Greetings. Welcome to the RingCentral Avaya Strategic Partnership Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Note this conference is being recorded.
I will now turn the conference over to your host, Brian Goodman. Thank you. You may begin.
Thank you. Earlier today, RingCentral announced that it will become the exclusive provider of UCaaS solution to Avaya. Joining me today to discuss the transaction is Vlad Shmunis, Founder, Chairman and CEO of RingCentral and Mitesh Dhruv, Chief Financial Officer of RingCentral. Our format today will include prepared remarks by Vlad and Mitesh, followed by Q and A. Some of our discussions and responses to your questions will contain forward looking statements, including statements regarding the new partnership between RingCentral and Avaya and its potential results and benefits and the potential size of the UCaaS market opportunity.
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. RingCentral assumes no obligation and does not intend to update or comment on forward looking statements made on this call. I encourage you to visit our Investor Relations website at ir.ringcentral.com to access our slide deck on the transaction with Avaya, our earnings release and slide decks, our non GAAP to GAAP reconciliation, our periodic SEC reports, a webcast replay of today's call and to learn more about RingCentral.
Unless otherwise indicated, all financial measures that are discussed on this call are non GAAP with year over year comparisons. A reconciliation of all GAAP to non GAAP results is provided with our earnings releases and in the earnings slide decks on our website. With that, I'll turn the call over to Vlad.
Good afternoon and thank you for joining us. We are excited to announce the strategic agreement between RingCentral and Avaya. This partnership leverages respective strengths of each company, aligning Avaya's strong market presence and worldwide go to market capabilities with RingCentral's leading global UCaaS platform. Many analysts view the UC to UCaaS transition as a $50,000,000,000 opportunity that is now reaching an inflection point. Benefiting from this shift, RingCentral has seen continued enterprise and channel momentum.
We think the strategic partnership between Avaya and RingCentral will have long term positive effect as enterprises worldwide continue migrating to the cloud. Most importantly, we view this strategic partnership as positive for customers and partners. We believe that Avaya UC customers will now be able to enjoy numerous productivity improvements offered by RingCentral's leading UCaaS solution that integrates voice, video and team messaging with an open platform and strong global footprint. Additionally, we expect Avaya customers to benefit from lower total cost of ownership as compared to their current operations, which involves their hosting and maintaining on premise systems and self managing a multitude of underlying carriers.
As for partners,
they will now be able to better satisfy the evolving needs of their customers while building a predictable recurrent revenue portfolio with attractive economics. Our CFO, Mitesh Dhruv, will later address positive impact that RingCentral expects from this partnership. I will now provide some additional details behind today's announcement. As part of this commercial agreement, we will be providing a new UCaaS solution named Avaya Cloud Office Vibrant Central or ACO. ACO will be the exclusive UCaaS offering for Avaya.
We believe it would effectively address the cloud transition opportunity for Avaya's 100,000,000 strong user base, which includes over 90% of the Fortune 100 Enterprises. It will also empower Avaya's extensive partner network in over 180 countries with a leading UCaaS solution. RingCentral and Avaya will jointly contribute technology and resources to develop programs and automation to further aid in on premise to cloud transition. Leveraging RingCentral's open platform, customer migration from Avaya's on premise UC to Avaya Cloud Office powered by RingCentral will be streamlined. ACO will also enable Avaya customers to leverage their existing investments in most of their Avaya phones and other devices, which is an important cost of ownership consideration.
In summary, we believe today's announcement represents a major opportunity for all parties involved, including importantly customers, partners and of course Avaya and AdientCentral. With that, I will now turn the call over to our CFO, Miters Dhruv, for more color on financial terms of this agreement.
Thanks, Vlad, and good afternoon, everyone. Let me begin with a walk through of the agreement terms. Under our commercial agreement, both companies will jointly contribute resources toward development and sales and marketing of Avaya Cloud Office or ACO. As part of these efforts, RingCentral will pay Avaya an advance of $375,000,000 in stock, which will primarily count towards future payments for ACO sales as well as certain licensing rights. Also, as part of the agreement for RingCentral to be the exclusive UCaaS offering for Avaya, RingCentral would invest $125,000,000 for convertible and redeemable preferred stock.
This would translate to an approximately 6% position in Avaya. RingCentral remains committed to our pure play SaaS business model and this 6% investment will require neither financial statement consolidation of any kind nor equity method accounting. From a financial perspective, we are laser focused on both the growth economics and growth itself. We believe ACO will be accretive to revenue and to operating margins. This partnership provides us the opportunity to accelerate the transition of a sizable installed base of UC customers to the cloud.
This should provide a new driver for our incremental long term growth. As to margins, ACO contributions have favorable unit economics. We expect that by leveraging Avaya's worldwide go to market and channel network, ACO sales would have a lower cost to book versus our other direct and channel efforts. As a result, we believe this partnership will be accretive to long term operating margins. In conclusion, we are excited about the opportunities this partnership creates.
We remain committed to our pure play SaaS business model and see this partnership as another driver to our continued philosophy of profitable growth. Now let me turn the call to the operator for Q and A.
Our first question is from Kelly Tillman with SunTrust Robinson Humphrey. You may proceed. Hey, Vlad
and Mitesh. Yes, I mean, I was still just digesting the news, but it seems very interesting and congratulations. That's just kind of the opening statement. I had a 2 part question. First for Vlad, as we're talking to investors and we see how you're all articulating how the finance is growth.
But how do we see KPIs or success metrics in terms of or what would stand out the most in your mind, Vlad, as it relates to looking at metrics on how this progresses? And then I have a
follow-up from Mitesh. Thank you.
Hey, Terry. Thank you. No, look, it is exciting news, very, very meaningful. Look, how do we measure success is how we always measure success, right? It's about growth.
It's about profitable growth. And in the end, it's about CSAT. Customers need to be happy and happy customers begets more happy customers. So look for more growth, I would say, over time.
Okay. Maybe that was the easier question. Maybe the harder question is going to be for Mitesh. So watch out, Mitesh. But if I just think about it and some of the yes, some of the questions I'm getting from investors are, look, over time on a piecemeal basis, you might take share anyways.
Now partnering with them, how does this maybe change that kind of migration and share displacement in your favor? Like if we look out 12, 24 months, just trying to think of how this makes it different as opposed to you all going out there and winning the business yourself from a direct or channel partner perspective, just trying to understand how that might affect
the model differently now. Thank you.
Sure, Terry. So on the differentiation and the impact of the business model going forward, look, we have been doing a good job of gaining share, as you said, and you used a good word called piecemeal. The UCaaS market has been gaining share piecemeal. And what this does is it's not a zero sum game, right? It actually enhances or amplifies RingCentral's opportunity to get more ad bats.
The market is big enough where what's happening right now is all the UCaaS players are sort of like in sergeants fighting with knives here to get the share. Now we have the opportunity to combine forces with the biggest player in terms of seats in the market and then remove a friction for the channel partners to adopt RingCentral and for the customers to adopt RingCentral. So I think that's where the magic is going to happen over time. We feel very optimistic. So the way net net to frame this opportunity is it's going to be an incremental opportunity for us, which would help us on both growth and margin.
Thank you. Congrats.
Our next question is from Nikolay Baer with Bank of America Merrill Lynch. Please proceed.
Guys, thanks for taking my questions and congratulations on the announcement. Vlad, my first question is for you and I have a follow-up for Mitesh, if you don't mind. Vlad, traditionally in technology company partnerships between 2 companies haven't worked out very well. What steps are you putting in place to make sure to ensure this partnership is successful?
Yes. No, great question. Look, obviously, some partnerships do work or else there won't be any more partnerships moving forward. So there is some precedent. But I tell you, this one is actually not that hard, because it really is in everyone's best interest, best financial interest is to make it happen.
So, the way we think of it is, there are 4 main constituents, okay? In order, if you will, 1st and foremost is the customer. Customer will get more for less. If you look at what the customer is paying today for an on prem voice only seat, if you take into account all of the costs involved, including very importantly lighting up that line that comes out of the box, then there are actual savings in going to the cloud. But of course, what they get is they get messaging with us, they get video, they get open platform, they get all of the integrations, they get mobility.
So, customer wins, okay? Next guy up there is a partner. So we have really spent a lot of time with Avaya folks understanding all of this from partner perspective. And it is our common belief that partner actually comes out ahead, okay? They now get on the bandwagon of UCaaS, so they don't need to fight the customer anymore.
They don't as they get a recurrent revenue stream, which obviously has numerous advantages. And I know they can really concentrate on what they do best, which is providing custom solutions, but now using modern state of the art technologies that we at Trinq are able to provide. All right. And then so then let's go down the line. Then there is Avaya itself.
So simple truth of the matter here is that vast majority of like 2 out of 3 of their customer base, again, as a reminder, it's 100,000,000 users we're talking about, but 2 thirds of them are currently unmonetized for Avaya. So to make it very, very simple, it is in Avaya's economic interest moving forward to convert as many seats as possible, including their on prem seats, okay, because again, they are largely disintermediated after the initial sale is made. And even they have some of these hosted models out there, powered by the call is ready now, storefront. And literally, we went 1 by 1 by 1. And look, I mean, you should ask Avaya, but our understanding is that they actually come out ahead pretty much in each and every case.
So they'll make more money. And look for us, it's an incremental growth driver. We love partners. We love associating with major brands. We have very positive experience with AT and T, for example, okay.
And we have all of those learnings. So again, just economic interests are fully aligned here. So and we've done it before. Very importantly, we have done it before. We've empowered other people with our product, with the core brand.
And of course Avaya is a pretty good to sell it. Yes. So we think it's going to work.
Thank you, Willard. And a follow-up for Mitesh. Speaking of economic interest, Mitesh, can you maybe if you can give us a little bit more details on is the customer sitting on Avaya or InkCentral paper? Is it the revenue share? And is it going to impact COGS or sales and marketing?
How shall we think about the financial impact? Thank you.
Sure, Nikolay. Again, it all boils down to unit economics in a SaaS business model. And to answer your first question, yes, it's going to be on RingCentral Paper. RingCentral owns the customer. Obviously, this is again Avaya think of Avaya as a super master agent in this relationship, where they have a large installed base.
And for us, when again, when it comes to unit economics for us, this transaction enables us to leverage their entire GTM, which in turn lowers our cost to book. So that's part 1. 2nd part is because the cost to book is lower and the churn is lower because it's sold through the channel, it helps us drive more revenue for every dollar of sales and marketing we invest. So that's the second part. And point number 3 is that lower part of money, which we save, then again can be reinvested to fuel growth.
So it's bit of a virtuous cycle that goes for us. And if you take out take this construct, this whole virtuous cycle and then layer it on to international markets, it just amplifies. RingCentral has a presence in about call it 4 or 5 countries where we sell directly. Avaya's revenue of more than 50% of Avaya's revenue comes internationally. So there's a lot of synergies and less very less overlap between these two companies.
So that's where I think ultimately it helps our unit economics. And again, it will help our rule of 40 and profitable growth.
Thank you.
Our next question is from Bhavan Suri with William Blair. Please proceed.
Hey, this is Matt Stottler on for Bhavan. Thanks for taking my questions. I have one for Vlad and one for Mitesh as well. First off, Vlad, in the press release and the prepared remarks, you talked about joint technology development to migrate customers. Can you help me understand exactly what you mean or what that means?
Sure. Look, so it will have a lot to do with easing customer migration from on prem to the cloud. So, we're envisioning migration scripts. We're envisioning basically pre populating a new Avaya cloud office by RingCentral account with their prior settings, the IVR, contacts, routing rules, stuff like that. So that's at the high level.
We will be integrating with their endpoints. They are a major presence in the endpoint market. So we'll be utilizing those not just for our VIA cloud office, but for a central office as well. And beyond that, look, I mean, there is a lot of know how there. I mean, they are the leader in on prem and we are not going to deviate from our roots one bit.
We are going to stay a pure cloud company always. But as you know, we've been on this quest to achieve absolute parity with traditional on prem equipment feature wise. I can tell you that the more we go up market, the more embedded we become in the channel, the more populous it is that you really do have to solve for all of those use cases. So don't believe whatever anyone else tells you, customers want a complete solution like they're used to, they just want it through the cloud. And who better to learn those tricks from than Avaya itself.
So hopefully that answers.
Right. Yes, yes, very helpful. And then for Mitesh, just kind of looking at the different components financial components of this deal, what's the rationale with the $125,000,000 investment here?
Sure, Matt. So the $125,000,000 is the preferred stake, about 6% minority stake in Avaya, which gives us a fully convertible and redeemable option at the end, A. B, it does not there's no consolidation of any kind of financial statement for us. So again, as Vlad said, we preserve our SaaS pure SaaS model. And look, ultimately, what do we get for that?
We become an exclusive destination for the world's largest install base, the UC install base, that's 1. The customers again then get to get the best technology with a loyal brand they are familiar with. And ultimately, for us, it comes down to unit economics. So this becomes sort of a call option, if you will, for us with a big opportunity and attractive economics, which can help our margin and growth. So that's the way we would think about this investment.
Okay. That's helpful. Thanks, guys.
Our next question is from George Sutton with Craig Hallum. Please proceed with your question.
Thank you. Guys, I think this is a fascinating deal. I'm curious from a channel partner perspective, obviously Avaya has a very strong channel partner group. Do you now have full access to that group? And how are those partners going to be bringing these opportunities to you?
That's the idea. And look, I've been asked for years, over a few years is, hey, guys, so how many of Avaya's diamond level resellers have you penetrated? How many overall, etcetera? And at this point, I would say all of them, once they get to read the press release. Some of them are asleep now because they do have partners in 180 countries.
So it is a worldwide situation. But yes, no, as I already mentioned, we would not be doing any of this if we did not believe that it is extremely positive for the partner community as well. Okay. It is accretive to the partners and we know that partners are asking for it. The partners were torn.
I can tell you the 3rd hand in talking to those people. They were torn between customers demanding, not asking for it, demanding UCaaS, demanding the cloud and their loyalties to the Avaya brand as well as frankly up until now Avaya fighting this and with incentives with making it pretty difficult for people to leave. Now Avaya is incentivized in seeing this transaction happen, as this transition happen. So, yes, win, win, win. Good for us, good for Avaya, good for partner community and I already mentioned a couple of times,
I will repeat, in the
end, good for the customer, which jumps at all.
So Avaya is a relatively new cloud effort. You mentioned ReadyNow and Storefront, obviously, their content center as well. Can you just talk about what their cloud efforts will be going forward?
Look, you need to ask that of Avaya as far as what their overall plans are. What I can tell you is that we are the exclusive UCaaS provider as opposed for example CCaaS and that also means that Avaya is not going to be developing its own multi tenant UCaaS solution during the duration of this agreement. And what we hear from Avaya, but please, I should not be speaking for them. So you really should not quote me on this, but our understanding is that they will now be redoubling their efforts in the contact center space where they have a very strong position in following. Okay.
Thank you.
Yes. Thank you.
Our next question is from Sterling Auty with JPMorgan. Please proceed.
Yes, thanks. Hi guys. I'm actually going to
go the opposite direction. Mitesh, I'm going to start
with you. How does the accounting work for the 375, so in the release you talked about that really for future commission. Does this become like a large prepaid expense on the balance sheet? So in other words, how does it flow through the balance sheet in P and L if it does?
Sterling, I knew you would ask me something which nobody else would ask me. So no, the way this works is, yes, it's essentially a prepayment, but for future commissions, call it, right, because they are becoming master agent. So this will flow through and the balance sheet will be a deferred commission for us, just the way we would have a deferred commission for other channel partners. And then it will flow through the P and L as it's depleted.
All right, great. And when you say deplete, so is it going to be so there'll be some sort of like deal matching or how does it kind of get drawn down?
Yes, I know it's exactly it's again, it's sort of for lack of a better word, I'll use the word pay for play in that sense. The seats only get depleted once we get the seats. So yes, it's basically based on number of deals they are able to bring to us and that's the way it gets depleted.
All right, great. And then Vlad or Vitesh, so I think the slides that you said were great, Slide 8, where you kind of talk about who is responsible for what. So on that go to market, let me ask it this way. Are Avaya salespeople being quoted for the RingCentral UCaaS solution? Let's start there.
Send it again. Sorry. Please repeat the question.
Yes. Will the Avaya salespeople actually have assigned quota for selling the Avaya RingCentral office?
Again, best addressed to Avaya, but that is certainly our understanding. Okay. And then,
is there any exclusivity? Can you still go into those accounts and talk directly to them even if it's being fulfilled by a channel partner? In other words, just trying to understand how the in the customer relationship, how that's going to be handled?
We are exclusive to them as far as we are their UCaaS provider. We are still within our rights to do whatever else we have been doing. But I have to say that over time, even with all of our success kind of for small business side, we are at 2,000,000 users and there is 100,000,000. So we do expect for them to be a very, very major growth driver for us moving forward. But it's not in addition to it, to be clear.
Understood. Thank you, guys.
Our next question is from Rich Valera with Needham and Company. Please proceed.
Thank you. I have a question for Vlad and then a follow-up for Mitesh, please. So, Vlad, just wanted to get a sense of how much this changes your channel today. Can you remind us roughly how many channel partners you have today? And then if there's any overlap between those and Avaya's 4,700 partners?
That's the first part of my question.
Yes. Look, there is overlap, okay. It's far from a perfect overlap. There are so I would say that sort of just directionally, some of the top ones we share, okay, because there are only so many of them, call it top 3, 5. But there is a very long tail that we have not been able to penetrate Avaya.
And that's where we think there is going to be this amazing incremental growth opportunity.
Can you give us a rough number on your number of partners now relative to their 4,700 just for comparison purposes?
In the same range, we have I don't think we've been disclosing numbers, that particular number, but it's multiple thousands of partners as well, but like I say, different overlap. You got to remember, they've been a they've been in business for much longer than we have and they've developed this partner network, which is very much oriented specifically towards communication solutions. And many of our partners are more general IT, if that makes sense. Sure. Where conversely, Avaya has been a lot less active historically.
Right. And presumably, they have not been selling a lot of multi tenant cloud software. Are you going to be engaging any special training to make sure their partners are effective at selling true multi tenant cloud software?
Short answer is yes. But if you want to double click, we are at this point envisioning more of a train the trainer motion. So we will make sure that Avaya's folks are well trained and they will train the partners. To be clear, it does not mean that we're apart from speaking to those partners, but we just want to be also as cost effective as possible. And because the buyer really knows the space well and they know their partners, we feel that we can be surgical moving forward.
I appreciate that. And then just quickly for Mitesh, you mentioned you see this as being accretive to long term margins. Can you comment in the short term? Is there any dilution from any investment near term? Or is there any different dynamics near term than the accretion we should expect longer term?
No. Hey, Rich. So no, I think you should expect this to be accretive to our margins starting day 1.
Perfect. Thanks very much, gentlemen.
Our next question is from Samad Samana with Jefferies. Please proceed.
Hi, good afternoon. Thanks for taking my questions. Congrats on this. It's an exciting opportunity. A few questions.
First, Mitesh, for that $375,000,000 since it's mostly for future commissions, I guess what amount of book of business does that represent? Like did you make some what assumptions were made around the number of seats that are expected to be sold that $375,000,000 represents for future commissions?
Yes. Hey, Samad. Thanks for the kind words. I think, look, we are not getting into specifics of the agreement, but here's one way to frame it for you. If you look at the installed base of Avaya and the overall opportunity at hand, it's an unassuming number that needs to change hands for our prepayments to get depleted.
That said, we do feel that once this prepayment is depleted, I feel this partnership is going to be here to stay and the opportunity is a lot larger.
Okay, great. And then, Vlad, maybe this is for both of you, but clearly, accelerates your ability to go to market, both domestic and international and with larger customers. How should we think about this changing your headcount investment plans or your go to market investments since you now have Avaya to help fill in or to extend what your own capabilities are?
I would not be projecting any slowdown or anything with us probably for as long as I'm involved with the company. We will continue in our aggressive ways.
Great. And then I guess
Yes. I'm trying to be a little polite about it. No, look, we would be yes, we will continue doing what we have been doing. And I think Mitesh already mentioned, I want to double click on this, is we do expect this to be accretive on all accounts including profitability. And again to temper expectations, obviously, over time, obviously, the core brand needs to get out and be accepted.
So it will take a little bit of time. But over time, it's going to be accretive. At the high level, we plan to continue with our strategy of profitable growth. We don't see a reason to change this formula. It's been working fairly well for us.
So in as much as there are additional incremental investable dollars available, some will go to the bottom line and some will go to GTM and expect a healthy dose to continue going to product, so we can start to differentiate ourselves from the rest of the field. Great.
And maybe one last question, if I can squeeze it in. This focuses on UCaaS. You guys partner with some other vendors in other areas and Avaya might be competitive with some of your other partners. How should we think about just kind of generally how this impacts maybe your other partnerships, if at all? And thanks again for taking my questions and congrats.
Thank you. Thank you for
the congrats. Look, we don't see any immediate change and maybe not a change. So if you look at it, I mean, Avaya has endpoints, That's probably the easiest one. That's purely complementary. We already carry a number of endpoints in our portfolio.
They will just join that. Customers always want more choices, okay? So that's just goodness right there. Some of these other things, there is not that much overlap as it turns out between what they currently have and our other partners. They are still by and large as we sit here today by and large an on prem or at least a single tenant hosted company and very, very strong in that obviously.
We are have been and will continue to be a pure play UCaaS provider. So I don't think that they are at this point, all that competitive with any of our other arrangements.
Our next question is from Brian Peterson with Raymond James. Please proceed.
Hi, gentlemen. Thanks for taking
the question. So, a high level one for me. I know you've had some big partnerships before and we've seen those take time to ramp. I'm curious, when should we start to see this really driving incremental ARR in revenue going forward?
Sure, Brian. Hey, it's Mitesh. So again, we have assumed look, we can it's an exciting time for us and we can all get pretty carried away with the large installed base Avaya has. And I look, while it represents an amazing opportunity for both companies, look, we've just inked the deal, it needs to close. So we are, as usual, very modeling in a very conservative ramp over time.
And let's see how things progress. Structurally, seems to us that there is a it's a combination that should remove all friction from customers and partners. But I think over I mean, again, not really guiding to 2020 beyond, I think it would be accretive to growth. But again, we are, as usual, modeling in very conservative brands going forward.
Got it. And maybe one follow-up for you, Mitesh. Just in terms of the existing RingCentral sales reps, obviously they had success gaining share from Avaya in the past. How are the swim lanes defined in terms of their
go to market versus the go
to market with Avaya? Just trying to understand what that will look like going forward. Thank you.
Sure, sure. No change as such, Brian. Think of this as one more addition to our family of channel partners, albeit at a much higher level. We have been harmonizing channel for a very long time and this will be no different. Vlad did mention that this is going to be train the trainers.
So this is where the opportunity comes in for our unit economics, where we will be able to leverage Avaya's go to market and we'll be able to supplement it with an overlay team. So really no change net net and it actually helped us to get to market faster leveraging their go to market.
Got it. Thanks, Chris. You bet.
Our next question is from Will Power with Baird. Please proceed with your question.
Great, thanks.
Yes, my congratulations as well.
Certainly, it feels like it should provide a lot more BAPS. I want to come to the global implications of that.
But I guess first question, I
just want to come back to the partners that overlap both of you all, just to make sure I kind of understand thinking about the unit economics right. So if a partner is selling both solutions or has options for both,
do you all have a preference
for RingCentral Office versus ACO? I mean how do we think about that and which direction that might go?
Well, look, 1st and foremost, we have a preference for a customer to be on our platform. So, we are this is by far the overriding factor. Look, they're a super master agent. They are economically incentivized to make that happen, which means that there will be they'll be getting a piece of the action, right? But we feel and as you know, we tend to model things fairly carefully.
We feel that our overall economics with this arrangement will be at least at level, if not superior than what we're able to achieve internally because obviously we don't need to be investing sales and marketing dollars anymore nearly to the same, certainly not marketing, but nearly to the same level. So we have a well established motion of supporting core brands without stepping on each house shoelaces too much and cases in point AT and T, British Telecom, Telos in Canada. So we will apply those learnings. We feel that overall it will be complementary with not that much cannibalization either way.
Okay. And then I just want
to ask you about the global opportunity. That's one of the big opportunities that the relationship seems to bring given they're in 180 countries plus. How do you think about your platform being able to handle big increase in volume? What kind of investments, if any, are needed there? And how do we think about the timeline for some of those other additional markets to open up for you outside the U.
S?
Yes. No, no, very fair question. I keep thinking about the 2, I have to say. But look, we are very comfortable in our ability to grow the platform incrementally, okay. We've shown this over and over again.
We do expect this to be overall, obviously accretive to our growth, But with what we have in house and now actually really interesting factor here is now availability of public cloud, okay, worldwide. So it is now possible to grow a footprint a lot faster and a lot with a lot less CapEx than it ever was. So by working with industry leaders there, you know the names, we feel that scale should not be an issue. As to the international angle, the only real obstacle long term that we see is regulatory barriers. Obviously not something we control, but there is actually potential good synergies there as well because a way a legal way to provide at least partial UCaaS in those regulatory challenging geographies is to team up with local carriers as well as with on prem providers and obviously Avaya is extremely well positioned there.
So I can't tell you that, hey, you know what, in 6 months or something, we are in 180 countries ourselves, but it certainly will be a major, major tailwind for us with this relationship.
Okay. Yes. Good luck. Thank you.
Thank you.
Our next question is a follow-up question from Sterling Auty with JPMorgan. Please proceed.
Hey guys, thanks for letting me do the follow-up. So, Nitesh, you actually mentioned and answered, I think, Rich Valera's question that the deal is freshly inked but not closed. When is the expectation for when it does close and go live? And is there any special approvals that are needed?
Yes. It usually will go through. So our expectation is Q4, it will go to the same regulatory HSR approval, which is pretty standard, So Q4 is our expectation.
All right, great. And your the video component of Office is based on Zoom. Given that this is a separate agreement with Avaya, has that changed at all your the partnership on the video side or with the UCaaS solution if they do the full office still include the Zoom meeting capability which is the RingCentral meeting?
Yes, I don't see why it would because Avaya doesn't have anything competitive to Zoom. Avaya does have endpoint like cameras, for example, that would be complementary, but I don't see how it's how it would be a factor in the core relationship.
All right, great. Just want to make sure. Thank you.