Employees will gravitate to ‘virtual assistants’ as much as ‘human interactions’: RingCentral CEO

RingCentral Founder & CEO Vlad Shmunis joins Yahoo Finance's Brian Sozzi at the Goldman Sachs tech conference to discuss the future of work and the economic recovery.

Video Transcript

BRIAN SOZZI: Shares of RingCentral under a little pressure today amid the broader market sell-off. I had a chance to sit down with the company's CEO, Vlad Shmunis at the Goldman Sachs Tech and Media Conference earlier this week. Take a listen.

VLAD SHMUNIS: It meant being connected and productive, and the two are intertwined-- so connected and productive any mode, any device, anywhere. That was our motto from day one. That is what we IPO'd the company on. And it's never been more true than now.

People need to stay connected, given distributed workforces, given rapidly improving mobility. And yes, we all have mobile devices, of course. But a mobile device as a business tool, there is still quite a bit of runway there.

And of course, multi-modality, so our flagship product is-- we call it RingCentral MVP. Yes, it is the most valuable player in the field. We just won four out of four categories in Gartner Peer Insights-- best for mobility, best for enterprise, best for integrated UCAS, CCAS, and best for S&B. So that's four out of four.

And the other reason why we call it MVP is message videophone. So we are really one of the very, very few players of size which combines all of these communication modalities. And we couldn't quite come up with an acronym for it yet, but we call it MVP, plus the integrated contact center. So all of those are trends that are very positive for us.

BRIAN SOZZI: What's the next big innovation-- given that we now have this hybrid workforce, what's the next big innovation on your platform that you are looking to create to cater to this workforce?

VLAD SHMUNIS: Short answer is AI. Neural networks are definitely, we think, are approaching a point of no return, approaching to where people will be trusting virtual assistants as much, if not more, than human interactions. And we actually have made an acquisition in this space within the last couple of years.

So that's being integrated into our product. So we see quite a bit there. So we're talking about meeting summaries, meeting insights, fun you can have with AR, augmented reality quality, or virtual background on steroids, OK, virtual bot-based assists into conversations that you can have not just with, call it, contact center agents, but even in more sort of B2B interactions when you are talking to your peers, your bosses, people on your team, et cetera.

So all of those. And another one is security. And another little acronym we use is TIP-- stands for trust, innovation, and partnerships. And trust has to do with reliability, where 5/9 reliability, best in class, with no one really able to touch that. And we've been at it for a few years now.

But also a very important commitment to customer data, data security. And, again, another acquisition we've made in the space is an end to end encryption company. And it's being integrated across our entire product portfolio.

BRIAN SOZZI: You guys seem to be doing pretty well. Your competitors seem to be doing well as well. Are you surprised just how the market has reacted to some of these, what they have called, stay at home trades? As the economy has reopened again, the market has been very penalizing to a lot of stocks in the space.

VLAD SHMUNIS: Yeah. That part is not great, obviously. But, look, we can't control the market. What we can do is we can try to control our execution. And the other thing we cannot control but is a huge positive for us is a TAM. TAM is humongous-- talking $100 billion.

We are clearly in the lead. At the very, very least, we are one of the breakaway leaders. But as I mentioned, based on this one Gartner survey, we are actually number one. We think that the markets will sort of recover their sense of reality. And again, we just feel very fortunate that we have this $2 billion business, still growing at a healthy clip, and being very, very profitable on gross margin basis-- 82.7%, being very strong operating margins, and good cash flows.

And we are absolutely, given the size of the business and how we're maturing, will absolutely redouble not just on our growth, which will continue pushing on, but also on profitability, including free cash generation. Which in the end, what all businesses of size should be valued on we think we will be doing quite well there.

BRAD SMITH: And that was RingCentral CEO Vlad Shmunis joining us here on Yahoo Finance with our own Brian Sozzi.