RingCentral, Inc. (RNG) Earnings Call Transcript & Summary

Okay. Next up, folks, is the Reimagining the Business and the Future of Work. Michael Frankel, the Senior Vice President, Managing Director, DNA at Deloitte. Michael, welcome to the program.

There we are. Thank you.

Good to see you.

Good to see you.

So look, tell me, given this current crisis, right, where we are, never let a crisis go to waste. How are you using it to advance your agenda? How are you helping your clients?

So in a wide variety of ways -- but there are a couple that I think are particularly interesting. One is this crisis has sort of accelerated topics around virtualization and remote work, right? We suddenly, in a short period, we're faced with everyone having to work remotely or almost everyone having to work remotely. And I think it creates -- obviously, it's a terrible reason for this to happen. But it creates a unique opportunity for companies to think about a trend that if they were move towards slowly and they suddenly had to move too fast. And it's particularly interesting for Deloitte from an internal perspective as well as a client perspective because we were always a very virtual organization. The difference is we historically as opposed to being in our home offices, we're mostly at client sites. But I like to joke, Deloitte people are like turtles, right? We carry our office on our back. And so when this crisis began, we very quickly moved to a home office environment very effectively, and we're able to continue -- we already have a lot of the technology in place. But more importantly, and I think this is what our clients, what companies in general, are going to struggle with is, it's not just about having the technology in place, the desk can place, it's about a shift in workflow. How you work together? Culture. How do you communicate, how do you effectively communicate? How do you go to market? We've had to continue to drive our business, working with clients over screens as opposed to in person. I think it will have -- it will shift globalization, right? The world is a lot smaller when everybody is on a screen anyway. So I think the interesting question for all companies, and we feel like we had a little bit of a significant head start is how do you purposefully make that change happen, right? We made that change happen out of necessity because of the crisis. But how do you purposefully make that change happen in your organization and move towards more virtual and more remote in a way that's effective, right, because some of the things that we've had to do in the crisis are not necessarily sustainable. So how do you create that more long-term change in your organization? I think that's one big shift. The other one that I'll point to briefly is, but we can dig in more, I think that this event has, if anything, accelerated. This, coupled with a bunch of the new technologies that have suddenly sort of hyper accelerated in the market over the last few years, has reemphasized the importance, the criticality of what I'm going to call complex ecosystems. And what I mean by that is everyone's always had corporate relationships, relationships between different businesses. I think what's happening now is more and more of the problem that businesses face, that our clients face, are solved by multiple parties coming together. Fewer of the problems that our clients have can be solved purely by one vendor, one service. And so the most effective solutions of the future, particularly ones that leverage very complex, fast-moving technologies like AI, are going to be built on complex ecosystem. So not just a lightweight punter, I'll sell your stuff and you sell mine stuff, but a really complex solution that deeply integrates human expertise, technology, data, workflows, go-to-market relationships. And I think the conscious design of your ecosystem, what's your role in it? What's the value prop? Not just for your customer and you, but for all your ecosystem partners. And the ongoing management of all those relationships which are going to constantly change as new technologies come in, technologies go out, your clients' needs change. I think that is sort of a challenge that was always evolving, but I think has sort of accelerated during the last couple of years. And I think the winners in the market in general have been ones that figure out how to master that.

Well, Michael, stay with us. we'll be back to you in just one minute. Next up, Jeff Wilkinson, CIO of Delaware North. Jeff, welcome to the program.

Thanks, Hunter. Glad to be here and be part of this discussion.

Great to see you. So give us an update, what's on your mind?

A lot on my mind. I represent the hospitality industry. And as you can expect, we had significant disruption beginning mid- to late March, taking a look at the impact across all of our operations. And as we try to envision the future, I'd like to echo many of the sentiments and words used by the other panelists. Really having a very deliberate laser focus in terms of what's truly essential to our business to run operations is incredibly important to us. I'd also suggest that things that we viewed as competitive differentiators, even back in February and early March, are now viewed as table stakes. In the hospitality sector, we all talked a lot about the future of mobile, where guests can use their own devices. We talked about the contactless experience and self service. That's now an expectation. So as we bring our restaurants, our sporting venues, our lodging properties all back into operations, that's now the guest's expectation. And to tie it into innovation and ideation, yes, we've talked about it before, and it was a focal point for us. But it's more important now than ever that we think about ideation across the enterprise, and it's not just about technology and data. It's about rethinking our operating structure, our operating model going forward and really trying to carefully select what those most important business capabilities are going to be for the future. I noticed Kevin asked the question to all the panelists, talking about this all sounds great success being able to work virtually but what happens after the pandemic and we return to this new normal? What I found is, at least in ideation and innovation for us as we think about the future, being able to work remotely does work. We can actually have our sprints. We can work on our product cycles virtually, but requires a lot of extra energy and effort. And I'd be the first to suggest that, that may not scale well as we get back into our traditional view of products, our product lines and all of our product releases. So many of us are certainly anxious for that more face-to-face dialogue and communication as well as co-location.

Jeff, it's great to see you. And you sound great. Thanks for making the program today.

Yes, glad to be here. Thank you.

Thank you, and I look forward to seeing you again soon.

You got it.

Excellent. Next up, Sean Lennon, CIO of Medtronic. Sean, it's been a while. It's good to see you my friend.

Doing well, for some reason I can't start my video. The host has stopped my video, hold on.

Okay. We'll see if we get that video cranked up. [indiscernible], can you crank up Sean's video?

There it goes. How are you Hunter?

Awesome. You've been busy for the past year at Medtronic. You have a global transformation going on. You have a -- like everyone, you inherited a lot of legacy. And you have some interesting projects.

I had been. I do. Yes. I think the big part of it is very similar to what we did at Allergan. And it's really just starting to look at how do you really reimagine work, right? How do you move from just automating processes to really reimagining the way you do processes, right? And I think COVID, while an awful and terrible thing, it's actually forced us all to really think different, right? So it's really unlocked people's mindsets from being, let's improve this process 5% to 10% to really starting from scratch and saying, how do we really want to do this differently? If we're going to build it out now for the new normal, what's it going to look like? And I think that's really been -- really a key for us to really look at how we can do that. Same time, you need to match that with a proper structure of data that's not just limited to a fixed way of gathering data, meaning all of our -- we're a medical device company, largest medical device company out there. And all of our products are IOT. So the ability to gather and collect data is there. But you have to be able to leverage and understand how to create a data model, it's not so static that it leaves other opportunities on the table or what we call dark data, right? The data that you collect, but you don't know what to do with it, or you don't do anything with it. So you've got to balance that. And then obviously, a workforce that actually work -- understands both the business side and the technology side because one without the other really doesn't work. I mean you can -- you have the best AI techs out there or machine learning techs, but you can't base it off to an unmet need in our business. It's actually not going to provide a lot of value. So we've been spending a lot of time in that space. And really, I think it's been fun. It's actually been a great time. I think look at even Medtronic, the way we've handled COVID, and how quickly we've had to work with customer -- partners that we never would have dreamed of working with before. We started working with Elon Musk at Tesla, working with Foxconn. We've open-sourced our ventilators. So for the good of the country to really enable faster manufacturing of these products. So we're doing things now that in the 60-plus years that Medtronic has been around has never thought of doing in the past. And it's actually great because the companies that are going to adapt and really change and create the new normal are the ones that are actually going to survive and thrive going forward. We're positioning ourselves in that space for Medtronic.

Sounds great, Sean. A little bit about the size and scope of Medtronic.

We're a $30-plus billion company, we're more than 91,000 employees, over 100,000 full-time equivalents and we're -- we have 357 offices around the world, right? So we're -- our primary -- we have 4 primary business units. One -- biggest one is cardiovascular. Then we have our Minimally Invasive Therapy unit, which is really where we're doing a lot of our ventilator work out of. Our robotics business is there. We have a restorative therapies, which is 3 components. It's brain, pain and spine. So we're doing deep brain simulation, spinal reconstruction, pain therapy. And then we have a significant play in diabetes as well. And with the continuous glucose monitors and insulin pumps as well. So it's an incredible company. I mean, the mission for the -- the great thing about this company is the mission is interesting. It's something that you can ask any of the 91,000 employees around the company, what's the mission, and they know it. That's how much they put into this. I mean, it's really 3 -- it's a long mission statement, but it really is around 3 pillars of alleviate pain, restore health, extend life. And it's been the same mission statement for almost 50 years. So it's actually an incredible company, and I'm actually excited that I joined.

Awesome, Sean. Great to see stay with us. We'll circle back to you here in a minute. Kira Makagon from -- Chief Innovation Officer of RingCentral. Kira, welcome to the program. Good to see you.

Thank you, Hunter. Great to be here.

So a little bit about the -- it's great to have you on. RingCentral is a great client of HMG. Thank you for your support. A little bit about being a Chief Innovation Officer in an incredibly or insanely innovative company. That's got to be a tough job.

That is a fun job. Yes. That is an incredibly interesting job, so I get to innovate. And that's what I do -- our global product engineering design deployment organization. For those of you who don't know what RingCentral is or who we are, we are a global communication company, public, over $1 billion in run rate. And what we do is we enable companies to run their businesses in the cloud. We were born in the cloud. And what that means for our customers is that they don't need to ever install anything. Not before COVID, not post COVID. What COVID has done for our customers is enable them to do -- to work from home, to take phone calls, to get on DJ meetings, to message, to run contact centers, to do all of that while working from home. And in -- or in a remote environment. And interestingly enough, RingCentral was born with the following -- that was before slogan, I would say, work from anywhere, work on any device, work in any modality.

It's a really ubiquitous communication platform, isn't it?

It is. And we're mobile first. So I walk around all the time with my iPad and on my house.

I love it, love it. So when you think about the digital gap and enabling the future of work, what comes to mind?

So look, future of work is here, right? And what we've seen happen is that companies need to close this tremendous gap today in technology so that their employees can work digitally, can work remotely. And so that they're able to run their businesses and grow their businesses in this new environment. And COVID-19, of course, is an incredible catalyst of telling everybody transform, transform very quickly. Companies typically take a long time to transform. There's a lot of decision-making. We don't have time to decide. We have to work. We have to work remotely. We have to serve our customers. We serve our customers. And in that, we enable them to do their work and to maintain their businesses. And it is no longer an IT decision. This is a business decision. This is how companies are going to work in the future. Even when we come back from this, we're going to work remotely. We're going to work flexible hours. We're going to work globally. We're going to interrupt on any modality. We are on media right now. We could be on the phone, we could be messaging each other. And everything that we do will get more and more automated so that for companies to continue to keep pace with the technology, they need to learn how to adapt this technology so that, for example, just to give you a basic example. Typically, if you're sitting in your office, you're used to your assistant -- or I was use to my assistant coming in and saying, okay, your next meeting is here. Well, my next meeting is on media, and I have to be able to switch from 1 meeting to another. So I need a reminder, I need something that switches me. I need to know how to press those buttons and that better be easy and it better work under any circumstances.

Kira, we lost your video feed there, but your audio came through perfectly. We'll circle back to you here in a minute, if you can figure out maybe [indiscernible].

That's interesting. Okay.

Stay with us. Sandeep, you still here with us? Welcome back.

[indiscernible] The story is, yes.

Yes. Question for you, how do you know it was the right fit for you in Mars? I mean you probably -- and it was you saw a million different companies at all levels, 10,000 feet, 60,000 feet, working with CIOs and CEOs and CTOs. How do you know it was the right fit for you and the C-suite at Mars?

Mars, for me, is perhaps the most human company on the planet. The leadership team, the family, [ extra rare ] sense of humility, openness to learning, despite being very accomplished and learned individuals. Today, in the world, we need that openness and that humility more than ever before. Just look at yesterday and today, just the last 48 hours. Nike, another fantastic company, had some surprise losses. They declared quarterly losses. And -- but what was inside the results, if you read through it, is that their online sales went up 75%. And they have said now that 50% of their sales going forward will be digital. That is a rare pivot you will see in a crisis. Diverting in a crisis needs humility, needs humanness, needs openness. Nike can choose to be arrogant. They have a fantastic business model. During the course of this meeting, Microsoft just twitted that they are shutting down all stores, period. Microsoft is shutting down all stores. However, except for a few experience centers. Imagine Microsoft having been arrogant about their store strategy. They have just pivoted very, very quickly. To Kira's point, the decision-making has been fast. So Mars seemed to be that kind of company that is open to change, that is humble to change and perhaps more human and friendly and frankly, who doesn't want a little bit of chocolate in a -- and some pets around them all the time. And Mars is one such company where you can do both.

What I heard -- I was reading the stats of Mars, 50% of all of the pets around the world, you touch somehow, is that right?

Yes. Our dominion for our pet care business, which is our largest business, by the way, is building a better world for pets. And again, in the last 10 weeks since this conversation is so topical for the last 10 weeks, pet adoption has shot up since we all hold up at home, and we've realized our pets are a perfect companion. I've seen my neighbors walking their dogs more than ever before. And as a result, I've gotten to know the neighbors as well. What we did was we used Zoom and Teams to enable pet adoption through shelters. So shelters now use our platform for adoption. And all that happened and now has already resulted in thousands of adoptions and so on. So we are so committed to building a better world for and touching more and more pets through our hospitals, through our genealogy company called Wisdom Health, through our -- company called Whistle, which is a fitbit for dogs, through our pet food, pet nutrition and so on, that even in these times, we feel we can become even more relevant to our consumers, to our pet owners, to our pets.

Sandeep, great story. I'm really glad you came on the program, stay with us. Hey, Michael, over to you. All of this talk about innovation, and it's almost as if in the last 120 days, there's a new lexicon that's wrapping around business technology leadership. And I mentioned that in my opening comments in our panel prep call, this notion of humility, openness, collaboration, loving your customer, being connected, sort of leadership. Would you wanted to go on that for a minute?

Sure. Yes. I think this is an unusual time because we combine, if we want to be honest with ourselves, incredible stress and traumatic events with this physical dislocation. And I think both internally in your organization, you have to figure out how you support your people, how you evolve your culture and how you work in this new bizarre normal. And I think the companies that are able to do that are going to be more successful. And the same thing applies to customers, right? You have to -- you have to figure out how you're going to interact with customers in a new way, but give them the same experience. So if we're pitching work to a client, if we can't do it in a conference room with a whiteboard where we're bouncing ideas off of each other, how do you create that same dynamic? How do you use technology? How do you think about the way you're communicating material? All that stuff is changing. And my suspicion is that as we hopefully get control over COVID, hopefully, we're not going to be in this situation, but I think the world 2 years from now is going to look dramatically different than the world 6 months from now. And a lot of the lessons that we've had to internalize about all those challenges are going to ironically help us to operate in a more virtual world. So 2 years from now, I think people will be pitching their clients more virtually and all the lessons they learned over the last 3 months on how to keep in touch with their clients, how to communicate, how to do demos, all that kind of stuff. How to build a personal relationship if you're not having a steak dinner with them? All of that will serve those companies well even after COVID is hopefully, knock on wood, under control. So I think it's a terrible reason, but it's an amazing learning experience for something that we were going towards anyway.

Love it. Thank you, Michael. Great comments. I was always spot on. Kira, what have you done internally in accelerating your innovation agenda over the past 3 or 4 months? I know you're on a fast track already. What have you done to push forward even further?

Pursue even harder. So look, we -- I'd like to put it in terms of our customers. I think that would probably be a great way to describe this. And last night, we received a letter from a customer that I wasn't aware of. They are a device -- medical device manufacturer for point-of-sale test or point of presence test, present in 89 countries globally, and they happen to be an essential customer in this pandemic where they're testing people in Asia, in Europe, in all parts of the world. And they have call centers set up to assist all these test results and questions and answers. And as you can imagine, multi language is a requirement for them to run their business. And the reason they orders through letter is that we help them essentially serve their customers, people who are coming to get tested globally and enable them to set up basically virtual call centers in a matter of days. So they're now able to run their business entirely on RingCentral, moving central call centers, contact centers within central point of presence, media, audio and messaging. And with that, like I think Sandeep said, what we have to all do here in our businesses is transform ourselves to -- in a way that we win the hearts and minds of our customers by enabling them to build their business that serves our community at the end of the day. And so what I feel we're doing differently is we're doing a much better job of serving our community. For example, when COVID was announced -- we announced COVID, look when COVID started becoming a reality in the United States, an unfortunate reality. And even prior to that, in Asia and Europe, we made an offer to our customers in education, in medical industries, in first respondents, in government organizations, to use our service free of charge for any size of organization. And that forced us to scale quite a bit because we went from normal course of business, and we're growing pretty rapidly as this to growing much, much, much faster, which, of course, forced us to do quite a bit of additional -- adding additional capacity, additional computing, additional storage, et cetera. So it tested our elasticity as a business, while we were serving a greater community and continue to do so.

Kira, thanks for -- great stroy. Excellent job. [indiscernible], final comment, final word?

No. Listen, I think these types of forums are great because it lets us all know that what we're trying to do is not unique, right? And we're all trying to drive our business in a different way, but utilizing a lot of the same processes and principles. And I think these are -- I think big part of what we're trying to do is take that leadership role, right? Stop -- move away from being that kind of partner that kind of waits for the orders to come in and then kind of fit fills the orders too. How do we lead -- how can we now take the companies and lead them through the mire of all these different technology. You know every CEO is getting knocked on their door every day by every technology company out there that says, "Hey, I can go help you". And they don't know which way to go. They don't know which is the right path. We've got to get it out of just doing things that are what we would call transactional relationships, right? I need one specific thing, let's buy that, to really want to be enriching partnerships that you really want to think about going forward, and how do you leverage that? And you can do it now, you're probably going to see what we [ show what ] we call interesting bedfellows, right? People that are work -- companies that are working with companies that you would have never thought would be working together in the past. And now they're going to be working together in the future. And the role of the CIO is to make that happen, is to help shepherd that through, get them in place to have a conversation about the future of work. And really help lead these organizations through the mire and get to the path of the new normal is really what I think we could all contribute.

Really well said, Sean. Great to see you. Kira, thanks [indiscernible] today, Michael, you as well, and Sandeep, great to see you. Hopefully, I question to the end. We'll talk soon. Thanks, folks.

Thank you.

Thanks.

Thanks.

Thank you.