FIVN - Earnings call transcript Q2 2024

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Operator

Thank you for joining us today.

On the call are Mike Burkland, Chairman and CEO; Dan Burkland, President; and Barry Zwarenstein, CFO. Certain statements made during the course of this conference call that are not historical facts including those regarding the future financial performance and cash position of the company, expected improvements in financial-related metrics, expected ARR from certain customers, our proposed acquisition of Aquion, certain expected revenue mix shifts, customer growth, anticipated customer benefits from our solution, including from AI, the extent of the anticipated TAM expansion and our ability to take advantage of any such expansion, company growth, enhancements to and development of our solution, market size and trends, our expectations regarding macroeconomic conditions, company market position, initiatives in technology and product initiatives, including investment in R&D and other future events or results 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 can 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 continuing inflation, increased interest rate, supply chain disruptions, decreased economic output of 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.

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

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

Michael Burkland

rate thanks, and $X driven achieved Emily, I'm key billion, pleased our report everyone, Thanks, run call a this with afternoon. exceeding for joining QX milestone primarily we that in to revenue annual XX% or subscription operating . strong of drive year-over-year. EBITDA enterprise revenue, XX% million margin LTM to LTM revenue $XXX increased XX% of of Adjusted sequentially by helping revenue. cash flow growing

to let year. I the the Before business of on on me our for remainder updates, move the outlook comment

reducing our top trends In X.X% flow. latest we on. the June will laser-focused are saw be managing expenses Barry improved guidance on generate margins annual will and in that on and we based bookings response, by elaborate to other line factors We cash

positive objective to our As a supporting shareholder of our the the of balanced is with growth, business raising our midpoint further driving annual result, And This value we're outlook. consistent non-GAAP EPS now updates. also guidance. profitable long-term through turning

experiences. FiveX focus significant will by to AI-powered on believe customer drive Today, announcements growth my some comments I for we improving future want

in CX our Aqueon reach. are to AI-powered acquire our and touch the strategy First, agreement latest significant in excited a innovations our position platform I'll announce AI acquire extending then step and I'll on AI. to on comment agreement Aqueon, our our and extending that leadership I'm to market

reminders customer AI for Symphony and care for across CX leading as connect conductor, support. and e-commerce, orchestrate to with and numerous to best reach big higher contextual proactive Aquion's sales increase data audiences customer e-commerce, Aqueon ambition a increasingly use capabilities through well Like to customers. marketing, brands and the as platform orchestrating to when has sales, health conversion entire revenue excels engagement a uses the proactively FiveX's appointment platform service and personalize are CX wanting customer Adding to and at businesses assisted and how including every collections and Intelligent predict, step retail orchestration cases. Aquion customers contact journey, Today, as rates. omnichannel interaction their services, financial reach to well is engine as realizing toward become our and across outbound service.

further data will strengthen some the enterprise the the incremental largest industry. by value multimodal Aquion And Aquion of FiveX very close second the the the we We half XXXX. opportunities to transaction anticipate Aquion the our in we're been generate handled addition, see bullish contextual on CX that AI. In the to in pipeline. and of opportunities win in already of have interactions partnering

due XXXX, has tell will FiveX our points, are Today, powered CX. with AI. and many touch you elevate often a that focused on interactions power AI interactions brands FiveX Intelligent brand by AI satisfactory. ambition Since many to consumer the siloed. to which Now not turning to harnessing strategy. our between a being to platform orchestrate customer each consumers across through driven is This has their CX of Genius every This of spread is and been FiveX's interaction platforms and disjointed

customer elevated personalize data. of to them using together interactions and these provides orchestration allowing contextual bring advanced us for platform Our experiences, all

that solutions AI customers to embedding throughout practical our But of deliver agnostic leverage AI not value and enable enough tangible in AI we drive responsibly. technology rapid AI. continually this Our consistent strategy advantage vision. engine with our has to approach, Also, been alone is our our business take across customers helping delivering the platform, innovation

trusted combine we navigate evolving our and CX so of customers it AI And with experts help our world this to AI. through

now steps to like AI. I'd share And taken to our in significant leadership X extend we've position

within to a external Gen more, break single points FiveX view to ability have general to but the and CRM, First, from we're of the pioneering XXX-degree apply our This as announce beyond. platform of silos all marketing, for We such unique brands central data Gen excited touch serves also product down This e-commerce glass. AI contextual the hub pane within of availability just systems, the platform, AI a as across not and through now Studio. data, leveraging by comprehensive all CX

brands their common us many experience outcomes. member AI improved newest customers to might suite, answers concise announcing the FiveX customer to have models custom brand. of AI enables second, to we're personalization knowledge allows Gen questions hyper with by AI Knowledge. and to deliver provide business And Genius unique training their Knowledge the AI

and waiting to to That reducing And us the integrated people reducing best something and agents all be chats reach voice the live improving CX to quicker questions. AI them also times all, for hold, and AI accurate offer allowing while money. agents, FAQ of use allows set That, calls wider prior bots, more appreciate. than of AI with accurate AI of can into saving reduces need of to for answers chat cost. much Agent used sit also cases bots. is and on handle time Knowledge previously get faster have FiveX generation customer to were brands a service, Knowledge can Assist, answers and in turn, amount Knowledge enabling possible self-service reduces to

are AI portfolio, to is which their AI elevate world's latest the today of largest These some innovations CX. market-leading additions enabling our to important brands

Turning to opportunity related now to our market AI.

FiveX. expansion As TAM for we've in past, the a AI said represents

hypothetical by XX%, are if cost basis labor XX%. we seats is that that by automation, the XX% therefore for revenue increases software a net on given subscription instance, automate a reduce FiveX interactions providing to and able our and customer For of

a In us. win-win for other it's our customers both and words,

get a and customer X let's little our base. a Now specific take real-life look from examples at more

first agents is supplier care that company is customer a health kits. with and a medical longtime a FiveX X,XXX test of The

As were call agent. volumes were schedule increasing, implemented they IVA able Xx pickup automatically delivery for in and to queue without our or waiting patients an a faster

since overall saw has that by time they increased XX%. subscription implementation, XX%. addition, In from IVA this And revenue handle total FiveX agent decline customer

reduction increased time while satisfaction saw volumes. seeing this from The FiveX's faster case, due second example response increasing agent was which Within times. month IVA total an of in institution, to talk customer X% this a call XX%. is our increasing a revenue customer implementation, financial In subscription they

subscription And cost XX% increased third Since total XXX reduction. Fortune device FiveX reduced resulting example our XX%. from IVA, the was this company. deployment the a duration customer in medical overall by is revenue of call

massive is Genius with position strengthen In and remain even FiveX our very opportunities we AI, we summary, the well further we are positioned believe optimistic market innovations to long-term leadership AI our Suite. this ongoing that further about with expanding the in to

business AI solutions our outcomes for CX. significant driving Our elevate to tangible and are customers

over Burkland. go it turn Dan, will our ahead. CRO, to please I that, with President And and Dan

Daniel Burkland

In second afternoon, a quarter, to for key scrutinized. to Today, and quarter go-to-market more by sharing bookings initiatives. we being I'd customer Mike, primarily challenging some QX, our everyone. you, good and off budgets like constrained start Thank had the and due discussing bookings

. have As expected result, any we during a and did quarter. than not ARR deals fewer the deals, had we mega $X million

integrations. sales are very we across EVP XXX% of while sales improve recently leader, technology our talented we're team, proud realigning action promoting addition, solutions segments In taking we including a dedicated sales and of sales, us also XX-year an veteran and accomplished execution certain with efficiency, are more to and aggressively giving FiveX partnering resources market further our single to and

for now I'd quarter. key like some to And wins share the

is first example customer who with Aquion a Solution. in order significant The place March, preparing was to including the a FiveX, new

ARR and a with fundraising. million deal a recall, company You over I who QX quarter, last described universities $X.X enrollment may recruiting, helps in for

were thereafter, FiveX. portion, we for completed SOW Aquion ARR customer of for and for million and that the March additional orders an order On million for an anticipated an to received completing details customer making the SOW place we Aquion the XX, the $X.X the the still Shortly solutions. ARR agreed to portion the FiveX $X.X

with example and is health the hyper-personalized platform at care care the Assist, second a experiences elevate our doctors, AI every in Agent Salesforce including e-mail, with point. nurses virtual and chat, improve patients, suite FiveX, leading experiences provider They've enable to to touch WEM all integration full The is gone their looking and pharmacies. SMS, with who

million $X.X FiveX. order result to initial will over this anticipate We in ARR in

AI a analyze, with and business experts and vast do experiences CCaaS optimization attention their full-service acceleration a field, using The team is deliver those company, will of not third better companies a outcomes. partner were and health of had outcomes. tailor continuous and leading the the an management elevate care from getting to array of also but AI who truly looking feel another With and focus are business been meaningfully the in their them they help benefits for who listen, example pharmacy solutions, provider provider apply improve

order and AI in will adopting e-mail, As including their chat, their million stream who ARR expanded to I'd result, and agent summaries. voice in like our examples share elevate have Verint, to of $X.X our for of Salesforce WEM color and our FiveX over result use our AI anticipate by solutions, a this now And existing powered FiveX. We they solutions automation integration, transcripts initial to suite customers CX. X purchased authentication assist by

a our with The been been automation. is spending from they've who had with advanced first $X.X been XXXX. health and workflow approximately solutions provider several million FiveX, care customer including FiveX VCC our annually They SMS, Agent a Assist since AI using example FiveX, has

we and QX, WEM example top-rated our The to a management FiveX ARR has and IVA experience. added over to real-time and customer provider In suite $X.X $X.X Fortune outcomes this to business interaction will truly using anticipate historical perform million. be the with omnichannel customer by million. AI elevate leverage a over they $X.X performance our Agent for been result With our analytics. apply has order, XXX Verint ARR both that AQM, now and over suite Assist, order a who to conversational in FiveX prescribe million been QX, add-on ways years, platform voice next X with Verint the IVA, to in data insights and company is in insurance powered digital and their added an and XX AI In WEM maximizing FiveX they

ARR FiveX $X.X order, with add-on anticipate With will this million. we their approximately be now

Baird and partner in strong, our Likely continued outlook the we validated some AI and AI as recent by survey channel QX, in the platform The #X each This ranked headwinds Easiest had of was long-term expansion. as Solutions, AI X July, again where Benefit leading we've well To most Provider were Best remains Work Most CCaaS While To far and the once following our given strategy our With. From categories: in by

to now Barry? the to turn Barry And take I'd like it through to financials. you over

Barry Zwarenstein

We billion. the $X exceeding Thank with you, second of quarter rate Dan. for the reported million $XXX.X revenue record annual run

Looking Mike components as LTM mentioned, revenue, subscription at grew enterprise revenue the of XX%.

new total continue QX year-over-year, XX% grew meaningfully revenue to quarter-over-quarter driven increasing be QX. logo Our strong deployments, our by which subscription

Assist, now and Agent be our fastest-growing the of offering subscription continues after portfolio, category year-over-year. biggest which showing strong makes of AI our to of AI particularly revenue automation up second our with XXX% growth products, X% enterprise AI RVA, Also,

up of XX% LTM made revenue. business Enterprise Our

telecom business, on XX%, up which is revenue, XX% again basis. grew commercial of an LTM QX both made in comprised digits and single usage, revenue. represented of subscription Recurring remaining Our the which total the

shift our the because used this their a we telecom X larger often for for continue. reminder, mix year to point to main X As use customers The each from existing percentage carriers reason subscription expect to usage. telecom is

margins. and a continuing channel Additionally, as positive both BT AT&T like trend from and them. growth mix this and our corporate long-term see revenue will not away carriers, we partners gross for shift We take business

up made X% remaining services of the revenue. Professional

rate declined as XXX anticipated. retention dollar-based XXX LTM slightly Our to from

we margins decreasing XXX support adjusted as XX.X%, and our gross making were approximately to international driven temporary of scale quarter we by the market points expansion. momentum substantial Second basis year-over-year, by the but primarily investments are

of primarily representing decrease and margin, strategic was which investments, EBITDA points million, of both notably adjusted opportunities XX.X% us. deliver quarter year-over-year, long-term approximately our at expect a to for basis Second a significant XXX driven by Fagron we India, $XX.X

generation, cash highlights. Second quarter In sheet to QX, continued same was non-GAAP flow flow per XXXX. share, strong EPS of as our EBITDA revenue. we $X.XX With DSO diluted our driven XX cash at by QX of our delivering flow and in equivalent balance regards performance, which days. of $XXX million LTM and operating our is came strong to cash XX% by This

of flow, We flow continuing operating positive delivered optimistic have for now potential remain cash consecutive LTM our quarters XX and generation. about cash we

Turning now to guidance.

know, growth on based year-over-year we of As conformed $X.XXX a key X quarter our assumptions. you XX% ago, which revenue guidance is annual billion,

the contributions dollar-based logo visibility of and rate First, of into retention half the the ads; in schedule second, ramp inflection from an new the the backlog; third, the year. second

respect to With to ebbs around schedule assumption first with on item, ramp our as largely normal unchanged continue and remains our our the backlog backlog flows. we

now to logo part guidance. are gates below our in which is to go saw and annual regard we other with to which annual causing billion, Therefore, regarding rate, us However, forecast. new the the latter trends guiding we retention $X.XX the quarter X dollar-based prior X.X% revenue our factors, lower of second are

Let me in detail. more elaborate

As the deals. expected, in of when which few QX logo weeks our we majority softer in explained, is a June, especially Dan came bookings new of typically our last close than

that a forecast. negative logos to ramp, months bookings X generally June on our revenue go enterprise have the are live, X to new impact Given expected QX lower-than-expected months most in to recurring take

revenue In strong work addition, the and start QX QX we as for headwind revenue as PS starts. both recognizing will be implementation since particularly soon in

the our have Also, in logo the in will QX, for softer new given new adjusted peers' bookings forecast remainder revenue second of the our year. half, logo which forecast we impact the bookings prudently

has DBRR, inflection while continue DBRR, we customers. an ramps seasonality that customers align are in points originally prudently to with muted further data to are long contribute expect discussions what longer than the with we out assuming bookings our This coming with service this because assuming the confirmed were of second to been recently, weak our seasonal by been XX-month is to longer positively the economic forecasting a than have we we to no and Turning in top half year.

a million into of QX, which quarter of revenue to terms for or midpoint same In of our X guidance the we the years. as is heading growth, the last X guiding are X% third quarter-over-quarter $XXX

laser As focused for in managing bottom the line, be investments profitability and second half. to we on order the aggressively strategic active will improve scrutinizing expenses in

we margin the from with QX of $X.XX, non-GAAP our EPS our are raising the quarterly EPS, midpoint result, of for we improve for of are the progression each sequentially which a exceeding a XX%. As midpoint to annual quarter guiding guidance $X.XX with regards EBITDA QX, $X.XX to to to non-GAAP and $X.XX implies QX,

that Aquion. impact note not line guidance include does bottom and our from top any Please

earlier. and including Mike more in immaterial. of as posted We taxes expansion expect representation be visual impact for to refer that XXXX count, from share our revenue Please Relations Investor the analysis AI the the and presentation additional estimates, to a discussed as TAM capital website well expenditures detailed

focused shareholder on is remain AI, with against value. which long-term further expanding opportunity will we that executing market In drive will summary, this massive

we achieving for of updating year. the on addition, of the remainder stronger you forward to profitability progress In our look

please Operator, go ahead.

Operator

from question from today [Operator Barclays. Instructions] Our MacWilliams comes first Ryan

Ryan MacWilliams

the was quarter? Barry, the to in mostly For And noticing Or on headcount the net Is just in any customer dollar-based rate. impacting call changes macro rates are headwinds pickup reductions? retention this churn you there a to agent volumes?

Barry Zwarenstein

Yes.

first. take I'll So the last part

up. In the Dollar quarter. churn, improved was actually terms logo no, no during of there pick slightly

into to the going the Foods, HX the seasonal did online education, insurance, about they And highlighted What that's Dan health it Ryan, installed is meaningful in we In our rate do elaborate, we August was tactic the seasonal a things the also is a in just but with uptick was drivers base customarily not we account. most for as of simply the consumer, to fashion, a middle companies impact, -- we home years, customers, terms And Gourmet back growing spoke in that, at slower change, December the care took are HX in in it them. which by terms were decor. we few of talking what of like fourth bunch, education, in at and as of the period. reduction care continuing grow, biggest and can a and year, And rate. the health to looking

Daniel Burkland

core. seats. They're just still adding were. still the more and just They're they not seasonally, still They're once a but adding so . in conservative doing manner at rates

Barry Zwarenstein

question. your the address didn't I And of usage part

perfect bit tandem dollars, time. tandem. don't but For in move move in usage a they -- grows in of us, over . from usage tend course, telecom and slower they to the

Ryan MacWilliams

changes their the . in mostly around customers for from quarter. it's guidance So fourth your plans

Barry Zwarenstein

yes. stated Succinctly

Operator

our Needham Berg will . next from be question from Scott

Scott Berg

here, a a a Questions been pretty off I guess quarters wanted last single sounds little especially with to sounds organization. your X the to quarter lots knee-jerk I like have of positive. in It of any quarters, generally changes, X bookings lot sales start them. a given changes like reaction bit

been why have it out to trying Help I up reaction large understand is the these broadly ones a guess, some really with or fired . to second you're quarter And guys us You roll something there. that more changes? all

Daniel Burkland

note, And we're Scott. be just Thanks, we room audibly Yes. in challenged. that may a thing X to

up we to quite our up we're wasn't heard mic speak the So picking because audio. trying

little a So we're than going to normal. louder be speaking

in working It's where If you ourselves. have several absolutely you execution, lots a reaction sales XXX% years that make an really strategy dedicated sure market somebody responsibilities doing And with been and realigning our with time of my any sales thin had us partners. and repeat shape of we single the segments. I've to of we working we just right form. ago. making the way, to hearing our stretched we know, is was sure and we'll hesitate company, us, let every a situation have the across not do . But day and this or not some coverage, all really EVP trouble had to knee-jerk with different wanted enjoy on

mid-market making so bookings. that know sure enterprise about optimal we've talked our strategic just and and we commercial maximize the and I model teams and can that we've got most coverage

really years of into more to leave to up to not leadership more and just of the execution. expertise haul. where now said, lot to an team. it sales the "I'm that's going And do sales point we've So just rate going roll It's for my had be $X all" it's about add the really to long replace a -- I X and focus changes. I'll a nothing not EVP company a We and ago. and And we're sleeves we run basis them. need feel like come a adding on billion

what that's we've So done.

Operator

question BTIG. from next VanVliet Matt from Our comes

Matthew VanVliet

shaping maybe revenue looking up? of at these sort guess some that, for can you over products products. of automation And AI I are model a how purchasing And offset maybe of couple the uptick much of of how dynamic expect that next on your lower How looking the wrapped seasonal more bunch of Thanks. adding that? are do years? terms change a to the basis occur in contract by a and customers at seat in

Michael Burkland

are per more options customers on frankly, quite Again, on that. more pricing to offer consumption to appropriate and both all talked and per solutions. we offer free a are in basis. our Matt, start. I Matt. we terms appropriate about in. And basis of and of relative to while seat other now, about consumption-based our AI are models a basis, more some for pricing some feel automation a that. for But on solutions clear port and a be to I'll want Dan, we've chime appropriate AI

the XX% on investor We've And automation from the see XX% a presentation quantification our also free math the it deck investor in in slide more our a transactions as math But in talked the my I in on And chime to increase TAM to self-service, there's happy case expanded little we that on AI. up of get on talked XX% some that. in. go where about feel TAM. well. to Dan, remarks. a website and do prepared everything And a about -- -- you'll of

Daniel Burkland

absolutely, business you the to a No, want said give their way flexibility fits we to model the to it And Yes. in purchase best. that well. customers

but the as tenant, tie example, don't will. per really sometimes seat, like to examples obviously AI X And Insight, or a that domain that's of That's there's across I you of seat the gave lots the an of . customers. across if products

things usage whether per And consumption on on minute, long it our are gig per on be or a basis, a whether done like so that certain best distance a of data. be

transcription have We services services. summary and

want simply are others we're those on to basis, if don't do want things so delivering when their to and that seat agent. of it DBAs, some for really clearly but a people transcribing And like just especially -- add summaries they an it's IVAs a consumption to human, or will to tie

So on therefore, consumption. to do it's it appropriate more

Operator

we'll William Arjun from Bhatia, hear Blair. Next, .

Arjun Bhatia

All right. Perfect.

attribute to as think XXXX to how would you're think our understood, bookings, I macro patterns then estimates. the what from seasonality versus you you just encourage the and that And Barry, you and much So QX June seasonal bookings saying you outlook. But us into about when execution? think of growth June were we what that think, about go-to-market baking would about how I

Daniel Burkland

of wasn't sure. up question ROI standard our say, I and Budgets about senses, we hold compelling build like to you to a get folks to. macro are and top very wasn't to to the prioritizing, also bookings. and there's stack, when certainly in mean, budget to people will, at But prioritized. in snuff. to that you sales the scrutiny execution, combination the up we of my get It got great the absolutely this mind, constraints a if is the X. we look some it are tight, Yes, It's deliver and

going on proud continue to look and the new to for We've had to our most and never always success. ways the we're rest of most extremely We're effectiveness X maximize organizations want of, productive but laurels. maximize going the that our world-class to sales we're

and at higher of yes, something forward macro, of are focus space, their looking able more us but and adding just this execution, of not customers bit of it. facing products is is lots so being And kind bit the we're all having same folks technology to execute you them, of SaaS at an little sales little little level that a And even a to. bit But coming customers the dilemma, from our we're the from on budgets. only within other how do help prioritize right focused which

We're very bullish and Mike we've accepted about everything. a love very continuing be our as and with where the future. got to going by And customers just they mentioned, that's portfolio prospects we're

So think help seat we're long in a term, this . driver to we market. drive absolutely

Barry Zwarenstein

the XXXX, to to the report respect turbulence stick look, to with especially you but this we are do give an like our pattern. third quarter an and And would we prefer Arjun, and in up that given to environment, to November economic on. firming in customarily creatures outlook, custom, then of current later we give when we And we . initial

Operator

Next, Sandler, we'll Piper from Fish. Jim hear

James Fish

But I did of off into of Fisher to kind to opposed apologies I prior X want for question good don't sure of as Fish. as as fleet, turned that. I Ryan's guys. Great. have a a work aspects Ben but on a

much rationale . do these the stay this impact be at the troughing. kind NRR at expecting cross-sells but You of this wouldn't NRR I actually And foreseeable AI to been why guys how point? range NRR future? get had why, into

Barry Zwarenstein

new move first. be cross-sell last materially. for just candid, But the it let base AI is perfectly So still part the can't is The the in the the take installed that somewhat rate bookings. on to And attach much higher me it's again, so needle that small helpful.

need you and of bigger. top think which In in but bottom which buckets, bucket, smaller terms it to is NRR, terms X of the then the of bucket, do somewhat is important

that normal case of case. are meantime. them the in as these the ebbs case, go months help that the top mega more live flows. therefore, been deals And the We and a we terms is predicted and be take the it to it calling In bucket, a than and has XX would with find

some the the to regular with be, we Where not it's that's is the sure because When we seats things what's the as that DBRR. macro business, exact through et it's that aspects We're growth a environment that a environment. like if run-of-the-mill people of of that's case look are the do we will, these speak we phraseology, getting And deals. customers, clearly know can at as you the negative I seeing driving in reducing of the are particular bucket, simply to not the slowing bottom out of of people forget AI, but cetera. difficult And constrained.

our going it's One to time, seats growth. in will add know been accommodate though, is rebound. a that that to position lower easy extra that excellent, when, about to we and that are at has supremely is And in because economy confident thing, retention certain point don't we then be extremely good

Operator

Siti Next, from we'll from Mizuho. hear question Panigrahi . a

Sitikantha Panigrahi

want million you kind about more $X $X.X years basis. I It ARR now, deal than million, X deals and of them the like of talked the to like per acquisition. more than have looks focus partnership on guys with you some

anything understand what's they and the customers of how overlap run us help revenue What have? or is do the have? So else? like you many write-down it contribution, when kind And have, no rate defer of you revenue Berry, said they because like

Michael Burkland

expand bring you Yes. beyond Siti, a I they to remarks, Barry, customer ability in an question. broader as start, We're for said Aquion, thanks the service. and can I'll category inbound then my they really about excited into us in. chime

best-in-class. solutions, Now outbound theirs and we proactive have platform, but is engagement outbound an it's omnichannel

into of respects. some world the really and brings e-commerce sales it marketing us in And and

a the customer It's massive the engine mission our the orchestration be big a to and it's on for across consumer opportunity. a brand interactions really between for So step us journey. entire

I'll repeat So that. just

And the business, still that win that's very business. the together. for, of we the look kind small of size a synergistic customers the it's in of terms we In technology, acquisition of very pretty terms great innovative,

is us are our large using largest enterprise huge Aqueon, to the of that a customers Some are megas of proof point. and

an And the heard of perspective terms Aquion the in from the of deals solution. size you ARR

opportunity not perfect So a revenue it's at forward, a the this up even stage I company, going them is though we frankly, picked think early time. tiny fairly

So kind do. the that's of like acquisition we Barry? to .

Barry Zwarenstein

question, haircut quite with the already. haircut Yes. had know it's In that we the as in of respect see accounting all of alluded then while said. haven't in and this And detail, going that to the -- growing. is we to Currently, you their a look company just policies particular, under yet. need at Mike them the to to QX, there to sort put your and what small, we still contracts is, be FiveX be time do will there

fully . stay So what tuned. transpires. informed keep We'll you actually about

Operator

hear Next, Tillman, Terry we Truist. from will

Terrell Tillman

of a of It's a bit unpack. but multiparter, to things number there's a

of for areas you'll like hopefully, is I've X mean centers, while me I I bear imperative an a So this contact you been it here. with talking well. is those that about feel as

the want get and you If CX, to you do got to to automation, improve AI cloud.

and just you slipped deals mega any to of kick saying? mean deals, I said what going the some they think out of the you close want didn't of 'XX to these that They're June So I just the and curve going think conservative? close XQ, the Or XQ deals to you or do be you some in down are and 'XX, can to are

any seeing of indicators. demand top and funnel because of at kind related And changing Is the what of these gen. to this, that the are leading those of trends, mega of forward around you some

Daniel Burkland

end naturally, the at to Terry. organizations in, quarter. and right at Thanks, if hockey But sales have June, particular, like a the it is chime the Mike. stick quarter, free feel which I'll start of in the of end you quite look many we Yes.

And the road and stick the looking at you just down prem of they that with more prioritization like are some their less kick of said, going decisions, it to and some right? it's the budgets, more

some lot They've a and year isn't ROI that away. things deals, that are to got things start And annual mega in return know plus. dollar multimillion going to the realizing right at look of to for itself deals going of larger they a

X next return a we "Oh, a not to months return that's is it to the a plus. those So even generating of that's X year " going start of things for kind easy need say, in

pushes note to next just had quarters. out pushed is as The into other we well that that thing some the

One the to year those from happen that on revenue from perspective. contribute our is adjusted that a reasons guidance for the deals don't of now

are we up the the our pipeline it business, enterprise as top the still and commercial we coverage we the and with the this get bullish quarter, that our But those strategic us help of can as and impacts the because revenue and XXXX a bit of the in of can else? sell number. revenue get we definitely running with by business market for year and little are to stuff for funnel, as So you yes, business, this mentioned, end year. Anything doesn't

Michael Burkland

be Yes, I'll RFPs and is Terry, continue just that add to at X record thing, levels.

X, what X always that's a demand it was, continuing me, see stay to So we say, ago. the at new that is the good health And to the which quarters double of of normal, relatively that indicator market. in

Daniel Burkland

channel distribute, business that most AI far. we talked one, partnerships. -- #X one, they've survey about our they with, from And our mentioned, X far add, in the We're seeing market and of the I us added benefit and routes and our story they as remarks to in number to Baird prepared on and partners most going talked and our to solutions. preferring to all other the who's FiveX AI enjoying, do I also as focus thing the number And rated chose as likely by in easy folks

feeling very the good help and they of with approach, along we're the . So us. fill funnel about that top

Operator

DJ hear Next, will from Hynes Canaccord. we from

David Hynes

Guys.

was it old had standing the So reacceleration implementation sounds kind up, like backlog has changed half. really on into material guidance predicated the It there. where your nothing pretty of baked second Barry,

And right? out is then the of the now a pushed what acceleration happens? quarters? couple in, seasonal happening. that, that into stuff mean kicking that that's by this Does you're understand reacceleration I doubt calling that seeing Or not gets

Barry Zwarenstein

I our because reacceleration we've comment, we're go on there. I'll about to that, and of given to cannot we we've guidance, stop -- and So timing do been not the explicit pretty DJ, the want that. beyond going

David Hynes

ever Barry the I make if rule time. to mean there time this exception to a an the is was

Barry Zwarenstein

responses asked is ranking. that our in there's worried you in I'm been you -- this lack I'll in a a guidance conversation the of bit terms are of about give in ordinal all of what about. So of that And that X clarity the driven reduction what there the terms and has

a and most margin by referred we to. material that biggest The is lower the go-gets

You up chain got the and we higher especially in the companies scale. and may PS be got revenue, higher a bit as surprised by -- that, but go we meaningful

from I'm recurring about subscription revenue QX the on revenue. the revenue. have QX the also talking We

X is that of biggest X. the so the And

Street that's second number we, with lower bit internal all our like we scrubbed than that very, a forecast the very companies, The carefully. X, other have little a share obviously,

spending And the than is we X type this We about, -- third but that every is that's that we've second want an big ordinal ranking. And the been seasonal. biggest. the not we of the most years this talking once is the I'm to more beads, biggest And -- do environmental XX which don't thing. is the actually

off wanted my I that So chest. get to

David Hynes

. appreciate All right. it. I

Operator

we hear Next, McGinnis UBS. Taylor will from . from

Taylor McGinnis

Can you hear . me? guys

Michael Burkland

Perfect.

Taylor McGinnis

Awesome. wondering bit could might if of give little how maybe impacting those the X just on be Barry, different guide. the a us you buckets and color just

that incremental recurring there sense or maybe So we guide then hit a and we help was second revenue -- old so the seasonal under the portion instance, and needed that in guide, ramps, how that differ existing it. you at just logos if in quantifying coming the the new have can look new increase give guide. that, of and to the so from some Can ARR might for us half the of

Barry Zwarenstein

Yes.

year-over-year And Taylor. be logo, the about breakout PS half We're to revenue actually of this may recurring the base, you, off well. revenue XX% from order recurring much. assuming second And X% roughly the the And is I in is memory, recurring fourth year-over-year, of second of XX% what for that the going not quarter. the installed I'm the little do of from the in talk revenue year from thank the increase but million. half $XX of So in a that as increase talking the PS and bit, about a by

Operator

will . Levine Peter you Evercore. from hear Next, from

Peter Levine

appreciate on X margin, op just just all margin. gross I color. the Maybe

some compression. seen You've

when You I but model is some infrastructure, maybe kind on investments in that's the for show . X point as time. at right? leverage think have like point is the we expected the Because pain the about in this of inflection, talked would we're the FedRAMP maybe us not seeing

Barry Zwarenstein

take Mike, that? can I .

Michael Burkland

. ahead. Go Barry. Yes. Sure,

Barry Zwarenstein

year. we in about see certainties, higher margins We're pretty aligning above of that We've some with second but dividends. and it to starting the EBITDA core between but that, the there much margins in be stars might these be the of QX, XXX% There's going good will dividends, than see no our which will from India the will feel improved to aspect. Peter. the said to with soon. come are get and XXX EPS, guided hit We XX%. half. gross to in in still half doesn't too it gross QX initiatives very be pay FedRAMP, moon second continue all margin, to And than can live . We explicitly we've the QX you inflection higher will and get QX explicitly, the

Peter Levine

today contact you on more any per or know can, the competitors seat? ago. XX on that Are voice just XX any any core And center if seeing month. a voice Maybe compression core just typically months Is lot I in than $XXX seat. color pricing are steady? I there's -- seeing I the you been was their space it it's know

Daniel Burkland

stayed very It's steady. Yes.

business. the when In the there's we've go where most deal-by-deal enterprise employees used at occasions add-on or seats And very look aggressive very, is given for and on yes, on SKUs fact, super the core. to a with we so. got, there beauty we've part, somebody get basis customer, to pricing try an let's maintained to sell buy a more say, XX,XXX But got we will X,XXX steady and you've that so much

the that When X solutions or the different looking from whole you we ago, and obviously, But you've is was the the even products. added that at will, most the customer other we more those could that we wallet could prevalent. start portfolio. AI just the have, most because years got in partnerships we then brought that so environments, resell go When much to if revenue we lower, suite, get extract much get we've that the you IBA to X, into share, would got other WEM common we've

and more getting we're So more.

metric, continued seat to If you very time. across look our steadily rise at over per our it's revenue base

in actually direction moving It's erosion. in been way. price a not positive the it's So other

Operator

Stanley. Morgan will Marshall, Next, from we hear Meta

Meta Marshall

RFPs? time But these Great. wanted that I Maybe because just of, throwing to execution. kind of kind deals a guess of sales on, off noted the sense I question to you on of just a into is signed of you're just get things the the elongating get amount

channel that or I into any different you're Just kind there? those more Like while you just the question, second throw the channel? kind taking kind And have and of execution? kind get seeing other AI pieces than professional you're implementation services know trends expanded it's of as just of a the guys so longer trying to to enabled in by approvals more then of it, of

Daniel Burkland

Yes. Thanks, Meta.

I So cover one. the first

all flowing and we've the to I with that's AI for mean as several about and the the approvals As case but more the absolutely, have that's years. extra added around quarters. you solutions, far the year meetings, been data X with talked that all for last meetings different several

shouldn't initial so And delay, that have once sales, right? you it affect

that earlier we when It's started they just in. the come deals

had prioritization time bit QX, while back we I that same and the the days right? But had it the when sales opportunities So as much closely as It of elongated we track approval the and some closes. that do into a little entered boat, elongated customers to to as a of very is moment timing system in the cycles extra equate because it from I the don't and with in budgets close well. the our are the that with necessary the

on at looking to pulling having had the being trigger macro too. they've entire They're their spending budgets and economy budget reduced, the and

with a enterprises. overall it's but competitive our environment, so you're spend by competitors, those just more So competing direct not for much

going their or to paused as of happen to year have kind the pushed in folks want And some to and or economy see later those they well. wait delayed of some the because with budget what's of

Michael Burkland

This enabling partners I'll the implementations. is we what your about to third-party Meta, project right? pull-through, other And comment question on do call

a many allowing our lot because, always We very continue team Andy do every that, consistently great just quarter. continue to we're leaning to in partners well. it and partners here partners to pride white still We're of were of of in done see are of or with we're pretty they in that a glove/NPS again, implementations and done job taken how making partners. have we've the do this focused -- increase doing scores by and terms percentage sure that, being being more

Operator

Samad Our Jefferies. from next question comes from Samana

Samad Samana

the Good moving dollars evening. were lot tends it Maybe I'm XQ about that first year But to appreciate in to understand implies get if I is what right? Is There's half XXXX. number suggest that first one, new And parts. trying growth, Barry. to the of if a just think think the to that the booked versus maybe it implied just of guidance, I X% all I -- subscription disclosure. revenue down

may book and the new million bookings in that or it, down, magnitude suggest for XQ first part up in declining us just are importantly, XQ reduction or the Can that implied you the flat be half, of because actually . please? of contracting. more just to understand $XX new ARR that like help guess, coming I numbers Is

Daniel Burkland

-- thing mega deals those understand Samad. versus is deals great, and I quarter-over-quarter, thing, to One in QX million-dollar when Yes. lumpiness one you've say and QX. got that cause year-over-year, the quarter-to-quarter

we QX, million insurance that in company a year booked. we last recall, significant may You had $XX

have that We didn't quarter. this

could revenue bookings is a the million cycle. $XX company But say that that's down? long, insurance could. implementation So generating, were that You long you

deals going to the start mega of convert revenuing bookings health of when are they the now. the from didn't have year of occurred, we meaning those revenue, a big timing that that X So in or to any

most sense, depends hard to beginning and that impact. an aha, It conclusion so quarter and the it's in X a will look of singular come to what's at at XXXX, just starting that in So a of get ascertain revenue bookings. that's those

top we out it when at I'll the $X way. So take steady big million some you X.X, that we that right, the significant. looked had X we of those that's as of kind forecasting X.X, solid remainder good shared, quarter, more anomalies, healthy. of the as the funnel put what then the year. QX, overall if QX, and But well was had a pipeline very, just We -- those didn't that I of very big is the But have about straddled which very you for we're feel deals

Samad Samana

there's it's fully like not maybe guidance complexity world feels about guess I anticipated. it visibility just there much and lower or as X appreciate the is the though as been to then the I follow-up. a maybe may is that visibility And of a is X where rapidly, changing we of quarters And Great. be lot and -- have it my question volatility. seems a

the time way the maybe guidance. I guidance up look as your history, rethink it you're that to is building at Just

guidance of the to of our itself. You're assumptions there's volatility kind the the I in creating just and I'm think framework and estimates curious permanent any making in rethinking on to because if some change outlook. that's

Barry Zwarenstein

exception, big going beats, Soma, issue the the fair thing And, the We future only we I that to but look were that be that best done with leaving have very there. don't rethink. a of the can. -- we've for and we like a not not environment that going put single not knowns The question. in. But every about have we We're test in is we're very it implying environment rethinking. we've tense, for there's that could We've course, for foreseeable and as them. -- always looked It's to this unknowns, it's

Samad Samana

you Understood. always thank frankness and the color. I as appreciate for the

Operator

Michael from be Funk will question next Our BoA. from

Michael Funk

your and guidance question, so the of year, about on to confidence does or down related And kind in guidance. is talked understand less in level that environment lot a What that bit the the to economy. a quarter. aside think half to recession, I you you outlook little fourth last to guidance? the the the would derisking a around the ramp your not? if back be of customers recession, occur, of maybe There's recessionary no more Barry, help for outlook the impression incorporate though debate the customers' did of the

Barry Zwarenstein

it by it's down a it to look our was Yes. data JPMorgan spending similar. about in it Michael. turn into look nominal, risk, not the and from XX% which you. America, are the are household Credit past. of us taking the June, perplexing clear question, Dimon And in And Bank when Great it's are was going at to it's card me. we debit by Thank debate huge recession you Jamie XX% that's the or There's that negative. X.X. And as internal at . to in we is strong as And matter actual data. not Chase real we it's way, per recession,

weakness are in so X And but seeing that little for in the little a which we've let verticals summary, not just X a also the vertical, in education, short, X debate on. other the which the some allowed health seasonality. amongst and care or What of bit, degree have are in go but bit consumer we projections, is others

Daniel Burkland

cite than conditions, economic we versus predicting kind stop while that less something Michael, talk seasonal they to we add, just our would that. usually our And of I to they of definitely customers, Yes. recession short talk customers. the

to the of uncertainty and comments of there. -- those they're just So this customers. all but with citing we out seasonal And them, we discussions look at . in again, obviously all talked our

Barry Zwarenstein

Sure.

retailer continue are throughout know. this and . cetera, choppiness, the headwinds our don't is macro to ongoing geopolitical. I et year, from challenges our is This customers, this speaking, like Expect So cautiousness, macro things FiveX cetera. comments global et not customer.

Michael Funk

really before up your like sounds customers be now customers a Right spending a are view I recession like though Wall to or in . the your is guess is projecting it Wall going recession. question. recession, a Street landing though are recession? Street soft a is projecting or is recession more But it the that's probably gearing is a

Barry Zwarenstein

do ADP an and an assortment. But they with not confident. being a sideline or business are fast. as a But very . start still bit, be, they're Index well little just we maybe could growing and may but some not They

Daniel Burkland

It's that's to them into those not comments about making their not software. thing getting remember, them One money or more about volume purchasing spending contact center. not not them

about, hey, contact rate the last not are coming they our talking growing at they're centers our but So year. volumes they're did into growing,

. that's that they're thinking recession It's things they what are so to that not say up not did suffering year. and or thinking last is. And or seasonally slowing inflecting they're just It's they're speeding like down. they're not

Operator

today question from Catharine comes last from Trebnick Rosenblatt. Our

Catharine Trebnick

your ARR bread your million during that's deals have where and butter you On really typically quarter. the $X

it could healthy. more? very funnel Because players, is area healthy, little a or more Is like just lot competitive is the the pipeline with a So pricing it a you now delay? -- a bit that saying poke seems and you're is more

So I'm that. reconcile just to trying

Daniel Burkland

up the execute taking my was yes, I and can't for a sure put the for it. -- can high It's action not it, we at precise that look we in make of a go just think on a to back to make pipeline, on, love which at and take our finger is and about being timing smaller lull just delay concerned sizes were It's level. yes, We're it this when on reason. us, I get you a back very health track we deal quarter. look overall But the

to a feel didn't ourselves, go actions set that QX, up in standard we're we And assured, very that. and do to do to but we We taking so always high like live for we it. rest the the feel we our of good long-term about the all sentiment beginning board, there's to long-term our the across the partner community, the -- future. good customer about the and way prospects back very funnel, And top

Operator

comments. call. That closing it of for Q&A I'll to Mike, over the concludes our . portion turn you

Michael Burkland

CX. Thank to say passion, Yes. your commitment our Five AI-powered customers just helping elevated you a team, our I quick thank our your to heartfelt achieve elevated CX, want especially Niners, to you. to

very, to all future team FiveX thank excited market. this in about very we entire for you the So do, you remain the

next So we'll as posted the unfold. keep of for you Thanks quarters couple joining.

Five9 (FIVN) 8 Aug 242024 Q2 Earnings call transcript