RingCentral Inc at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Funk - BofA Global Research - Analyst : That's all good stuff. Thank you. I'm going to start with a few that we're asking in all the meetings. They're really just higher-level questions, so we can kind of get a sense of the general landscape. And one you're probably getting a lot, but can you describe the macro environment and the impact on your business today versus 6 or 12 months ago?

Question: Michael Funk - BofA Global Research - Analyst : AI questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 8:20PM, RNG.N - RingCentral Inc at Bank of America Global Technology Conference

Question: Michael Funk - BofA Global Research - Analyst : And I asked one of your competitors this question earlier after the first one, because it came to mind, there are really three separate potential factors here, right? I mean, first would just be that customers, they provisioned XCaaS during COVID to meet the work-for-home needs of all their employees, right? They scrambled, they added the seats, and then figured it out later. And that's one thing where maybe those are going away. That's number one. Second, you could be seeing pressure from headcount reductions in 2023, 2024. That would indicate that we're lapping that and potentially feeling less pressure today because headcount reductions have been less in early '24 than they were in 2023. And then the third is just the broader macro, which is my first question, which is rates are higher, CFOs are tighter, is more approval required to get a deal done? But you could have a pig in the python effect, whereas rates come down to see if those get more comfortable, then it loosens up the deal flow. Can you help me think through how you think about those three different factors and the impact on your business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 8:20PM, RNG.N - RingCentral Inc at Bank of America Global Technology Conference

Question: Michael Funk - BofA Global Research - Analyst : That leads to my next question. I think it was actually three years ago at my conference when you were talking about guidance and your nature conservatism and guidance. But maybe you wanted to guide a little bit closer to the actual rather than having a 10% delta every quarter, right? Thinking about 2024, and you've certainly outperformed peers in terms of revenue growth, that's undeniable. But presuming you still have conservatism in your guidance, where are the levers do you think you can pull to exceed guidance? Is it lower churn? Is it higher ARPU? Is it higher gross additions? Where is the opportunity to outperform that guidance, which is presumably still conservative? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 8:20PM, RNG.N - RingCentral Inc at Bank of America Global Technology Conference

Question: Michael Funk - BofA Global Research - Analyst : Hypothetically, it was conservative.

Question: Michael Funk - BofA Global Research - Analyst : That's all a great color. Thank you for that. You've done a tremendous job in driving free cash flow. You should be congratulated the last few years in exceeding the estimates there as at most your forecast. But how do you think about reallocating that capital back into the sales motion? Presumably you have some weaker competitors now that are struggling, don't have the capital to put into sales and marketing, don't have the cash flow -- excuse me, that you do. So how do you think about taking now as an opportunity to claim some of that market share since you do have much stronger cash flow position?

Question: Michael Funk - BofA Global Research - Analyst : Are people breaking rank? I feel like last year, there was some scuttle about people were breaking rank late in the year and telling me to cut you off.

Question: Michael Funk - BofA Global Research - Analyst : No, it's great. It's great color. I mean, just thinking about modeling out free cash flow, I mean, I think you started your efficiency initiative, one in October of 2022 was the first. I think you talked you talk in the [box] at incremental since then. But if I'm thinking about building up a free cash flow for '24 and '25 are most of my moving pieces, operating leverage, reduction in cash interest, are those the major pieces or is there more to take on the operating expense side?

Question: Michael Funk - BofA Global Research - Analyst : Okay. And just on the concept of say, like maintenance CapEx for capital intensive industries, you obviously have the concept of maintenance R&D, just to keep that ARPU, to keep that running flat, hopefully. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 8:20PM, RNG.N - RingCentral Inc at Bank of America Global Technology Conference

Question: Michael Funk - BofA Global Research - Analyst : Yeah, continuous improvement just to keep the ARPU flat. What's the right way to think about that maintenance level of R&D percentage of revenue, if you ever got there?

Question: Michael Funk - BofA Global Research - Analyst : You mean less of a bespoke type product and more off the shelf, right?

Question: Michael Funk - BofA Global Research - Analyst : And I do want to ask about AI. These 30-minute sessions go so fast, but I don't want to leave that out today. But how should we think about the AI opportunity? And has there been any traction in our API for RingCentral? And then I guess kind of the follow on, because I want to get on to one question, is thinking about pricing. A lot of questions around pricing and AI, if you can charge [it for it]. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 8:20PM, RNG.N - RingCentral Inc at Bank of America Global Technology Conference

Question: Michael Funk - BofA Global Research - Analyst : There's a lot of debate around the pricing model. I'm going to go about a minute over, if you don't mind. So Microsoft Dynamics 365 contact center was announced. Seems like much more of a specific push into contact center from Microsoft. Do you have a hot take on that?

Question: Michael Funk - BofA Global Research - Analyst : Great, thank you for giving me another minute or two. I appreciate it. Thank you, Sonalee.

Question: Michael Funk - BofA Global Research - Analyst : Thank you, all.