FIVN - Earnings call 4 2023

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Operator

[Audio Gap] Mike Burkland, Chairman and CEO; Dan Burkland, President; and Barry Zwaranstein, CFO. Certain statements made during the course of this conference call that are not historical facts, including those regarding the future financial performance of the company, expected ARR from certain customers, customer growth, anticipated customer benefits company growth, enhancements to and development of our solution, market size and trends, our expectations regarding macroeconomic conditions, company market position, initiatives and expectations, technology and product initiatives, including investment in R&D and other future events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are simply predictions, should not be unduly relied upon by investors, actual events or results may differ materially, and the company undertakes no obligation to update the information in such statements. These statements are subject to substantial risks and uncertainties that could adversely affect Five9's future results and cause these forward-looking statements to be inaccurate. Including the impact of adverse economic conditions, including macroeconomic deterioration and uncertainty, including increased inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency exchange rates, lower growth rates within our installed base of customers and the other risks discussed under the caption Risk Factors and elsewhere in Five9's annual and quarterly reports filed with the Securities and Exchange Commission.

In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results and guidance, is currently available in our press release issued earlier this afternoon as well as in the appendix of our investor deck and in the Investor Relations section on Five9's website at investors.five9.com.

Burkland. unless like financial over to Chairman CEO, that, non-GAAP. And discussed to reminder and I'd now turn Mike a otherwise figures indicated, are FiveX's Lastly, the call

Michael Burkland

EBITDA our be Thanks, for revenue This revenue call share Emily, driven grew we for year by helping business revenue XX%. enterprise quarter XX% Fourth XX% the the million margin increase strong primarily flow finished everyone, and grew Adjusted and was for XX% that with LTM this I'm year-over-year pleased thanks, afternoon. to results. fourth quarter revenue. to with $XX growing drive year-over-year. subscription XX% a continues operating our joining full of of of or revenue, QX cash record year

know, for approach line balanced the all We you the off to profitability. Today, like cloud. a ahead take and market growth never enterprises commenting better to we opportunity FiveX. to top by market I'd for move start line large bottom been to believe has the delivering on As

are momentum new by as evidenced in upmarket QX strong continuing record to logos our enterprise with bookings. We see

grow, addition, pipeline record In high. our another hitting to continues

three acceleration than ongoing indicator being with the top the strategic RFPs key trends. inflection point. This a enterprise an at being more We of by of is seeing doubling are driven is at which market year-over-year, funnel strong our opportunity market

there priorities the cloud is being believe migration ahead. enterprises, platforms [ First, of With XX% life becoming as highest of ]. runway approximately significant penetration and for center many to cloud solutions end contact especially a one at on-premise we are is

becoming the are increasingly durable, remains this to This to these opportunity. are and imperative their on and and AI CX. initiatives. massive businesses third, multiyear reimagine of to experience Second, centers believe are is an and deliver enterprises a market customer automation enabling their on cloud are cloud underpenetrated, contact businesses heart AI enterprises and we contact And empower their centers leveraging laser-focused at improving

of you Now I'd remind like to drivers of three main our business. growth the

our the market our platform, expansion. march start international with Our and up, I'll platform.

continue to as infusing AI We AI IDA AI-powered been CX strengthen throughout solutions further generative leveraging in our chat We've power expand ]. leadership the bots of and such AI to platform. FiveX [ by our

In many addition, gaining is generative AI AI summaries, AI enhancing are and and offerings other portfolio AI meaningful our in traction. insights automation which including

believe the For in example, with quarters, each Assist, deliver for AI growth year-over-year bookings leading growth three generative try-before-you-buy of be much attributed can successful to our in capabilities We and increase rapid includes Agent the a program. AI culminating accelerated to last which this Xx QX. our customers summaries, in we of value

also widely leadership recognized Our in being is industry. by AI the

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continue we for and new with to in momentum the contact up in this from the Baird we solutions. recent with total Enterprise XX% logo were our automation QX. bookings center the December named AI see Channel area late Additionally, most survey ACV provider making of AI Overall, best as significant in

X% Additionally, now automation of AI up products and enterprise revenue. make our subscription

customer use an More data Richer created, the of just up-leveling and normalize number for unlocking build iceberg. has like personalization all where in and critical with the improvements contact data to to amazing becoming considerations of of We the for FiveX data acquired Leveraging are self-service differentiated of agents, and data sources. much operators than opportunity become utilized for is solution data to with the collected, types responsible and experience and the this data benefits decisions. present The to a data managers more customer and we decision-makers. of contact are agent strong experience critical data strategy buying center of the key a early Data insights on create strategy. for secure is this, is in AI customer better Data Lake. about upon recognized that addition having tip leading Aceyus, How clear. value drives platform experience. FiveX center, stakeholders in actioned. is data rich recently every and our the the the including explosion sources, To and CX. make I'd accumulate, Next, deliver optimal diverse important talk ever

a to also our data key continues leading this We customer delivering an and of important experience the pillar experiences. strategy. to be We data more with to deliver data platform personalized integrate our order other sources see customer exceptional as in

A be and As you see, to strengthened in market. platform continuing significantly are we can our good FedRAMP, will throughout is position investment. a example investments we to which the enhance XXXX, our leadership key multiyear make

state market us it However, market up new stream long revenue like also just governments ultimately meaningful level to generate opportunity, at our will a with we believe local but on that not and and I'd the federal believe we a the international open huge term. And march focus expansion. will up now help

touch Dan strong see in will a momentum, to continue moment. We on which

our market of significant strategic rate, enterprise we at a so and have confidence give the RFPs some the and are reasons to continue to deploying been XXXX one enterprise want earlier, in in I mentioned in winning beyond. Also, successful to and us largest marching to increase accounts. I point key ability As which continuing up of

our our that but for from feedback also only of get they people. chose to continue because platform, market-leading us not customers our We

outcomes. vendor of focus Our and ensure must is implementation a and they experts choose transition business the we the customer better and customer globally And to have a on cloud experts transformation, optimization. have differentiator. model success hundreds key CX The smooth that experience ongoing to migration, improved

best-in-class the deliver who in similar CX the best partners also collaborate with world a also We some of experience.

grew driver. revenue strong was International be Europe. Our we by This growth continues are in In XX% ongoing particularly XXXX, a driven making, the year-over-year. investments growth international expansion to

data DAC strong region. last there the go-to-market Hub, Porto we expanded by nearly by our centers engineering count For XX% our increasing Also, that local our strengthen up region turning in head our continue in team year. to scaling instance, footprint and we

success dedication marching up internationally Our FiveX. being of driven by in market leading and partners network expanding their ever-growing with are our and increasingly global to

of which for comprehensive programs which provides services. helps Intelligent and partners enhanced enable and and retire launched example, announced we the their commitments. Also, Marketplace, platform we on our Cloud to [ and sales, recently training new Google listing implementation Google For recently certification our ] of product simplifies procurement FiveX spend GCP the CX partners, these FiveX University customers in

year-over-year certifications sales same As a XXXX, the result, during that of and global doubled implementations partner number in period. partner tripled

In in had partners booked than addition, we XX XXXX. million in who more ACV $X

extremely over Dan, opportunities underpenetrated we say to about remain optimistic it to this turn like in massive and that I'd I Before the market.

We have Burkland. capitalize to President I'll and the And with turn ahead. opportunity. the please right CRO, and this it growth team on that, Dan and right go durable over Dan, platform long-term to our

Daniel Burkland

afternoon, to our our technology generate FiveX, in of momentum exited customers to report XX% for any and our a pleased over $X everyone. more bookings for go-to-market and upmarket adding good strong to partnerships. expand had Mike, year that QX, the ARR We representing to we enterprise million revenue. recurring that we with than Thanks, I'm as record continue XXX

FiveX. And for In partnerships, with experience continue just chosen global and lead TELUS to terms to now some to have BT, examples International, quarter. practices build the key name customer of wins few, invest large like share global and IBM a of and Deloitte, to around I'd

best example lacked the deliver the advanced here will self-service. our been they With end-to-end chosen experience. routing Avaya, deeply customer most their for the the complete CCaaS integrated They U.S. access of providers, Epic to CRMs. both intelligent innovation accomplish to nonprofit goals. comprehensive first be great and and in and will FiveX, as a which is and patient ServiceNow and care organization reaching IVA using competed solution we're health was The life end based also services offerings We They using solution both with the leading omnichannel had a to with

to suite anticipate prominent have been players AQM, to our giving scheduling in next our and university their care to a deep the integration Verint result deep we Cisco, students, exceptional in FiveX. The a and solutions is using transformation CRM. ARR and proven into end-to-end their our example of powered agent groups. $X over data our education order Salesforce, to delivering suite transcripts in We and to not which education, powered including complete to initial They'll care generate QM, as assist patients Verint, business and They in digital also summaries center facilities. CCaaS FiveX by to be agent analytics contact million initial automated over and will a chose our vertical result Epic providing and IVA WFM, They strong care. to technology all health evaluated summaries in anticipate assist WEM conversational approximately with insert by for and of set including Interaction We're references using for and for and for transcription their health WFM CRMs. more They health meet WEM chat speech expertise Our be Analytics and and prospective this be order and alumni. also the did performance for providing control $X.X experience both our We well research bots solutions whole students, their automation this workflow education management. for ARR and ServiceNow initiatives forecasting. using care where health million major are as superior They'll leveraging FiveX.

physician organically to as powered use their full the to expanded and I'll of anticipate the replaced including our The in Once health result ARR acute now example this been of channels final order CRM over annual result FiveX, This cost innovative we're Cisco in hospitals, I an With over bank. Then business This their who specialty agent million scheduling platform $X.X able for FiveX. in FiveX to summaries. added solutions. they This IVA refills provider. FiveX. And to cloud. a unit, ARR share and normally using and which appointments, full has WFM migrated services third customer do, will of and QX analytics. the initial also and approximately the they proactive our outreach test chat million notifications. customer a system in they care customer including grew for the and will locating nearby started million with of looking $X included spend prescriptions ago bank FiveX. to transcriptions integrated pharmacies. outbound Cisco other refilling rehabilitation over about including XXXX, relatively the single small with We after and network solution, patients be a of Epic our Likewise, have coaching, added we years a in and to and XXX rollout we a $X.X where to omnichannel digital ARR. merged variety consolidated prescription to and as Interaction bank is plan They reminders, WEM solutions, suite use a seats be access They in with at assist by their care and several retail agent XXXX, for WEM via inbound generate for bot another will will are about also in we example Verint seats. to regional Avaya, and deeply FiveX IDA now solution, expanded a add appointment FiveX QM, FiveX, XX and then groups brought and

go-to-market that, migration we the and cylinders on all Barry? engine we enter the massive for adoption of Barry over as AI to the of that transformation And advantage automation. to is XXXX, the cloud to very the our accelerating CX with feel and So strongly increasing financials. underway take hitting

Barry Zwarenstein

you, Thank Dan.

the quarter in base We are growth the our consumer consumer macro installed a the This seasonally discretionary to FiveX illustration, pleased is with report on of year-over-year. medical. on normally to first growth despite By experienced of recurring revenue coming decline. revenue platform, for quarter a headwinds way subcategory our fourth sequential number in strong time slow of fourth ongoing XX% since clients the

the suite In had strong tough quarter compare [ with separately fourth turnups internationally log a XXXX. addition, of in a new ] we

X% in remaining the of grew up services. was accounts over Our now business, grew on the [ and total XX%, LTM the business comprised which commercial digits for revenue, made revenue Also, ] subscription enterprise year-over-year. in LTM XX% accounted which basis. an fourth again revenue, XX% revenue, recurring and represents single of LTM other total High of the quarter, of our enterprise for our XX% revenue XX% professional

same Our at LTM as remained XXX%. last retention dollar-based quarter rate the

per dollar [ inflection trend the higher or due very Longer we continue no have rates. Fourth quarter latter but rate a diluted million, retention EBITDA per economy. $X.XX Fourth to ] were XX to of margin, share. enterprise LTM a XX.X%, gross basis decrease XXX of basis a high mix EPS to QX representing approximately decrease and expect of flat a diluted a XXX ones, assuming quarter-over-quarter we XXX either a basis a larger positive increase of points. increase year, towards term, basis approximately XX.X% higher adjusted expect XXXX year-over-year quarter rate slightly We approximately Fourth year-over-year quarter-over-quarter approximately to margins retention especially debt improvement be year-over-year the non-GAAP was major of the adjusted of quarter the in points changes $XX.X our down, $X.XX part XXXs by retention points. by was share, which a in of points expect customers,

like on that a share industry to year-over-year XX% XXX,XXX average concurrent seats. basis, approximately in a measure I which seats the fourth to equivalent quarter, the is named-seat Now count to unit grew XXX,XXX site. our for This of some others would

an will reminder, only annual provide metrics on we a continue As these to basis.

driven Finally, turning which DSO pleased $XX.X part for to sheet some and to in in QX cash came achieved operating that continued our report we by balance a flow highlights. days. at strength before I'm XX performance, flows million record of guidance, cash in

the our LTM now delivered year guidance. of our positive [indiscernible]. I'd about to like have flow, discussion model, quarters quarter full substantial remain cash We optimistic continuing today's for cash consecutive flow generation and and operating XX our of remarks our we finish with potential XXXX given prepared a first long-term

the years, for last with X started reminder, guidance revenue we've X of of year-over-year a As XX% out prudent growth.

XXXX same of level at in of progresses. With earnings and high outlook doing year ] the as are of is, the non-GAAP billion last regards side For we quarter. XXXX we by provided we guiding our or growth a the XXXX, as to update we line the a per will in outlook a guiding XX% point, growth $X.XXX is EPS the the which of to $X.XX the we are midpoint course, XX% outlook diluted midpoint line, to same bottom for during share, The year-over-year revenue, [ call. last provided year-over-year with

in As go-to-market to a reminder, strategic making we enhance plan to continue leading initiatives investments and position in our market. the innovation

quarter. we seasonal downtick quarter we headwinds, due are to quarter of than quarter, As first fourth This change, flat of the result prior a for ongoing the of revenue change a but the the guiding better to less quarter's which better to the to macro to muted a QX first sequential X% last range decline. midpoint represents X% a we're similar the guiding quota seasonal a in expect in Despite uptick historic guide, relatively in to $XXX.X million.

remainder we small in growth expect sequential very year, sequential of increases second the larger the in quarter for the and second the a As half.

more we of result, slightly annual being half our a the XX% revenue XXXX. As generated in second anticipate of than

the of share first expect first $X.XX diluted EPS diluted quarter point the quarter midpoint, to the EPS non-GAAP and of diluted a prior per our quarter-over-quarter the guidance. like out is first of $X.XX is range in the We decrease $X.XX at within would quarter to [indiscernible] always I that come per sequentially. at share share per non-GAAP weakest decline year

with the Please to to share refer remainder quarter year, the summary, website per taxes increase on non-GAAP the for posted capital we estimates, in additional improved fourth Relations $X.XX share approximately and Investor our half. in EPS pleased quarter expenditures. In including performance. second expect second presentation further diluted we For the to and count, our are

and marching We to by the expanding will up our to strategically innovating year please a position invest platform, continue enhance go throughout ahead. on Operator, internationally. leading market further

Operator

[Operator from Instructions] Scott come Needham. Berg Our will question with first

Scott Berg

And year understand I implementation QX basis fourth revenue quarter the in frames. covering company. revenue I usage your tends remember revenue quarters time can the help your revenue your start quarter least historical I different stronger all what in this outperformance? the business years was was side. the weakest us from the had in guess, quarter that you a seat that to don't results. the beat have can this variances have Why quarterly and around other maybe that any one of with side outperformance to Barry, at operations tends drive on versus

Barry Zwarenstein

Yes.

installed that services. The comes for [indiscernible] our are credit down transaction the growth, be the center, less low half So [indiscernible] agents that for we contact is less card spending approximately into headwind there's were dividend growth. And Chase part provided demand data, If our negative less of we the nominal showed coming our from to to facing. We business, and base. clear. are numbers there that interactions which very was going it that means single-digit demand which

is In addition, the in Scott, lower magnitude ago. year beat we out X%, which by of X% predict. terms The was to a we normal, beat by difficult quarter than of I'd very to fourth the like point beat, admittedly

a was to in over seasonality quarter the I because X minimum beat higher I'm is of units [ QX, ]. and to. the give four the and the skip then factors if and those the soggy. of account those alluding quarters. the you little clearly, ] by last customers fourth that a context spread going way COVID maximum of bit the QX, degree of in in over maximum QX, because Our at it years, environment XXXX [ [ do is into you variability have beats And QX ] XXXX numbers, two look to take those illustration, extraordinary. that's you the And and were between macro

So that the explanation. really is

Operator

with comes question next Barclays. MacWilliams Ryan Our from

Ryan MacWilliams

think of it second the the XQ revenue guide call half solid like of cadence and full besides the in throughout growth there is seasonality? there we should about Anything the growth seems guide, How year year? Given the to out embedded XXXX.

Barry Zwarenstein

Yes. we team visibility so and got We've fact that new revenue the is side. on or orders will bring months towards backlog, reason we've that in the enterprise the considerable there four count good and XXXX. new The over in got that still of will have this logo Dan basic [indiscernible]

pretty we the we're the right the balancing stance on side the comfortable taking and with installed new that have that new. So feel on prudence net base the we visibility

Michael Burkland

Ryan, And just I'll pile little on bit a here.

confidence what's very Our by backlog. rest several QX booking in good year bookings a of the the confidence We had lot enterprise, gives really the had driven a us that's from back in and and in standpoint the for year. of the is quarters, last we've the of quarters half record what for a it's

Barry Zwarenstein

our initial on. that rocket neglected it starting there to that figure I our going Mike QX, piling explicit that pile Well out second to is XX% at is gave, of guidance the we but into guidance that with mention since earlier the as year acceleration guidance. doesn't the revenue. I'm the and an on, give -- is coming And thing is in on obviously take we that also look explicit half in other pretty QX And if to point. There can a you one in well. embedded scientist is And for

ones very the the plus had we to very by up performance XXXX, had better in XXXX, terms going good the from the QX -- seed we account was international. in FedEx, in against in going which is of But company your the Ryan, -- ] question, count but that first in of knew it ever Europe company, also British not insurance delivery quarter fourth even strategic actual had, [ of that quarter, doesn't Scott. turnouts in XXXX. So in. We've I parcel the starting tough strong for but compare terms it's going really a one we this

Operator

Our Hynes question DJ from Canaccord. comes next with

David Hynes

correctly, but I'm I about me. can Barry, maybe if know help thinking this you don't

happening help declines that's attach the with enterprise It in and year. seat, which with kind So grew me which me growth odds between that's just subscription this XX% continued been seat at maybe seat discrepancy count rates, year, AI but growth the stable seems right, subscription grew of everything has count to enterprise decline, and unpack price per growth. just XX% tells last declining,

Barry Zwarenstein

Great question, DJ. you. Thank

the arithmetic, you'll If you're right. in see you do that, fact,

QX whole you at per that The reason If by is down XXXX for or usage. exclusive the the revenue look approximately recurring seat, for to XXXX that QX reason X%. always is

-- these company. more of [ is us by clients to We platform the where come to ] big a important all likes committed health the AT&T on contracts, a have and good BT that with care brought and example

biggest and second in AI our they [indiscernible], current from Now currently of offsetting something that's as they're big in but goodness as revenue. but don't future, caused use not. our And comes the the may and not customer, still usage what our it's is that automation XX%

David Hynes

continues to ] [ to ex usage, pricing way it per seat [ trend ]? about think Is that the correct up. So

Barry Zwarenstein

some is are the it's like U.S., dynamics Latin been little lower. a how But in the with little you're bit is a past. much America faster are pretty line prices, if the bit looking in they it growing at growing There other than

Operator

Our with comes next question Stanley. from Meta Morgan Marshall

Meta Marshall

as it I getting them biggest services? overall you bottleneck Question and guys getting Is just they Is to today? Is kind budget professional want guess, your ramped? guys see approach it to bottleneck what kind just what you to it organizations take Is is you me. biggest it Like getting with environment? authorization? for think do faced of what macro the AI? do of customers realize

Daniel Burkland

single any there's bottleneck. Gosh. I don't think

to different "Hey, a consolidate -- different managers different and experience saying, running technology how using to what one and mission-critical a to important nature used in cases, going we're previously in nature so AI in to that do customer we with be is example, I'm lot the and of delivering [ having some help do probably companies more locations they're throughout to able distribute to operations into take fashion those understand virtual come XX this with of independent is just automation going to and the and XX work all available". what we're really wasn't very they're those an centers contact transform ] what strategic think I and XX much

it's lot So of to large planning. roll come and a stack you is up difficult for on and to larger agreement The the and the them enterprises, how companies larger go organize to it more larger of things out.

So always when we to longer them as you work times that business quickly We'll as capable going moving try actually consulting up. go of upmarket, help lead to kind move that they're speed you're of rollout. have have with longer to and and experts

about talked to big undertaking. but Aceyus it migration a speed up, that also We help acquisition is the

to how but realistic to recognize bring our have more on I it lot don't not work point very on really to on we then customer they we we're long just launch to get side upmarket, can only effort continue customers to not getting and move to ramp. up, side as so but any think a it's takes And they're the the and it's these longer, that that where

Operator

Fish Our comes next with Piper Sandler. from question Jim

James Fish

revenue around AI appreciate finally. Barry, the disclosure

I were think longs looking that of a lot one. for

XXXX what the versus a your product And goal? on that think their assist rate version be competitors for that, could growth you have any -- topic, Dan, sense bit? then how for what's of speaking AI revenue kind So of should and about to X% what that for that what out there differentiating to this we kind of year get to

Daniel Burkland

Assist sources more Sure. answers CRM, transcription part the efficient that in to into solution. company and the There's be they product summary -- delivering I'll our and there's three that agent call components the so inserted the AI, can effective talk the within of -- so AI our can the from assist all a about Agent question. real-time gets customer data it, coaching the the agent AI answering and of that

transcription about is The on The real conversation you real and there that use to to agent. you and in see key are platform, talking product. transcription feed those look, assist that take have to back capabilities. is platform time. the and you you're the time perform all And doing you're coaching, have same our others agent if you'll into in it summary to of agent need the you near listening the have to If perform reason the our if to

There's and you FiveX ultimately contact when same probably but a a different a we're slightly gets ton underlying can't work. FiveX customer, go it of somebody that the difference say what the you We delivering won't what's So capability. not technologies, difference? delivered. in it else's assist But in use all take all about center agent that

Barry Zwarenstein

So of base, faster. when [ spring-loaded that this happened to temptation XXX,XXX advantage growing XX% We've just to temptation. a be increase. would what got Jim, we are in to concurrencies. easy of following. terms it's finding It's inevitably an resisted turns I [indiscernible] is the economy And that reason I'm the consistently it say ], tempting, but going massive resist installed the And around. take to

installed have to across base. magnitude when that and been going will And of not installed overwhelmed be enjoy the growth are those just entire in rates Our from mid-XXs. automation. retention transactions that spread the if increase, clearly AI by it demonstratively base, we the sheer embarrassed that the And we

Operator

Our McGinnis Taylor with UBS. next question from comes

Taylor McGinnis

the the visibility that the bit or about talk outlook. embedded can least to have XQ in assumptions Maybe, little you Barry, a at guide you

growth. So implies sequential flattish it

to mid-single I think closer you XQ, have done in digits. guys historically,

that the some the we point longer have softer where gotten about headwind. to is activity usage So you've no serving spoken of as incremental an

growth. mentioned XX% the think I you subscription

move deals we growth as ramp sequential we could these as to so see improvement -- start could in So the large an throughout year?

Barry Zwarenstein

With you year. first. be part in last [indiscernible]. where clear the that Yes, to your in pretty the you the half to around QX, assuming second take of we're the going question respect to would dynamics growth started see the lead I'll guidance

each Here, we down X% past, number beat the go a normally a X% give -- there. The it to X% would have time. and always is decline. a in We guide, the X% to to

is a in would I two data And Now data, spending. uptick, that pretty we're we've There's we've a in And own beyond our kept guide basis. customers not QX comments it we from beyond actually a uncertain. I'll make downtick, QX, we and for data the that. we're our JPMorgan terms on given, is say given. going in have which environment comment window had daily it comfortable we QX that what by external of an The to clear flat. that we've feel that so is on want to really small negative, a of smaller see into terms doing that accepting with to in [indiscernible]

transactions the are negative. sure, for meaningfully So

we're we've biggest you consumer, that fourth in where account. quarter. when discretionary customers an taking experience just our come consumer well, So the at biggest into amongst from And look

For since QX happened came onto first I time the QX. from decrease before. was there a the sequential platform, ever to Never

take into when we so this we're our doing account guidance. And

Operator

Our ISI. next question from comes Evercore with Levine Peter

Peter Levine

the services an for Maybe, Maybe you, investments just you past offloading on it update the know infrastructure, about year should on that's ticked trending. gross gross partners. how kind over kind we for I down, of it what's forward? expectation And how gross the modernize margins. of your Barry, give to year, margin the margins to but us margins? looks made in like front, I think going know then

Barry Zwarenstein

for the Dan. for by just have ask next somebody the going to operator to question or And be Perfect. Mike way, I'm

costs. a been factors of are higher. margin, GCP that of professional in including a to terms the number some coming making, margins moving in in moderation where is the There's from gross we've headwind. investments of international services. instances But the [indiscernible] So as of there's one fourth higher exception the all see is quarter. rate typically fixed always of quarter because semi fourth the And a strong fourth that, of you that in fixed quarter, all and that's that the -- growth the against revenue because over is the

revenue overall we the We So I don't experiencing. that disappointed we with Cocky and to we ? been it in have given sound or should put actually, margins, weakness actually gross -- not our the want that are how anything.

]. to going improvement. levers we a number where but demonstrate understand won't take from very So pull. to margin the your we've gross then to of major gross of if a And directly the see despite we revenue, got terms you'll area, would they it that programs we internally tailwind It's the margin, sharply expect question answer to are importance, while a can have in in got fruition, now we we a [ focus get to come the

Peter Levine

And an offloading and some pro update on partners services? those of ] [

Barry Zwarenstein

Mike?

Daniel Burkland

partners Yes. competency more sales us. on, take to represent the We've side, begun they now obviously, the more enabling have to and on

that And something of being through want far folks we're the unheard well Internationally, It's as increase as in the it as because allowing before, XXs invest we've make qualification that are the Mike number have industry. world of important We people that that. identified earlier. standard the ] few high upholding we to that [ for below We've as by our partners a that XX delivering we requirement plus it we want representing XX. high willing services very we're referred the to that are over we our platform. alluded to maintain scores. have very well. that his plus very Most We and in It's plus to pull-through, It's in ] comments are We've a to ongoing done to record-level what's nicely percentage [ maintain thousands for that [ we that have sure getting led partners. those NPS go ourselves XX% in ]. called FiveX. And us partners. that rating, project hold and where to also partners to now implementation We partners domestically, select the of throughout and [ of preferred accountable is projects XX%. certification and our ] tracking are

Operator

Wells comes Michael next Fargo. Turrin Our with question from

Michael Turrin

Just multi-parter. a quick

you So I'm of sorry, the because in some elongation coming curious, into we're be for in any still also on that remarks on. focused important but some QX, of of if the you're forecast investor prepared half I you maybe the mentioned saw to have And tougher precision behind side a you lot have the a forecast reacceleration M&A second headlines, know fatigue, it we seems to can you. question for XQ expand 'XX. Barry, the that tied

well. what you just there can you as add confidence gives the maybe So

Michael Burkland

some M&A. want feel record to did that reason. the did and press relative that and Michael. not question, partners set to free But very the We those a first we with We one, a reacting Dan, I'll prospects and start from rumors there release chime straight let occurred Barry definitely and quickly, for customers and false to second of handle with the impact no in. was news.

quantify it issued increase. clear sales you Barry? release. That's X-day was if the terms cycle big want a in why it it, press of So to a release wasn't with delay we potential press the we're But impact. very

Barry Zwarenstein

again, versus So the preceding new in [indiscernible] terms days, installed of about base. think logo

the In we've terms before, economy is installed the that somewhat going that used phrase use remains I made rest the the to the of year. of for same soggy base, assumption the

down, have to a And we've course, retention think LTM course you closely on rate, And dollar-based of I like -- the gave [indiscernible] the the by closely. rate that, we the would the of guidance looked positive deep way, during of QX [indiscernible] upon that we, said, XXXX, nothing based inflection get a XXXX. for we spot we very being the up. get just

had of in revenue So $XXX million we XXXX. $XXX million,

increase, same from you've year, there's the rate, If That's got you've the use $XX one base. that, it around the just million installed [indiscernible] the $XX no part. you million got for

[ team what his bring team sitting implementation to and that balance sales end we of The June and Andy million million, in his May what's the $XX supreme the high-stepping of ] have before backlog bring by say will and be part, end will and high-stepping implement confidence $XX or Dan year-end. other the in able is of

Operator

with Our next Mizuho. question from comes Panigrahi Siti

Sitikantha Panigrahi

your to follow-up a last maybe think answer. I

implementation implementation you the sales go as look also, insurance You an care how companies? talked of conglomerate large compare in And get about guys deals you your and live, ramp versus your health about cycle. on XXXX. talked year pipeline at can some or XX enterprise update cycle But you year, of last large this the do that you or in Fortune

Daniel Burkland

area. Great question. accounts at in that's across upmarket particularly pipeline is enterprise strategic all-time all most and your really an pipeline sectors, and the our answer the To question, record,

platforms being for As large get on that embarking transformation, to that the the digital offer more many, RFPs on projects, advantage large those by before, also enterprises they're cloud They legacy and choice. from they're now these being replace no of being platforms and and years. out those that only ending advent solutions AI providers of pulled by mentioned development. have many into take really the they the more they've from to living either we've been and But under they're automation or legacy of. end-of-life away are the pushed because not It's can

So pipeline been that's has never one, stronger.

of on, right several that's anyone. see and of we cloud organization that effectively better had that which we new because most that make pride far in through future best We've one with for that do the And and the and onboard positive easily the the do work it we've most in can outcomes in mentioned how them achieve. is world with us they his and quarters. consult in services got help customer so experts and having prepared think what business trying Mike the earlier. they're give we with And visibility understand go those the remarks, can with yes, does so into revenue cycles got It's the can to ourselves key mentioned As really where it backlog. to FiveX to we We than transition customers, to that as a I independently. those each them

things. we're So and more side there will. you But that's quickly. But our it, the tooling more onboarded yes, efficient comfort and things on more helping always get and more making of if and working customers are certain

value to really of to platforms the integrations able got and into lots different automation from our AI extract solutions. be You've

the there we and building and that, One a go data decisions make integrating the live. have put those integrations to intelligent keys engine matter can it more those then data that bringing on sources And of once is that we them that's and then you it's in that do to board. up ramping before key all them flip the biggest the can feeding of is the so make needs

Operator

Matthew Our Niknam next Bank. from question Deloitte comes with

Terrell Tillman

It's Deutsche [ Nik Matt ] Bank. I'm from

retail lot give how discretionary. XQ typical curious, relative financials any So about and the and fourth did health just in we and in those color baked consumer how any talked seasonality? abnormal softness And on they to care verticals? quarter you a you for can I'm two in -- have

Barry Zwarenstein

the and are being biggest third. and biggest the vertical, the care health financials second is consumer the So

in care, in two growth the not they prior much at others we've as you all the health QX. line were the sequential And pretty major headwind were in financial majority vast from any in year. terms quarter consumer, If in look being so verticals in and the baked aside in fourth those they of

Operator

Our next question comes from Northland. Mike with Latimore

Mike Latimore

DB&E [ you the the on improve are year? it you the year? for about, of second expect Or be say XXX% talked expect to you -- Barry, the number So to ] you did do by it half you

Barry Zwarenstein

[indiscernible].

QX. QX, XXX%. not it's giving So We're currently

the we all of think year. explicitly half I expect in second said very inflection is we the an that

commercial. a and enterprise between have We good breakout

rate. have spot the We

within higher And customers, no versus customers. have demonstratively the to is small have question. [ which enterprise and it, some art breakout ] bigger between consistently enterprise, there's the retention rate We those -- the elevation there

second what the in we going know quarter, do, feel don't doing to what customers we exactly upon saying this But Our little comfortable analysis be early based a half. best we the said. they're in can

Operator

with question next Our Rosenblatt. Trebnick from comes Catherine

Catharine Trebnick

Dan, for you. So this is

[indiscernible] are it's transformation you know pull factors in digital and customers to I ago. it feeds is you other And these year automation, different asking AI but what there So the seeing from in was RFPs your that in would for are a that you these large that are say you? are today than enterprise

Daniel Burkland

Yes.

automation, you we've ] multi-cloud just solutions, they're starting. embark their an isn't to resulted on-prem really of of came and which legacy that lifing and instead are, announcement That's biggest process. of on because So new a three wouldn't obviously two their that market set awesome I'll Genesis got in end customers [ let a whole one, with two question. their of Thank And with answer changes which made the give AI you, me But answers all Catherine. these. --

RFP, these what that ask of to for establish enterprises, assemble big they're Some write them going several to in and team, launch. takes a an RFP it quarters

especially RFPs number mentioned of of we So market. that we a out year-over-year, doubling the saw

and is case, always been due and the one along which with solutions. Legacy primarily Genesis Avaya to that's space Cisco the So to that what's go

remarks, mentioned Avaya of I I Cisco Cisco. and think examples, in was a and one new combination my one Avaya, prepared As was three was one the net

kind that's of So the first.

their create is somebody the professional with really expertise with from that that has resources, are there, our got they largest finding have have just into to they're field on The not question and resources largest customers who the services partner them the the They've work they're for. and and looking of their worked your to and has platform. to that. this and just we're or formally came we're services. help been Many recognizing the enterprises They purchasing. done previous platform it is What can't it's companies the that value enterprise the second realizing plug enterprises

came choose what's they're examples. of back our in the industry. in and coming this the them look So coming oftentimes the our we because power give consulting to as we pain as at to And you services before to show us, cases, tailored is underestimated That's FiveX, points prepared our explained in well them could the RFPs. show be our -- a solution demo the architects that closed it's to and is it's the When with having about requirements to you I us our team, in many more in those you demonstrated and of and came some capable. professional people. about the and upfront the of be sale the able capable what for level reasons and feel saying them We of and in They're of remarks technology more business I out people power made the when why experts. the talk saying to

Operator

Our from next Samad Samana Jefferies. question comes with

Samad Samana

and If last each versus the spending several in for you're just revenue added subscription for think like sales dollars about what marketing years year I annually.

you're less where you're adding have ratio right, and of but marketing year. increasing, sales that basically elevated, each dollars spending You kind has remained

you acquire sales more building getting -- we're for customers? So the payoff. count somewhere expensive is you either Are it more to are where waiting head investing out

me Just in that of means maybe understand for and dollars what marketing kind seeing what you're versus investment organization? help sales go-to-market the and that

Daniel Burkland

it Yes. give that. some be are Barry to bit I but surprised of to question take that Barry? you'll know me to you a by result because the that the he's break, directed at a chomping of numbers

Barry Zwarenstein

is logo account cited, enterprise -- spending say advantage you rates enterprise economy loaded looking at numbers that weaker inevitably to mean the there's Yes. I No. you're And those that has in bring around of really on the that keep subscription declining the base. correctly when what them that consistently we installed with Samad And includes that, into When to businesses turns spring earlier. logo I've I the on repeat to got business mid-XXs. are dollar-based And the retention business. the going a you it's is somewhat the I'm to ] in retention the you And real. given the -- money better churn, logos. two the from way, you've [ rate, not half under hood. been is this said new when by I approximately our take of XXXs XXXs an not

care reason. the a is reason. the dollar dollar driving on they're but parcel are dominant Otherwise, on there. these [indiscernible]. that disproportionate. world world Lamborghinis And companies transactions, auxiliary delivery not So people companies have health second There's We the in and of they're there, in they've less time. all companies big the got And pay that the the reason, around dollar last every single we'd that's for don't the

then [indiscernible]. have -- lumpy, those we they so bookings help they lumpy And but remain are and

Michael Burkland

quarter look right? the And I'm lots on I new. single at efficiency, metrics net that We And and one don't going at to it XX cost of is ACV It's one time, by the on Samad, bookings of have years. internal for we disclose. one looked the and every more sales pile marketing $X of

again, it sales very, I a you -- net tell And can we're bookings, and number. best-in-class. for that long it's been say not time, consistent again, which very marketing is would it's consistent. very has So over to, long, compared disclosing I

Samad Samana

fair Maybe, guidance, public want make just you're proxy let's I a question. -- at is correlation there's if it, if So how moving And before say apologize good like right? a look kind better So direction what on the us trend that? for about for to if to there, what just that is a in will guys report, we get citing sure that that think what at housekeeping worse, I assume -- least that keeps or you for for it to happen I it that so have January worse of Barry, February? I we've you rest or seen the Or is far assumed this when in the some third-party but it and and gets better? stays is missed looking for directional fair data right? is that of at levels forward year

Barry Zwarenstein

it's of first Very question, is indication. the an it that point towards We fair the answer And yes. because question. external referenceable open, part you

alone even some fact, In quarters, by tracks it by monthly in quarter.

be transaction to a nominal Well, the banks already different. I'm try America on UBS in respect the forward, may going use time, we Using to of the number Bank that [indiscernible] said that is well different all going JPMorgan, there basis, be might January as negative mention one not on a as with -- basis. different. to all each I've the Now the

we've there. around are into coming reflected to in weakness that's that there's we and that positive for. of end, an the They're numbers. pockets not comments were world And We're just So assuming overarching allowed enough taken account. is those simply what

to we've not going February [indiscernible] negative have it's our January own it. going -- our you're quiet whether to positive, content neutral. guidance have when draw to period to see you or and conclusions or you're your that with and Now that given we're in

Operator

BTIG. Matt Our VanVliet next question comes with from

Matthew VanVliet

RFPs terms you're sort on a cycles, relative how what you on are at feeling the relative macro you've frame execute the those to And to your to I RFP nearly where curious today? the along looking then you're ability seeing customers, how guess in on activity in about upmarket when the time those about, processing sales normal of past? doubling of the is are of deals talked on

Daniel Burkland

from of standpoint would. always lake Yes. [ course They're they normal just taking ] a the that

Now we've moved up market.

good to those rate. about demonstrated and we our complex efficient two at manner say market close led I'll the out and going to the about kind they're timely referenceable, roll world. our most of securing our the largest great just ability ability in forward. unprecedented that. We of with We've feel a opportunities opportunity when our and those they as of to complexity So sales and have more in expected. of that cycles, The because automation sales those them. slightly occurrence led But a deals, more we do and longer and naturally cycles and was it's to larger we of that more AI but all there's advent very RFP feel no, the became scope. were and onetime longer part And as

So there. all positives

Operator

comes Blakey final question Our from Thomas KeyBanc. with

Thomas Blakey

I just maybe I'll -- person. a wanted as do last the two-parter

the expectations thing, that It half. this for getting has your I Just smaller. maybe a consumer in know Barry. double-clicking headwind. just just I know be on consumer second to been want should

the there. couple of But what second maybe are know, questions update a that half? the I think wanted for of that vertical there was just an And around explicitly in terms I in to then expectations just consumer installed Dan. visibility

hear the to the mega record kind pipeline maybe pipeline, about of wants update, about talked deal everybody update would You give us helpful. an just be

Barry Zwarenstein

to exaggerating not vertical a because to question explicit quarter sharing going I'm for we're disappoint to you afraid of each fact. be on have I'm Tom, expectations your going I'm for second last -- the

view to that. [ overarching an have one we've limited and ] We that shared

Daniel Burkland

pipeline, And extremely deal the mega the of part about I your second strong there. feel question

opportunity very feeling that they times And lies at so it's because say. lumpiness to lumpy. those accounts, very record strategic earlier, about it's but those the They mentioned in those come I deals, ahead. and high. As are that you positive team to are and a numbers the mega We've create the different of expanded future large, -- bookings work as at our

Barry Zwarenstein

] Obviously, one. And give Tom, far most is consumer a response by the time the just -- variable one as [ some

increasingly we year-over-year And so quarter go we 'XX, for an just the situation as when not goes comparisons company, easier look into by the 'XX. consumer, at entire XXXX, each

including So easier, the half the second is clearly consumer. somewhat

Thomas Blakey

you. Thank question. leading the was That

Michael Burkland

as you just the for our if as hard and about And want say as XXXX to could, closing, I partners, all are the this FiveXers quick dedication to thank record well the great work, I we market all in And excited to they call billion continue so we revenue the their them, for employees a results our massive reason go work, opportunity ahead. surpassed XXXX. the $X after as in I'm in FiveX

So keeping for very updated everybody, and joining to exciting look the good times. you as a Thank you Have year. us, one. we progress through forward

Five9 (FIVN) 21 Feb 242023 Q4 Earnings call transcript