RingCentral, Inc.

Good day and welcome to the RingCentral second quarter 2026 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. To withdraw your question, please press star and then two. Please note, this event is being recorded. I would now like to turn the conference over to Stephen Horwitz, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to RingCentral's second quarter 2026 conference call. Joining me today are Vlad Shmunis, Founder, Chairman, and CEO, Kira Makagon, President and COO, and Vaibhav Agarwal, CFO. Our remarks today include forward-looking statements regarding the company's business operations, financial performance, and outlook. Thank you for joining us. Good afternoon and thank you for joining us. We delivered another strong quarter.

exceeding the high end of guidance across all key metrics. Total revenue, subscription revenue, and both GAAP and non-GAAP operating margins surpass expectations. Free cash flow generation also remains strong, and we now expect to deliver more than $7 per share for the full year. Given our quarterly performance and our confidence in the longer-term sustainability of our operating model and free cash flow profile, I am excited to announce that our board has approved an increase to our quarterly dividend to 12.5 cents per share. We are also making meaningful progress toward our medium-term target of reducing SBC to a range of 3% to 4% of total revenue. Our disciplined focus on profitability has put us ahead of schedule on GAAP operating margin, and we now expect to reach our 20% target within two to three years, a year ahead of schedule. We also remain on track to reduce growth debt to a billion dollars by this year end. This performance reflects a multi-year effort to strengthen our financial profile while transforming the company into an agentic voice AI leader. RingCentral is becoming an intelligence layer where AI agents and human agents work together to manage customer interactions end-to-end for better business outcomes. We believe the market opportunity is large, spanning UCaaS, CCaaS, and conversational AI, totaling more than $150 billion. This is based on estimates from IDC and Gartner. Further, we believe that the convergence of these disparate markets into a broader category of AI-powered customer engagement plays to our strengths, and that we are well-positioned to address this shift with one of the industry's broadest AI-powered customer engagement portfolios. We're investing over a quarter billion dollars annually in R&D to expand our portfolio, deepen our mode, and accelerate innovation. Voice is at the center of this transformation. It remains the primary way customers engage with businesses, through both human-to-human conversations and, increasingly, interactions between people and AI agents. Our carrier-grade platform serves approximately 600,000 businesses across 45 countries and supports international numbers in nearly 100 countries. It carries roughly 40 billion voice minutes annually and more than 3 billion text messages, both growing faster than our user base. Adding to our mode are billions of recorded and transcribed conversations that reside on our platform. This gives us invaluable learnings in delivering AI-native solutions that are best tailored to address our customers' needs. This wealth of data, combined with our infrastructure, scale, reliability, and decades of operating experience, create a high barrier to entry. In addition, the breadth of our product portfolio gives us the ability to cover all aspects of customer to business interactions, including person to person, person to informal contact center agent, person to a dedicated contact center agent, and, of course, increasingly, person to an AI agent. It is this ability to freely intermix AI and human agents while having both learn from the other that gives RingCentral a sustainable structural advantage. Unlike many AI point solutions that depend on third-party telephony or contact center stacks, RingCentral's agentic voice AI is built on our own global business voice network that is hard to replicate. It also integrates closely with our well-established cloud native product portfolio. This matters because most businesses want a single platform that can support, connect, and orchestrate across every customer interaction, whether to a human or an AI agent. This constitutes a clear competitive advantage for RingCentral. This advantage translates into strong adoption, broader portfolio penetration, and meaningful customer expansion. We're seeing the demand across every part of our go-to-market engine, direct, channel, and GSP, with customers and partners increasingly leaning in to adopt AI across the entire platform. Numbers don't lie. ARR from customers who utilized at least one of our native paid AI products now represent approximately 13% of ARR, having doubled year over year. These customers have net retention well above 100% and meaningfully higher ARR pool than the rest of our base. This momentum spans our entire AI portfolio. We ended Q2 with more than 16,000 paying AI or AI receptionist customers, which is up 400% year-over-year. Our AI conversation expert has more than 6,300 customers, growing more than 70% year-over-year. More broadly, ARR from our AI-led new products grew nearly 60% during the first half of the year. These new products also help us increase wallet share. One example is a large U.S. automotive dealership group with approximately 30,000 employees. Beginning with RingX in 2024, they later expanded into RingCX and AI Quality Management, and more recently rolled out AIR and QualQs across its dealerships. This has more than doubled their ARR over the last several months. Our new Customer Engagement Solution, or CEB, is another standout. CEB adds lightweight contact center capabilities to RingTX, such as call queues, shared SMS inbox, and analytics. CEB now serves more than 9,600 customers and has grown more than 80% sequentially. Our progress on product innovation wouldn't be possible without transforming ourselves into an AI-native company. This quarter, most of our product and technology employees, in partnership with OpenAI, executed an AI native project with over 99% success rate. This marks a major milestone towards RingCentral becoming an AI native company. We'd like to thank OpenAI for their guidance and support in making this happen. Another core strength and mode is our differentiated go-to-market, which includes direct sales, over 16,000 channel partners and resellers, and global service providers. Our AI and new products are resonating with channel partners. In fact, about half of our AI ARR originated from the channel. Partners investing in AI services and outcomes are winning, and we're building out programs around that momentum. We also have 16 leading global service providers in our network, and they remain an important part of our go-to-market strategy. These partners are increasingly bringing our AI products to the market. Recent wins include BT selling Ring CX and AI Quality Management to one of the UK's largest electricity and gas brokers, and Vodafone UK recently deploying AI-powered Ring EX at PwC, one of the big four consulting firms. To further build on our momentum, I am delighted to welcome NICE to our family of strategic resellers. Today, RingCentral and Nice announced an extension and expansion of our partnership, whereby Nice will begin marketing and selling Ring EFs in combination with CX1, while RingCentral continues to offer Nice CX1 to our customers. We now have a symmetrical, mutually reinforcing partnership that brings together two market leaders to deliver the future of AI-powered customer and employee experiences to businesses of all sizes. Also, in an effort to streamline customer experience and to better align with our respective strategic directions moving forward, we have recently restructured our relationship with Avaya. While RingCentral will remain Avaya's exclusive multi-tenant cloud UCAT offering, existing Avaya cloud of its customers and partners will transition to the RingCentral platform and brand directly. We see this restructuring as a win-win for RingCentral, Avaya, and most importantly for ACO customers and partners alike. We look forward to continuing to serve the ACO community under the RingCentral brand and working with them directly. Last but by far not least, this progress would not be possible without our outstanding people. I am delighted to announce that RingCentral was recently named to Time's list of America's Best Companies for 2026. recognizing employee satisfaction, financial performance, and sustainability over a three-year period. This important award recognizes the passion of our employees, the trust of our customers, and our focus on culture, innovation, and diffusion. I could not be more excited about the road ahead. With that, I'll turn it over to Kira.