious what you guys are seeing on the UC and UCaaS side and what momentum and demand looks like there. We continue winning. We are at the tail end, it seems like, of post-COVID headwinds. During COVID, people have pre-bought. They have overbought, and then the economy tanked. With our retention patterns, for example, we don't lose that many logos, but we have been seeing downticks. Now, as people are right-sizing, we are hoping that this effect will be tapering off. Look, I mean, we are now, for the first time, able to sell multiple products into our very large base. It's, you know, many millions of seats out there that we have and through our very large indirect and differentiated channel. Whereas before, we were able to sell UCaaS and CCaaS together. We were unique in that, but CCaaS was a white label for us. Now, we're leading with our own tech, and that is obviously hugely margin accretive. You know, I mean, there's going to be some turbulence and has been, as the channel gets reoriented towards our own native tech. Also, our pricing is quite a bit more aggressive, more disruptive. It's still very healthy and accretive on the margin side, but just revenue-wise, you know, expect some headwinds there. But we think that those are short-term, and you know, we're absolutely convinced it's the right thing to do is to lead with your own tech. For that matter, eat your own dog food. So we've converted our 2,000 agents in-house, from the OEM solution to our own native. That project has successfully completed last couple of weeks. At last earnings, I think I announced that we are half or two-thirds there. We're now 100% there. That's you know, we feel good about that. You know, it's a large business, right? If we can run our business without any interruption and any change in productivity or any loss of productivity on our own platform, then, you know, that's a good reference case. We'll take this one to town. Perfect. That was great context, and in terms of what all of this means for next year, I'd love to talk through the puts and takes for growth next year. And this is something that all of you can opine on, but when we think about growth going into next year, I think the guide for subscription revenue for 4Q implies something like 7%-8% growth, so one, should that be, you know, the starting point, I guess, for how we think about next year? And then two, I know you guys have made some comments about prioritizing RingCX and that potentially, you know, being a source of headwinds, so can you talk about, in the context of what you're seeing in demand and maybe some of these headwinds that we have to be mindful of, what that means for the growth trajectory? Yeah. So I'll take that, Taylor. So look, we are focused on closing out the quarter and the year strongly, and we are in the process of our annual planning cycle for next year. So we'll provide formal guidance, or Abhey will provide formal guidance in February, next year. In terms of RingCX, though, Vlad provided the commentary. I think we are very pleased with the strong early traction that we are seeing. You know, we announced a $1 million TCV deal with a large retailer on our 3Q earnings. Vlad talked about moving almost 2,000+ agents internally to RingCX. So that was a big positive for us. So as we are focusing our efforts on RingCX and you know, focusing our GTM efforts towards RingCX, it's gonna result in some substitution effect in the short term. However, we think that's the right strategy to go with as, you know, with our own tech, with the proprietary technology, we are able to innovate faster and meet our customers' needs, and it's gonna be margin accretive in the longer run because we get our own economics. Perfect. Yeah. Maybe let's dive a little bit more into that. So I guess now, are you prioritizing RingCX over RingCentral CC with NiCE? Is there gonna be a transition period where maybe you're migrating some of the customers onto that newer offering? What does that mean for your relationship with NiCE? Maybe you guys could provide a little bit more color there. Yeah. So, look, we follow the customer. Customer now has more choices. New customers, they also have choices. We're still, you know, the contract is still alive and well. We're still able to resell NiCE. And in certain cases, we do. But, you know, everybody understands that future is RingCX, which is our native. RingCX, we originally envisioned it as a more down-market product. Doesn't mean bad, by the way. It just means more logos, but smaller logos and easier to deploy, not as deep a feature set, more disruptive pricing. We are absolutely seeing points of strength there, and we're able to address use cases that we were not able to address with NiCE, for pricing reasons, for complexity of deployment reasons. Yeah. But we're also seeing, you know, larger enterprises, ourselves included now, able to use CX, RingCX, just as effectively, if not more so, certainly for cheaper, than they were able to use NiCE or NiCE as acquired through us. So again, net-net, it's follow the customer. We expect that they're, you know, we've flagged this already. We do expect some headwinds as the channel is being reoriented. Some of the customers in the existing base, as they come up for renewal, you know, they may be evaluating their options. Their options, by the way, is not just RingCX or NiCE. There are other options out there. People are evaluating those. We continue to believe that a partnership still has value. We, you know, we believe that the combined solution is still the world's only undisputed UCaaS leader and a very strong CCaaS leader, on a single invoice, you know, one umbrella, one throat to choke. But it is a change. You know, any change always, you know, there are some puts and the takes. And again, I'll just get right back to what Vaibhav said, which is, you know, just bear with us. We'll guide when we guide, and which is going to be in February of next year. I really would like everyone to urge everyone to think longer term, because longer term, we are the only entity out there, you know, $2+ billion, you know, $2.4 billion run rate as we speak now. Not run rate. Better than that now, but yeah, whatever the guidance for this year. You know, $250 million in annual R&D spend and with very strong UCaaS and rapidly emerging CCaaS and rapidly emerging AI under one portfolio, so that keeps us differentiated. Perfect. And Abhey, I'm gonna put you a little bit on the spot, but given, you know, you're new to the CFO role, would love to hear why RingCentral and what you're prioritizing in particular within the business. Thanks, Taylor. And yeah, it's a couple of things I'd kinda highlight here is, RingCentral and its markets are not completely new to me. As you know, in my past, I've worked at Cisco. I've worked at Amazon. And we at Cisco, we competed in the same markets. We still did. And with Amazon, we have a partnership with AWS, so I've been able to keep an eye on, at least, know about the company in the space. What really attracted me here is all the things that Vlad just mentioned, right? We've built a really solid business in UCaaS. As you can see, $2.5 billion in revenue with about $500 million of unlevered free cash flow. We've been on a good margin journey, gone from 12% to 21% and up in margins. So there's a lot of goodness that we've delivered. And as we look at the next chapter, all the things that Vlad mentioned, we're moving from to a multi-product company with multiple growth drivers, multiple levers on areas to work on. And as I reflect on my experience, a lot of the things we did at Autodesk were pretty similar to where we are here right now. It's essentially we're developing multiple growth drivers back when I was there. A lot of the lessons learned from there are gonna be highly applicable here. And now, to answer the last part of your question in terms of what I would be focused on is essentially the journey that we are on, how do we get it go further in that? How do we keep growing to our top line as well as on the margin journey? How do we keep delivering on that? Work on learning the business more and give you guys more color as we go along. Perfect. And yeah, maybe to elaborate on that a little bit further, 'cause you guys have seen tremendous margin improvement at RingCentral. I think two years ago, it was roughly 700 basis points of improvement. This past year, on track to do 200 basis points of improvement. So when you think about where there's still opportunities, right, and what the pace of that leverage could continue to look like over time, any high-level thoughts that you could share with the audience? Yeah. So, look, we are very pleased with what we've delivered over the last two years. Abhey mentioned going from 12% to 21% on operating margins. We've gone from free cash flow-wise, we've gone from 7.5% to almost 17%. So tremendous progress there. And we are delivering this while we are continuing to innovate. We've launched three new products. There have been numerous innovations along the way. So really happy with the progress there. Of course, there is more opportunity. And, you know, with our cost structure, there is, you know, room for operating margin expansion. And when you look across the areas of spend, you know, there'll be tailwinds on gross margin as RingCX, you know, ramps, and we get our own economics, so it's expected to be margin accretive. On the sales and marketing front, we've done a lot of work. We brought it down by almost 600 basis points over the last two years. We are continuing on that journey. You know, we are very mindful of optimizing for routes to market that are more profitable. We are working on sales rep productivity, and we are very mindful of the business that we are taking. So we expect to continue to drive improvements there. And then, there continues to be leverage in the business. You know, areas of spend like G&A and R&D will continue to scale as the company scales. One other thing that we look at in terms of profitability is not just operating margin, but we also look at free cash flow per share. So operating margins drive free cash flows. At the same time, we've been very disciplined in terms of the grants that we've been giving out, which is resulting in meaningful reductions in SBC and dilution. So with free cash flows growing and dilution coming down, there's a meaningful improvement in free cash flow per share as well. So overall, you know, long story short, more room for margin improvement. But at the same time, we do try to kind of balance, you know, margins with investing back into the business. So we'll continue to be kind of on that journey, and we'll continue to make strategic investments that are right for the business. Yeah. And Vaibhav, when you think about the difference between operating income expansion and operating cash flow expansion, any differences between the two, like these two that should trend roughly in line with each other? Is there maybe more opportunity on the working capital side? How do you think about the differences between them? Yeah. So over time, meaningfully reduce the gap between operating margin and free cash flows. And we expect free cash flows would trend more in line with operating margins in the years to come. There will always be some working capital differences. And in the SaaS model, you invest upfront, and the revenues come over time. So there'll continue to be some working capital adjustments, but free cash flow should trend more closely with operating margins. Perfect. Great. Now, with a lot of that finance stuff out of the way, let's get to the fun stuff, which is AI and what this conference is partially about. So, when you think about RingCX and your guys' opportunity with AI, I think one thing investors are trying to figure out is there's a lot of SaaS companies that have all come out with their own flavor of agents, right, conversational AI, some things on the voice side. So what makes RingCentral special, and what positions you guys well to really monetize this opportunity? Yeah. Our network, our presence, our brand, millions upon millions of seats that are active that we have deployed, our channel. You're exactly right. Everybody has their own flavor of AI. None of them are native to Ring, but Ring. So we have this, still the world's largest CC base. We have rapidly growing UCaaS, I should say, rapidly growing CCaaS base. And we have an absolutely differentiated channel, certainly by number of partners, but very importantly, the service provider business, which is simply unique. The fact that we have AT&T and British Telecom and Vodafone and a host of others, TELUS, a host of others, reselling Ring in certain cases exclusively and increasingly more, not just our core RingCX product, but also the new RingCX and related, call it peripheral around it, such as RingSense. That is unique in the industry. Okay? So, where we intend to differentiate is on this integration in overall ease of deployment and overall ease of ownership. And again, don't discount our development and innovation capability. We got about 2,000 people in product and tech. We are distributed, and we have just, for example, opened up a new office in Bangalore, where we have multiple hundreds of engineers and rapidly hiring there. So if you know people, please, please, please send them our way. So we will be coming up with differentiated tech, especially given the fact that we have all of the data flowing through the network. So yeah, you need to be very conservative with GDPR and customer access, customer data access. But with customer permission, certainly we can provide with differentiated solutions, including in the AI space. Where you're seeing the momentum with RingCX, is that mostly with new logos? Is it more with your existing customer base? And it's really a cross-sell motion. And then as a second part to that question, I'd love to hear what this is doing to deal sizes, right? So when you introduce RingCX, what happens to the size of that deal on average? And then two, there's a lot of concern on, well, if you automate more, there could be a reduction in seats. So are you seeing any of that, and what's the puts and takes there? Well, so in reverse order, reduction in seats will disrupt store because we don't have that many CX seats. You know, if you're one of the CX incumbents, that's a different story. But here, we're as happy to sell them a human seat as opposed to a bot or an agent, you know? So that's, that's an easy one. We don't have this dilemma there. Look, with CX, yeah, I mean, part of it is from the base. I think I already mentioned NiCE inContact, which is a very nice, high-end enterprise product. But, you know, they're not known for SMBs. They're not known for ease of deployment. They're not known for self-service, all of that, you know? So we're absolutely able to go deeper into our base, and we're seeing good traction there. But, also, look, this business is heavily channel-oriented. And we've trained the channel to deliver at certain kinds of deals with NiCE inContact. Now this is getting back to these potential headwinds, which maybe are potential. You know, we're just being conservative here. But you know, we are seeing that some of the channel is kinda reevaluating their options. We strongly believe that over time, they will learn to love CX just as they have the NICE inContact combination. It's easier to deploy. It's better priced. It's more modern. It's AI-first. Everything is just lighter weight. And that's the way that the world is going, we think. Okay? But there will be a transition. Okay? So again, we'll have to see what the future holds. Super optimistic in the medium to longer term. Perfect. Then you guys put out a target of $100 million of exit ARR from these new products by the end of 2025. So can you even provide any high-level color in terms of where you are on that journey and how we, as you know, the investment community can assess your progress there? So we keep reiterating the target. Probably would not be doing that if I didn't feel good about it. Yeah, look, we're well on our way, but, you know, we still have, it's still 2024. It's at the end of 2025. So look, stay tuned. I'm gonna reiterate the target again. I do believe that we're gonna hit it. Obviously, we're doing everything in our power to exceed it or maybe pull it in a little, but we'll have to cross that bridge as we get there. Perfect, and then maybe just in terms of what you guys are seeing on the large deal momentum side. I know that that's something that you guys have been talking about the last few quarters is seeing some of these bigger, bigger, you know, 10,000+, right, seat deals. So in terms of that momentum, any update that you can give us there? What does the pipeline look like for that and what that could mean for growth of enterprise and mid-market going forward? So I cannot provide interquarter color. Makes sense. Yeah. Unfortunately. Yeah. But, look, we're seeing generally, we're seeing stabilization in the market. Mm-hmm. We are optimistic along with the rest of the, you know, populace that thinks that the economy is actually gonna do a turnaround. We should be super good for us, you know? We continue seeing strong demand from all sides of the market, including larger enterprises. Again, stay tuned as this quarter ends. By the way, you need to all realize too is in, and I'm sure you do, in the enterprise space in particular, it's very much back-loaded, you know? So many deals will close 12/ 31. Why people wanna do that versus, you know, other activities? You need to ask them. But, you know, so I can tell you that we continue seeing demand. We don't see much negative change in competition. Microsoft raising prices is helpful, you know? Obviously, there is talk and some activity on debundling. But again, also Microsoft. It's not so it's not that bad because of Direct Routing, because of embedded dialers, the API that they have. We can coexist with them quite well, and we do. We have many enterprise customers who are saying, "Yeah, I mean, I'm a Teams shop, but I still need Ring for my voice interactions," you know? We've just announced, and we're the first ones on the map to do this. We've just announced a Pan-India license and a Pan-India presence. Many people, ourselves included, have offices in India. So tell you what, if you have a location in India that you need to light up with voice, you know where to call, and this is the only place to call. So it's these types of innovations that keep us ahead of the game. Yeah, again, like I say, hopefully more to come. Yeah. I know. It's really interesting. So can you maybe talk about what you've done? I know you mentioned like a few things, but really to unlock some of the recent large activity that we've seen in terms of these, these big deals. So is it as simple as, you know, you've had this good relationship with Microsoft. You've talked about being able to, to work alongside of them. Maybe there's like the opening of new regions. But anything else that you would say that's really helped gain maybe some of this momentum that you're seeing? Some of it is economy. Mm-hmm. Some of it is just long sales cycles. And look, I mean, COVID is only, what, two years old, you know? So there is still some sort of aftershocks after that. But now, as people are coming out and coming out of those contract renewals and starting to rebuild again, that's helpful. We're getting better established in the channel, renewed and much improved relationship with Avaya. They're driving business down our way. We are an exclusive UCaaS provider for them. And hopefully, you know, it will be not just UCaaS moving forward. We'll see. So all of those add-in, carriers, service providers are helpful. We're getting major wins, in particular in Europe, for example, through Vodafone. So, they help. We're getting nice traction, continue getting nice traction, including in the enterprise through some of the, some of the domestic carriers. AT&T is a very long-term relationship of ours. You know, we have made improvements, and I think we made some announcements last time about this relationship going forward. It's everything adds in. Everything adds in. Look, are we where we were, say, growth-wise at the peak of the COVID? No, of course not, but no one is. We think that outside of these short-term headwinds potential with RingCC, RingCX dynamic, outside of that, I think that we you know, maybe hit the bottom, and you know, are optimistic. Perfect. And one of the partnerships that you didn't mention was the recent strategic relationship with Verint. So can you give us a little bit more color there and how big of an opportunity that could be? Yeah, it's huge because the one thing with NiCE inContact that was a selling point is the fact that they had closely integrated WFM, Workforce Management, Workforce Optimization. This is heavy, heavy tech. The only person out there with maybe better technology than inContact has is Verint. So, we view this as critical for high-end enterprise. I can tell you that we are in the middle of implementing WFM on us. Again, we like to eat our own dog food. And we absolutely plan to take this to market, and I think it's going to be a great partnership. Perfect. And maybe last question for you in the last minute here or so. We'll just be on the international opportunity. So you mentioned earlier you guys have a lot of very strategic partners, right, outside of the U.S. So in terms of the momentum that you're seeing there, I know like the last two quarters growth has been around, you know, 9%-10%. But can you help us understand, like, what could be bigger growth drivers going forward and maybe how some of those partnerships play into that? Yeah, so those markets are generally behind the U.S. They are yet more underpenetrated. It is expensive to do business there, and we found that out, and our solution to this is to absolutely go international and heavily international, but via partnerships with service providers in particular, some wholesalers as well, and you know, they have the workforces already. They're in region, you know, obviously all of the regulatory stuff they got figured out, and you know, they're fundamental.