RingCentral, Inc.

Good day, and welcome to the RingCentral fourth quarter 2024 earnings conference call. All participants will be in a 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 a touch-tone phone. And to withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to Will Wong, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to RingCentral's fourth quarter 2024 earnings conference call. Joining me today are Vlad Shmunis, Founder, Chairman, and CEO, Kara McEgon, President and COO, and Abai Lamba, CFO. Our format today will include prepared remarks by Vlad, Kara, and Abai, 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 comparison. The 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.

Good afternoon and welcome to our fourth quarter 2024 earnings call. We had a good close to 2024 and could not be more excited about the year ahead. I'd like to start by congratulating Kiera McEagan on her elevation to RingCentral President and Chief Operating Officer. Kira has been with the company for over a decade and has been our chief innovation officer for a number of years. She has been in charge of all product and technology and has been the driving force behind turning RingCentral into an open-air platform and our evolution into a multi-product company that now includes contact center and AI. In her new role, Kira will be responsible for the company's product and technology organization, and will add direct and channel sales, customer success, marketing, and business operations organizations. Kira's expertise in driving product vision and innovation, coupled with your deep understanding of customer needs and our company's culture, makes her the ideal leader to help guide RingCentral into our next phase of AI-fueled multi-product growth. Now, let me share with you some highlights about the quarter and the year before sharing more about our AI strategy and the traction we're seeing with our new product. Q4 total revenue of $615 million and operating margins of 21.3% were both above our guidance. We also generated free cash flow of $112 million in Q4, a quarterly record. For the full year, total revenue rose 9% to $2.4 billion. While still early, our multi-product strategy is clearly working, with new products such as our native contact center, RingCX, and our flagship AI product, RingSense, already making meaningful contributions to our growth. Operating margins were 21%, up from 19.1% in 2023. And for the first time, we achieved positive gap operating profitability for the full year. We also generated $403 million of free cash flow, up 24% versus 2023. We expect to generate half a billion dollars of levered free cash flow in 2025. In addition to our strong free cash flow growth, I am pleased with the progress we have made on stock-based compensations. In 2024, SBC as percent of revenue declined over 5 percentage points year-over-year to 14%. Importantly, we reduced the value of net new shares granted by about 40% year-over-year, with similar improvements slated for 2025. This should set us up for another year of healthy free cash flow per share growth. Our strong financial profile and culture of innovation puts us in a strong position to supercharge our product portfolio through AI. AI is a mother of all megatrends and the future offering central. In this new era, our vision is to empower every business with an AI-first platform that not only connects, but also enhances conversations between businesses and consumers, thus driving better outcomes for our customers. This brings me to our exciting product announcement today. We just unveiled RingCentral AI Receptionist or AIR, which we believe will deliver tremendous value to businesses everywhere. Building on our history of industry-leading innovations, AIR is an innovative generative AI phone agent that is seamlessly integrated into the phone system. It acts as a true digital employee that enables our customers to do more with less. Kira will provide more details about this exciting new product. With respect to our new product announcement last year, I am particularly pleased with the success we're seeing with RingCX, our native AI-first cloud contact center solution. We now have over 700 customers on RingCX, up from roughly 500 last quarter. This success is no accident. According to Metrigy, over 75% of customers prefer UCaaS and CCaaS from the same vendor, to close silos and create more connected employee and customer experiences. We are seeing it firsthand from our customers. A good example of the power of an integrated UCaaS and CCaaS solution is a large new customer win this quarter with Genpak, a global advanced technology services and solutions company. Genpak has more than 125,000 employees serving over 800 clients across 30 plus countries. Genpak selected our full communication suite across Ring EX and Ring CX as they look to foster greater collaboration amongst both employees and clients who are spread across many time zones. Importantly, Ring CX will be replacing several cloud contact center solutions as Genpak looks to continuously improve and streamline their platforms. Another key reason why GMPact selected RingCentral was our ability to deliver fully regulatory compliant UCaaS and CCaaS solutions across all 22 telecommunications circles in India. Another important proof point of RingCX's success is its adoption by our GSP partners. Most recently, BT has selected RingCX to power its CCaaS offering, joining Cox Communications, Vodafone UK, and Zaya USA as GSPs that are now selling RingCX. We expect more GSPs to follow. We also continue to see strong traction with our other new products. RingSense, our conversation intelligence platform, and RingCentral Events, our virtual hybrid and on-site events platform, are both doing well. We now have over 2,000 RingCents customers, up over 65% sequentially. We also have 700 RingCentral Events accounts, up from about 600 in the third quarter 2024. With this, We're already halfway towards reaching our goal of at least $100 million in new products ARR by the end of 2025. To wrap, we closed out 2024 on solid footing. We look forward to continuing to drive profitable growth in 2025 and beyond, with strong free cash flow generation and further free cash flow per share improvement. I could not be more excited about our future as we continue expanding our portfolio via our new 10 expanding AI first product. The opportunities ahead of us are huge, and we have the right people, product, and partners to take us to the next level. With that, let me turn the call over to Kira to discuss our product and go to market in more detail.