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Operator
Good day and welcome to RingCentral's fourth quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please also note this event is being recorded. And I'd now like to turn the conference over to Ryan Goodman, Head of Investor Relations. Please go ahead.
Ryan Goodman
Thank you. Good afternoon, and welcome to RingCentral's fourth quarter 2021 earnings conference call. I'm Ryan Goodman, RingCentral's Head of Investor Relations. Joining me today are Vlad Shmunis, Founder, Chairman, and CEO, Mo Kataba, Chief Operating Officer, and Vaibhav Agarwal, Interim Chief Financial Officer. Our format today will include prepared remarks by Vlad, Mo, and Vaibhav, followed by Q&A. Some of our discussions and responses to your questions will contain forward-looking statements, including our first quarter and full year 2022 financial outlook and our assumptions underlying that outlook. These statements are subject to risks and uncertainties. Actual results may differ materially from our forward-looking statements. A discussion of the risks and uncertainties related to our business is contained in our filings with the Securities and Exchange Commission and is incorporated by reference into today's discussion. In particular, we continue to be impacted by the COVID-19 pandemic and its effects on our business will depend on the severity, duration, and extent of the pandemic and actions taken by governments, businesses, and consumers in response to the pandemic, which continue to evolve and remain uncertain at this time. RingCentral assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. 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. Please visit our investor relations website at ir.ringcentral.com to access our earnings release, slide deck, our gap to non-gap reconciliation, our periodic SEC reports, a webcast replay of today's call, and to learn more about RingCentral. 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 turn the call over to Vlad Shmudes.
Ryan Goodman
Good afternoon, and thank you for joining our fourth quarter earnings conference call. I'd like to start the call with a warm welcome to our new Chief Operating Officer, Mo Ketebe. Mo and I have known each other for many years, and Mo is very familiar with DreamCentral, as he had previously led the groups responsible for our AT&T partnership. Mo joins us from AT&T business, where over the past 20 years, he held multiple executive positions including chief product officer, chief marketing officer, and head of AT&T network infrastructure and build. Mo had managed a portfolio of businesses with $36 billion in annual revenues and had managed a global force of $50,000. Given Mo's customer-first mentality, deep appreciation for innovation and passion for building multi-billion dollar global cloud businesses, I'm confident that he will be an invaluable asset to our entire team as we head into an exciting 2022. I'm also pleased to be joined by Vaibhav Agarwal, our Interim Chief Financial Officer. Vaibhav has been with RingCentral for six years most recently as chief accounting officer and has been instrumental in scaling and leading ring central finance organization weibo was central in driving the financial aspects of key growth initiatives including our strategic partnerships and rapidly expanding ecosystems of global service providers prior to ring central weibo had senior financial positions at PricewaterCoopers, and Intel. With that, on to the results. We delivered an outstanding fourth quarter. First, subscriptions revenue increased 37% year-over-year to $420 million. This is acceleration of three points year-over-year. Second, total ARR increased 39% year-over-year to $1.8 billion. This is an acceleration of four points year-over-year. Third, mid-market and enterprise ARR, which includes customers generating 25,000 or more in ARR, increased 52% year-over-year to over $1 billion. And fourth, we announced our strategic partnership with Mitel. a global market leader in business communications with over 35 million UC users worldwide. Our continued leadership and success in the massive 100 billion plus UCAS market opportunity is evident in our strong Q4 and 2021 financial results. We are in the early innings of a generational transformation from legacy landline voice-only telephony to mobile-first multimodal cloud communication. Businesses are embracing multiple modes of communication, including team messaging, video, and voice across multiple types of devices. They require a solution that can meet these evolving use cases without sacrificing reliability or functionality of a traditional PBX system. RingCentral is well positioned to provide a feature-rich, highly reliable enterprise PBX replacement via a mobile search platform with integrated team messaging and business video. Why does RingCentral win? I'll give you a tip. It all comes down to our culture of trust, innovation, and partnerships. Trust is something we earn with our customers day in and day out. The communications platform is the central nervous system of a business. Reliability, security, and data privacy are table stakes. And as larger companies adopt cloud communications platforms, auditability, analytics, and feature depth are mission critical. RingCentral's track record of delivering five nines uptime for over three years and counting is unparalleled. This equates to around five minutes of downtime a year, including maintenance windows. This is literally 100 times better than the three nights for close to nine hours of downtime per year that some of our competitors provide. Another cornerstone of the trust we've built with our customers is our unquestioned commitment to security and data privacy. Simply put, we never sell, share, misroute, or mishandle our customers' data in any way, shape, or form. But last but not least, it is our deep commitment to compliance with local regulations across the globe. Case in point, whatever essential is available to customers, they can rest assured that it is compliant and legal to use. Next, innovation. At the core of our innovation is our multi-mode, mobile-first approach to our mission to make business communications easy. RingCentral provides world-class voice capabilities fully integrated with world-class business video and advanced e-messaging. Over one-third of our customer accounts engage with both messaging and phone. And over one-third of our customer accounts engage with video and phone. Overall, we continue to see over half of our customer accounts use RingCentral MVP for more than one mode of communication. But there is more to RingCentral than message, video, and phone. Our partnership with the leading cloud contact center provider puts us in a uniquely advantaged position to offer a market-leading UCaaS solution that is deeply integrated with the market-leading CCaaS. This bundle offering is driving strong traction with upmarket customers, as Rencentral offers the only pure cloud, mobile-first, multi-mode UCaaS platform that is deeply integrated with a market-leading CCaaS that is available in the market today. To further leverage and amplify this technology leadership, we've invested in co-branded solutions with industry incumbents, providing our customers a more seamless path to modern communication and expanding our go-to-market reach. This brings me to partnerships, the third pillar of our success, where we finished the year with strong momentum. Notably, we expanded our unique family of strategic partners namely Avaya, Atos, and Alcatel-Lucent Enterprise with the addition of Mitel, thus growing our total opportunity with these strategic partners to over 200 million users. Mitel is off to a very promising start with rapid channel enablement underway and already contributing to our seven-digit TCV customer portfolio. We are also working on integrating CloudLink for MITRE customers and beyond. We have also assembled a unique ecosystem of leading global service providers, which includes AT&T, BT, Telus, and Verizon Business. To this, we recently added Vodafone Business and Dolce Telecom, where last week we announced expansion of the relationship from video-only to full MVP functionality. Overall, we have now signed with four of the top 10 GSPs and over 10 in total, up from five last year. This continues to unlock new geographies and new channels that we expect to help drive growth for years to come. In conclusion, 2021 was a transformative year for how businesses worldwide operate. And Green Central is well poised to continue leading through our differentiated trust, innovation, and partnership strategy. With that, and with our winning seasoned team in place, now fortified with exceptional new talent, we are looking forward to an exciting 2022 and beyond. I'll now turn the call over to our Chief Operating Officer, Mo Katiba.
Vaibhav Agarwal
Thank you, Vlad. I wanted to take a moment to introduce myself. I've been fortunate to spend the last 20 years of my life in the communications industry and have had the pleasure of working directly with Vlad and team over the last five years. Many people have asked me, why did you want to join RingCentral? And it's a pretty simple answer. The size of the market opportunity, the quality of RingCentral's platform, and the relentless commitment to innovation are at the heart of why I've seen so many businesses select RingCentral and why my previous team and I were one of the first key partners for RingCentral. This is why I wanted to join the team. For years, I've seen firsthand the customer feedback on the positive impact RingCentral has had on their businesses, simplifying communications, enabling greater work flexibility, and ultimately elevating productivity. I've now been with the company for a month and have been so impressed with our well-seasoned executive team and 2022 velocity. The year is off to a strong start with robust pipeline growth, new partnership ramps, and a high innovation velocity, all reinforcing my decision. With that said, let me turn to our 4Q results and the product and go-to-market differentiators that position RingCentral to continue to lead in the cloud communications market. On the product side, we have our RingCentral MVP platform and our contact center solutions. And on the go-to-market side, we have a growing channel partner ecosystem, as well as ramping strategic and GSP partners. I'll begin with the RingCentral MVP platform. It's all about delivering value and ROI to our customers. We are constantly adding customer-driven capabilities to our solution, which is driving new, large enterprise wins. A great example is a win for 10,000 users at a Fortune 1000 financial services company. Here, the global presence of our platform set us apart from the competition. This implementation was across more than 20 countries with high-quality, regulatory-compliant voice capabilities. Next, a nearly 15,000-user win with Brigham Young University. Our new embedded dialer integration with Microsoft Teams was the key point of differentiation. We provided the customer with the advanced call handling and SMS that they required, all in an easy-to-use interface with high reliability. And what I loved about this win is that it wasn't just about UCaaS. The customer also chose us to provide a tightly integrated contact center implementation. And that brings me to our integrated cloud contact center offerings. We are seeing strong growth here, where over 60% of our million-dollar-plus TCV wins included Contact Center. A great example is our win with Renaissance Learning, who are a global leader in education technology. They are implementing RingCentral MVP for over 1,000 users and Contact Center for approximately 300 agents. By embracing the full platform, Renaissance can provide truly unique experiences to their customers like contact center agents to customer video interactions via RingCentral Video. The net here is that the RingCentral platform stands alone in its ability to meet large-scale customer needs. And over the past few years, we have built an advantage go-to-market model that includes direct, channel, strategic, and global service provider partners to tap into the global market opportunity. This has provided our customers with multiple ways to choose RingCentral. It's becoming less about how we reach the customer and more about providing a differentiated, seamless path to the cloud. To that end, we're evaluating the go-to-market-based ARR metrics that we currently provide. As for Q4, Channel delivered a great quarter with ARR 684 million, up 47% year-over-year. Channel partners are especially key to winning with large enterprise customers who need to manage multi-mode communication implementations across in-office and remote workers. We've established trust and leadership in the channel community over multiple years and we continue to expand our community presence at double digit rates. Additionally, we're activating incremental channel networks via our strategic partners, including Avaya, Atos, Alcatel-Lucent Enterprise, and Mitel. We benefited from ramping contributions in Q4 and look forward to incremental contributions in 2022. Avaya, Atos, and Alcatel-Lucent Enterprise all delivered sequential growth in both number of accounts and users. Three examples of marquee wins include a 1,500-user Avaya Cloud Office win with Carter Machinery, a large industrial equipment provider, an over 3,500-user Avaya Cloud Office win with healthcare services provider Watson Clinic, and an over 1,000-user Atos Unify Office healthcare win. Finally, Mitel, our newest partner, is off to a promising start in terms of both channel enablement and early wins. In fact, Mitel already contributed a win for approximately 7,500 users and 400 contact center agents with a leading financial services organization who needed an integrated UCaaS and CCaaS platform. As for global service providers, a space that is near and dear to my heart, we have several recent notable announcements. First, Vodafone Business UC with RingCentral has now launched in the UK. Germany, Hong Kong, Ireland, Italy, Portugal, Singapore, Spain, and Sweden. And within the first week, we secured an 800 user win with a prestigious university in the UK. Just last week, we announced an expanded partnership with Deutsche Telekom, in which Deutsche Telekom will now sell a full MVP RingCentral with Telecom solution. And third, with our RingCentral Rise platform, which enables faster lead to close time and significantly faster onboarding, we continue to expand our GSP presence with new carriers such as Versatel in Germany. In conclusion, I'm early in my journey with RingCentral, and I believe that RingCentral is early in its journey as well. This market is massive, and with cloud penetration at less than 10%, we believe we're just getting started. I strongly believe that the company has the best technology in the space with a unique go-to-market motion that enables quick and efficient scale. I'm excited to tap into the passion of the team and determine a path to further realize shareholder and employee value. With that, I'll turn the call over to our Interim Chief Financial Officer, Vaibhav Agarwal.
Vlad
Thank you, Mo, and good afternoon. 2021 was another strong year, and key financial metrics came in above our guidance. Subscriptions revenue grew 36% year over year to $1.5 billion, a three-point acceleration from prior year. Non-GAAP operating margin was 10.2%, up half a point year over year. And non-GAAP free cash flow of $90 million was 5.6% of revenue, reflecting over half a point of margin increase year over year. We finished the year on a high note in the fourth quarter. RingCentral Office ARR grew 41% to $1.7 billion. Total ARR grew 39% year over year to $1.8 billion. Subscription revenues grew 37% year over year to $420 million. and non-GAAP operating margin was 10.5%, up over 40 basis points year over year. To summarize, this year we delivered growth acceleration, higher profitability, and an increase in free cash flow generation. The company is operating well above the rule of 40. This is a significant accomplishment for a growth SaaS company generating over $1.5 billion in revenues. It is a strong validation of our commitment to durable growth as we aim to capture this massive market opportunity, as well as our discipline mindset in terms of investments and profitability. Let's begin with growth, where I'd like to highlight several important underlying drivers. First, upmarket traction. Enterprise demand for our cloud-based communications platform continues to rise, as evidenced by enterprise ARR, which includes customers generating $100,000 or more of ARR, increasing 62% year-over-year to $734 million. In 2021, we secured a record number of million-dollar-plus PCB wins, bolstered by growing traction with Fortune 1000 and Global 2000 enterprises. Second, contact center. Our unique offering of industry-leading UCaaS, deeply integrated with industry-leading CCaaS, is gaining traction with our larger customers. We are seeing bundled wins with both new and existing customers, and Contact Center accounts for over 10% of the overall business. Third, our partnerships. Our direct and partners ARR increased 38% year-over-year, an eight-point acceleration versus last year. driven by ramping contributions from our strategic and global service provider partners. Looking ahead between strategic and GSP partner ramps and ongoing channel contributions, we are poised to significantly and efficiently scale our go-to-market reach. And fourth, international. We more than doubled the number of international million-dollar-plus CCV wins in 2021. International now accounts for 12% of revenue in 2021, up from 8% in 2020, and much of this opportunity is still ahead of us. We are well positioned to capture this growth with key international partners ramping in 2022 and beyond. In addition to growth, it's also about delivering profitability. We are benefiting from increasing net retention, with higher upsell and record low churn for the year. Greater contributions from upmarket segment are driving higher lifetime customer value and higher sales productivity. In addition, as we capture incremental growth via our partner-oriented GTM motion, we expect to increasingly benefit from favorable unit economics by leveraging our partner's scale distribution networks. And finally, as the overall business continues to grow, we are unlocking efficiencies of scale in other operating expenses. These positive dynamics and profitability enabled us to reinvest in key strategic areas while delivering half a point of margin expansion in 2021. With this backdrop of robust market demand, UCaaS and CCaaS platform leadership rapidly expanding go-to-market reach and increasing profitability, let's turn to the 2022 outlook numbers. We expect total revenue growth of 25% to 26%, reflecting $2 billion at the midpoint. We expect subscriptions revenue growth of 26% to 28%, with similar revenue linearity between the first half and the second half, as we saw in 2021. We expect non-GAAP operating margin of 10.6%, reflecting a 40 basis points increase year over year. And we expect non-GAAP EPS of $1.69 to $1.72. In summary, 2021 was an outstanding year, and we finished with strong momentum. With our market-leading solutions, ramping partnerships, and diversified go-to-market strategy, we are excited and energized at the opportunity ahead of us in 2022 and beyond. We have multiple incremental drivers layering on and are confident in our ability to continue to deliver durable, profitable growth. With that, let's turn the call to the operator for Q&A.
Operator
Thank you. We will now begin the question and answer session. If you'd like to ask a question, press star, then 1 on a touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If you'd like to withdraw yourself from the question queue, press star, then 2. And the first question comes from Brian Peterson with Raymond James. Please go ahead.
Brian Peterson
Uh, thanks everyone and congrats on the strong quarter. So, so I wanted to hit on some of the strategic partnerships. So, uh, we saw the incremental ARR step up this quarter and maybe shed some light on how each of these are progressing versus your expectations and how do you stack rank kind of the strategic partnerships as we think about a growth factor in the 2022.
Vaibhav Agarwal
Hey, this is Mo and, uh, thanks for the kind words. Let me take that one and then I'll let Vaibhav chime in as, as appropriate. What I tell you is the partnerships are all executing relative to our expectations. As we look forward to 22, obviously the newest one is Mitel, and it's getting off to a strong start. Since we didn't have to use a branded solution there, we were able to very quickly go to market. As you heard during my commentary, we're already putting up wins as part of that partnership, and then it becomes incremental growth on top of everything that we've been doing today. The other comment that I'd make there is really the continued expansion of our GSP relationships. As Vlad mentioned, we ended last year with five relationships. We're ending this, you know, the end of 21, if you will, with 12, with more to come. So these are all strategic partners that layer on top of one another. They get through contracting. We go through the sales enablement motion, and they start incrementally contributing to our growth. It's been quite strong across the board, and as I mentioned, meeting our expectations.
Brian Peterson
Great, Mo. And maybe a follow-up for you, just, you know, it's great to have you on board. But, you know, I'd be curious, you know, from your perspective, you know, what are you looking to try to accomplish or key growth opportunities over the next year or two and how we should be thinking maybe about longer term about those partnerships. Where do you think that you could take them? Thanks, guys.
Vaibhav Agarwal
Yeah, thank you. So I tell you, I'm focused on five key things relative to nearer term growth. The first one, as you stated, is executing on our existing partnerships and getting them ramped. The second one, which we didn't talk as much about is expanding on our AI motion around optimizing retention. You know, we're getting to be quite a large company now. And so continuing to drive down our churn year over year is incredibly important. We started this work in 2021, and we're pouring fuel on that fire. I think there's more opportunities there for us. The third one is even more new channel and partner motions and getting those scaled. The fourth one is brand investments and implementing our first brand investment at scale, which inherently we expect will drive growth across all of our channels. And then the fifth one is continuing to invest and differentiating on an ongoing basis our MVP solution. as well as the way that we're approaching an integrated UCaaS and CCaaS solution for our customers. So call that what we're doing explicitly for 22. Beyond that, I think it's quite clear to everyone that we've got a world-class product, a pretty incredible go-to-market motion. My focus now is also on longer-term initiatives that are going to enable us to deliver sustainable, profitable growth in 23 and beyond. And so I'll leave it there, and I'll just say more to come, okay? Let's talk about that further in the coming quarters.
Atos
Good to hear. Thank you. The next question comes from Bhavan Suri with William Blair.
Operator
Please go ahead.
spk06
Hey, team. Thanks, and let me echo my congrats. Another just solid quarter.
spk07
I guess maybe for Mo and a lot of things on, but Mo, as you think about Mitel, it feels like that partnership is ramping faster than Avaya certainly did, faster than Atos and things like that. I guess help me think through sort of is that because now you guys have become the standard and it's accepted? Is that because their salespeople are getting it faster? Is that because of CloudLink? Help me think through maybe why Mitel appears to be, and maybe it's not, but it seems to be ramping faster than those guys did given the early nature of that relationship?
Vaibhav Agarwal
Well, the first comment I'd make is, as I mentioned during my opening comments, that all the partnerships, the three A's, if you will, saw quarter over quarter seat and revenue growth. So, you know, check on that one. Relative to your question on Mitel, and, you know, I made a reference to this just a few moments ago, it's off to a great start. One key difference here is there is no co-branding. So we were able to immediately begin enabling the channel and the go-to-market motion. Already secured multiple wins. I mentioned the 7,500 user MVP win with over 400 contact center agents. And where we are now, and you can imagine like with all of our partners, the Mitel team and myself are spending multiple hours together every week. trying to accelerate our growth, is continuing to enable their channel partners for success with the RingCentral product.
spk07
Yeah, that's helpful, and I'm glad it's after a quick start. And then a quick follow-up for Veba. You talked a little bit about the better economics from these relationships and how those will play out. I think it would be really helpful for me and for everyone else maybe to get a sense of maybe what those economics might look like three years down the road or five years down the road. Like the relationship with Avaya, yes, you know, there was a prepaid sales commissions or with Mitel. Help us think through what those economics might look like vis-a-vis the current direct sales model. Some sense would be really helpful.
Vlad
Thank you. Of course. Thank you, Baban, for the question. So, look, for us, it's always been about profitable growth and not just growth. And it comes down to two things, really. It's the unit economics and the leverage in the model. So in terms of unit economics, look, we have attractive economics, and we've been operating well above the rule of 40 over the past few years. And when I think ahead in terms of the levers, particularly on the distribution side, like you were mentioning, you know, we will benefit from the lower cost of work as we will be leveraging the partner-led GTM motions. So that inherently will be a driver of margin expansion in the future. The partnerships are enormously accretive to us. And even right now, that is a choice that we have to make in terms of do you expand margins or do you invest in the business to drive more growth? And given how early on we are in this journey, you know, we are reinvesting the dollars back into the business for growth. So I think you'll see a continuation of much the same, you know, enormous leverage in the model, redeploying it back in the business for this year and for the next few years. But as the growth matures, there will be meaningful upside in the margins.
Baban
Gotcha. Gotcha. Thanks for taking my questions, guys. Appreciate it and appreciate the candor. Mo, welcome to the team. Thanks, everybody. Thank you.
Operator
The next question comes from Terry Tillman with Truist. Please go ahead.
Terry Tillman
Yeah. Hi. Congrats for me on the results and the outlook. Hi, Vlad, Moe, and Babob. Two questions. First for you, Moe, it's good to see the ongoing traction of market. And I think you mentioned in your prepared remarks, you see strong sales pipeline into 22. So that's great. What I'm curious about is, Is there any gating factors or anything that could get in the way of you all continuing to ramp the size of your customers, you know, so 20,000, 50,000 seats or even greater? I'm just kind of curious what you see on the ability to keep moving up market, and are there any gating factors there? And then I'd follow up.
Vaibhav Agarwal
Well, Terry, first and foremost, thanks. And, you know, I hate to give one-word answers, but I think the answer to that one is no. There's nothing gating us. You can imagine, you know, back to your comment on prepared remarks, robust pipeline growth year over year, driven largely by large-scale customers. I'll tell you that the pipeline growth that we're seeing from the broader channel, our partners, the third parties, et cetera, is also a material contribution to the growth year over year, and just more and more larger customers in that pipeline. So from a product perspective, it's ready, and we look forward to continuing to win larger customers and demonstrating the efficacy of our product.
Terry Tillman
That's great. And I did lure you into more than a one-word answer there, so I'm excited about that.
spk22
I felt bad. I felt I needed to say more than no.
Terry Tillman
You should feel bad. So that was a great catch-up. Thank you. And then for Vabob, just a quick question as it relates to the change in Office ARR. We have seen the last couple years, if my math is right, there is kind of a low double-digit decline in net new office ARR between 4Q and 1Q. You know, Mo's saying a lot of great things in terms of the pipeline. It sounds like the business is strong. But should we expect kind of similar seasonality as we move into the first quarter around office ARR additions? Thank you, and congrats again.
Vlad
Yeah, so when you look at the fourth quarter, we posted our strongest Q4 in terms of the new ARR ever, and we still grew it over 30%. We grew ARR at 39% at over $1.8 billion. So we are exiting the year with a strong momentum. But the other thing to keep in mind is that we are lapping increasingly tough compares, and the law of large numbers is kicking in. So you have to factor that in. But on counterbalance, there's a lot of, you know, a number of growth drivers ahead of us. More talked about the partnership ramps. We are pretty early on in terms of Avaya and Atos and Ale. And contributions from Mitel, Verizon, Vodafone, and the others that we recently announced are largely incremental and ahead of us.
Atos
Thank you.
Operator
We ask that moving forward that those in the question queue limit themselves to just one question, please. And the next question comes from Sterling Auty with JP Morgan. Please go ahead.
Morgan
Hi, this is Drew on for Sterling. What is baked into the 2022 guidance for the assets that you acquired from Mitel?
Vlad
Yeah, so in terms of the Mitel partnership, The $650 million that we paid has been recorded as an intangible asset, and that will be amortizing over a period of time in the books.
Morgan
Okay, got it. Thank you.
Operator
The next question comes from Samad Samana with Jefferies. Please go ahead.
Samad Samana
Hi, good evening. Thanks for taking my question. So I'll ask a guidance follow-up. Just, Vaibhav, is there any change to the guidance framework versus what the company has used over the last couple of years, just given the change in the CFO position, just trying to understand if there's anything we should be aware of? Because the initial guide for 26% to 28% growth for subscription revenue is actually a stronger starting point than you've had over the last, few years despite a tougher comp. So just trying to understand the guidance framework.
Vlad
Yeah, thank you so much for the question. So just by way of context, I've been with the company for six years, and I have been deeply involved with Mitesh, you know, with the guidance process. So overall, no change in the guidance philosophy. You know, we guide to where we have a high degree of visibility on, but look, we don't know what we don't know. So we build an appropriate level of prudence accordingly. In terms of the confidence in the guide, we ended the year with strong momentum. We had strong retention rates. We have, you know, a good base, solid base to grow from. And we have all these incremental growth drivers ahead of us in terms of the partners. When you layer that on along with the healthy demand environment, we feel very comfortable with where we've guided. Of course, we are being prudent across all of these drivers, you know, as we establish the guidance. And as my boss would say, there's a healthy dose of prudence and optionality in the guide that we've baked in.
Samad Samana
Great. Great. And Mo, just a follow up for you on the brand investment side. I just want to make sure I understand that. So are we talking about like national advertising campaign? Are we talking about kind of traditional media? Just how should we think about that and where should we expect to maybe see it or hear about it with our eyes and ears?
Vaibhav Agarwal
Yeah. Thanks for asking about that. We're pretty excited. you are going to see our first major brand campaign and spend at scale. And that is inclusive of advertisements. Obviously, in the B2B space, we want to be very judicious and targeted with how we're putting our ads out there. And so we're finalizing the exact attack motion, if you will, on where the dollars are going to go. But think traditional advertising, upper funnel, as well as targeted ads that are intended to drive both e-commerce traffic as well as general awareness of Ring Central. We have an incredible win rate, and we want to make sure that we're continuing to crank up the awareness of our brand and drive more growth. It's that simple.
Samad Samana
Great.
Atos
Congrats on the new Roma. Take care. Thank you. The next question comes from George Sutton with Craig Hallam.
George Sutton
Please go ahead. Hey, good afternoon. This is Adam on for George. Thanks for taking my questions. It's great to see existing partnerships continue to expand. I'm curious to hear whether or not you see incremental opportunity coming from partnership expansions, and if so, how would you describe the size of that opportunity?
Vaibhav Agarwal
Well, I'll start with what I mentioned a little bit ago which is if you think about Vlad's remarks earlier, one of the beautiful things is that from a GSP perspective, we went from five announced partnerships at the end of 2020 to 12 relationships at the end of 2021. And obviously, those take a little bit of time to get the product ready, to get the sales motion ready, the sales enablement, if you will, and then they start ramping from there. So just the increase in the number of GSP partners, from my perspective, is upside for 2022. And then, as you think about, there's likely more to come in that space. which then, again, brings additional upside for late 22 and 23, is a positive. And then, of course, we've, you know, talked quite a bit about Mitel already, so I won't go back to that, but to say, you know, brand-new partnership there. And as we said, it started strong, and we're now in the middle of continuing the enablement process.
Atos
The next question comes from Meta Marshall with Morgan Stanley.
Operator
Please go ahead.
Vaibhav
Great, thanks. I wanted to circle back to kind of the slide in your deck that referred to kind of over 50% engage in multi-modes and just how that statistic either informs how you think about the team's opportunity or how that goes into how you think about reducing churn over the next couple of years. Thanks.
Vaibhav Agarwal
Thanks for the question. So let me kick that one off, and then, you know, Vaibhav can build on it. I mean, what you just asked, Mehta, is at the heart of why we believe having the world-class MVP product matters. You know, just to give you a quick anecdote, you know, Vlad and I were chatting the other day in the office, and, you know, I needed a drive and go to a dinner. And so we started on my desktop PC, And then I seamlessly transitioned that to my mobile device. And then when I was in the car, we needed to take a look together at a slide deck. I pulled over, flipped over to my iPad, again, seamlessly transitioned over. And we were able to go through slides together. I turned on the video. And this is the heart of multimodal. This is the heart of why our product truly matters when you think about businesses and how businesses use their devices in a multimodal way, either for internal communications across employees or externally with their customers. And then the other question that you asked in there is the opportunity with Teams. And what I'll tell you is, you know, from my perspective, you know, Teams is a better together opportunity. There's going to be businesses out there, especially in the enterprise space, that are embracing and adopting Teams. And we're seeing strong traction with both our direct routing capabilities, putting in Five9's world-class voice behind that product, which is really, really important to a lot of business customers, as well as with our embedded dialer. I talked about Brigham Young and that win that was enabled by our embedded dialer and some of the key business capabilities like SMS and fax, et cetera, that that brings to the table as well. So I think I fully answered your question, but if I didn't, feel free to ask a follow-on.
Vaibhav
No, I think that that gets to it. I just wondered if kind of – part of your initiatives that you mentioned earlier about reducing churn are around kind of getting people to interact more multimodally with RingCentral. But you essentially answered part of that.
Vaibhav Agarwal
Yeah. Thank you. I appreciate that. On the churn side, I'll just quickly say I'm really excited about what our teams have been working on and building internally. And not only is it about multimobile and usage more overall, It's about looking at many different drivers that would be indicative that we need to actively lean in with our customers and help them better understand, better use the products. We're seeing really, really strong success, which means we're just simply expanding that to more and more of the customer base to continue improving our term percentage.
Atos
Thank you for the question. Great. Yep. The next question comes from Cash Rangan with Goldman Sachs.
Operator
Please go ahead.
spk09
Hi, thank you very much. Congratulations on the results. And Mo, congratulations on your new position. If this question has been already addressed before, my apologies. I've been toggling from call to call. But wondering what your take on the strategic direction of Green Central is. Granted, it's got a very solid strategy and execution for a number of years. I'm wondering the unique angle that you bring. If you repeat the answer again, I wouldn't mind hearing it at all. And also, any go-to-market changes as the competitive environment definitely changes and your motion increasingly goes upmarket into the enterprise, any tweaks or changes to go-to-market to accommodate that changing lens also would be appreciated. Thank you so much and congrats.
Vaibhav Agarwal
Thank you, and no problem. I'm happy to repeat the answer I gave a little bit ago. So specifically, if you think about it in terms of first key initiatives with the company, I'm really focused on what I call our growth, our people, and our future. And growth is really about 22, unleashing the drivers that drive the growth that we're expecting. And there's five things. First one is executing on our existing partnerships and getting them ramped. The second one to the last question that I answered is about expanding our AI motion around optimizing retention and continuing the drive down churn. The third one is, There's more out there when you think about channel and partners and continuing to scale new partnerships. The fourth one is about implementing our first brand investment at scale to drive growth across both e-commerce and really all channels and route to market, getting the name RingCentral better recognized out there. And then finally, continuing to invest in the incredible R&D machine that we have, to differentiate our MVP solution and our integrated UCaaS and CCaaS solution. And then, as you think a little bit further out, right, if you call it our future, you know, everyone knows that we've got a world-class product and an incredible go-to-market machine. I'm also focused on longer-term initiatives that are going to enable us to deliver sustainable, profitable growth in 23 and beyond. And I'm spending quite a bit of time there, as you can imagine, and I'll just say more to come. Let's talk about that in the coming quarters.
spk09
Wonderful. If I could follow up very quickly. Mo, you probably had a very good lens into the company. You probably are aware of the UCAS landscape. Can you just give us some comfort? How did you feel better about the longer-term comparative position, given that investors are worried about more influx of investors? of PBX in the cloud from the likes of Microsoft, Zoom, et cetera, although they may not have patently a technology that could confront RingCentral head-on. How does it get comfortable with the technology competitive position of the company vis-a-vis larger competitors? And that's it for me. Thanks once again.
Vaibhav Agarwal
Very good. So the way I'll answer that is, yes, as part of my previous remits, I did say grace over both our UCaaS solutions at my previous employer, as well as the broader voice set of portfolios. So very deep knowledge of call it the TDM to IP, the prem to cloud ecosystem. And this is at the heart of why I wanted to come to RingCentral. The number one reason was what I see is that UCAS still has a staggering amount of growth ahead of it. We always talk about, you know, that this is less than 10% of the total TAM has been addressed. I was looking at some third party data this morning that showed that UCAS as a space is going to grow by another 75 million seats in the next handful of years. And the heart of it is I've seen it and I believe it, and this is why I wanted to be part of the RingCentral family and team. And then vis-a-vis some of the competitive landscape that you've articulated, I am deeply comfortable, again, in my previous life, having been a partner for essentially every solution that exists out there at scale, that the RingCentral product, bar none, is best in class in the world. And then the very last comment I'll make is, you know, to the larger competitors piece of it is, you know, I think there's been a lot of chatter about, you know, are some of them friend or foe? And I think that there's a better together motion. We talked about one of them a little bit earlier. Direct routing, embedded dialer is opening up entire new sets of the customer base for us to go after and one that I'm very excited about. Appreciate the question.
Operator
The next question comes from Michael Turin with Wells Fargo Securities. Please go ahead.
Michael Turin
Hey there. Thanks. Good afternoon. Congrats on the closeout to the year. Look, the ARR metrics are each showing continued strength. The one question we're getting is just the Q4 revenue upside was maybe a touch lighter relative to prior guidance than what we've seen in recent quarters. Bob, anything you'd add to help characterize the Q4 revenue results? Was there anything timing-related for us to be mindful of, or anything else you'd add to help frame that out, particularly given the especially strong guide into next year? It's helpful. Thank you.
Vlad
Yeah, thanks, Michael, for the question. Yeah, we guided a bit later in the quarter than usual, which provided us with greater visibility in Q4, and we had posted, call it the strongest Q4 guide, I think that's what was pretty much driving the lighter beat that you are seeing for Q4. Overall, no structural changes or no change in the guidance philosophy, if you will.
Atos
Thank you. The next question comes from James Fish with Piper Sandler.
Operator
Please go ahead.
spk21
Hey, guys. Maybe one off of not asking around the corner or guide here, but you guys have highlighted innovation and quality of the network as differentiation and And obviously a big part of the news today has been around the Russia Ukraine conflict. And we were wondering with such a large part of your development team based there that is also handling the quality assurance of the network, how you are looking to handle the situation of further escalation or sanctions and ensuring that five nines of quality. And if you're potentially looking to shift any of this development to other countries instead. Thanks, guys.
Vaibhav Agarwal
Thanks for the question. You know, what I tell you is, first and foremost, About 12% of our revenue comes from outside of North America. And, you know, you can see that much of our sales presence is really outside the US and the UK, Europe, and Australia. And then to your question around R&D, you can imagine that we've got contingency planning in place for any eventuality. We're monitoring, like everyone I think right now, we're monitoring what's happening in these regions and believe that the likelihood of any meaningful business impact is low because of our contingency planning.
Atos
Appreciate the question. The next question comes from Ryan Kuntz with Needham.
Operator
Please go ahead.
spk18
Thanks for the question. I wanted to touch on pricing, if I could please. I see your revenue per account is Certainly, you know, heading up nicely there as you penetrate the larger accounts. But on a on a perceived basis, you know, are you seeing any pressure there, especially with the opportunity to upsell into teams with direct routing?
Atos
Thank you.
Vlad
Yeah, hey, this is Vaibhav. So overall trends on pricing remain stable, so nothing really to call out. You know, a couple of areas of color. When we look at our larger customers, we do see some volume discounting, you know, which is a fact of life. But enterprise customers do end up buying premium SKUs along with contact center. You know, as we are going more and more upmarket, what's, you know, what matters more is the wallet share, which is the ARPA metric you just mentioned. And we are seeing a steady increase in that, and that's driven by a couple of things. It's the customer demand coupled with the integrated MVP platform and the multimodal engagement. And then when you go down to SMB, pricing is holding very steady. So net-net, ARPU trends are holding really stable, and we are getting nothing really to report there.
Vaibhav
All right. Thanks very much.
Atos
The next question comes from Alex Zukin with Wolf Research. Please go ahead.
Alex Zukin
Hey there, this is Al-Anon for Alex Zukin. Thanks for taking the question. I just wanted to touch on hiring for 2022. I was wondering what your trajectory of growth for quota-carrying reps is and how you're thinking about an increase in productivity.
Vaibhav
Thanks.
Vaibhav Agarwal
Yeah, so what I tell you on that, Alex, is we don't disclose the explicit numbers around hiring. What I will tell you is for the last several years, the efficiency of each one of our sales reps has increased in terms of the total quota that they're carrying. Frankly, it's a fairly impressive metric. And even with that, based on the growth rates that we're projecting, we do expect to continue hiring new sales force. I'm not going to get into the exact numbers, but I think that gives you the color you need around both the efficiency side of it as well as what are our expectations around hiring new workforce.
Atos
Appreciate that. The next question comes from Matt Nicknam with Deutsche bank.
Operator
Please go ahead.
spk22
Hey guys. Thanks for taking the question. Um, just given the number of the C-level changes over the last few months, obviously the risk for business disruption or execution risks been on a lot of investors' minds. I'm just wondering if you can talk to anything you may have seen surface the last couple of months or whether any of these C-level changes impacted customer demand or behavior in any way. And then just as a follow-on, anything you'd call out in terms of Omicron-related impacts during 4Q that may have pushed some larger activity into 2022 that you might call out? Thanks.
spk15
Yeah, hey there. Vlad here. I thought I'd say hi to people as well. I guess I'll take the first part of the question. look as you all have heard from me before numbers speak for themselves when we went through some changes on the management team I believe we've projected a very strong sense of security if you will and confidence in our ability to continue executing at least at the same or if not better level. And I think you're seeing this now. We had a truly outstanding quarter. It kept a very, very strong year. And we firmly believe that we have the team in place to continue our march forward in 2022 and beyond. with, you know, without skipping a beat and hopefully even picking up pace. The fact that people like Mo are choosing to join us is the most clear testament to what RingCentral really represents in the marketplace competitively and, you know, if people are familiar with the space and the arts, These are the people who tend to do well here. So again, this is just to reiterate a warm welcome to Mo. And you can rest assured that we will do no worse under Mo than ever, and we have always done reasonably well, pretty well, I would say. And there is room for optimism. that we will do meaningfully better moving forward, especially as the world is coming out of the pandemic. And this may be the second part of your question is, look, many people have had Omicron by now, and most people came out and life is beginning to stabilize, it seems like. And I just want to remind everyone, again, this is a repeat of past performances here from me, but RingCentral was not a COVID story. RingCentral is not a work-from-home story. RingCentral was, is, will continue to be a work-from-anywhere, and that is our core strength. is ability for people to be equally productive from the office, home, hotel room, airplane, what have you. This is our unique differentiator, and as work shifts from purely at home to other more traditional venues, and I'm not saying that work from home is not going to continue. Clearly it will, but it is going to revert back to normal or start moving in that direction. That's our strong belief. received from our customers. And again, this is why we are so confident and are providing, you know, fairly strong guidance for 22 at this point. Anything to add, Vaibhav or Mahmoud?
Vlad
I think from my perspective, it was a great quarter and a great finish to the year, so we are pleased with the results. I think the team did a great job executing without missing a beat. You know, of course, any given year we want a lot more, but there were no material missteps. And, you know, there's a lot of excitement and optimism with all the incremental growth drivers that are ahead of us.
Atos
That's great, and I appreciate all the callers. Thank you. The next question comes from Ryan McWilliam with Barclays.
Operator
Please go ahead.
spk12
Thanks, guys. Nice results. Sneaking into the two-part question here. How should we think about the potential for RingCentral's partnership with Microsoft Teams? Do you think this contributes more in line with some of your strategic partnerships from a C-count perspective or more in line with your global service provider partnerships? And then separately, you just mentioned your contact center business now accounts for greater than 10% of your total overall business. How does this number compare to this time last year? Thanks, guys.
Vaibhav Agarwal
Okay, on the Microsoft side, I think that we've hit on this one a couple of times. I'll just put a bow on it and say, look, there's a two-pronged opportunity here. There's the direct routing opportunity, and there's the embedded dialer opportunity. And to kind of build on an earlier question, as you think about larger and larger customers up the stack in the enterprise space, Many of them are demanding Five9's voice. Our voice is substantially better than other VoIP products out there. And it's an opportunity to go sell better together, if you will. And let me turn it over to Vaibhav to wrap this up and talk about the second part of your question.
Vlad
Yeah, in terms of contact center, We are growing at a fairly healthy clip. Contact center is growing faster than the overall business. So seeing some healthy growth trends there. I don't think we disclosed what the actual number was last year, so I'll just keep it at that. Greater than 10% now, growing faster than the overall business.
Atos
Appreciate the comment. Thanks, guys.
Vlad
Thank you.
Operator
Ladies and gentlemen, we are out of time for questions, so this concludes our question and answer session, which also concludes today's conference call. Thank you very much for listening in. You may now disconnect.
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