Go-to-Market. David Sipes COO RingCentral, Inc. All rights reserved.

Transcription

1 Go-to-Market David Sipes COO RingCentral, Inc. All rights reserved.

2 Multi-Channel Go-To-Market E-Commerce Inside Sales Carriers Channel Field Sales ENT (>1,000) 9k businesses $8B MID-MARKET (50-1,000) 205k businesses $7B SMALL BUSINESS (1-49) 5.5mm businesses $10B *US only RingCentral, Inc. All rights reserved.

3 Trusted by Companies of All Sizes Up to 1,000 Employees 1,000 5,000 Employees 5,000+ Employees RingCentral, Inc. All rights reserved.

4 End-to-End Customer Experience Purchase Deploy QoS Support

5 Scalable Sales Engine VISION World-Class Go-to-Market Strategy & Execution Direct Indirect ROUTES TO MARKET ecommerce Direct Sales Signature Field Sales Resellers ISV Service Providers PEOPLE Direct Sales Channel Managers Sales Leadership SALES FOUNDATION Systems & Tools Enablement Metrics & Analytics Compensation Policies & Process Culture of Success Coverage MARKETING Marketing & Lead Generation PRODUCTS Office Global Office Contact Center Glip

6 Award Winning Customer Satisfaction RingCentral performance vs. TSIA CSAT Benchmark RingCentral US Support 9.2 SaaS 8.3 Software or Services 8.5 All (138 companies) World Class Source: TSIA benchmark data 2/25/2016.

7 Total Cost of Ownership Advantage Costs of On-Premise Communication Services Cost of Cloud Communications PBX Hardware Maintenance fees Web meetings Audio conferencing Fax Telco (PRIs, T1s) Local, long distance, toll free Multi-location (MPLS, PSTN) PBX parts Outside services All-inclusive user pricing Uniform IP desk user phones experience

8 Solution Consolidation Example: A leading high tech company with ~1,000 Users Legacy Solution Cost = $1.3M/Year RingCentral Solution Cost = $0.3M/Year PBX $0.3M Web Conferencing $0.1M ~80% Cost Savings RingCentral Office $0.3M Conference Calling $0.9M

9 Growth Strategy Expand Upmarket Accelerate Indirect Channels Scale Globally Relentless Focus on the Customer

10 Enterprise Acceleration 1,000+ Deployments Q3 2016

11 5,000 User RC Office Company: One of world s leading casual dining restaurant companies 1,600 restaurants and 100,000 EE in 31 countries Replaced: Avaya Deal Stats: TCV $3M+ Differentiators: Platform APIs, Admin Simplicity, QoS

12 Growth Strategy Expand Upmarket Accelerate Indirect Channels Scale Globally Relentless Focus on the Customer

13 Channel Acceleration RingCentral, Inc. All rights reserved.

14 2,700 USER RingCentral Office Standard: Direct / Channel Company: Unified School District Serving Over 21,000 Students 28 Sites Across Silicon Valley Replaced: Avaya Deal Stats: Partner: CDW Differentiators: Google Integration & Deployment / Support

15 Service Providers Telus Connect BT Cloud Voice

16 Growth Strategy Expand Upmarket Accelerate Indirect Channels Scale Globally Relentless Focus on the Customer

17 A Global Cloud Communications Solution Global locations multiple systems Global locations single cloud solution RingCentral, Inc. All rights reserved.

18 800+ RingCentral Office Premium RC CC: Direct Company: Hi-Tech Identity Management leader High growth Pre-IPO 7 offices across the globe Deal Stats: Differentiators: Global Office (UK, SE, FR, NL), Meetings

19 Competitive Landscape Cloud PBX Global Service Video & Web Conferencing Contact Center Team Collaboration Open APIs Integrations RingCentral, Inc. All rights reserved.

20 Path to $1B $1B In 4-5 years Global Indirect channels Upmarket SME

21 Q&A RingCentral, Inc. All rights reserved.

22 Customer Panel Ryan Azus Senior Vice President of Worldwide Sales

23 Panelists: Paul Chapman CIO, Box Philip Luedtke VP, IT & Workplace Operations, New Relic Samuel Eakin Operations Manager Hawk Ridge Systems

24 Channel Partner Panel Zane Long VP, Channel Sales

25 25 Partner Overview Bubble up Enterprise customers are proactively initiating Trusted Advisor Relying on RingCentral partners to make UCaaS choices Scale YTD added 8 Master Agents, providing access 200,000 sub-agents

26 Panelists: Dave Dyson CEO Ian Kieninger CEO Tim Handren Managing Partner

27 Financial Overview Clyde Hosein CFO RingCentral, Inc. All rights reserved.

28 History of Strong Growth while Expanding Margins Subscription Revenue and Op Margin $146 M $200 M $271 M -2% $356 M* 2% Subscription growth 30%+ Best-in-class SaaS software gross margins of 80% Expanding Non-GAAP OM for 10 consecutive qtrs -19% -14% Three consecutive qtrs of positive free cash flow E Subscription Revenue Op Margin % *Analyst Consensus as of 10/26/2016

29 Addressing Three Market Segments $25B U.S. Opportunity ENT (>1,000) 9k businesses $8B MID-MARKET (50-1,000) 205k businesses SMALL BUSINESS $7B ~2-3x = $50-75B+ Global Opportunity (1-49) 5.5mm businesses $10B

30 Small Market Efficient, Scaled up Business Office ARR and Revenue Pay Back 25% Growth Y/Y Lowest CAC = Fastest Breakeven Good Gross Retention at 99%/month Scaled up GTM Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 $7 of Lifetime Revenue per $1 Invested ARR Revenue Payback (Months)

31 Mid Market Shortening Sales Cycle Driving ROI Office ARR and Revenue Pay Back ~90% Growth Y/Y Best ROI Today Better Gross Retention at 99.5%/month Upsell Opportunities Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 $12 of Lifetime Revenue per $1 Invested ARR Revenue Payback (Months) *ROI = Discounted LTV/Customer Acquisition Cost

32 Enterprise Market Early Stage Strategic Investment Enterprise Pipeline ($) Enterprise Product Ready Ramping Salesforce Significant Upsell Opportunities $15 of Lifetime Revenue per $1 Invested Q1'16 Q2'16 Q3'16 Q4'16 Best Potential ROI *ROI = Discounted LTV/Customer Acquisition Cost *ROI = Discounted LTV/Customer Acquisition Cost

33 Early Enterprise Trends: Winning More Logos Seats Total Logos and ARR 20 Logos 6 Logos 2 Logos $0.8M $2.8M $9.6M Q3'16

34 Early Enterprise Trends: Driving up ARR Top 20 Customers ARR 62% CAGR $10.2 M $4.4 M $6.9 M Q3'16

35 Early Enterprise Trends: Meaningful Upsell Opportunity 20 Largest Deployments 8.2K 15-20% Penetration Currently 1.4K Current Average User Deployment Average Total User Opportunity

36 Investing for Better Quality Revenues Annualized Net Retention 2015 Cohort 2014 Cohort 2013 Cohort 117% 110% 104% Enterprise product investments paying off Land and expand Product portfolio expansion Improving Retention 2012 Cohort 100% Sep 16 Note: Chart reflects growth in total monthly recurring subscriptions over time, inclusive of losses, for the group of customers that joined RingCentral in each respective year. Net retention represents increases in total monthly recurring subscriptions after the initial acquisition of each customer, annualized for the time period from the month of acquisition to the end of Sep 2016.

37 Balancing Growth, Investment in Enterprise, and OM Office ARR and Revenue Pay Back 39% Growth Y/Y Total Office ARR of $317M Addressing all market segments Enterprise Investment dampens near-term OM expansion Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 ARR Revenue Payback (Months)

38 Strong Efficiency and Growth S&M Efficiency 2016 (1) 2016 Revenue Growth (2) 104% 96% 38% 34% 31% 29% 68% 62% 57% 50% 25% 24% WDAY NOW RNG N CRM EGHT NOW WDAY RNG N CRM EGHT (1) Represents consensus incremental revenue in 2016 divided by 2015 S&M expense. (2) Represents consensus revenue for * RNG Revenues adjusted to reflect the transition of direct phone sales to the agency model. In 1Q16 RingCentral transitioned direct phone sales to an agency model, in which RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company s results with prior periods as-if the Company had transitioned phone sales to the new agency model on January 1, Carrier phone sales will remain under the direct phone sale model.

39 Upmarket Mix Shift Drives Better Long-term Economics IPO Current Long-Term Net Cumulative Lifetime Revenue* Bookings Mix Weighted Average Bookings Mix Weighted Average Bookings Mix Weighed Average Small $7 90% $6.3 60% $4.2 35% $2.5 Mid Market $12 10% $1.2 35% $4.2 45% $5.5 Enterprise $15 0% $0 5% $0.8 20% $3.0 Total Lifetime Revenue $8 100% $9 100% $11 Lifetime Contribution Gross Profit $5 $7 $9

40 Path to $1 Billion in Revenues $1.2B $1.0B $377M* Current 5 Years 5 Years (Without Carrier Growth) Carriers Direct + VAR *Midpoint of 2016 Guidance as of 10/26/2016

41 Growth/Margin Framework HIGH GROWTH GROWTH LOW GROWTH Priority Top Line Top & Bottom Line Bottom Line 4-5 year CAGR > 30% 25-30% 20-25% Operating Margin Flat to up slightly +100 to 200 bps +200 to 400 bps

42 Target Model (Non-GAAP except Revenue) Current Q Previous Target Current Target Subscription Revenue Growth Y/Y $106M 47% $146M 38% $200M 37% $271M 36% $92M 31% Subscription Gross Margin 66% 68% 71% 76% 80% 75-80% 80% +/- Sales & Marketing % 47% 44% 45% 46% 49% 25-30% 25-30% Research & Development % General & Administrative % 21% 20% 19% 16% 14% 13-15% 13-15% 19% 17% 15% 14% 12% 9-11% 9-11% Total Operating Margin -26% -19% -14% -2% 2% 20-25% 20-25% 1. Other Revenues and Cost of Revenues adjusted to reflect the transition of direct phone sales to the agency model. In 1Q16 RingCentral transitioned direct phone sales to an agency model, in which RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company s results with prior periods as-if the Company had transitioned phone sales to the new agency model on January 1, Carrier phone sales will remain under the direct phone sale model.

43 RingCentral Business Model Summary Large $50-75B+ market opportunity Pure-play leader in size and growth Only UCaaS company addressing all three market segments GTM growth and efficiencies in small market Improved and best productivity in mid-market Seeing early traction in enterprise Proven business model with attractive unit economics Targeting $1B of revenue in 4-5 years