RingCentral, Inc. (RNG) Earnings Call Transcript & Summary

All right. This is delightful. We're all back together in person. Amazing attendance, registrations off the charts, I am told it's the biggest conference that is ever hosted, ever. So thank you for coming out. RingCentral, it's a team that does not need a lot of introduction, but we still make the introduction. Vladimir Shmunis, the founder and CEO; Sonalee Parekh, former Goldman.

Yes, yes.

Back in the industry; and Mo Katibeh, COO of the company. Isn't it your 10th anniversary since you went public?

Ninth, ninth.

Ninth. See, time flies, time flies. Yes.

Almost. Yes.

So let's -- I want to go back to the company, the value proposition. You're a full-fledged UCaaS, and you went public, you were voice, PBX in the cloud, selling small businesses. Now you're a full-fledged UCaaS platform. I think you used the expression NVP, video platform...

Make this a video call.

Correct. Still learning the acronyms. So how do you look at the evolution of the company? Where does this place you with respect to what are your long-term goals for the company since you are a UCaaS platform? But do you see this changing? Just as you change from PBX in the cloud only to a UCaaS platform, how do you see the future of the company evolving in that direction?

Yes. No. Look, it's been a great run. We started out -- well, we started out back in 1999. But in 2013, when we IPOed, we were, call it, $150 million business, and certainly not printing very much cash. Let's put it that way. Look, at this point, run rate is over $2 billion. So that's pretty healthy growth. We've expanded our gross margin, I think, from sub-60s to now over 80%, 82%, I think is right.

82.7%.

82.7%, okay, which is best-in-class, not just for UCaaS, but for very much respectable concept as you call. So that's good. We are quite profitable on free cash flow basis. And especially in this economic environment, we're very fortunate to find ourselves in this position where we are of size and are able to grow not only the top line, but the bottom line in a very healthy manner.

Yes.

Now as far as this evolution from the product perspective, yes, of course, we went from voice SME to where now we are addressing everyone from still SMEs, all the way into larger enterprise. We are a message video firm and contact center together. We have just recently won number one from Gartner Insights, which is basically customer-driven. This is way to go for the community. And we actually scored #1 in all 4 categories, which are...

The Gartner Peer Insights, right?

Yes. Gartner Peer Insights.

Exactly, which looks at segmentation and capabilities across 14 key vendors in the space. So number one across all 4. It's very, very rare for Gartner to come out and do a mid-cycle update. But the sheer capability increases that they had seen led them to do it. And it's a pretty amazing accomplishment.

And it covered SMB...

SMB, Enterprise, UCCC and mobility, yes, all 4 categories.

Wow. It's a...

Yes -- so yes, so we feel great about it.

Are you -- is there a gap between the #1 or #2? I mean, how wide or how not so wide is that gap since you touched on...

I don't know if we know that. I don't know that.

No, they don't disclose the specific details around that. We're just excited to be #1 across all 4.

That's great. So maybe switching to you, Mo, I know you joined the company about 9 months back or so -- 9, 10 months back or so. And you're done answering this question, what attracted you to RingCentral? And I will not ask you that question. But as you get deeper into the RingCentral story, how would you describe the TAM, total available market, for the company? And where are we really with respect to market penetration in the UCaaS space across all players?

So very good. Yes. And I see how you bridge there because that was one of the key reasons that I came to RingCentral. I mean, I think the net for me is as you think about the global workforce, about 7 billion people on the planet, 3.5 billion of them are working. One of the key questions we get is how large is your TAM? And the net is, as you think about small customers, large customers, et cetera, for sure, there are several hundred million seats out there that have historically used on-premise PBX capabilities for calling, et cetera, predominantly for businesses that were in the business of serving consumers, highly regulated industries, a.k.a. not knowledge workers, right? Not a lot of us that are sitting in this room right now. But those businesses that are truly focused on the consumer. They make up the majority of those several hundred million seats. And frankly, it doesn't matter which third-party AR firm you go to, Gartner, IDC, Synergy, et cetera, there is one constant truth, which is the penetration into that TAM is still quite low, and there's quite a bit left out there left to go. And it's a very exciting proposition.

Back to you, Vlad. You have a new management team. Lots of new C-level Chief Digital Officer or Chief Marketing Officer, Chief Financial Officer, Chief Operating Officer, what do you want them to do?

Continue executing, you know. Look, there is a method to the madness, if you will. The company is a large company now. We, especially I wanted to have people who are familiar with running large businesses and very fortunate to have Mo and Sonalee here both coming from larger companies, AT&T and HP in particular, and both of them having deep experience with communications, Mo running AT&T business, both product and marketing for them, is what is $40 billion business, and Sonalee being in charge of communications business for HP, most producers there. So what we want to do is mature as a company, but not lose the startup firing abilities that we had initially and still hoping to retain. And yes, we're very -- just keep in touch, but quite capable with all these folks.

So how do you feel about those mandates? I mean do you feel like several months in, do you have more conviction in being able to deliver last mandate? Sonalee, let's start with you, Sonalee, and then go to Mo.

Start with me?

Yes.

So I would say, yes, my conviction has certainly increased. And you didn't ask me, but I joined RingCentral, and I did have lots -- quite a few opportunities at the time. I joined RingCentral because it is such a unique opportunity to create value and such an amazing opportunity to collaborate with this great team and with this inspirational founder, who's sitting next to me. And RingCentral has $2 billion of revenue, $2 billion plus now run rate. But not only that, we are profitable. And we have OP margins that are the envy of the competition. And we have the ability to generate multiples of the free cash flow that we generate today. So I have higher conviction around that and our ability to deliver on that today than I did 3 months ago. In terms of what Vlad specifically is asking me to do, look, it's twofold. One is to make sure that we maintain the growth mindset, and that is first and foremost. And for anyone who has the question, are you prioritizing profitability over growth. No, growth is a priority, but we have this huge opportunity to also expand profitability at the same time, which I think this makes this an unbelievably exciting story. And that ability to expand profitability then translates into generating free cash flow. And there is true free cash flow power in this business. And again, Vlad is a tough taskmaster, but that's exactly what you want. He's extremely involved in the business. And he's a mentor, but also someone who has a very, very strong strategic focus. And as a CFO, that's exactly the kind of CEO I would want to align with. And then there's the working relationship with Mo. And we're in lockstep on everything. And any initiative I talk about, he's deeply involved with and vice versa. So in that sense, it's only getting better.

Mandate for Mo.

Well, I'll just build on that because I think Sonalee nailed it, like it's twofold. It's growth and materially expand OP margin and free cash flow. She talked a lot about the growth side, so I'll double-click on the profitability side. We have been disciplined hiring all year, even before it was sexy and cool to be doing so from day 1 as I've joined. And as we look across the opportunities in front of us, we've said as part of our last quarterly earnings, 20-plus percent OP margin. That's not an end, it's the beginning of where we expect the journey. And we're not trying to shape it over x period of time. The mentality and the fire in the belly is the, how do you become as efficient as you possibly can be as quickly as you can be. And there's a multifaceted initiative framework in place to go optimize across sales and marketing, R&D, G&A, COGS and then horizontal initiatives, which is really focused again back to the, how do we think about hiring and the most efficient workforce that we can have.

Got it. Mo, I want to come back to you again. On the last quarter earnings conference call you talked about sales cycles reverting back to pre-COVID levels and a bit more caution in enterprise buying. At the same time, you also said that leads are up, and you had a record million dollar TCV deals. They seem like they are somewhat conflicting with each other. Can you just maybe diagnose this a little bit and tell us what you're seeing out in the field down to this day, what's going on in the broader macro as it pertains to the caution that you saw?

Very good. Yes. So I'll say, look, we're deep into the quarter. And so I would just reiterate the guidance that we gave for this quarter as part of 2Q, right, and not...

And Central guidance for Q3 and for the fiscal year.

Well, I said Q3, but thank you for bossing us. As we get deeper and deeper into the enterprise space, obviously, linearity skews more and more towards end of quarter is something that we've talked about before. And it's something that we're continuing to monitor and push. Okay. So to the other half of your question, yes, we saw an interesting dynamic unfolding in second quarter, which is above and beyond FX and what was happening in terms of the world, we did see our enterprise constituent, and this was true across both channel and direct, which again gave us conviction that it was more of a macro play. Leads were continuing to go up, speaking to the demand and the opportunity that's ahead of us in this space. At the same time, the buyers were being a bit more cautious where the opportunity side or the initial deployment, if you will, was smaller than we had originally expected it to be. And as we sat down with our customers and our channel partners, et cetera, and really was trying to determine what was happening in the marketplace, it was really this caution about as I'm thinking about my deployments, I want to make sure I don't know what's happening with the world, I don't know what's happening with my budgets. So hey, let me -- I want to go test this thing. I think that there are savings here. Let's go do in a smaller initial deployment, and then we approach it as an upsell opportunity thereafter.

And where are we with that? Okay, reckoning with higher cost of capital, whatever it is need to do a pilot project before I really go full stream. How long is it adjustment there in your view? Does it take a quarter or 2? Is it permanent? Or I mean...

Yes. It's really interesting question. We did expect that cycle time as we're going to revert to, call it, 2019 levels. So as we did our initial planning for the year, and we were thinking about CIO mentality, proof of concepts, initial deployments, et cetera, we did think that hey look, it seems slightly unreasonable to believe that the cycle times are going to remain at the, call it, back half '20, first half '21 levels. And we built that into our plan. No change to that at this given point in time. We're continuing to see cycle times in line with those expectations. Again, as you skew more Enterprise, obviously, some of it is more back-end loaded relative to the quarter and more to come on that topic.

Got it. Okay. I want to go back to SMB, whoever wants to jump in here. So Enterprise, a little bit more cautious with all the factors you talked about. What's happening on the SMB side? I mean a slate of companies, including Intuit, which I regard as a pretty good indicator for the health of the SMB ecosystem, their guidance was fine. I mean the quarter was good, and people were very surprised that SMBs in the U.S. are doing quite well. Has your experience...

Don't be surprised. Yes, SMBs are super resilient. SMBs have been able to go and Enterprise can downsize and many are, SMBs cannot because they can't fight themselves. So we've been saying, me in particular has been saying for a long time to not underestimate SMBs, which is a full 1/3 of U.S. economy numbers of Nortel worldwide, but it's a very significant percentage. And I'm not at all surprised that we made those comments, we think it's a feature, not a bug that we have, how big is our SMB business?

40%.

Like $700 million or something like that, business.

So SMB is 40%, Enterprise is 60%. Okay.

Well, mid...

Yes, exactly. We have majors. Our segmentation is slightly different.

You have 3 segments, right?

Yes.

Yes, Small, medium, large.

Got it. Okay. Yes. With respect to -- maybe before we get into the competition, I just want to switch back and forth. Certainly, we'll get to you on net new business. One thing that struck people despite your very solid growth rate in Q1 and Q2, if you strip out the FX, net new business bookings, the way people do the calculation looking at ARR or run rate in your subscription revenue, it looks it was flat to maybe down a little bit relative to Q1, Q2 of last year. Can you just give us a bit of a diagnosis as to what drove that? And what are the things that you're looking for with respect to making your numbers in the second half of the year, you're expecting a better rebound in net new business, any things that can explain how it shaped up in Q -- first half? And how it might shape up in the second half?

Yes, yes. So one thing you know, Kash, we don't guide on bookings. So -- and we are very deep into the current quarter. So I'm going to try and keep my comments fairly high level. We've actually never guided on bookings. But I would say in Q1 and more so in Q2, there was a very strong FX drag. And as you say, if you remove that, you basically saw a fairly flat picture. We also had a couple of -- if you look back at Q1 and Q2, there were some very large deals the year before, so it made the comp somewhat difficult. And then finally, there was the linearity around -- we are becoming more of an enterprise. We're shifting higher up into the enterprise. And as a result, many of our bookings come later in the quarter, which is completely natural, and you cover other SaaS companies, that's the order of things. We still saw an incredibly strong ARR quarter in Q2. I mean it was plus 32%. And we continue to believe that we will add meaningful bookings going forward. This is a very healthy business. And Mo and Vlad both alluded to the fact that we have some real growth drivers, underlying growth drivers. And particularly, I think in the current backdrop, one of the things that I think about as a CFO is -- and we're constantly doing this is where can I save money? Where can we make NPV-positive decisions for RingCentral? And our customers are going to do the same. And switching from PBX to the cloud, switching to UC, that is a positive NPV decision with a very quick payback. And that's the other thing. If you're a CFO or an IT buyer today, you care a lot about how quickly you can pay back. And for RingCentral, on average, it's about a 9-month payback period. And then we have all the other drivers of growth. The things that Gartner ranked us #1 for, we have this amazing UCCC go-to-market motion. We are investing strongly in international. That remained very, very underpenetrated for us. And then you haven't asked it yet, but we have teams and teams...

I love it when you answer questions very much. It makes my job so good.

Teams has been a fabulous growth driver for us. We gave some disclosure in the last 2 quarters. I think in Q1, we talked about 500% growth in our team's practice. We'll be doing more of that. So I think overall, we feel very comfortable. That being said, we did see certain trends in Q2 around the slightly smaller deployments among our enterprise base which we, of course, expect to result in upsell and the slightly elongated cycles relative to a year ago, they're back to pre-COVID levels. And what I would say is without being specific, and I'm not trying to guide in any way, but we're seeing the same trends continue. And nobody -- and I don't think -- I'd be remiss if I didn't say there's no company that is completely immune to the macro. And that is a fact that we're all working around. And what I would say is we're constantly evaluating it. And I feel that we have some great levers, should we need to pull them and use them to ensure that we protect our growth and profitability.

Got it. Coming back to you, Mo, on the topic of competition, I think Zoom recently declared 4 million seats versus your 5 million. I know there's a big ARPU difference between your offering and theirs. But how -- what's your take on how Wall Street sees the competitive environment? So it assumes installed base is at 80%, although their yield rate is much lower than yours, and Teams throw out some big numbers, 12 million of their subscribers using PSTN lines. Help us understand what's going on in the ground as far as reality of the competitive situation is concerned vis-à-vis how they report these statistics?

Very good. So I'll build on what Sonalee said, which is, as you think about Teams, I do believe that there's a misconception around there, around Teams and their growth vis-à-vis our growth and the opportunity. The net is that as you think about the Teams' licensing constructs, E1, E3, based on the most recent numbers, about 88% of the Teams base is using those 2 licensing constructs. And then that is they come with no cost. And so as you think back to those hundreds of millions of seats out there and those customers that actually need calling because of the nature of the business that they're in, business to consumer, ones that value telephony, even smaller new companies that have never had on-prem PBX that need those capabilities like all the SMBs that Vlad was talking about and national fitness companies, et cetera, all of them need these calling capabilities. So the rise of Teams in the enterprise has served as a growth vector for us. It's not only articulated the numbers. We talked about 500% growth in first quarter. We talked about second quarter being the single largest quarter we have had of sales into the Team's base. They have built a platform that is broad, but it is not deep feature functionality, reliability, the ability for us to go in with UC and CC together is a meaningful competitive differentiator and why we're seeing the results that we have. And on that other company and more broadly, this is a very large market. We expect multiple winners here. There's room for everyone. And then as you articulated, frankly, I struggle to understand how there can be that many seats and it represents under, call it, $400 million-ish of revenue. There's something there.

Yes. Like $100 a year, $8 a month versus your $3,200, $3,300 ARPU.

Our ARPU has been stable and consistent both on acquisition and base.

Sorry, what is $8 you said?

Sorry?

What is $8 you said?

It just works at the pricing of the other company that disclosed 4 million seats, and they're doing $400 million in revenue, that's about $100 per seat per year. So...

But what gets lost in translation, and that is on top of the other products. So their overall ARPU is in the 20s, and they do not have a viable contact center offering. So there is this misconception that we are holding on for dear life to this ARPU, that's not the case. If you look -- remember, we are MVP, message, video, phone. I guess they're starting to talk about chat now, okay? Well, we started on that journey in 2018.

You made an acquisition, yes, long time back on this, yes.

Okay. So let's say that pleasure is in that form of factor, right? So okay, more power there. But I think the point is it is strictly an add-on. We could play the same game. We could say, hey, you know what, our video, which we do have, is $5, $8, $3, doesn't matter. We just bundle it in. I would urge you to look at the overall ARPU for our product, okay -- actually, look at TCO, not ARPU, total cost of ownership. Ask Microsoft, Zoom, okay? All in, you will find that everyone is at about the same level except that we are the only ones with a viable high-end UCaas, CCaaS integration, and that does pull up our overall ARPU. But that is sustainable because there is huge technological advantage there.

Yes, yes. So I know that you have off late started to publish your ARPU trends and you have this yellow line and then orange line, whatever, your RingCentral colors and then you have your ARPU going above that, right? And some say, "Oh, that's because contact center is growing very nicely, and that's a higher-value product. And if you strip that out, the underlying ARPU is actually going down." Any response to that?

Strip out messaging, strip out voice, the whole point is in integration, right? Yes. So that's why we don't. So what did we disclose, we said that overall ARPUs are steady at the base. Without that new business, ARPUs are steady and not dragging overall ARPU down. So we showed you both sort of the present and the past and the future. And yes, if we did not have the contact center, it would not be as healthy. But we do have...

You got the contact center. You should be better for it.

Yes, yes.

Yes. And at some point, maybe your ARPU starts to go up and contact center business becomes large enough as a percentage of revenue.

Hopefully. But again, we are rising a $2 billion base and still growing fairly nicely. So no, I mean as Sonalee said, we definitely don't want to stop being a growth company. The question is we'll get what level growth, right, and profitability. And we're optimized for both.

Anybody with questions, just raise your hand. Yes, just speak, and I will try to...

[indiscernible]

He's asking can the Rule-of-40 become Rule-of-45, 50?

Yes. So shall I take that and then others can add? We've never specifically guided to be the Rule-of-40 company. It was certainly a north star. And if you look back at our last couple of quarters and again, I'm not going to provide new guidance today. You'll see that the way we define Rule-of-40, which is subscription revenue plus OP margin, we have been a Rule-of-40 company. When we look forward, what I would say is that we will be showing -- if you think about the trajectory of the profitability side of that equation, and if you look at the trend over, say, the last 2 years and then what we did in the last 2 quarters, you can see that we will be pivoting somewhat towards higher profitability, which is natural when you become a $2 billion SaaS company. It's kind of inherent in the model. So the way I look at it is I would be disappointed if we couldn't do meaningfully better. And again, without providing guidance, meaningfully better on the 180 basis point year-on-year improvement we're going to give on OP margin this year. And if you look on a several-year view, I have personally committed to a minimum of 20% OP margin. And we want that sooner rather than later. Someone asked what does Vlad task you with? Like yes, he wants iron focus there. And why not? We can have both. So that's the way I would think about it and frame it. I don't know if anyone has anything else to add.

I asked that question. Yes. What's Vlad holding you to, margin?

Yes, exactly.

Anybody else with a question. Yes, please.

You've done a pretty good job of sort of making a range of [indiscernible] over the last few years. How did IT [indiscernible] consolidation with more of the maybe smaller players that are actually sort of have true UCaaS platforms like an 8x8 or the new go-to or you might tell a flagship product there? Do you see more consolidation for the next few years across the board? Or do you think it will be more of a game of you guys continue to grow and they'll have challenges where you'll just sort of compete the revenue away?

Who wants to take that? I mean, shall I have a go and then do you want to add to that? Or do you -- you go for it.

I'll go for it. Look, it's a very large market. Don't forget that. It's a very large TAM. It can support multiple players. More than Microsoft and Ring and Zoom, there will be a longer tail. Look, we are always open to suggestions. We are -- it needs to make sense, right? It needs to be not dilutive to margins, for sure, especially in this economic environment. There need to be revenue synergies. There need to be operational synergies, et cetera. So would I rule out consolidation? No. But if you were to ask this question 2 years ago, I'd give you the same answer. Just never say never, right? But again, just to remind everyone, it's a user-favorite count, $50 billion to $100 billion TAM, not counting the contact center, okay? And we are one of the clear leaders in that space. So we can do fine as a stand-alone. And if there is consolidation outside of us, it's fine. And we do participate. Okay, it makes sense.

Is there a question on this side?

[indiscernible]

I don't think it's on. Across the pond in Europe and then the mic went out.

I think the question was, if I understood it right. I think the question was, why did we partner as opposed to acquire the legacy players, right? That's the question? Yes, because it's very different to run a hardware-centric business, which is what all of they are with very different economics, a very different growth profile, profitability profile, different talent bases, et cetera. So what we thought we would do is 1 plus 1 equals 3 or more as opposed to 1 plus 1 equals 1.2. The idea was -- continues to be to take their installed bases and move those from on-prem to the cloud. And I think what we've disclosed in -- I forget, Q1 or Q2, Mo, what did we say about size of...

Yes, we said -- so in Q1, we said, look, we've approached almost 0.5 million seats that have moved over as part of the first 3 partnerships, the As, if you will. And then in Q2, Mitel is continuing to ramp quite nicely. We've said, look, 100% growth in terms of the seats that have moved over Q2 year-over-year. So that strategy is working. These disclosures are new to help investors and the market understand the efficacy that we're seeing there. And there's a lot more seats.

So Mo, you said 100% of the new seats were from partnerships?

No. I said they -- so about 0.5 million seats had moved over at the end of the first quarter. And in the second quarter, relative to the 4 partnerships we've seen 100% growth in, call it, the seats year-over-year.

Got it.

So short answer to the question is we thought and we still continue thinking that we could sort of have a cake and eat it too. We could affect massive migrations from on-prem to the cloud, which is taking place without taking on the unnecessary burden of somebody else's balance sheet, somebody else's -- without a scale the quarter that really...

Have the cake and eat it too without having to -- okay. Let's talk about the -- I think -- the Street is concerned about net adds, especially Avaya, since it's presumably the largest contributor to your partnerships. Did you add net new adds in Q2 on Avaya? That's the elephant in the partnership.

Yes. And we announced that.

I think they said that they had a record quarter in Q2.

So in net ads, right?

Yes. In terms of net adds, so new seats, new bookings in quarter up sequentially in Q2 and up sequentially in Q1. And obviously, that for Q2, that's also within the context of their own broader announcements.

Yes. And Vlad you said -- or Mo you said, it's 100% growth rate on a year-over-year basis, that base of 500,000 seats is $250,000 a year back or so. So obviously, trends recently it's been up...

Exactly. And 500,000 is clearly at that point as well, right? I think you got an extra quarter.

And what's the outlook for the partnership business?

One more time, the what?

What's the outlook for the partnership business?

Well, to use the line from Sonalee, certainly not here to guide. But what I will tell you is...

It's 10% growing 100%. That's...

There's a lot more seats out there. There's a lot more seats out there. The decisions that we've made in terms of those partnerships were specifically because the 4 of them together represent, call it, a little more than half of all the legacy on-prem seats that were ever sold.

It's good intake. I feel good. 10% growing 100%. You didn't say any forward-looking thing, but 10% growing 100%. Any other questions? Please go ahead.

Give us a stated look with the contact center market looks like where you guys positioned there. I'm familiar with Genesis, I kind of view it as sort of one of the other larger ones throughout is really in this work that you're getting again how do you guys [indiscernible] there?

Yes, I can repeat it. Talk a little bit about the state of the contact center business and who are you seeing there in terms of the competition, okay? So one of our fun facts for second quarter that we've referenced is our contact center business is now a $0.25 billion ARR and continuing to grow quite nicely. It's a mega trend. It's a growth vector for us, et cetera. And our sweet spot, if you will, and how we're positioning is UC and CC together. And why are we doing that? And why is it working for us? Well, if you think about both of these temps, if you will, are migrating legacy seats that were historically on-prem into the cloud. About 2/3, over 60% of all the legacy CC seats that have been sold were purchased from the same vendor that sold that customer, UC is well, starting with Avaya and then Cisco is where all those legacy seats are. So it's a very familiar logical motion for the buyer. And it is that because of the unique integrations that you can get when you're buying UC and CC together mean that you're optimizing your cost, UC ARPUs are lower than CC. You can make every single employee, customer outward-looking by doing the integration company direct, et cetera, that lets you seamlessly move calls from the contact center to the employee, rider logistics trucking is a big example that we recently used that's the epitome of that. And this is why we're continuing to do well. And you articulated who the competitive set is, no surprises there. And again, our sweet spot is when a buyer needs those things together or to our 5 million seats that we've surpassed on UC upselling them on CC as they are now ready to go on the CC and the cloud journey.

One last question from my end for Vlad. The stock did really well for a period of time, then it seems to be under a lot of pressure. But you've got a good business, it'd be growing 32%, 33%, vibrant market opportunity, good unit economics and you have -- you've led the company. What do you think is -- let's say, a year from now we're doing the same conference and the stock is up whatever, 50, 75, who knows, right? What do you think will have been the misperception as to why RingCentral is still growing at an acceptable rate and turning more than acceptable profit? Let's say, looking backwards, what will be the reasons why RingCentral has outlooked people's pessimistic expectations?

Well, that's a question to you all, right? I don't know. Look...

We unite, it's chorus.

We -- yes, I mean, we hear probably what you all are hearing is that Microsoft is going to eat your line so they are going to eat you. Well, they haven't yet. No one is going to eat you, but this is slowing down also. I think that there are all of these concerns. It's very hard to disprove the negative. All we can do is point to our past record, it's point to a very large TAM, point of the fact that most sell side still continues to be liking us, vast majority are buy strong, by data, and just the fact that we're -- look, we're solving a real need out there. It's not sort of some sort of fanciful idea that may or may not work. People need to communicate, businesses need to communicate, businesses need to have a phone identity that's different from their personal identities. And we are the absolute leader in that space, both by seat count, pure-play revenue, geographical coverage, reliability, don't forget that. We're the only player out there with Five9 SLA. And we don't do this as a way to pay people back. We do this as a way people can count because 5 minutes of downtime mean a lot. So I think that -- I mean, hopefully that these misconceptions will now be clearing out now that we're back in normal, right [indiscernible]. And the fact that people are now a little bit back to the reality that no, not every communication is going to be via video, where we are an up and comer, but no chances that we have historically led with. And yes, some communications will be via video and some via texting, and there also continue to be via voice. Like, all of B2C is via voice. We expect continue leading that.

Great. Thank you so much. Thank you, Vlad. Thank you, Sonalee. Thank you, Mo. I appreciate it.

Thank you.

Thanks for coming out.