Good morning, everyone. Welcome you to day two, Mizuho Technology Conference. We're fortunate to have RingCentral, and representing Vaibhav Agarwal, CFO, and Devang Shah, Senior VP, Strategic Finance and Operations. Welcome to the conference. Thank you. Thank you. Thank you for having us here. All right. I think we should just maybe you can give a quick intro, both of you, wherever you can, but just about quick brief on RingCentral, but more important, Vaibhav, you took over CFO in August last year, and you can talk about the progress you guys made and fantastic job. Stocks moved from what? Low 20s, mid-20s to now close to 40. Why don't you kick off with that? Yeah. Thank you for inviting us. Always good to come to New York City, especially at this time. I think the weather is still nice, and I feel the optimism. I experience the optimism around the Knicks winning the NBA title yesterday firsthand, that was good. Look, it's an interesting question about my CFO role. Actually, my son, who's a rising freshman, was asking me this question yesterday. He was like, "Daddy, what is it that you exactly do?" I was explaining to him, look, my job is for the company to have enough money, raise money, and then make wise decisions with the use of the money, whether it's coming out with cool products that customers would want and having a sales force that can sell these products. In a lot of ways, I feel like my role is very similar at RingCentral, right? Which is, I've been at the company for 10 years. I've seen the company evolve through multiple phases of growth and scale. Frankly, over the years, it's given me a very unique perspective on both the operating levers in the business by working with all the cross-functional leaders, as well as the financial framework to drive long-term shareholder value. In a way, getting into the CFO seat was kind of a natural step for me. Really since last year, what I've been focused on is disciplined execution. I think my framework that I've communicated on multiple earnings calls has been to drive an optimized free cash flow per share as a North Star metric for us, and we've made meaningful strides there. Really, I feel that's a comprehensive metric because it encompasses driving durable growth, both from our core as well as our AI products, improving margins and free cash flow. Yeah Being smart about how we are allocating the capital. I feel the company is at a really interesting intersection now with AI, and we have a very exciting product portfolio to be able to address a lot of new use cases. Couldn't be excited. Okay to be the CFO at Ring at this point. I think, well, let's cover the most important topic next is that AI disruption. That's a question everybody thinking about in the software sector. Could you give an overview of RingCentral differentiation and why AI is more of an opportunity versus threat to RingCentral business? Yeah, fantastic question, one that we get asked often and almost every day. I believe we are in a unique position, we have a competitive mode, and the reason for that is several reasons. Number one is, RingCentral's an acknowledged leader in business voice communications. We built a $2.5 billion business over the last 20 years by making human connections simpler and more reliable and easy. We have built a carrier-grade network, again, over the last 20 years. That is feature-rich, that is reliable, and that is global. We have about 600,000 customers. It's been trusted with over 8 million users, and we are carrying tens of billions of minutes and billions of SMS messages on the platform. It's kind of not easy. It's very hard to replicate that, and it'll not be cost-effective. We believe that our platform is the bedrock for applying AI or agentic voice AI, as we call it. That's point number one. Point number two is voice continues to be a key mode of communication. Voice is going strong. We see traffic on our platform go up consistently. It's in fact kind of outpacing user growth. Voice is going strong. We are strong in voice. When consumers are calling on their providers, they're generally calling or texting, and those calls or text messages are going through the RingCentral platform. That gives us the ability to be at the top of the funnel, and we are almost the front door wherein we can apply AI from the get-go, Okay at the very beginning, and then during and after the call. That's number two. Number three is over the last 18 months, we've launched a portfolio of our AI products, AIR, AVA, and ACE, the three As as we call it, to be able to address those use cases and drive ROI for our customers. Lastly, we have a large base, as I indicated, 600,000 customers. We are investing meaningful sums of money in R&D. We are spending over a quarter billion dollars in R&D, a lot of which, most of which is going in the new AI products. We have a differentiated go-to-market motion. Yeah. I think net-net, I think it's the platform, the customer engagement platform that we built, the voice traffic that is going through the platform, our AI product portfolio, which is, by the way, showing good early traction in terms of numbers and having a unique differentiated go-to-market motion. Yeah. Maybe dig into that voice AI traction. Devang, I know you guys talked about and launched three A's, like AIR, AVA, and ACE? Yes. ACE. Okay. Those three last 12-18 months, right? Can you talk about the traction you're getting there and also the monetization mechanism for those products? Yeah. We launched the three A's, as we call it, AIR, AVA, and ACE, over the last, say, 18 months. For us, this has been a great time to be launching these products as the demand for AI is increasing. They are all built to meet different needs of our customers. We think of it as a customer journey when somebody calls in, that they need AI to help them at the start of the call, in order to, say, deflect calls or answer the calls before it actually gets to a person. That is where AIR comes in. AIR kicks in before the call actually reaches the customer. They answer simple, basic questions, as well as make certain tasks, like if they want to schedule a meeting, change their appointments. It can do things like that. It's integrated with multiple calendars. AIR, we have a pricing model is usage-based. As people use more AIR, we can charge them more for, that's how it is. AVA is, think of it as a co-pilot which helps these customers navigate through the product, and it can help them answer questions. It can help the actual agent, answer questions, basic questions, as well as detailed questions in either if they are selling something or in a support setting. AVA, we offer it with our products, and it adds tremendous value to our products. It increases the stickiness, and we see that when customers are using our AI products, they are a lot stickier. ACE comes in after the call is over, and it generates insights and helps customers understand what the product was, what the customer call was. It helps populate their internal databases with information which they can use as insights. Then AIR picks that up and learns from it so that next time when a call comes in on a similar thing, AIR is a lot more intelligent in answering those questions. Okay. Yeah. That's helpful. Going back to the core UC side, how do you frame the current market opportunity? What are kind of trends you are seeing there, do you see still opportunity migrating from on-prem market? Yeah. Look, our core business is growing generally in line with the market, and it's fairly durable. The durability comes from several different things. Number one, voice continues to be mission-critical for a lot of customers, especially in verticals. We are seeing- You can't do voice coding a voice, right? You cannot do voice coding of a telephone line. Of a telephone line. Yeah. Yeah. Of a telephony network or platform. That's number one. It remains mission-critical, and that's why we are trusted by 600,000 customers, 8 million users, et cetera. It's a recurring revenue model that we have in the core business. There are strong retention metrics, with monthly net retention rates of greater than 99%. It's a cash-generating machine for us. That's point number one. Point number two is, look, it's a natural bedrock to my prior comment on which customers are applying agentic voice AI. We are able to sell our AI products on top of RingEX, which is our core product. In terms of the TAM, the TAM continues to be tens of billions of dollars in terms of revenue and is still growing. In terms of the opportunity, the opportunity is coming from. There's a large runway in terms of on-prem to cloud migrations. There's still hundreds of millions of seats globally that are out there that will at some point transition from on-prem to the cloud, because to be able to use the power of AI, you generally need to be on a cloud solution. In fact, on this past earnings call, we had a number of examples of notable customer wins wherein customers moved from on-prem to the cloud. Biggest ones being Coca-Cola, the third largest bottler in the U.S. There's a Fortune 500 insurance company that moved. A name that a lot of people in New York would associate with is the New York Mets. They moved from an on-prem solution to the RingCentral cloud solution. I think there's a common kind of a theme across all these migrations. It's number one, companies want to modernize their communication stack, they are moving from on-prem to the cloud. Number two, they want the ease of deployment and flexibility of change, which we offer. Number three, a lot of these customers buy our AI product portfolio along with the core RingEX product. I think overall, the core is going strong. It's a durable business. It's a cash-generating business for us, and it helps us layer on incremental AI products on top of it. Yeah. That's helpful. Just to add to the CCaaS, you also have contact center solution along with that. You guys talked about RingCX, and I think that Customer Engagement Bundle, CEB, there. How does that fit into your core market, and what kind of traction you're seeing there? Yeah. We recently released the CEB. With that now, the way we think about it is we have customer engagement solutions at every spectrum for every type of our customer, which is a meaningful differentiator for us compared to our competitors. The CEB is a solution which was designed mostly for RingCentral customers. We have a huge demand within our base for CEB. CEB, think of it as a lightweight contact center. Small businesses generally do not have large IT departments, so they need something which is easy to deploy, and it can quickly address some basic things like, time in queue and things like that. CEB was released in November of last year. In just one quarter or one and a half quarter, we have had over 5,000 customers sign up for it, which is a huge success. We see that scaling further. On the other spectrum, RingCX is for somebody who needs a full contact center, and it is to address much more complex solutions. We can now have customers from all end of the spectrum. Just to add to that, one more thing, all the three As we talked about it, they work with both CCaaS as well as UCaaS, so RingCX as well as CEB, not just EX. They amplify these solutions. When calls are coming in, the flywheel of three As goes in action, and it helps their customers address a lot of these needs. Okay. Switching to the area, I think last year we highlighted small business and GSP, that cohort of customers, that's the areas of strength, and that's growing double digits with strong unit economics you guys talked about. How have those cohorts fared so far in 2026, and what makes them as strong for RingCentral? Yeah, there is steady performance across those cohorts. What we had said last quarter was our small business and the global service partner business, which also kind of tends to skew towards the small customer base, both are growing in double digits with very strong unit economics. That trend has continued in Q1. Why do we see that trend in that cohort? From a small business standpoint, look, there is very strong product market fit. Voice continues to be a predominant mode of communication for B2C interactions. We see traffic going up. Our new products, the AI products, are faring really well, and the ARPUs continue to be strong. Those are the reasons we see success in SB. In terms of our GSP practice, look, these are strategic relationships with carriers such as AT&T and Vodafone and Charter, the household names. These are strategic relationships, we've cultivated these over a number of years. We've also kind of optimized these motions in terms of, there's a level of integration that needs to be done, both from a product standpoint as well as operationally. We've kind of optimized these motions, and we know how to run these at scale. Also there's a very strong product market fit in the sense that the carriers are now wanting to introduce an AI product portfolio to their customer base, which is where there is a natural product fit that happens. I think those are some of the reasons we are seeing successes in those two cohorts. Okay. Other topic is, the AI product, you say ARR from the customer who utilize at least one paid AI product. You talked about that's doubled year-over-year, and now I think that's 10% of the total ARR. Why is that an important metric that you track, and as you drive this new product adoption, what feedback are you hearing from customer, in terms of uptick? I think there's a few key reasons why we are using that as a metric internally and externally. If you look at the evolution of Ring, we are moving or we have moved from a single product seat-based model to a multi-product portfolio with differing kind of monetization models. We believe that this metric kind of captures, and it's a clear proof point of adoption of the AI products, both within the base as well as with the new customers. It's indicating that customers are not only just trying the product, but they are buying. We are able to monetize, and these customers are paying for these products. That's number one. Number two is we also want to look at the economics and the customer behavior within this cohort. What we clearly see is improvements in ARPUs and net retention rate. AI is making the base more sticky, and customers are buying more products, and they're staying on the platform longer. Number three is, look, AI is additive. That's the important takeaway from AI is that AI products for us are additive to our core products. It's because of those two or three reasons that we believe that this is an important metric for us to track. Another topic is on the enterprise side, you talked about some pricing pressure this year from that COVID era contract. Did that play out largely as expected in Q1, or should we expect those headwinds begin to fade in 2027? Does that provide an opportunity for you to improve growth from this year, as you're going up for renewal? Look, it's playing out as expected. What we had called out in the last quarter, and I think the quarter before, is that we are seeing lapping of COVID contracts into 2026 and early 2027, wherein there is price rationalization. It's playing out as expected. We are going through those contracts through the end of this year into early next year. Having said that, look, overall blended ARPUs, even in the enterprise space, are strong because the headwind that's created from the COVID contracts is being partially offset with the new AI products. Customers are now buying more products. They're signing up for longer durations. That's helping overall blended ARPUs. Again, while we are not guiding for next year, look, not having this headwind would be a beneficial factor for next year. Okay. Devang, we talked about how RingCentral making all the transition, from migrating customer to the cloud, now selling seats to even maybe a greater focus on revenue per customer with AI inclusion, usage-based products there. How is RingCentral navigating from a go-to-market perspective? You build the product. How are you changing the go-to-market side, and how is the financially quarterly execution perspective, how you are fair in doing? Yeah. As Vaibhav said, we have multiple price models over here. I tell you, last 18 months or so since we have released this product, it's been really exciting time to be at RingCentral as we pivot from a cloud company to an agent voice AI communications company. Customers are demanding different things at different stages. Many customers want simplicity. They want to know what they are going to pay at the end of the month. Some customers want usage-based pricing. We are offering both type of products, or type of pricing mechanisms in our products. AIR, as I mentioned, is usage-based. ACE is per seat. RingEX and CX are per seats. We are experimenting with usage-based over there based on customer demands. As customer needs evolve, our models will evolve too. Rest assured, we are looking at pricing very closely. Pricing falls squarely in my domain, so I'm very close to that. As it comes to GTM, as Vaibhav was saying, it's a key differentiator for us. We have multiple GSP partners, and we have over 16,000 channel partners. Plus, we have our direct sales force. We use all three of these to go to market. The pricing models have to be simple enough so that all these different people or distributors are able to understand them. They can communicate it to their sellers, who in turn sell to the customers. Our pricing models are designed to be very simple for their sales force to understand and deploy. Yeah, we look at pricing every single day, and we think about it a lot, and we are evolving as their needs evolve. Going back to the growth, of course, COVID was beneficial for you and all your peers as well, and growth kind of decelerated. Lately, Vaibhav, I think after Q1, you raised your even mid point of your subscription growth 5% or so. What are the growth drivers? How do you stack rank that opportunity at this point? What gives you that confidence to raise even after Q1? Yeah. No, that's a great question. There's a few things there. One, we had a strong Q1, wherein we came in at the high end of our guidance. As you saw, the growth rates were relatively consistent with the growth rates we saw over the last five quarters. We guided Q2 in a similar range. I think we are seeing stabilization in the revenue growth rates. From a driver's perspective, look, back to my earlier point, our core business is durable, recurring revenue model, strong net retention rates, and it's providing us with an opportunity to sell our new AI products into that base and to our new customers. The core is durable, recurring. Layering in on top are the AI products. As Devang mentioned, we are seeing strong traction, we are adding customers both within the base as well as there are new logos that we are acquiring at a consistent clip. Overall, when you put the two together, I think that gives us confidence in the long-term durability of our growth model. Net-net, you look at it, we have a large customer base. The customer base is fairly diversified, and it's a recurring revenue model. That gives us confidence in the long-term durability of growth. Now that we have CFO, we have to dig into the expense side of it. Sure. You have done a phenomenal job in terms of expanding margin when growth started coming down. The one question I was getting first is on the AI side, when you use internal AI, how are you looking at the headcount or even some of the expenses? How are you seeing the efficiency and productivity there? Basically, what are the drivers for success in expanding the margin? Thank you for the acknowledgement on that. I'm really proud of the margin expansion that we've driven over the last, call it three to four years. We've doubled our operating margin profile from 12% close to 24% that we've guided to this year. Q1 was another proof point of that. That margin expansion trajectory is continuing. We raised our guidance for 2026. Look, in terms of the drivers, I feel that the margin expansion is structural in the sense, again, it comes back to we have a recurring business model. We have strong overall blended ARPUs. Net retention rates are strong. Our gross margins are at close to 80%, which is industry-leading. Number two, there is operating leverage in the business. Our revenue growth is consistently outpacing expense growth, frankly, by disciplined cost management. We are disciplined in terms of our hiring. We are off-shoring to get the benefits of lower-cost locations. There is a lot of vendor consolidation that's happening. Like you mentioned, there is increasing use of AI across the board within the company that's leading to efficiencies. We also look at margin expansion in the context of SBC reduction, which has been a big focus area for the management team, and conversion of operating margin into free cash flow and free cash flow per share. We've made a lot of strides in terms of curtailing our new stock grants. That's resulting in our SBC going down, and we've guided to a long-term or medium-term target of 3%-4%. Which is 500 basis points reduction. GAAP operating margins are now growing faster than non-GAAP. Yeah Predominantly because of SBC. Our conversion into free cash flow has improved over time. Now, the delta between operating margin and free cash flow has narrowed quite a bit. From a free cash flow per share standpoint, we are approaching $7 this year, and it's growing even faster than free cash flow at 17%. I think overall, it's been a lot of work in terms of being disciplined and getting the benefit of the leverage that's embedded in the business. Because of those factors, I feel really confident in the long-term sustainability and the durability of both margins and free cash flows. Yeah. Another thing you guided, I think, that GAAP operating margin 20% in next three, four years. You talked about one of the SBC reduction. Are you expecting also other operating leverage to continue to hit that 20% GAAP margin? Yeah, absolutely. It'll come from a combination of further efficiencies in the business and lower SBC and intangible amortization over time. Look, we've been expanding margins by, call it 100 basis points, 100-150 basis points. My expectation is that operating margins will continue to improve from here. That'll be a driver. SBC is going to come down. Between the two, we feel fairly confident in our ability to drive towards the 20% GAAP operating margin target. I think the other topic we keep getting is capital allocation. That's one of the big focus for RingCentral. You not only reduced debt, you also repurchased shares. Even you announced the first dividend as well, did all these things. How do you balance the three in the context of your free cash flow generation? Again, it comes back to having a disciplined and a balanced framework that we have. The over-level goal is to maximize free cash flow per share. The component parts are, we talked about the improvements in free cash flow. Again, free cash flow over the last three to four years have 6x. We went from $100 million to $600 million that we've guided to. Again, very pleased with the progress that we've made there and gives us a lot of optionality. I think from there, from a capital allocation standpoint, the number one priority is always to invest money back into the business, and particularly within AI and innovation. To my earlier point, we are spending about $250 million in R&D, majority of which is going into AI. That's, call it 4-5 points of margins that is being reinvested back into the business. Number two from there is to strengthen the balance sheet. Our leverage levels, our debt to market cap is at a healthy and sustainable level. We've laid out a target of bringing gross debt down to $1 billion by the end of 2026, and we remain on track to achieve that. From there, we look to return additional capital in the form of buybacks and dividends. From a buyback perspective, at current stock levels, we believe it still remains an attractive opportunity. We want to offset the dilution that's created by employee stock vesting, we remain opportunistic after that. We paid out our inaugural dividend. This past quarter, that really reflects the confidence that we have in the long-term sustainability of our free cash flows. Look, overall, I think the goal for me is it's a balanced and a disciplined approach with all of these three or four components. The metrics that we have laid out will largely remain on track to achieve that in terms of debt reduction by the end of 2026. Okay. I think we can take a pause here and see if there are any questions in the audience. Vaibhav, thank you for educating us on how you're thinking about it, congrats on the continued progress. I believe that you're amongst a handful of companies that have quietly pulled financial discipline and kept innovating. As you look to the forward trajectory of RingCentral, how do you think about TAM? What are the opportunities that sort of lie ahead? Thank you. Yeah. Thank you, thank you for the acknowledgement there. Look, the TAM continues to remain very large. The TAM's kind of broken up into two or three different pieces. The core business, which is our UCaaS business, is, I think Gartner has projected or IDC projected it at, call it, in $20 billion of revenue. There are still hundreds of millions of seats that are on-prem waiting to be converted to the cloud. There is a large opportunity there. The whole UCaaS market or industry is relatively under-penetrated. It's probably, what, 30, maybe less than 30% penetrated. There's a long runway there. Our expectation is that with AI coming into the fold, there should be an acceleration in terms of those migrations. Because to be able to get the power of AI, you need to be on a cloud-based solution. That's one aspect of the TAM. The second aspect to the TAM is the customer engagement platform that Devang briefly touched on. That market, again, is in the tens of billions of dollars. It's growing in, call it, high single digits to low double digits. That's another big portion of the TAM. Then there is this TAM that, again, Gartner, IDC have projected, which is really large, is about $65 billion around conversational intelligence. The overall TAM in the market is, by different accounts, is greater than $150 billion and is growing. Look, the opportunity ahead of us is immense. Where we are focused on is creating a comprehensive customer engagement platform with AI at its core so that we can meet customers based on their use cases, because customer use cases are changing very rapidly. Their needs are changing rapidly. They are experimenting. We want to have a complete platform with all different product sets, with AI at its core, so that we can meet customer needs, be able to address use cases, and drive meaningful ROI for our customers. That's where we frankly have been focused on. You look at our product portfolio, I think the pace of innovation has been very, very impressive. We've come out with so many new products in the last 12-18 months. While they are early, we are seeing a lot of good early traction on these products. Overall, we are super excited. We are very excited. We are all very focused on The mantra at RingCentral is execution, execution. Stay focused, come out with a product set that'll meet customer needs, have the right go-to-market motions, execute based on that, keep the financial discipline. Any other question? Thanks for the opportunity. You've done a great job of injecting AI into your product set, understanding customers' needs. I'm wondering from an internal standpoint, in your use of AI for efficiency, revenue lift, other opportunities, just how are you baking AI into the day-to-day, and where are you in that journey internally? Look, we are selling our AI products to the customer base, It starts with dogfooding those products internally, We are using those products internally across the board. Examples of those are, Devang, he used to head marketing at some point. We are using AI to develop branding and content within our AI teams. Now, our content can be created in a matter of hours versus days, We don't need external agencies, for example. Maybe you can expand on that later. That's one example. Within our sales organization, we are using all of our products, AIR, ACE, AVA. Again, it's to drive efficiencies. It's to enable the sellers to be more productive. In the past, enterprise sellers would have to build RFPs. They're building all these PowerPoints. Now we don't need to do that anymore. AI helps generate customer content at a fairly fast speed. It's driving efficiencies there. In terms of our customer support organization, again, they are using all three of our products along with RingCX, Agents are answering customer calls. There's call deflection and containment that's happening in terms of the calls that are coming in. We've also started using AI within our back-office functions, finance, legal. I think it's resulting in productivities across the board. That's frankly resulting in some of the operating margin expansion that we are seeing. We are nearly not hiring as many people as we used to before. People are able to deliver a lot more. People who are there at the company are being more productive and more efficient. Yeah. Yeah. With that, I'll wrap up this. Vaibhav and Devang, thank you for joining us. Thank you. Thank you.