RingCentral, Inc.

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.

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.

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.