Welcome back, everybody. I'm going to read some disclosures real quick while everybody gets settled. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I'm Meta Marshall. I cover the communication software space here at Morgan Stanley. Delighted to have RingCentral here with us. We have Kira Makagon, COO and President, Vlad Shmunis, Founder and CEO, and then Abhey Lamba, CFO. Welcome, everybody, and thanks so much for being here today. Maybe, Vlad, just starting with you, great to have the team here at TMT. You're transitioning from a single product to kind of multi-product company. Just how do you see the core value proposition with customers changing over the next couple of years? We do more for them and hopefully do more for more customers. Multi-product means, obviously, a bigger share of the wallet, deeper engagement, retention patterns are meaningfully better as customers transition from a single product to multiple products. It also opens up new channel opportunities for us. In particular, our RingCX product has been picked up by a number of global service providers, and that's actually the first in the industry. Kind of goodness throughout. Got it. I mean, maybe starting with you, Vlad just kind of laid out this going from product to platform. How does that change kind of how you think about the growth algorithm of the company, just in terms of how much comes from core markets versus kind of new products versus new customers? Yeah. I think on that one, Mira, we kind of gave the algorithm on our Q4 call when we talked about this year's growth. Essentially, a big part of our revenue base is coming from the UCaaS market, where we have been the market leaders for a number of years. We've maintained our share around 20% in that space, and over there, we are launching a lot of innovative products. We've built that base on innovation, and we continue to innovate in that space, so we expect to maintain our share, grow in line to faster than the market in that space, and that's the kind of foundation of our growth there. On top of that, what gets layered on is all the work we're doing on the RingCX and some of the new AI-based products that we launched. Basically, the new products that we launched about a little over a year ago, we set out a target to hit more than $100 million of ARR by the end of 2025, and we reported by the end of 2024, we were more than halfway through that. Now, that's a product set which has gone from near zero to $50 million plus of ARR within a year, so we are seeing really strong growth of that. We are expecting that to double this year in ARR, so the revenue contribution should more than double from that product set coming into next year. That growth gets layered on top of that, and then we've got some pricing dynamics between RingCX and CC that have, I would say, a bit of an impact this year. It's more of a transitory impact, where we're seeing CX going in at a slightly lower price point, causing essentially on the profitability front, it's not causing any issues for us. We actually come out ahead in terms of it being a higher margin product. On the revenue front, we get lower revenue because it's priced disruptively in that space. So that's a little bit of a transitory impact. But over time, you should see us continue to lead in the UCaaS space, continue to grow faster than the market there. And in terms of on the CX side, that growth should get layered on top of that. Got it. Kira, maybe turning to you, RingCentral has always had this very good go-to-market, kind of master agent channel, a lot of partnerships. Just how does go-to-market change or how does who you rely on for kind of the preponderance of the growth change as you expand the portfolio? I think we still utilize all our go-to-market channels. As Vlad mentioned, many of our global service providers are now picking up our multi-product portfolio. In fact, we'd be the first in that category to carry both RingCX and RingEX, which is the UCaaS, CCaaS, and the AI products that are attached to it. Then a global vast reseller network of channel providers, of channels. They are carrying our multiple products. It's just actually the ability to sell more through these channels and make it stickier and more differentiated with the combined portfolio. Okay. Perfect. I'm going to maybe back to you. You talked about kind of already getting $50 million towards this kind of $100 million ARR target. Just what were kind of the most important steps to getting to the $50 million? And then just what kind of gets you to that $100 million, either from getting people trained up or macro, just kind of what got you to $50 and what gets you to $100? You know, for macro, we just assume continuation of the environment. We didn't kind of make any macro there. I think a lot of it is what's driving it is essentially the product itself. It's very well received in the market. It's got the right kind of product fit in there. For RingCX, we have seen adoption across all kinds of customer sets, going from small business to large companies like Genpact, we announced on the last earnings call. So we have seen a really broad product adoption there. And RingSense, again, enhances our product set and delivers AI functionality to our base. And Ring Events is another addition to our portfolio. So all of those things, this is the right kind of product fit that's been adopting that sales execution on those things and great customer feedback on those products. Those are the key elements that are really driving what drove us from zero to $50 and what gives us a lot of confidence in going from $50 to $100 plus. Got it. Either Vlad or Kira, just how does the move towards platform and kind of incorporation of more products, does that change who the ideal RingCentral customer is? Is it smaller or larger than it used to be? And are all of kind of current RingCentral customers today ideal for kind of adopting more products from RingCentral? Our product philosophy has always been easy to buy, easy to use, easy to manage, and the way that we've built our combined portfolio with our RingCX product and RingEX, that philosophy still holds. Obviously, the larger the customer, the more complex the use cases are, and for the most part, not always, and there it's sort of still the same approach applies. They still use the multi-product. It was just more involvement, probably more assistance, but the nice thing about what we're able to do with our RingEX and RingCX is the smallest customers are now able to buy it and use it and deploy it without a whole lot of IT assistance, which larger customers can afford, and that actually wasn't open to us before, and then on top of it, we also have our events product that fits the entire spectrum. And of course, all of the AI products that are attached to the RingEX, RingCX products, which enhance agent productivity or employee productivity, allow you to do better on your phone calls by not having to pay attention and take notes, allowing your managers to have better visibility into how teams perform. So all of these actually enhance the base platforms of RingCX and RingEX, the two you see plus CC. Okay, so with such a valuable kind of value proposition, what are kind of specific efforts to sell that into the install base or to kind of circle back with the existing customers to kind of upsell them? And is that opportunity just when the contract is up, or when are you finding that opportunity to touch that customer? If it's a new product, then we can touch the product at any one time. We have campaigns that are going inside the customer base and outside the customer base. For something like RingCX, it goes onto an install base, and then it's part of the motion on new RingEX products. Our voice product, voice message video, phone message video, business cloud phone product, today, out of when we disclosed that publicly, out of the 1 million plus TCV deals, very large deals we closed last quarter, about 50% of them had our RingCX, our contact center products attached to them. And then on top of that, to that product, we had the contact center product, we had our AI modules attached on top of that, and also to another 50%. You can see how all of that gets compounded with install base and new customers. Okay. Got it. With so many platform extensions possible and even more every day kind of with different AI capabilities, just how are you determining what to build versus buy versus partner on? There's always a level. You kind of always have to look at all the options, what's available to buy, how long is it going to take to build. Obviously, the preference always if you can build it, build it. It's native. It's organic. It's already integrated into your platform. But we always evaluate these options. And we've done several acquisitions in the past. Even actually the very beginning of our AI platform came from a small acquisition that we grew and that became the foundation for our RingSense product, which is our AI platform. So it's sort of an ongoing process and case-by-case dependent. But we're always evaluating options. I mean, you've done a pretty good job of incorporating those acquisitions. Has there been any kind of key to identifying what made the right target and kind of integrating those acquisitions? What made the right target? Well, our RingSense product is the basis of our AI portfolio. So that was the right. But just the process of integrating those. Oh, the process of integrating. Yeah. It's always sort of a journey. And we have a very strong platform. And that platform is our own platform. The basic RingCentral platform is built in such a way that allows us to add on components to the platform so that it minimizes time to market. And then over time, we refine that. So the first objective is to take it to market under the RingCentral umbrella as soon as possible so we can start monetizing under RingCentral umbrella and the entire portfolio. And then we continue to refine as we go. Got it. Maybe turning to you on the 2025 outlook. It contemplated 5%-7% subscription growth rate. What are kind of the key drivers that could accelerate this, or what would kind of drive performance to the lower end of the range? Yeah. I think on that one, we shared again the building blocks of the guidance, right? The core UCaaS market growth, our ability to grow faster than that. CX revenue kind of more than doubling next year. Sorry, the new products revenue more than doubling the next year. And some of the kind of puts and takes from the substitution effect. I think when you look at the range of outcomes on those, that gets us to the low end versus the high end of the range. When you look at a bunch of different puts and takes, it's really hard for me to pinpoint specific things that would push us one way or the another. I think the range we've given you is we feel good about. And that's the various outcomes can get us there. I think we feel good about the range we put out. Can you just outline again, just for those who might not have been on the earnings call, just kind of what that transition from RingCX to your own product kind of? Yeah. So RingCX is our own product. We own the technology. We own the product base. And our contact center, RingCCC, is an OEM-based product for us. And based on the way we've priced it, we've priced RingCX to be a bit disruptive in the marketplace. And it comes to us at a lower price point versus the contact center price point. But the economics are such that since it's our own product, our profitability on that product is much higher. And so when it comes to the bottom line, we get better economics from that product. And as that product scales, we would be able to improve our profitability from that as well. So that's a benefit of doing that. But in the interim, if we get a bit of a revenue impact as we sell more CX and less of CC, but on the profitability front, it helps us. Okay. Got it. Kira, maybe activity in the SMB space has been muted for a lot of kind of 2023 and 2024. But you recently called out seeing some signs of stabilization. To what extent do you expect to see improvement in 2025, or did you embed any sort of improvement into kind of how you looked at 2025? Look at 2025. We looked at basically a stable growth in the SMB base. We continue to see that our products actually fit well with that SMB base. Like I described, the RingCX product actually fits into that base where before it was hard to address that. We overall see stable growth and ability to actually sell more products into that base or grow that base with more products. Yeah. The UCaaS market has obviously faced scrutiny from investors over the last couple of years. However, you noted kind of on the earnings that you've held share relatively stable at around 20% for the past few years. Just how do you maintain that position, and where do you see kind of the most compelling opportunities from a core UC perspective? The core UC, so we continue to do well across the spectrum of all deal sizes. That's part of the strategy is continue to maintain that. We work well where there's opportunity for us to integrate with MS Teams. We actually hold our own as Teams plays with messaging and video. We fill out the phone component of that, cloud phone component. Everything that we build into the product continues to work across that with all the integrations that are out there, including MS Teams. Users get the full benefit of our phone seat. Then within that UC base, we've, for example, just announced our UC market. We just announced our AI product, AI Receptionist, that is sold on top of typically what would be a built-in IVR into a product to enable any business, basically of any size, to be able to not have to man the phones at all times and be able to take off of the table a set of use cases that are very easily configurable with AI as a product. It's not free. We charge for it. And so we're seeing early, obviously, it's very early, but very positive feedback from our customers that it saves them time. It reduces dropped calls. It enables them to take care of business of use cases such as be able to, instead of taking a voicemail, be able to talk to an AI machine that can help them answer even off-hours basic questions and send directions to the business, something like that, which is sold directly. And it's the first of its kind for a phone product. And it's sold into our base and new customers. Got it. I mean, who makes up that kind of ideal on just kind of the core telephony side? Who is that kind of ideal customer to kind of maintain and grow share within that either vertical size of customer who kind of makes up that ideal customer? We serve customers from single solo entrepreneurs to very large businesses that are, I think the largest one we announced was a 40,000 seat customer, which is a very, very large company with many locations and many different departments that are all interconnected on our UC product. And that's what makes our product, the UC product, makes so strong is that it can address that gamut of use cases. And we've said that from day one is that businesses can grow on RingCentral. New businesses always show up and always grow. Existing businesses change. And there's still plenty of, besides sort of greenfield seeds, people, there's new businesses of legacy seeds that are still out there and being transformed. And this is where the 20% share comes from. And holding on to that share, if not increasing, is a combination of all ability to address customers of all sizes domestically and internationally. Also, our ability to expand our routes to market is very important. We have over a dozen global service providers that take our UC product to market. And it's a very unique offer. Nobody has a similar offer in the cloud phone system. And then we talked about our channel partners and then some strategics. So our diversified go-to-market is part of a big part of what enables us to maintain that market share. Got it. I mean, in terms of where you see the most opportunity there, is it international? Is it domestic? International is relatively small for us, and this is where a lot of global service providers play a major role for us, so I think it's fair game both internationally, where there are many geographies and still many untapped opportunities, and domestically, North America and South America as well. Okay. Turning to profitability, you guys have driven impressive margin expansion over the past couple of years. What areas of the cost structure could see incremental leverage over the next couple of years? And just where are you kind of focused around investments? Yeah. No, thanks. Thanks for recognizing that. It's been a lot of hard work that has gone in. We went from nearly about 12% operating margin a few years ago to 21% last year, and this year we're talking about 22.5% operating margin, so there's been a lot of hard work that has gone in. We've optimized all of our spend categories, and you're going to see continued leverage. I think this year, what we're calling about 150 basis points of leverage. A lot of the leverage, part of it is going to come from top-line growth. As top-line growth comes, we do see benefit across the board, but more prominently, you're going to see us drive leverage in the sales and marketing line. That has gone from about 45% of our revenue earlier to less than 40%, and that's an area where we continue to optimize. So our journey on the margin side is going to continue. But we've come a long way. And sales and marketing is the main area you should expect. Got it. And maybe kind of conversely on cash flow performance, just what underpins kind of the confidence towards growing the free cash flow another almost 25% to the $500 million-$510 million range? Absolutely. I think a lot of it is some of the margin leverage kind of flowing down, and what you've seen is historically, our free cash flow margin has been behind our operating margin. And over the last few years, you're going to see us converge that. We've said that over the longer term, you should see our EBIT margin and free cash flow margin to converge, so this year, we've got 150 basis points of margin expansion on the operating margin side. Free cash flow margin is growing by about 300 basis points based on our guide, and the big part of the growth is coming from the operating income growth. As operating income grows, free cash flow kind of grows with that, so that is the biggest driver. The second one is essentially the working capital items. As we fine-tune the business, as we optimize different categories, we get to drive some free cash flow from the working capital items. So those are the two big sources. And what gives us confidence is the strength of our business, the $2.5 billion of recurring revenue business that's coming in, which is going to drive the profitability and the free cash flow. Got it and just kind of thoughts on capital allocation? Thanks for asking that too. I think on that one, we basically remain committed to doing the buybacks and debt paydown in addition to investing in our organic and inorganic growth. Those priorities remain intact. I know on the debt front, we had about $161 million due. Therefore we've paid that off. So that's been taken care of. And beyond that, we have debt maturity next year. But we're generating about $500 million of free cash flow this year. And next year, it should grow. Even if you take the similar amount, you're talking about $1 billion of free cash flow coming in. And we've got some sources of debt that we haven't tapped into, like the TLA delayed drawdown and a revolver. Both of them combined about $575 million available to us. So between our own free cash flow and some of the incremental debt capacity we have, we think we have enough liquidity to take care of our debt obligations. We have a target to get to about $1 billion of gross debt by the end of next year. And we feel pretty good about that target. So net net, you should expect on the capital allocation front for us to invest in the growth and then do the buybacks. We can do both. When you're generating over $500 million of free cash flow, we can do both buybacks and deleverage at the same time. Got it. I mean, Kira, maybe turning to you. You've been at RingCentral a very long time. You've held a lot of roles kind of within the company. Just what are you excited about stepping into kind of the COO and president role? Yeah, it's been a journey. And at the top of it, I'm always excited about the innovation journey. We've been in the market, leading the market in many ways and defining the market. And I'd like to see us continue to do that. And there's an opportune time to do this now because so many things are changing with the emergence of this megatrend called AI. We have a number of new products in the market and essentially driving the combination of our flagship product with new capabilities that are AI-powered now, new products such as RingCX, which is AI-powered and has a number of modules that attach to it. These are all innovation avenues that create a lot of value for our customers. And that's what I'm always excited about, is creating value for the customer and making customers more successful, more productive. And then, kind of looking with the new role taking a little bit more of an execution and operational role, it's driving profitable growth, continuing to drive growth and make it profitable, make the company a little more, as we show every quarter, continue to make the company every quarter show that we continue to be more operationally efficient, and with that comes a lot of sort of exciting internal work that has to be done, which I'm super thrilled to be leading. Vlad, I mean, you now have somebody to run a lot of the day-to-day. Kind of where is your attention focused? It's always strategy. Next big bets. You sort of touched on M&A. Is there a next big M&A? Not even next because we haven't even done one. Overall capital allocation, how do we think of buybacks versus various forms of debt restructuring or paydown? Some investors are beginning to ask about dividends. So thinking, that's true. I mean, you got to respond, right? So yeah, so those types of things. I'm also pretty involved with the product still and just some of the sort of details having to do with onboarding user interfaces, some of the integrations like that. Okay. Perfect. A question that we're kind of ending all these sessions with this week is just kind of how are you guys using? You talked about selling AI products, but how are you using AI internally? Yeah, it's a great question. So I'll tell you this that right before taking on this role, I was head of, in addition to other things, head of marketing. And marketing is sort of a good example of very fertile ground to take advantage of AI products. And beginning of 2024, there was one way of generating content and having website enablement, having creative work be done. It changed dramatically over the course of the year with application of AI for our internal use, which is requiring fewer people and creating better outputs and faster. It's also able to now tap into, for example, our knowledge bases and be able to generate even Q&A type battle cards for our salespeople, for example. We're enabling our sales teams with more tools to be able to, let's say, for inbound or outbound salespeople, to be able to answer questions faster with the aid of tools and or feed them sort of a workflow that allows them to move from one call to another call, follow up with emails. So they spend less time on administrative tasks and using our own tools that now, our own technology that takes notes when they're on the phone. And I think that's just the beginning. We deployed our own RingCX product in our own contact center and are seeing savings there. On top of that, we've deployed our own, for example, quality management module for contact center agents and definitely seeing material savings and productivity improvements there. These are all one way or another AI-powered tools. And I think that's just the beginning of the journey. I don't know if there's any business out there that's not utilizing this. Obviously, we're eating our own dog food, and every function that you can think of that we sell, we absolutely first adopt and use ourselves, and for example, our people love our AI notes, so they don't have to take notes when they're on the phone, so if you call one of our people, you'll see them saying, "AI is taking notes for you." That's just an example. Yeah. Perfect. All right. Well, RingCentral team, we have one question in the back. Regular questions. Yeah. No, go ahead. Last question. I'd love to just follow up on Vlad's comments on capital allocation because you obviously have extra important perspective as a founder and a large owner as well. If I look at capital allocation over the last two years, you've bought back, I think, $300 million plus a year in stock. Given your cash flow has continued to grow, is there any reason you wouldn't buy back at least that much this year, and if not, kind of where would you be looking to allocate the capital? That was over two years, not. No, $300 million what you bought back. Yeah. So, in the last two years, your cash flow, free cash flow is $300-something million, $400-something million. This year, it's $500 million. And your buybacks were $300 or so, $300 and so. So I'm just trying to understand why you wouldn't buy back at least as much stock this year, given your cash flow generation is even greater. Yeah. No, fair question. We're not saying would or would not. We do have debt maturities coming up, and we need to deal with those. They were farther out. But in general, I'm super happy that we were actually able to not only offset SBC dilution, but actually take share count down. And there is every reason to continue. Look, obviously, you have to look at share price. Yeah, these multiples, why not, right? But look, again, that's what myself and Board are involved with. And we're looking at our various obligations again on the debt front, M&A opportunities versus buybacks, and trying to come up with the right balance. Is there any further characterization you can provide on M&A opportunities and how fertile the opportunity set is or isn't and what you would and wouldn't consider? Well, very easy. Not for companies, but types of acquisitions. No, no, I understood that. Oh, types of acquisitions. Look, there are technology tuck-ins, right? Kira mentioned our RingCX product, which is growing very strong double digits quarter over quarter, is in itself a result of two acquisitions that were integrated. Our AI portfolio, the core of it, is a result of a tuck-in acquisition we did during early COVID, I forget, 2021 timeframe. So obviously, those have worked for us. So we are generally looking at tech that will be accretive to our portfolio, but also has to be at a somewhat reasonable multiple. Where we sit now, there seems to be a fairly wide gap between public and private market valuations, and we don't want to get too drunk on that drug either. All right. Perfect. With that, I think RingCentral team, thanks so much for being here today and telling us a little bit more. Thank you. Thank you.