Ryan Koontz: Hi, thanks. I want to ask about product mix a little bit. I know you can’t give us exact metrics, but can you kind of reflect on what’s transpired over the past year in terms of Contact Center upsell? Are you seeing more of a shift toward Contact Centers? It seems like it’s got a little more durable growth, obviously, than the core UCaaS space. And just as a follow-up on the Teams 2.0 opportunity, if you can give us any customer feedback you’ve had on that new product offering? Thanks.
Vlad Shmunis: Yes. Maybe I’ll take that. Vlad here. Look, Contact Center is — it’s less penetrated than UCaaS. To be clear, UCaaS, UC to UCaaS is still relatively early even there as well. I mean, if you take our numbers and Microsoft’s and Zooms’ and put it all together, we are probably still easily under 20%. But Contact Center, I would say, is earlier in that migration. Interestingly enough, Contact Center offers interesting opportunities in AI, and there are some puts and takes there. So traditional contact center vendors who are relying on enabling agent seats, that could be a little bit of a headwind as there will be less reliance on humans and more reliance on virtual agents and bots. But for people, who are innovating in the area and coming in from the perspective of an AI-first approach, and this crowd definitely includes ourselves, at this point, we are seeing this as a major tailwind to really take share.
Contact Center tends to be yet more sticky than UCaaS. Those are more considered decisions generally. And your question was over the last year. Look, we’ve seen a robust demand for contact centers and especially for contact center that’s closely integrated with UCaaS solution. We saw that for a few years now via our white label offering of RingCentral Contact Center. What we are seeing now is that there is, I would say, a renewed interest in AI-first approaches. And very importantly, in softwares that’s more oriented towards self-service with easier and faster deployments. And what we are seeing is even some of the larger deployments now and I think, in our prepared remarks, we shared that we have some literally Fortune 500 companies choosing RingCX, which, by the way, is only in controlled availability as we speak here now, but we’re already seeing multi-thousand seat wins.
Frankly, it’s been a pleasant surprise. We saw that it would skew lower. But for now, we are seeing good traction across the board and expect it to continue.
Sonalee Parekh: One thing I would just add there is that we are still seeing very, very strong UCaaS, CCaaS attach in our larger deals. So more than 60% of our $1 million plus TCV deals again included a CCaaS component, and we continue to grow well above the overall CCaaS market.
Ryan Koontz: Got it. Sonalee, thank you.
Operator: The next question is from Tim Horan with Oppenheimer. Please go ahead.
Tim Horan: Thanks, guys. I know the Microsoft Office Copilot was just launched, but have you had a chance to study it? And it seems like it opens like a dozen questions to you guys. I guess is that a large improvement to their Teams? Does it make their ability to integrate UCaaS and CCaaS better? Does it improve your partnership? Or on and on, I mean, there’s a ton of questions and one of the key questions is they’re charging $30 a month for it. And I guess it’s not really clear. Are you saying you guys think you can charge for your AI over time? But I guess the most important question is what does Copilot meaning for the industry at this point?
Vlad Shmunis: Right. Well, number one, you have to ask Microsoft, right? Look, we are not prepared yet to disclose additional details on RingCX pricing, stay tuned. It’s coming soon. We do expect this pricing to be aggressive, if not disruptive. So I would just, again, urge a little bit of patience on that. Now having said this, we are not competing with Microsoft. We are leveraging what Microsoft has. We are participating in the ecosystem that they’re creating. We are both using core innovation from open AI and that the company is in our case, okay? And we certainly expect and building our product to be an open platform. And again, not to preannounce anything, but expects that every innovation that Microsoft has that Microsoft chooses and decides to make open and interoperable with other platforms, we will be on that bandwagon, okay?
So again, I would just say stay tuned. And you can also assume just in closing that our early customers for RingCX that they are also well aware of other advances in the industry, including the Copilot and given what they know of our road map and what we have today and Microsoft, they’re choosing to do business. So more to come.
Tim Horan: Well, on that point, do you think Copilot is a major improvement on Teams?
Vlad Shmunis: Look, look, it depends. I mean it’s a great idea detail, right? I mean is, will it — how accurate will it be? It’s not just a price point, how accurate will it be? Will it or will it not hallucinate? And data is going to be trained and so forth. I’m not personally prepared to appoint one way or another. I do think that it’s a really good idea. It’s a timely idea. It’s an idea that makes sense, yes. Copilot is for during call, as Tarek said in ways that we classify things before, during and after. I can tell you that there is a lot of interest in the — during the call experience enhancements, which Copilot addresses. So when you have an agent online with the customer, getting real-time hints, data feeds, maybe even call scoring, all of the things that Microsoft is talking about, appointment making for that matter in real time.
All of those are timely ideas. Customers are looking at it. But it’s very, very early and people are just in general, trying to figure out what to do with this new capability.
Will Wong: And we have time, I think, for one more question.
Operator: And that final question is from Michael Turrin with Wells Fargo. Please go ahead.
Michael Turrin: Hey, there. Appreciate you squeezing me on. Tarek, you had — you commented in the prepared remarks around retention rates and is coming in below where you think the company is capable of. Is there any way for us to just unpack how much of that is tied to macro and external factors versus just execution related opportunities you see and thinking about key contributors there? Are there any primary points of focus you’d point us towards? Thank you.
Tarek Robbiati: Yes. Thanks for asking this, and it’s certainly a good way to finish up our conversation today. Look, our retention rate is around 100% in Q3. Really, what will take it upwards from here is a combination of factors. But going forward, we are really focused on upsell and customer retention to drive higher net retention. And when you have a multiproduct portfolio, it does help tremendously the upsell sales motion because simply put, you have multiple conversations you can have with a single customers, right? And so our new products, RingCX, RingSense, our new Ring Events provide opportunities [technical difficulty] customers. And by the way, when a customer buys more from you, then that customer is stickier over time, which helps also the net retention.
So this is exactly the reason why we are innovating and to be able to capitalize on the opportunities of this new product portfolio. We need to think differently in terms of our sales motions to help customers see the new products value. And therefore, this is going to be a journey over time. But I feel optimistic about the prospects of net retention in the long-term for RingCentral, given the — how much emphasis we’re placing on dialing up innovation with the team. Thank you.
Operator: This concludes our question-and-answer session, and the conference has also now concluded. Thank you for attending today’s presentation. You may now disconnect.
