RingCentral, Inc. (NYSE:RNG) Q2 2019 Earnings Conference Call - Final Transcript

Aug 05, 2019 • 05:00 pm ET


RingCentral, Inc. (NYSE:RNG) Q2 2019 Earnings Conference Call - Final Transcript


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Greetings, welcome to the RingCentral Second Quarter 2019 Earnings Conference Call. A question-and-answer session will follow the formal presentation. [Operator Instructions]

I would now like to turn the conference over to your host, Ryan Goodman, Head of Investor Relations. Mr. Goodman, you may begin.

Ryan Goodman

Thank you. Good afternoon and welcome to RingCentral's second quarter 2019 earnings conference call. I am Ryan Goodman, RingCentral's Head of Investor Relations. Joining me today are Vlad Shmunis, Founder, Chairman and CEO; David Sipes, Chief Operating Officer; and Mitesh Dhruv, Chief Financial Officer. Our format today will include prepared remarks by Vlad, David and Mitesh followed by Q&A.

Some of our discussions and responses to your questions will contain forward-looking statements. 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. RingCentral assumes no obligation and does not intend to update or comment on forward-looking statements made on this call.

I encourage you to visit our Investor Relations website at ir.ringcentral.com to access our earnings release, slide deck, our non-GAAP to GAAP reconciliations, 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.

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.

With that, let me turn the call over to Vlad.

Vlad Shmunis

Good afternoon and thank you for joining our second quarterly earnings conference call. We had a strong second quarter, and we extended our leadership in the $50 billion unified communications as a service market. Revenue, operating margin, and non-GAAP EPS all exceeded the high-end of our guidance. Mid-market and enterprise continued to lead the growth, with strong contributions from our channel partners. We are also pleased with the early results of our targeted vertical market initiatives, which again contributed multiple seven-figure TCV wins during the quarter. While not a regular quarterly metric, I'm pleased to note that we achieved a key milestone in Q2.

Namely, we closed a record number of 30 TCV wins of over $1 million, which is up over 60% year-over-year. This included a full enterprise-wide footprint win with a Fortune 1000 multi-national software company.

Let me cover some of the key metrics for Q2. First, total revenues grew to $215 million. This is a 34% increase year-over-year, and is above the high-end of our guidance range. Second, mid-market and enterprise continued to be a key driver of our performance. We define mid-market and enterprise as $25,000 or more in annual recurring revenue, or ARR.

This grew 66% year-over-year and is now a