Greetings. Welcome to RingCentral's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to our host, Ryan Goodman, Head of Investor Relations. You may begin.

Thank you. Good afternoon, and welcome to RingCentral's fourth quarter 2020 earnings conference call. I am 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. Some of our discussions and responses to your questions will contain forward-looking statements, including our first quarter and full year 2020 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, our business is currently being impacted by the COVID-19 pandemic. The extent of its continued impact on our business will depend on several factors, including the severity, duration and extent of the pandemic as well as actions taken by governments, businesses and consumers in response to the pandemic, all of 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. I encourage you to visit our Investor Relations website at ir.ringcentral.com 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 the Investor Relations website. With that, let me turn the call over to Vlad.

Good afternoon and thank you for joining our fourth quarter earnings conference call. I would like to start this call with a warm welcome to our newest board member, Secretary Arne Duncan. Arne is a former United States Secretary of Education. Prior to his federal government service, Arne was CEO of Chicago Public Schools for eight years, and he is currently a senior fellow at the University of Chicago Harris School of Public Policy. Welcome, Arne. Now to RingCentral. 2020 was a transformational year. The global pandemic is fundamentally changing how businesses operate. With a vaccine now being distributed, many businesses are preparing for a hybrid work environment. They are planning for some workers in the office and some at home for the foreseeable future. As companies adapt to this new work from anywhere norm, digital transformation of business communications will become more critical. Enabling this transformation are cloud-based communications solutions. This is essential to enabling employees to productively engage with customers, partners, and peers from anywhere, on any device, and in any mode. According to Gartner, by 2024, 74% of the new unified communications licenses purchased by organizations will be cloud-based, up from 48% in 2019. Businesses are increasingly turning to RingCentral as a trusted partner in their transition to a cloud-based communications platform. This growing customer demand is evident in our strong and standout Q4 results. Total revenue grew 32% year-over-year to $335 million, an acceleration of two points sequentially. RingCentral Office ARR grew 39% year-over-year to $1.2 billion, an acceleration of three points sequentially. We delivered a record number of $1 million TCV wins, up over 50% sequentially and we had strong contributions from our key partners led by Avaya, AT&T and Atos. As we look to 2021 and beyond, we are increasingly confident in the size…

Thank you, Vlad. Good afternoon everyone. Operationally, Q4 was an outstanding quarter across the board. ARR growth was solid in all customer segments. Both new customer wins and install based expansions contributed to the strong performance. And we are seeing a high level of demand across our integrated portfolio of cloud-based unified communications and customer engagement solutions. Modern cloud communications solutions are becoming a top priority for companies of all sizes. We are privileged to be a key partner in their journey to the cloud. We continue rapidly innovating and we are scaling our operations and platform to effectively meet the needs of our growing customer base. Let me share some highlights: First, our people. We further strengthened our leadership team throughout the year. We appointed a new EVP of Products and Engineering, Nat Natarajan, Chief Marketing Officer, Jaya Kumar, Chief Digital Officer, Matthew Bishop, Chief Information Security Officer, Heather Hinton, and Chief Privacy Officer, Paola Zeni. These industry leaders bring invaluable operational and technology expertise. Second, our channel partners, we continue to expand our presence in the channel community, a key driver of our upmarket success. In Q4, our channel ARR increased 55% year-over-year to $465 million. Third, our service provider partners. We are seeing positive momentum with service provider partnerships. We expanded our relationships and became a lead offer for industry leaders like AT&T and BT. We are also excited to welcome Vodafone Business as a strategic partner. Fourth our strategic partners. In Q4, we expanded our rollout with Avaya and Atos in several new geographies. Alcatel-Lucent Enterprise is on track for a Q1 launch. We are seeing early go to market traction, with our strategic partners contributing multiple $1 million plus TCV wins in Q4. Fifth, with our proven upmarket traction, we signed two $10 million plus…

Thanks Anand and good afternoon everyone. 2020 was a standout year for our financial performance, driven by many of the tailwinds that Vlad and Anand highlighted. Subscriptions revenue grew 33% year-over-year and surpassed a $1 billion, a significant milestone for RingCentral. Non-GAAP operating margin improved 50 basis points to 9.7%; and for several consecutive years, we've been executing above the Rule of 40, demonstrating profitable growth. Q4 capped the year with strong performance on key financial fronts. Here's a quick snapshot. RingCentral Office ARR grew 39% year-over-year to over $1.2 billion dollars. Total ARR grew 35% to $1.3 billion dollars. Subscriptions revenue grew 34%, above the high end of our guidance. Non-GAAP operating margin was over 10%, at the high end of our guidance and non-GAAP free cash flow margin of 6.5% improved about 120 bps sequentially. These robust trends reflect RingCentral's growing customer mindshare, both with new and existing customers, as well as contributions from our partnerships at favorable unit economics. To that end, we yet again saw strong new logo momentum in Q4. Our ability to land new logos validate the strength and value of our MVP platform as enterprises look to transform their entire business communications stack to the Cloud. And traction with our existing customers has never been better, three key things there: First, upsell represented over 40% of new Office bookings. Second, churn hit a record low exiting the year and third, trends stabilized in those verticals most impacted by COVID earlier in the year. As to our partnerships, we are pleased to see contributions from Avaya and Atos as they begin to ramp. We are also seeing strong results from our carrier partners, most notably from AT&T. Looking ahead in 2021, we have a healthy pipeline across all our segments, as each facet of…

[Operator Instructions] and our first question is from Brian Peterson with Raymond James. Please proceed with your question. Brian, please make sure your line is not on mute.

Just on the enterprise strength, I know you mentioned a record number of seven figure deals. It sounds like there were lot of contributing factors there. Is there any way to kind of unpack that a little bit?

Sure, Brian. I'll take that. So I'll give some more financial color on the $1 million TCV deals here. You're right we did have a banner year on the $1 million TCV wins. It was up 50% sequentially. We also were able to squeeze in two deals over $10 million. What I'll do is I'll provide some color on two- or three-dimensions Brian. One is one the quality of the deal themselves on the go-to-market motion and then some product color on where the deals came from. On the deals themselves, the deals are getting larger, the wins are getting larger and customers are committing to longer duration. Vlad, can you go on mute? On Q4 itself it was a record quarter. The total TCV value we've booked for $1 million deals was over $100 million. So it was unprecedented for us and this was up 70%. On the go-to-market factor, it was really broad based. Three quarters of the wins came from channel partners and we also had like very good representation from all the three A's. We had Avaya, Atos, AT&T. All had $1 million representations. We also had about half the deals were from our targeted verticals like financial, education, healthcare and now if you move on to the product side. About over 60% of our $1 million wins included a contact center element, so really good pull through. I mean so overall if you just pull this all together. Net, net we're clocking in higher lifetime value deals and they're coming in from all facets on GTM product and verticals. Some established factors but also some that are still ramping.

That's great color, Mitesh and congrats on that. So maybe a follow-up. You guys have made a lot of investments internationally over the last 12 months and I know it's kind of hard to paint all international markets with a broad brush. But I'll be curious what you've seen in terms of demand signals for some of these markets. Is there a tipping point? And how should we think about the adoption curve relative to the strength that you've seen in the US? Thanks guys.

No, that's a great question. This is Anand. I'll take that. You're right in your question, if I look at Avaya, if I look at Atos. We've added multiple international geographies in Q4 and inline with that we've had one of the stronger international quarters as well both in terms of growth and in terms of percent of revenue. So the progress is exactly as we expected because we're layering in many facets of growth primarily through our partners all contributing to significant international expansion.

Great, thank you.

And our next question is from Bhavan Suri with William Blair. Please proceed with your question.

Congrats, the $1 million deal number is great and then obviously the color you just gave was phenomenal. I just want to follow-up in the previous question, but now looking forward. So if you think about the guide you gave and it's one of the higher ranges that you have given for four guides historically. I'd love to understand maybe from Mitesh initially, what's behind that? What are the tailwinds that you're building in and what are you not building in that could potentially be upside? Help us think about how to unpack the guide given the tailwinds of the three A partners. Obviously, the BT partnership, Vodafone, the natural move to cloud, etc. I'd love to understand that.

Can I request everybody to just go on mute? [Indiscernible] mute because we're on different locations, Bhavan. So yes. So what we'll do is Bhavan, I'll quickly take it a click below on the planning process itself. How we do planning? And then I'll hit the punch line so it will give you some good color on what we are baking [ph] in or not? Ryan, can you? Thank you, Ryan. From an annual planning perspective we combined two inputs Bhavan, one is the extrapolation of trends we witnessed that's one and then we then marry those two our bottoms up view from our various go-to-market product motions. So from a trends point of view last year, COVID definitely raised the priorities for as you said business communication solution. It's a structural change, it's a more strategic purchase and we saw elements of that layouts throughout the year. Our new logos was strong, [technical difficulty] incremental improvement on churn and retention metrics as we progressed throughout the year and enterprises kicking in high gear. So that little trends we're seeing. Now looking at bottoms up 2021, we evaluated multiple aspects. First on the go-to-market side direct channel the A service providers and then also we layered on go-to-market product motion for the Office, Glip, video messaging and contact center. So combining these two trends call it top down and bottoms up, usually and as usual. Even for 2021, we always take a prudent approach to our guidance. So we've assumed a reasonable ramp for Avaya and Atos and for Alcatel-Lucent and Vodafone we've baked in minimal contributions as they'll ramp. It will take about six to nine months to ramp from the launch date. So it's more of a 2022 driver for us. So overall I mean if you just hand it out, we feel really good about what we saw in Q4 and the visibility we're seeing with the early trends here.

Got you. That's helpful and maybe one, maybe to Anand here. You guys have offered from a product perspective a solid set of APIs right to voice customers some time. Along with purchases of RCO, you've added some CPaaS capabilities, bulk messaging. But some of the primary UCaaS competitors have made investments in full CPaaS offerings. I guess I'd just love to think strategically about the importance of this functionality as part of the ability to differentiate your UCaaS contact center as a service offering. Do you kind of see the full CPaaS ownership? Thus having benefits from a competitive respective or do you think that right now it's kind of focus on the core integrated functionality of what you have today? I would love to understand how you think about them strategically? Thanks.

So that's a great question actually. So I would basically say, our core focus remains the same which is UCaaS across Message Video Phone, deep integration with contact center, bringing that AI element to it. You saw these acquisitions which Vlad called out and so that remains the core strategy. Now when customer demand comes through, we're absolutely open to exploring specific CPaaS used cases. You saw us do that with high volume SMS used cases we basically talked about a quarter. But that's very specific and that's customer driven. So that's [technical difficulty] strategy is consistent and we're going down the same time.

Thanks Anand, I appreciate the color and the candor and again guys, just really consistent. What a great job. Thank you.

And our next question is from Sterling Auty with JPMorgan. Please proceed with your question.

Thanks guys. I think you got the audio issues because for a while, it sounded like Darth Vader was on the call with us. So maybe Mitesh, can you give us a sense? You added a number of geographies through the fourth quarter with Avaya. Help us understand how these big five partnerships will ramp in terms of the additional geographies and at what quarter would you anticipate all of the partners to be fully ramped and off the geographies that they want to compete in?

Yes, sure. We've got three strategic partners right now. Avaya, Atos and Alcatel. Avaya is in 12 countries, Atos is in 11 and Alcatel will launch in 10, 11 countries coming on. If you look at the size of the market and the addressable market we have, we'll be able to address a lot of this opportunity in the next couple of years. So I don't think there's going to be any dearth of what we can attack in terms of these seats because we're going after the biggest geographies first and where the most of the seats are. So I feel overtime as I mentioned earlier Avaya is ramping really nicely, Atos is off to a good start and it will keep on providing incremental contributions throughout the year and Alcatel-Lucent is going to be of 2022 driver. One thing is that, these partnerships I don't think you can think of them as one and done. So they provide you a continual benefit for several years to come. So that's the way we think about these partnerships.

Sounds good and then one follow-up. In terms of the Avaya wins in the quarter. You mentioned the 7,000 seat win. Where are you heading in terms of the sweet spot? And is there a cap on the size of your organization where you think the product is going to resonate moving forward specifically to Avaya?

That's a great question, let me take that. So couple of things, you said where are we hitting the sweet spot? So what I see is, across all fundamentals we feel that the Avaya team their channels are firing in all cylinders. So that's the customer transactions, that's seat expansions, that's large deals [ph] closed and that's geo expansion. We saw in line with the fact that we had now 12 countries online for ACO. We actually saw a good bit of geo expansion broadly and we also see the last layer which is specific traction on verticals like financial services and manufacturing. So what I would see it's actually broad, it's broad and we see strength everywhere as we expand our relationship with Avaya.

Got it, thank you.

And our next question is from Terry Tillman with Truist Securities. Please proceed with your question.

Maybe Mitesh, this question is for you. There's been a lot of chapters because AT&T book overtime it ramped from basically nothing to well over 10% of revenue. In fact, I think it was in the teens as a percentage of revenue. But then it started to kind of trend lower but what I love to get a perspective on is, would that still headwind though in 2020 from some of the dynamics going with AT&T a couple of years ago and how do we look at AT&T into 2021 in terms of tailwind specifically around that relationship.

Sure, Terry. I loved the way you phrased it. There are lot of chapters in the AT&T story book and I will say the greatest chapter is being written right now. So of course tongue-in-cheek here. But if you hop in back memory lane. We did at the trough couple of years ago AT&T was about five-point headwind to growth. Now fast forward to the end of 2020 with our new relationship underway these headwinds are dissipating. 2020 in fact was one of the best bookings year in our history with AT&T and the contributions are strong. In across the board, up market and down market and we've recently have launched new packages to open up new verticals like SLED. So for 2021 looking beyond to answer your question, we don't expect this AT&T relationship to be a headwind anymore to overall growth. And I'll wrap it by saying this that, with our new expanded relationship with new markets. I think in the next couple of years AT&T could be - become a larger business definitely than the previous go around we had.

That's great to hear. I don't usually talk about or ask about stock comp but it looks like it's going to double. Can you just quickly describe some of the dynamics that's causing the significant stock comp and again, congrats?

Sure, thanks Terry. Yes, stock comp I would say there are two or three main reasons for the stock comp increase. The first one is, I was strengthening up the executive team. Anand did mention that we being hiring a seasoned C-suite bench. The market opportunity is just too large for us not to scale to become a multi-billion company. So we're hiring ahead of that. We've hired several C suite executives there, so that's part one. Second is, our overall headcount increase which is, RingCentral is a great place to work and people are seeing our vision. So we're adding headcount in the normal course of business so that's the second reason with the headcount increase and third one, is the increase in stock price. Right while it's great for the market cap and the stock price is good. It also puts pressure on the stock comp, having said all of that Terry. Net, net if you look at the dilution in the share count, we're adding about 1.5 million shares. So there's going to be lower dilution than we've had in the previous years. So if we get combined the best of all elements, we'll get to hire top talented team and we get to reduce dilution for our shareholders. So I think it's a win - win there.

And our next question is from George Sutton with Craig-Hallum. Please proceed with your question.

Mitesh that was the best job I've ever heard. Taking large stock comp and turning it into a positive, so congratulations.

George [indiscernible].

I wanted to look at 2020 which I completely agree was a transformational year when we look at all the partners and the new offerings. I wonder, if we look forward a full year from here judging on your pipeline that you're looking at right now. Are we going to see additional partners? Are we going to see additional offerings that expand the platform in ways that we might not be considering today?

I'll take that. So I think we've always talked about this. RingCentral's success is founded on the basis of partnerships. So you can expect that we are constantly looking to expand our relationship with our partners and thinking through partnerships across all dimensions, which is our health and wealth partners, our strategics, and our GSPs. So that is absolutely something which we are focused on.

Got you. One other thing relative. You brought up Microsoft in a direct routing win. I wondered if you could go on a little more detail on what you're seeing out of that Microsoft opportunity.

Yes, so see, when I think of Microsoft, I literally think about it in three different ways. The first is the UCaaS solution, right? We feel really good about where we are because, one it's about integrating across message, video and phone, like Vlad called out, which is the reason you see Ring is the leader in the Magic Quadrant for the sixth year in a row now with Gartner. And we're still expanding our innovation moat every single day, which is what you see reflected in the large deal wins. So we feel very good about the UCaaS solution. The second thing I would call out is the integration with CCaaS. I mean, one of the things Mitesh just mentioned is over 60% of our large deal wins actually had contact center in it, and we have the deep integration with CCaaS is a very unique differentiator. And then the final thing I'd talk you through is core customers who are a big Microsoft shop, that's where the direct routing comes in because they've made their decision to standardize on Microsoft and hence, teams is in play. But with direct routing with teams, it still gives them the opportunity to leverage the best cloud business forms, such as RingCentral, which is where we are seeing the traction. And that's the example of the 7,000 plus teams direct routing win we talked about. So we feel very good when we compete, and we feel really good when we can actually just work with teams and integrate with it as well.

Great, thanks guys.

And due to the interest of time, we do ask anyone who's asking the question to please limit yourself to only one question. Again with the interest of time, please limit yourself to only one question. And our next question is from Michael Turrin with Wells Fargo Securities. Please proceed with your question.

Mitesh, ARR picked up here in Q4. We had to go back to 2015 to find 35% growth in our model. Is there anything you can add in terms of contributions from those strategic partnerships you're calling out sounds like the likes of Avaya and Atos are likely differ this to long? Anything you can add both in terms of Q4 contribution and anything that might be embedded there in framing initial outlook for the coming year is helpful?

Q4, ARR was strong across the board and every chip in way accelerate. Also we did have very strong contribution from our partnerships there. We're extremely pleased with progress with Avaya. It's been a heavy lift to making a reality. It's really cross functional with both companies but it's been working really well and we saw sales double quarter-over-quarter with Avaya and we had multiple million dollars deals there. Avaya will serve as a blueprint for future partnerships. The first one is Atos which is again off to a great start. The product is now offered in 11 countries now. More international companies are coming. Countries are coming in 2021. We're activating the partner ecosystem. In Q4, for Atos we had three times the number of partners in Q4 quarter-over-quarter. So I think Atos will start to incrementally add on to growth rates in 2021 but overall the key things we think to note, Michael is that with the size of the opportunity we are and the penetration level being so low. I think this will be a multi-year drum beat for us to provide an opportunity to grow at a solid rate for years to come with these partnerships.

Great, that's all clear. Thanks guys.

And our next question is from Meta Marshall with Morgan Stanley. Please proceed with your question.

Maybe just the question given the success of home grown engaged contact center platform and obviously the success of RingCentral video just any recent thinking about either transitioning have existing customers that they be on our kind of Zoom video product as well as just kind of status of the inContact relationship as you're kind of home-grown products kind of continued being developed.

Meta, this is Anand. I'll take that. Good question. So let me start from the last question you asked. Engage was a good quarter. Our partnership with inContact is really strong and that continues as well. So no change in strategy. We continue to work closely with inContact. They're big part of our large TCV wins where contact center was embedded while we make progress on Engage. Now on the second part of your question which was Zoom and RCV. Right now every customer who we acquire new default student central video and we've had good traction and we've got good feedback. As for the installed base, we're going through the process of getting them on. It's not a post migration but we're getting them on our RCV platform because the benefit of a tightly integrated experience across message, video and phone is very strongly resonating with our customers and we're on that journey as well right now.

Is there a timeline for that as far as when you would expect that migration to be complete?

No timeline, but the journey and the process is pretty strong.

Great, thanks.

Our next question is from Samad Samana with Jefferies. Please proceed with your question.

Mitesh, if I look at the channel partner ARR. It actually on a percentage of net added dollars was the smallest contribution that has had in several quarters even looking back to last couple of years. I'm just curious how should we think about maybe the percentage of channel ARR dollars as a percentage of total ARR added going forward? And was there anything in the fourth quarter that were direct was particularly strong that might have driven out mixed shift lower for the contribution from the channel?

So everything was really strong in Q4 particularly direct and the enterprise was really strong. If you look at the growth rate for the channel again the mix is driven by both components right the channel and the overall. So the overall was very strong. But if you look at Samad the channel of growth rate of I think about 55%-ish. It's tracking in line with the overall enterprise growth rate. So there was nothing really to call out. In fact, channel we're seeing increased momentum in terms of number of partners we're signing and some of the initiatives we're working on, where we can help channel close the deals faster that's underway as well. So nothing more to read there.

Great, I hear there was direct strength. Anand and maybe just one for you on Glip Pro, any early reads on download data or activity or early engagement from customers or trends that are worth calling out to the extent you've seen conversion? I know it's only been just around 60 days give or take but just given it's an exciting opportunity, anything you can share will be helpful?

Well, Samad good question. It is too early, 61 days to be precise and the progress is as we expected and it is too early to share any trends or any other details?

Great. Got you. Thanks for taking my questions guys and congrats on strong finish to 2020.

And our next question is from James Fish with Piper Sandler. Please proceed with your question.

You highlighted a number of very impressive wins with large entities. But really, we only heard a few thousand seats for cost. Is it just the initial roll up to the broader enterprise? Was it more departmental at this point and that we're looking to upsell kind of over the next year to two? You even extended that to Atos obviously impressive 30,000 employees' addition but they obviously have about 3x more than that in terms of the overall. So just trying to understand, is it just the initial win and we should expect the next year to two to see additional adds.

Not really, if I just look at record million dollars plus TCV wins we had. It was actually pretty healthy and it was a good mix of UCaaS and CCaaS. And so I actually thought it was pretty healthy as we look at the number of seats going forward as well. So, I'm not sure where you pick that up from. And we've also had a fairly good upsell as Mitesh called out as well. So we're also not just getting in new customers, but we're reaching back into our installed. And we've very good upsell expansion motion which is bearing fruit as well which has affected in the seats as well. So we see good progress across all of them, not just the number of large deals but also the seats across them. Frost & Sullivan just published their report for 2020 where they called out RingCentral as not just the highest in terms of share, in terms of users and seats. But also in terms of growth for users and seats as well, so we feel pretty good about it.

Thank you.

Our next question is from Ryan Koontz with Rosenblatt Securities. Please proceed with your question.

As we think about the channel mix increasing overtime, any headwind we should consider on the model to gross or operating margins? Thanks.

No. Channel in fact it's an accretive motion, right. But channel themselves as relatively as the strategic partners they're accretive to unit economics because we don't get to pay the upfront sales and marketing cost for these motions. So overtime as the channel takes share it would be neutral or at best neutral or slightly accretive for the model.

And our next question is from Will Power with Baird. Please proceed with your question.

This is actually Charlie Erlikh for Will. Thanks for taking the question. Congrats on the really strong results. I'll just ask a quick one, just maybe on the pricing environment you're seeing. With lot of competitors and some coming at the market at bit of lower price point. I'm wondering if you would maybe comment on any changes, you're seeing in the pricing environment at all, if anything? Thanks.

Yes, so I'll take that Mitesh. Not a whole lot of change we see, we see the trends sort of kind of be the same across the year, so no material change.

Our next question is from Rich Valera with Needham. Please proceed with your question.

Question on the SMB performance. Looked like you saw another nice quarter-over-quarter acceleration in the SMB growth rate. I wonder just that was due to improving churn, if that was a factor and in fact SMB churn was back to pre-COVID levels. Thank you.

Rich, it's a good call out on the SMB. There are couple of things happening under the cover on the SMB side. I will say there are three or maybe four trends to call out. The first thing is, we're seeing strong traction with our e-commerce motion which is more of the self-service motion and that's accelerating which is pulling up the SMB growth. Second one is the benefit we're getting from our recent branding efforts. So we now have the optionality for Glip Pro as well. So that overall grinding halo does fall through to the SMB side. And the third one as you called out, net retention or churn definitely an improvement in churn in the SMB side. It stabilized. It kept on getting better throughout the year. We're almost there at a pre-COVID level on the SMB churn from there as well and I think the over driver I see in this COVID world no one is really deploying on-premise equipment, right. People are only going to cloud to stay productive. So I think that definitely helps the SMB space first.

And our next question is from Matt VanVliet with BTIG. Please proceed with your question.

I guess from a bigger picture standpoint you mentioned the number of countries that you're in with bunch of bigger partnerships now. But wondering if you have much of an update in terms of the number of partners kind of within those geographies or kind of across their entire system. How well penetrated at some of these bigger ones. I presume Avaya is a little further along which is kind of how do you feel overall about the potential for sort of organic growth within these partnerships as you move through the year?

I'll give the first part of the subjective color which is, I'm assuming you're talking about partnerships like Avaya and Atos and their partners, right?

Yes.

Yes, as we look at it. I mean as we bring every country we bring on, we basically are able to activate all the partner in their channel who exist in those countries and so as of now. We have activated almost somewhere in the 90s on Avaya partners in the countries we operate in. As Mitesh said Avaya is now, ACO is now available in 12 countries. Atos is now available in 11 countries and we feel really good about the percentage of partners in those countries. We've activated and we're working with to train and enable and build pipe jointly.

Great thank you.

Our next question is from Siti Panigrahi with Mizuho. Please proceed with your question.

Most of my questions have asked. But just a follow-up to the SMB question earlier Mitesh what's your expectation baked into 2021 in terms of SMB growth. Should we expect the similar kind of trend that we saw in Q4?

Yes, look SMB, we always internally model SMB call it high teens like that mid-to-high teens. It was used to lower to mid-teens now. It's now mid-to-high teens. I think that's the reasonable level to model. You just never know SMBs easy come, easy go. So I think a more prudent way to dial in expectations is call it like high teens growth rate in 2021.

And our next question is from Catharine Trebnick with Colliers. Please proceed with your question.

Well, thank you for sneaking me in. Congratulations on a good quarter. So this is back to the contact center. Could you parse perhaps and go a little bit deeper into where you're using inContact versus your internal and Engage? And what's the gap you would say in capabilities between inContact and Engage? Because it does seem like you're moving yourselves directly into the contact center, even though you said earlier you still have a tight relationship with inContact. So I'm just trying to parse the capabilities and where you use one versus the other. Thank you.

Catharine, hopefully, we'll have a follow-up with you on that. That will take a bit of time. I would say at a 30,000-foot level, essentially, it depends, one, on the specific use cases which the customer is looking at. It also depends on the size of the customer and the number of agents they want. So all of that comes in together to help us understand which product we lead with. As I said - again, I'll go back to saying it again, our partnership with inContact is really strong and further strengthening, and we see huge momentum as part of that. We also see Engage pick up momentum in specific use cases, in smaller customers as well. So it's literally - it's working across the board with our customers directly and also with our channel.

Our next question is from Matt Niknam with Deutsche Bank. Please proceed with your question.

Just a follow-up on the $1 million deal, so we got some good color on the fourth quarter. Any color you can share in terms of how those size deals have been trending thus far during the quarter in 1Q? Thanks.

Let me answer that. We are still in 1Q. What I would say is Q4 is a seasonally strong quarter. It's the strongest quarter. That said, I'll just broaden out the question here. If you look at the trends we are seeing, early trends in Q1, we are seeing our trends of Q4 continue into Q1 overall.

And we have reached the end of the question-and-answer session and this also concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.