RingCentral, Inc. (RNG) Q3 2023 業績會文本

Brian Peterson - Raymond James

Robert Dee - Truist Securities

Ryan Koontz - Needham & Company

Thank you. Good afternoon and welcome to RingCentral's third quarter 2023 earnings conference call. Joining me today are Tarek Robbiati, CEO; Vlad Shmunis, Founder and Executive Chairman; and Sonalee Parekh, CFO. Our format today will include prepared remarks by Tarek, Vlad, and Sonalee, followed by Q&A.

We also have a slide presentation available on our Investor Relations website that will coincide with today’s call, which you can find under the Financial Results section at ir.ringcentral.com. Some of our discussion and responses to your questions will contain forward-looking statements regarding the Company’s business operations, financial performance, and outlook. These statements are subject to risks and uncertainties, some of which are beyond our control, and are not guarantees of future performance.

Actual results may differ materially from our forward-looking statements and we undertake no obligation to update these statements after this call. For a complete discussion of the risks and uncertainties related to our business, please refer to the information contained in our filings with the Securities and Exchange Commission, as well as today’s earnings release.

Unless otherwise indicated, all measures that follow are non-GAAP with year-over-year comparisons. A reconciliation of all GAAP to non-GAAP results is provided with our earnings release and in the slide deck. For certain forward-looking guidance, a reconciliation of the non-GAAP financial guidance to the corresponding GAAP measure is not available as discussed in detail in the slide deck posted on our Investor Relations website.

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

Yes. Thank you all for the time and the questions. It's Mike. So, Tarek, you laid out your priorities. One of them is productivity. You said taking steps to materially reduce sales and marketing expense. Is there a good benchmark or a metric we should think about with your target for sales and marketing?

Look, I wouldn't use benchmarks for really determining and percentage of sales and marketing spend as a percentage of revenue. And the reason why this is, is that you need to retain flexibility to go and capture opportunities as you see them. And it's always important to understand productivity down to the driver level of our sales force and our channel partners and see to what extent we are acquiring growth effectively and that the growth has to come with calories, mindful of the cost of customer acquisition and the cost of retention of these customers.

So we do believe there is upside in the short-term in becoming more effective and efficient in sales and marketing. And when you really look at our spend as a percentage of revenue today, it is too high for my own liking, considering the growth we are delivering. So you can determine whether or not we reduce that spend for the same growth or keep it, but we need higher growth. And that's a reflection that we have to ask ourselves as we look at this very important part of our P&L.

Great. Thank you very much.

Yes. Maybe I'll take that. Vlad here. Look, Contact Center is -- it's less penetrated than UCaaS. To be clear, UCaaS, UC to UCaaS is still relatively early even there as well. I mean, if you take our numbers and Microsoft's and Zooms' and put it all together, we are probably still easily under 20%. But Contact Center, I would say, is earlier in that migration.

Interestingly enough, Contact Center offers interesting opportunities in AI, and there are some puts and takes there. So traditional contact center vendors who are relying on enabling agent seats, that could be a little bit of a headwind as there will be less reliance on humans and more reliance on virtual agents and bots. But for people, who are innovating in the area and coming in from the perspective of an AI-first approach, and this crowd definitely includes ourselves, at this point, we are seeing this as a major tailwind to really take share.

Contact Center tends to be yet more sticky than UCaaS. Those are more considered decisions generally. And your question was over the last year. Look, we've seen a robust demand for contact centers and especially for contact center that's closely integrated with UCaaS solution. We saw that for a few years now via our white label offering of RingCentral Contact Center.

What we are seeing now is that there is, I would say, a renewed interest in AI-first approaches. And very importantly, in softwares that's more oriented towards self-service with easier and faster deployments. And what we are seeing is even some of the larger deployments now and I think, in our prepared remarks, we shared that we have some literally Fortune 500 companies choosing RingCX, which, by the way, is only in controlled availability as we speak here now, but we're already seeing multi-thousand seat wins. Frankly, it's been a pleasant surprise. We saw that it would skew lower. But for now, we are seeing good traction across the board and expect it to continue.