RingCentral, Inc.

Good afternoon and welcome to the RingCentral fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Will Wong. Please go ahead.

Thank you. Good afternoon and welcome to RingCentral's fourth quarter and full year 2022 earnings conference call. I'm Will Wong, VP of Investor Relations. Joining me today are Vlad Shmunis, Founder, Chairman, and CEO, Mo Kadiba, President and Chief Operating Officer, and Sonali Parekh, Chief Financial Officer. Our format today will include prepared remarks by Vlad, Mo, and Sona Lee, 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 turn the call over to Vlad.

Thanks, Will. Good afternoon, and thank you for joining our fourth quarter earnings conference call. 2022 was a milestone year for RingCentral. I am very proud of what our team has achieved against a challenging macroeconomic backdrop. The strength and resilience of our business model and stickiness of our customer base allowed us to once again deliver on our guidance. Let me give you a few facts regarding 2022. One, we finished the year with $2.1 billion of annual recurring revenue. We are now one of only 10 pure play SaaS companies with over $2 billion of recurrent revenue and greater than 80% subscription gross margin. Two, we exited the year with a record operating margin of 14%, which is up over 300 basis points versus last year. Three, Contact Center is now approximately a $300 million ARR business, which we believe makes us a top five global CCaaS provider. And four, most importantly, we still invested over a quarter billion dollars in product and technology, further cementing our market leadership position. And going from strength to strength, In 2022, RingCentral received over 30 workplace and employer brand awards. We were honored to be included amongst best companies for diversity, women, and company culture. This allowed us to build a world-class team as we attracted top-notch senior executive talent from companies such as Google, Adobe, AWS, NVIDIA, and Five Nines. Building on the SOLID foundation, we expect continued growth and improving customer acquisition costs, resulting in strong operating margin expansion. We have also made significant progress driving down SBC as a percent of revenue by almost 400 basis points in 2022, and we expect continued improvements in this area going forward. All this puts us on a path to significantly stronger free cash flows, which, combined with our new credit facility, puts us well on our way towards addressing our outstanding converts. Mons and Ali will provide more detail about our results and outlook shortly. But before they do, let me remind you of the main drivers of our success. It comes down to our corporate values, trust, innovation, and partnerships. First, trust. Q4 marked the 18th consecutive quarter of 99.999% uptime. Reliability is often the single most important factor for customers as our service is mission critical to them. They select RingCentral because we can be trusted to connect them with anyone, anywhere, and at any time. This continues to be a positive differentiator for us in our industry. And we see it in our base, with over 95% of our customers actively using RingCentral for both internal and external communications and with billions of API calls each month. Trust also means data privacy and security. This quarter, we expanded end-to-end encryption beyond support for video. It now includes messaging and phone, giving customers the ability to keep critical information safe. Privacy and security are top priorities, and we will continue to invest to maintain our leadership in this important area, given its criticality to our customers. Second, innovation. RingCentral was built on the dual megatrends of mobility and distributed workforces. which we leverage to improve the effectiveness of communications for enterprises worldwide. And now there is a new megatrend emerging that is potentially even more disruptive, namely AI. While the power of large language model AI has recently captured the imagination of the broader public, we are proud to have been one of the first in our industry to deploy these types of solutions. We're leveraging AI to make real-time communications more intelligent, seamless, and effective. Noise reduction, echo cancellation, virtual backgrounds, meeting transcriptions, summaries and highlights are just a few examples of how we use AI to further enhance our users' experiences and productivity. Moving forward, we will continue to invest in AI across our portfolio. You will see us launching new products that leverage AI to improve efficiency of collaboration for knowledge workers, improve the efficacy of our contact center for agents and supervisors, and improve the productivity for frontline workers. We expect these investments will further cement our leadership position in the age of AI. Stay tuned. for exciting new product announcements throughout 2023. Outside of AI, we've added hundreds of features to our platform in 2022. These include delivery on our advanced EU data privacy requirements, Raybaum Act compliance, browser support for Firefox, enablement of GSP partners like Vodafone and Charter, the introduction of device-as-a-service, new unique integrations for RingCentral Contact Center, a revamped Resource Center, 60-plus new integrations into key third-party tools to simplify customer workflows, and expansion to additional digital customer engagement channels like LinkedIn, for example. And finally, partnerships. We're committed to our strategy of partnering with the world's most recognizable brands to create additional value for businesses and enterprises worldwide. Our partnerships with companies like AT&T, BT, Vodafone, and a number of others are unique and have been a meaningful driver of our success. Partnerships remain an important part of our strategy. More will double click, but let me share a couple recent highlights. First, we are launching a new partnership with AWS. This announcement marks the beginning of an important new relationship whereby we will work together with AWS to deliver technologies and innovations that improve business communications for today's hybrid workforce. Under this new multi-year strategic agreement, RingCentral and AWS will directly sell our product and customers will be able to directly purchase RingCentral MVP and contact center solutions from the AWS marketplace. In addition, RingCentral and AWS will work together to develop and deliver vertical solutions for businesses in core industries such as healthcare, financial services, retail, education and public sector, as well as invest in joint marketing, lead generation and promotion activities together. We are extremely excited about this new strategic relationship and cannot wait to get started. Also, yesterday we announced an extended and expanded agreement to our strategic partnership with Avaya. with significantly improved terms. Avaya Cloud Office by RingCentral remains Avaya's exclusive multi-tenant UK solution to Avaya customers. Avaya continues to hold the world's largest base of unified communications on-prem users, and we remain best positioned to migrate this base to the cloud. Looking ahead, there are hundreds of millions of on-prem seats that are still to be migrated, and where we have the right to win every day. There is tremendous product market fit, and we have the product, partnerships, and most importantly, people to capture this large untapped opportunity that is still in front of us. With that, let me turn the call over to Mo to discuss in more detail what we are seeing in the market today.