Good day, and welcome to RingCentral's Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ryan Goodman, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to RingCentral's Third Quarter 2021 Earnings Conference Call. I'm Ryan Goodman, RingCentral's Head of Investor Relations. Joining me today are Vlad Shmunis, Founder, Chairman and CEO; Anand Eswaran, President and Chief Operating Officer; and Mitesh Dhruv, Chief Financial Officer. Our format today will include prepared remarks by Vlad, Anand and Mitesh, followed by Q&A. Accompanying today's presentation are slides being shared via webcast. The link is available at our Investor Relations website at ir.ringcentral.com. For those listening via telephone dial-in, I would encourage you to also join the webcast and select the listen by phone option. Some of our discussions and responses to your questions will contain forward-looking statements including our fourth quarter and full year 2021 financial outlook and our assumptions underlying that outlook. 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. In particular, we continue to be impacted by the COVID-19 pandemic and its effects on our business will depend on the severity, duration and extent of the pandemic and actions taken by governments, businesses and consumers in response to the pandemic, which continue to evolve and remain uncertain at this time. RingCentral assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. 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. Please visit our Investor Relations website to access our earnings release, slide deck, our GAAP to non-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. With that, I'll turn the call over to Vlad Shmunis.

Good afternoon, and thank you for joining our third quarter earnings conference call. I'd like to start by thanking Mitesh for his valuable contributions to our company over the past decade as RingCentral grew from a little over $50 million to now over $1.6 billion run rate. Since stepping in as the CFO nearly 5 years ago, Mitesh has been instrumental in driving consistent profitable growth and outsized shareholder results. We will certainly miss seeing and working with Mitesh on a day-to-day basis. But he has left his mark on his term with a very strong foundation and an exceptional finance team that I'm confident will carry the torch forward. We wish Mitesh all the best in all of his future endeavors. With that, on to Q3 results. Third quarter results were outstanding. First, subscriptions revenue increased 38% year-over-year to $385 million. This is an acceleration of 5 points year-over-year. Second, RingCentral total ARR increased 39% year-over-year to $1.6 billion. This is an acceleration of 5 points year-over-year off a base of over $1 billion. And third, leading our ARR growth is enterprise ARR, which includes customers generating $100,000 or more in ARR, and this is our fastest-growing segment. Here, we grew 53% year-over-year to $653 million. This is an acceleration in growth of 8 points year-over-year and demonstrates our strong growing traction with large-scale customers. These strong results speaks to our continued success in capturing the $100 billion-plus market opportunity of on-premise PBX users migrating to the cloud. This massive opportunity does not include the near adjacencies of cloud contact center, another successful RingCentral solution, which adds an additional tens of billions of dollars in total addressable market. To date, industry research estimates the addressable market cloud penetration is still at less than 10%. This means there are hundreds…

Thank you, Vlad. Good afternoon, everyone. We had an excellent Q3 across the board. Our growth is accelerating, the pipeline is expanding and the partnerships are ramping. On today's call, I'll focus on 4 key growth drivers that both contributed to the strong Q3 performance and reinforced our confidence in our ability to continue meeting the cloud communications market. First, partnerships where our strategic and carrier partner contributions are ramping and our channel continues to deliver strong growth. Second, international, with a record number of $1 million-plus TCV wins. Third, upmarket customers where we see strong momentum. And fourth, integrated UCaaS and CCaaS, which is driving new customer wins and upsells. Let me now dive into some details. Let's begin with the strategic partners. In Q3, Avaya Cloud Office by RingCentral delivered solid growth with both new logos and migrations from the installed base. Contributions were particularly strong in our upmarket segment. Together with Avaya, we secured a new 3,500-plus user retail win across 240 store locations that replaced multiple legacy on-premise systems. We also won Medical West Hospital migrating an Avaya on-premise solution to Avaya Cloud Office with 1,400 lines. We also had strong contributions from Atos. An example is a great win with a Global 2000 chemical manufacturer in Europe, who is upgrading approximately 3,500 users to unify office by RingCentral. And as for Alcatel-Lucent Enterprise, our channel enablement and training work is on track, and we expect this partnership to start contributing next year. And last but certainly not the least, I'd like to extend a very warm welcome to Mitel, our newest strategic partner. These strategic partners collectively account for approximately half of the global market opportunity. Our partnership network creates a significant go-to-market moat for RingCentral in terms of both market reach and cloud migration…

Thank you, Anand. Good afternoon, everyone. We had a record Q3. We had the best growth rate in over 7 years when RingCentral was 7x smaller. This speaks to the market opportunity, the unique moats we've built as well as our consistent track record of execution. Subscription revenue grew 38% year-over-year, up 5 points from the prior year. And non-GAAP operating margin was 10.5%, demonstrating the leverage in our model, especially as our partnerships start to scale. This, again, puts us close to the rule of 50 on a subscription revenue run rate of over $1.5 billion and is an important measure of our profitable growth success. The exceptional growth we saw is a function of 4 underlying drivers: partnerships contribution, international growth, upmarket strength and net retention uptick. First, on partnerships, we are seeing ramping contributions. This is evident in our direct and partner ARR, which grew 37%, up from 34% last quarter and a 12-point acceleration from last year. On that note, I'd like to extend a very warm welcome to Mitel, which will add yet another engine to our future growth. Second, international revenue growth significantly outpaced our overall growth. Nearly 1/3 of our $1 million-plus TCV deals came from international wins. As new international partners come online, this presents a large incremental untapped opportunity ahead of us. Third, we are seeing continued strength in mid-market and enterprise customers. Customers are demanding platforms that can bring together phone, video, messaging and contact center to meet the needs of increasing hybrid workforce environment. RingCentral's MVP platform and our tightly-integrated best-of-breed UCaaS and CCaS are serving as a key differentiator. Our mid-market and enterprise business is now approximately $1 billion business, making up about 60% of our ARR mix and growing over 50%. Lastly, we continue to see positive…

[Operator Instructions]. And the first question comes from Bhavan Suri with William Blair.

Can you guys hear me okay?

Yes, Bhavan.

Great. Great. Well, congratulations, guys. I mean blockbuster earnings. The partnership number was amazing. The one blemish obviously, Mitesh, you've had a massive impact, and I know Vlad and Anand said it, too. But I'll say it from our side, you had an amazing impact on shareholders and on all of us. You've done a great job, and you will be sorely missed. But do stay in touch my friend. I do want to talk -- I just had one major question here, which is the one I think a lot of people have, which is you had obviously a really, really strong direct and partner contribution. I guess you added to that partner with Mitel. How should we -- or what do you expect? How should we think about the contribution of Mitel going forward, say, over some period of time? I'll let you define that. But how should we think about that contribution from Mitel? What do you expect? I'd love some color there.

Sure, Bhavan. Thank you for the kind words, first off. And of course, we'll stay in touch. In terms of the direct and partnerships, yes, we had a very strong quarter there. Look, our partner strategy is very unique. It does give us a clear advantage to capture the secular growth for a long, long period of time. And I think this will be really hard for others to replicate. As to Mitel, this partnership is differentiated in many, many regards. One key facet is that it will be the RingCentral brand going forward. And so what it means is there will be a faster time to market, so we'll begin the sales and channel enablement fairly quickly. But in terms of contributions, I think we'll start to meaningfully layer on contributions in the back half of '22 following device compatibility. And then we have this very unique CloudLink architecture, which will further unlock demand after that. Now if you take it a click up, right, for all the partnerships, right, for 2022, you'll have all the 3 as contributing and you'll have Mitel layering on. And one final thing to note on these partnerships, Bhavan, is that it's -- these partnerships are just not a one-and-done. The benefit of these partnerships come year after year, with a steady drumbeat and really extend the durability and the maturity of the financial model and really increase the terminal value of RingCentral significantly.

The next question comes from Terry Tillman with Truist Securities.

And congratulations from me as well. And in the spirit of probably trying to embarrass Mitesh, I would say you've come a long way from being a fellow sell-side analyst over a decade ago, we sit at these analyst days together. So the tremendous job you've done, particularly on this consistent financial execution quarter after quarter, all the metrics, the unit economics and really trying to create a narrative that was a good aid for myself and investors. So congrats on everything and good luck going forward. Now with an actual question. It looks like when I'm looking at fourth quarter, particularly the subscription revenue, the guidance, it looks out, it actually looks stronger than what typically you provide. And I know you try to be conservative, but maybe you could help us kind of unpack what's the confidence or what are the drivers that's driving that, I think, much stronger than I anticipated subscription revenue guide for 4Q? And that's my only question.

Thank you, Terry. Yes. Thank you for the kind words as well. It has been a long journey since I used to be your bag carrier. So we'll try to do that once in a while. But in terms of your actual question, look, there's always -- there's no change to the guidance philosophy. We still guide with our usual prudence and leave a fair amount of optionality in the guidance and hope to outperform as we always do. So in terms of what's driving the confidence, that's a fair question. It's a couple of things. It's higher visibility from 2 or 3 things. So the first one is the full impact you see from Q3. It's a recurring revenue business, so the full impact shows up in the fourth quarter. That's point number one. Point number two, the pipeline, the pipe is at a record high. So that also allows us to have a very high visibility. And number three is our earnings is a week later on. So we did get to see a full up to month of October and the momentum thereof. So net-net, we've got multiple growth engines firing with our MVP and UCaaS and CCaaS demand together is pulling forward. And with the increased pipe, it gives us enormous confidence for the Q4 guide.

That sounds great. I'll probably be carrying your bag though, for -- to get that correct there.

The next question comes from Brian Peterson with Raymond James.

I'll add to Bhavan and Terry's comments. Mitesh, it's really been a pleasure to work with you, and you're going to be sorely missed on these calls. But you are kind of dropping the mic here with the quarter, the guide and then the Mitel partnership. But I want to start on the other topic. We're just going to get this question tomorrow. And I guess it's more on 2022. I know you guys aren't officially guiding to anything, but we're going to have a new CFO coming in. So is there anything that you've got to share qualitatively about expectations for 2022?

Yes. No, that's a fair one, Brian, and thank you again for the drop the mic comment. I really appreciate this. Look, we, again, as usual, we don't guide for our 2022 until Q4, which is the February call. But you should be rest assured that given the momentum we have with the drivers in place, plus, with the addition of Mitel, we do have a lot of things to be excited going forward, and for our key is our durable growth model. So I think there will be no showstoppers for the years to come.

Got it. And maybe just a follow-up for Anand. So obviously, some big news today with Mitel. There's just a lot of potentially hardware vendors and carrier vendors that you can work with. Are you -- is it starting to get to a point with some of these potential partners, where it's -- why they aren't going with RingCentral? And how confident are you in the cadence to continue to add new partners as you kind of continue to build out that global opportunity?

Yes. Why don't I take that? So a couple of things. One is it's not just -- we've talked about the 3, we've talked about Mitel. We also have partnerships you guys haven't asked about yet is the carrier providers, the service providers. So there's many different layers and types of partners and we are confident on this journey of layering on more partners for more kinds of growth coming on. And that goes back to what Vlad said earlier, which is the partner-first mindset which RingCentral displays, is as critical to establishing these partnerships in addition to the innovation and the RingCentral MVP platform being the best UCaaS solution in the industry, both of them equally matter, and we are just getting started as Vlad always says.

The next question comes from Sterling Auty with JPMorgan.

Just a quick congrats and good luck with the next step, Mitesh. It will be great to work with you again in the future. In terms of the business, on the Mitel opportunity, can you help us understand what your initial thoughts are around pricing for users, given that it's this hybrid approach instead of full UCaaS? And what the migration plan for those users over time will be to full cloud and how that pricing evolves?

Mitesh, do you want to take the pricing one?

Sure. I can take it. Look, I think the punchline here for Mitel's partnership is that we will be converting the base to our product. So the pricing will follow what we have done in the past. And on that note, our ARPU has been super stable and our ARPA has been increasing. So I think you will see more of a continued story there.

I also want to comment on the comment you had, Sterling. It's -- strategy is not hybrid. Strategy is full cloud, no questions asked. What CloudLink offers us is ability to transition customers, if you will, in big steps, with them using messaging and video, RingCentral messaging and video from the cloud, while still utilizing their on-prem for voice. But there is absolutely no doubt in anyone's mind or myself that end result is going to be MVP with all of M and V and P, all of them are being strictly in the cloud. So once those customers transition, we would expect same, if not better pricing. As they would be more familiar with the platform, it would be a smaller step for them to take. But even in the interim, of course, we're hoping to be able to monetize our messaging and video technology to Mitel's 35 million users. Just want to reiterate that this has never been done before in the industry and is an absolute first. Once the jury is out, we have to see how users react. But for now, it seems that it should remove a major, major obstacle and why not as people consider their digital transformation.

That makes a lot of sense. And maybe just one follow-up, if I could. On Microsoft, with the announcement and I forget the exact term if it's Operator Connect, then they have the direct program, where does RingCentral fit in each of those programs? And are some of the announcements that have been made over the last quarter, does that diminish your opportunity to participate and win business alongside Microsoft?

Yes. Microsoft has many ways of addressing the core issues, as they do not have a viable cloud PBX product. So let's start with that. So they have direct routing, which is actually a tailwind for us, which allows cloud UCaaS providers like ourselves, to plug into Microsoft's 0.25 billion strong Teams user base. But remember, those users are using Teams Messaging by and large, Teams Video, not Teams Telephony, okay? So this is where we come in and our direct peers. We are doing very well there. We are -- we haven't broken out the numbers, but I can tell you that it is definitely a growth driver for us. If you just look at Teams and Direct -- and yes, direct routing as a subsegment. Now as far as Operator Connect, the latest thing, this is for people like AT&T and Verizon's side to plug directly into the phone part of Microsoft PBX. And frankly, that capability was there for a long time anyway. It doesn't change the fact that Microsoft, again, really does not have a competitive PBX product in the cloud. They don't have a competitive worldwide global footprint like we do. And frankly, if you were to ask me, it's just another admission of the fact that their technology is incomplete. Their MVP strategy, and by the way, they are the only ones who are other than ourselves, who are talking about the strategy, but their MVP strategy has a good M, maybe a KV and not a KP. Obviously, coming from our side, we have a very, very strong P as we continue demonstrating.

[Operator Instructions]. The next question comes from George Sutton with Craig-Hallum.

Mitesh, I remember sitting down, you told me about the Salesforce.com model experience and how this was going to look like that, and I thought you were insane and look at you now. So congratulations. I'm a believer in video becoming the first decision that a new company is going to make versus phone. And I'm curious if you have started to do anything differently from a marketing of the video part of your capabilities as a result?

Yes. So let me start -- Vlad, do you want to take it? I'll jump on. Yes. So this is what I was going to say. So one, for us, the strategy is across message, video and phone. And as Vlad even shared in his prepared remarks, our customer base, the number of users who are using multiple modalities is a lot. I mean, so people use messaging and phone, video and phone. So video is already an integral part of our strategy. The second thing I wanted to also share is all our new customers are defaulted on RCV at this point in time. All our strategic partners, the 3 As, Mitel now, and going forward, as you look at our carrier partners, Vodafone business, et cetera, all of them are defaulting all of their new customers on video as well. So RCV is already going along in the right path. The third thing I would offer there is even looking at our installed base, over 70% of our installed base has already migrated to RCV. And by the way, when they migrate to RCV, we actually see their usage get -- daily active host increase and do better. So we feel that video is already on the right path as part of our MVP strategy. And that's where we go back to. People want a unified communication strategy across message, video and phone, and we feel we represent one of the best value propositions for customers in the market.

I just want to add to this just a little bit, is that if you look at the new Mitel announcement, it actually very much plays into the [indiscernible] that you have, that these -- many of these may be video-led sales. And I'll double-click on that in a sec, but the whole thing with CloudLink is the point that we will now be able to lead with video and messaging, while letting them move phone telephony at a later date. So it does play [indiscernible]. And to be -- to double click, the opportunity here, and it's a fairly immediate opportunity now, is 35 million Mitel users, of which by the way should that vast majority is in regions where we already operate, namely Americas and Western Europe, okay? So that's one key point. Another one, though, I want to highlight is that while sales may be video-led, it is also true that video is a lot less sticky than messaging or the phone. And we are seeing this source hand now on the positive side of this equation, if you will as we are migrating users to RingCentral Video from an OEM product, and that migration is going very, very well. And basically, as long as video experiences are sufficient and comparable, then people are happy to switch. People are not happy or able to switch their messaging for their home, which is why if you look at it, all of the competitors or would-be competitors are now doubling down on phone because it also realizes the issue that they have is that Ring has a decade-old -- decade-strong jump start on technology. We are the only one with Five 9s reliability over 3 years. I would urge all of you compare that record against any and all of our competitors and between our strategic partnerships, Avaya, Alcatel, Enterprise, now Mitel and something like 50% or 60% of world top carriers now bending behind RingCentral, it's a little bit hard for me to see how this strategy is not going to play out in a very, very positive way. There is a technological advantage and there is, I would say, especially for this announcement, an almost insurmountable partnership advantage that we have. The remaining component of the strategy, which we call TIP, which stands for trust, innovation and partnerships, the remaining part is T for Trust, we're second to none there as well. So pretty confident.

The next question comes from Meta Marshall with Morgan Stanley.

Just a question since the partnership allows you to kind of have more exclusive access to CloudLink, is that something where you could use that porting technology eventually with some of your other partnerships? Or would that -- do the terms kind of require it to stay on the Mitel platform only?

Yes. Vlad here. Let me take that. So short term there is absolutely yes. RingCentral now own CloudLink outright. There will be further cooperation between the companies in feature enhancements and other -- just other platform enhancements. But it is our IP, meaningful number of dollars changed hands as part of this transaction. The reason for that is CloudLink. And specifically, our ability to not only apply to Mitel's 35 million user base, but to apply it to as well to other platforms.

The next question comes from Samad Samana with Jefferies.

First, Mitesh, congrats on having to guide RingCentral so well over the last several years. I hope you get some time off and I wish you the best on your next even bigger challenge, which is improving your golf game. Maybe on to the question, I wanted to maybe unpack the $650 million that's being invested into Mitel. How much of that is for the exclusivity in being able to transition the base versus the acquired IP? And could you have built it yourselves and are there minimums for the deal that you get in terms of minimum seat commitments?

Sure. Samad, yes, I will try on the first part, which is the golf game. But in terms of the $650 million, it's a combination of IP exclusivity and CloudLink together, it's going to be hard for us to break down each component separately. And the contract has all kinds of cool provisions, which will be hard for us to get into on this call for competitive reasons. But rest assured, I think what Vlad mentioned, there is some industry-first defining things we are doing, which has never been done before. So stay tuned.

The next question comes from James Fish with Piper Sandler.

And congrats Mitesh here, the exit here and look forward to working with you down the road. Just for me, what are you guys seeing in terms of new endpoints, one between new users, one between those deals with the strategic partners versus kind of nonstrategic wins in terms of the big ones and the carriers, of course? And any way to think about how that mix could change longer term? And I'm going to sneak in a 1b here, did you guys provide an update on -- in terms of where the CCaaS penetration is and what that mix is between reselling your third-party partners versus selling some of your own stuff?

Yes. Jim, maybe we can rephrase the question. I'm not sure, a win is a win. And we're not beggars, but we're not choosing -- I mean we like every win, regardless where it comes from. So what -- could you maybe just ask the question again please?

Yes. I'm trying to understand what percentage of the new users you guys are getting, are coming from the strategic partnerships that you have versus the nonstrategic partners that you have? So winning against Cisco, for example, or NEC, those kind of companies, just trying to understand how that is doing given the success you guys are talking about with partnerships, especially this quarter.

Yes. I'm going to take that. Let me take a first shot at it, and then yes. So this is how I would phrase it, Jim, which is actually, all of these partners are actually layering on growth or expectations in the right way. So when I look at Avaya, I mean, it was a really good quarter, record $1 million-plus TCV wins, good growth in seats, new accounts, transaction volume, strength in upmarket, strength in international. The same way when I look at Atos, it's sort of the same thing, strong by sequential progress on large deals, important driver of international growth. When I look at the carriers, it's sort of more of the same, which is the quarters are getting better sequentially and year-on-year. We are building momentum on vertical and a lot of the key verticals are popping up really nicely, education, health care, retail. And we are also starting to see good upmarket benefit across the board with the carriers. And then finally, we don't talk enough about the channel. The channel has been a foundation for us and the channel momentum continues. So it's going to be hard to say strategic versus nonstrategic, all of these different varieties of partners, different other sorts of partners are layering on growth in the right way, which is in a way, which is what is propelling these -- there's a 12-point acceleration Mitesh talked about on direct and partner is a result of all of these coming together in the right way. And by the way, not to discount our direct and VAR organization. Our direct sales force have been putting on quarter-on-quarter of really good wins across the board across all customer segments. So this is a case of all of them starting to fire well and coming on board.

The next question comes from Matthew Niknam with Deutsche Bank.

And I'll keep it to one as well. Can you talk about the linearity during the quarter? And then any color on how 4Q has started out now that we're roughly halfway in?

Sure, Matt. Linearity was not -- it was very usual 3Q, nothing unusual to call out there. And as far as the start to 4Q, it's been a strong start for us, October. And we've seen the full results for the full month, and that also has given us more visibility for the guidance for Q4.

That's great. Congrats Mitesh.

Thank you, my friend.

The next question comes from Will Power with Baird.

This is actually Charlie Erlikh on for Will. Congrats on the results and Mitesh, it's been a pleasure working with you. I just wanted to ask one question on contact center. How do you guys feel about your internal capabilities and your strategy to partner on the higher end? How should we think about that strategy going forward? How should we think about your plans for your internal capabilities going forward?

That's a great question. So let me just set some context. One, it was a fabulous quarter for the contact center. Our new growth -- new business growth has actually been really good, again, triple digit year-over-year with strong enterprise momentum. And we've also shared that over 60% of the $1 million-plus TCV deals included the contact center. As we look at it, we follow the same playbook, the same strategy, a very, very strong partnership with NICE inContact or NICE CXone as they call it right now, for all digital-first use cases, we lead with Engage, for everything else, we lead with NICE inContact, and it's been working really well. The mix has been sort of stable over the quarters.

The next question comes from Alex Zukin with Wolfe Research.

Just a quick housekeeping one. I guess if we think, Mitesh, around the unit economics of the latest partnership with Mitel from an ROI or cost of customer acquisition basis, how would you compare it to the others -- the other deals? And how should we think about the progression? I think you mentioned that the progression of seats or the on-ramp for this one could be faster than the others. So how do we think about that? And then on the margin side, obviously, some good margin progression this year. in the model. But as we start thinking about next year, given the resumption of travel, the increased investment in kind of sales and marketing, should we continue to assume margin leverage? Or should we kind of pause that in the model as we reopen?

Alex, thank you. And amazing job, as usual, for packing in 15 questions in one question. So I will try to address all of them. But it's not just a follow-up again. So the first one is in no particular order. The seats ramping faster is a question or is a function of RingCentral's brand being the go-forward brand. So there is no -- it's a faster time to market because there's no time to be spent on co-branding the product and the channel enablement, along with the sales enablement happens immediately. So that's point number one. Point number two, on unit economics, the way to think about these economics and these partnerships is that because there's enormous leverage for these partnerships on the sales and marketing side for us, the economics work out such that these partnerships, especially this Mitel one, along with the other ones are massively accretive to the long-term model, our margin profile of RingCentral. So that's number two. Number three, on the leverage for next year, look, if you look at the unit economics again, there is enormous leverage in the business model. If you look at our recurring margin, which is our revenue less cost of goods sold and some of the recurring costs, it's north of 50%. So what we are doing though is plowing those margin dollars into fueling further growth because this opportunity of 400 million seats is too big to pass up on. So what you will see next year is a continuation of more of the same, enormous leverage but redeploying the money to fuel more growth, and elongate the business model and terminal value of the company.

As good of a job as I do of asking multipart questions, I think you do an even better job answering them. So congratulations on the next step.

The next question comes from Siti Panigrahi with Mizuho.

Congratulations and Mitesh, what an impressive journey from $50 million to $1.6 billion, congratulations. So I wanted to ask you on the direct and partner growth. That's good to see that growth accelerating even this quarter and next quarter as well. So help us understand like where are you at this point with Avaya partners? Any sense of timing as to how the growth from Avaya and other major partners that we have is going to stagger next year?

Sure, sure, Siti. Thank you for the amazingly kind words here. The way to think about the partnerships is in -- I'll parse it out with each and every partnership of ours, and then I'll amalgamate them. So Avaya is the furthest ramp -- ramped and which is what you saw in Q3 and you will see in Q4. Atos is next in line, where we are seeing contributions coming on. The next one is Alcatel-Lucent, where we hope to have contributions starting 2022, which is what we flagged earlier. And then now the latest installment of Mitel would be in earnest, back half of '22. And so that's going to be the layering effect. The punchline here, Siti, is as you roll forward to beyond '22, this is what the beauty of these partnerships are because there will be a steady drumbeat of seats coming in for multiple years to come.

That's great. And we probably will see this acceleration growing.

The next question comes from Ryan MacWilliams [ph] with Barclays.

So we had the Avaya Cisco channel, then the reseller channel, and after today, I think it's fair to say we now have the RingCentral channel. But I kind of wanted to go a different direction and talk about your 1,400-seat win with the on-prem hospital with Avaya. That's pretty interesting, given how complex some of those deployments are for hospitals. So are you starting to see larger customers in sectors like the public sector or health care that have previously been slower to adopt cloud solutions starting to accelerate those cloud voice deployments?

Absolutely, Ryan. We are actually -- that's why I said we are starting to see vertical strength coming up from these strategic partnerships as well. And Avaya, I just called out how education and health care does actually make it a bit different. So that's where we saw early traction for bigger and larger wins converting from on-prem Avaya to ACO. And we're seeing similar strength not just in Avaya, but also in Autos. Also in some of the carrier partners, we are seeing some of these key verticals pop up in a significant way, which is leading to some of the wins. Mitesh also called out one specific thing, a lot of these partners are coming on internationally. I mean this was a record large deal, $1 million-plus TCV for us internationally coming on as well. Almost 1/3 of a large $1 million-dollar plus terms from the International segment. And that is where specific verticals are popping out in a key way, education, health care, retail, financial services.

The next question comes from Steve Enders with KeyBanc.

This is George on for Steve. I'll echo everyone else's congratulations. I wanted to follow up on a previous question about applying CloudLink to other partners outside of Mitel. Can you just explain the strategy a little more? Is the idea to sell this as a product into those bases? Or is it to utilize it as a tool to help accelerate their adoption curves? Just any color would be helpful.

Yes. Vlad here. No, great question. No, it's the latter. CloudLink is middleware and value of CloudLink is to allow for those transitional deployments. So monetization will be from MVP, message, video and phone, and that went monetization to Ring, Mitel will continue monetizing their on-prem piece for as long as that exists. And again, the differentiating part with this approach is that we will now be in a position to sooner than later, monetize the M and V parts of MVP, without having to wait for the heavy lift P for phone that will come in later.

The next question comes from Michael Turrin with Wells Fargo Securities.

Congrats to the team on the results and Mitesh, congrats on stepping down on a very high note here. I just wanted to sneak one in on international. I know Anand referenced it a little bit just a moment ago, but the degree to which you're expanding there stands out, now partnerships in Mexico, licensing in India. So global footprint continues to expand. Can you just put some context around where you are from an international standpoint and how some of those investments help differentiate, whether it's region-specific or just from a multinational perspective?

It is many layers there, Michael. You actually called out some of them as well, right? Which is a lot of the partnerships are helping us extend our reach internationally. This is where we just -- Atos has been a huge powerhouse in helping us establish many international wins and many international large deal wins actually there. Now there's a lot of things which have been done, which is adding to it. You called out the unified license in India, which is the first ever granted to a UCaaS provider. And so we are pretty proud of that. On top of that, we also announced our security posture and security matters a lot. And this is where when Vlad talks about trust is a huge commitment. It is not just the Five 9s, which we -- the journey of Five 9s SLA and reliability we've been on more than 3 years. That makes a difference. The end-to-end encryption, we recently launched for RingCentral Video, that makes a difference. Our security posture, which we have announced for data privacy, data residency that makes a difference. So all of those things are coming together to create a significant momentum in upmarket wins, significant momentum in large deal wins and our partnerships from Avaya to Atos, to the carrier partners from British Telecom, is actually starting to create more layers of international growth. And we have not even talked yet about Vodafone business, which is coming on soon, Deutsche Telekom, which is coming on soon. So we are pretty bullish. And Mitel has a significant international presence as well. So we are very bullish on where international is going in terms of contribution to the overall business.

The next question comes from Tim Horan with Oppenheimer.

Great quarter. Vlad, can you just talk about the conversations with enterprise customers now that we're kind of pulling out of COVID? Do they realize hybrid work is going to be the new normal and maybe they should accelerate the timing of cloud adoption? And do you think we can kind of see maybe 2, 3 -- next 2, 3 years, more like 5, 6 years type of normal adoption, given hybrid work and the new normal?

Yes. Just to remind everyone, Ring was not -- is not a COVID story, right? And our numbers speak for themselves. We are -- we performed a year-over-year growth before COVID, into COVID and now, hopefully COVID is subsiding. As you can see, our growth is only accelerating. Again, just looking at the numbers and thinking it was what we already disclosed, our Enterprise business is our fastest growing segment. It is growing at over 60% year-over-year, and it is now a very significant business in the strong rise with over $650 million of ARR. So again, certainly before, numbers don't lie. Now is this attributed to companies being more customers to hybrid? A little bit how to say, we are seeing consistent growth in all segments, led by Enterprise, no question in that. And also, just a reminder, and they said this a couple of quarters go, I really want to double click because the trend is only strengthening. Mobility, mobile phones, It's not a foe. It's a friend. We terminate and connect lots of lots of calls through mobile devices as well as we do with desktop devices, okay? So again, when COVID just hit, I talked about -- I did talk about work from home, many people have. I did not. We did not. We talked about work from anywhere and work from anywhere hasn't changed, and we don't think it will change, okay? Now what we are seeing though is now renewed interest in cloud contact center in CCaaS. And you're seeing it across the board and pure CCaaS players are obviously pretty good numbers. So that's great. We're absolutely benefiting from that. But again, our core business is very strong, is stronger than ever. And again, with just again, with this Mitel -- new Mitel relationship and CloudLink, we think it will do well into hybrid of course, if that's what the future has for us.

This concludes today's call. Thank you for attending today's presentation. You may now disconnect.