Five9, Inc.

Thank you for joining us today. On the call are Rowan Trollope, CEO, Dan Berkland, President, and Barry Zorenstein, 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, industry trends, company initiatives, 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 the COVID-19 pandemic and the other risks discussed under the captioned 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 is currently available in our press release issued earlier this afternoon, as well as in the appendix of our investor deck and available in the investor relations section of Five9's website at investors.five9.com. And now I'd like to turn the call over to Five9 CEO, Rowan Trollup. Please go ahead.

Thanks, Lauren. And thanks to all of you for joining our call this afternoon. Our first quarter results exceeded our expectations across the boards and demonstrate the success we've had in pursuing our mission to help businesses transform their contact centers and reimagine customer experience. Our first quarter revenue was a record $138 million accelerating to 45% year-over-year growth, an all-time record growth rate. The acceleration in revenue growth continues to be driven by our enterprise business, as demonstrated by LTM Enterprise subscription revenue, which also grew 45% year-over-year. While we're having success in all of the parts of our business, Today, I'll focus my comments on the success we're having in the enterprise business. This success is best demonstrated by the fact that in the first quarter, we closed another two exceptionally large multi-year global deals. We anticipate that these two deals will generate over 14 million and 6 million in ARR respectively. These two deals follow the fourth quarter $12 million ARR win with a leading European insurance company. Now, Dan will elaborate on these deals in a moment. But in the meantime, it's clear that something has changed. Why is it that Five9 is having such success in winning large global deals? In my opinion, there are three key drivers. One, market momentum. Two, Five9's product innovation. And three, our go-to-market machine, which I'll now discuss in turn. First, the market. The market's driven by two immutable trends. The premise to cloud transition and digital transformation. The strong demand is persisting at a similar rate as it did before the pandemic, as many businesses focus on customer experience and contact center refreshes. There's also an emerging demand for AI driven automation to increase efficiency in the contact center. The resulting savings are especially appealing to larger enterprises with the scale and resources to automate. Second is product innovation. Last quarter, I put a stake in the ground and said that after two years of focus and an increased investment, we'd reached a critical milestone in delivering a hyperscale architecture. Every Five9 product is now redesigned to run in the public cloud in a container-based architecture, which takes advantage of public cloud storage, elastic scaling, and multi-zone redundancy, to name just a few. This modern platform has also enabled us to take the lead in providing exceptional digital first experiences. With Five9, businesses can seamlessly transfer their end users from digital to live engagement while ensuring that the context isn't lost for the customer or the agent. The increased preference towards the digital first experience is reflected in digital interactions on our platform, which increased 80% year over year in the first quarter. The traction we have in digital is particularly important as we expand internationally, especially in parts of the world where digital channels like WhatsApp are already the channel of choice. Now we further differentiated our product by building a leadership position in AI powered automation with our IBA and agent assist offerings and with our workflow automation platform. We have many customers adopting these technologies. For example, a state government agency has recently gone live with 5.9 IDA to answer FAQ-style questions and are reducing their labor costs by automating 31% of the thousands of calls they receive every single day. Another example, this time using 5.9 Agent Assist, is True Connect, which provides mobile and wireless services handling more than 62,000 calls a month. across three contact centers globally. Now, TruConnect uses our AI-powered agent assist solution to assist human agents with real-time transcripts, call summaries, and coaching cards. Together, these technologies make their agents more efficient, resulting in savings of 7.5% of their labor costs in the first year and 20% in subsequent years. So whether it's AI-powered automation or Digital Channel Innovation, it's clear that our customers are confident in expanding their business with us as demonstrated by our LTM retention rate, which accelerated once again to a record 121%, up 10 points year over year and four points sequentially. Now I'll remind you that the 121% is a blend of enterprise and commercial. So the enterprise retention is higher and within the enterprise, The larger clients tend to have meaningfully higher retention rates. Finally, the third reason I believe we're making such strong progress upmarket is our increased investments in our go-to-market machine. Our strategic sales teams, which we created just over a year ago, have been partnering with our channels team to deliver these recent landmark deals. And we anticipate that the momentum will continue. We're also investing aggressively internationally with our EMEA and LATAM bookings increasing year over year by 3x and 2.5x respectively. With our international momentum increasing, we're significantly increasing our international headcount, which is now double what it was a year ago, and we're stepping up our marketing initiatives by building thought leadership and driving localized campaigns in region. We've also doubled our partner resources internationally and have added key partners in EMEA like CanCom and Connect. And of course, All of our customers, domestic or international, big or small, can count on Five9's PS and customer success managers to treat them with our widely recognized white glove service. This is a key differentiator for us and is demonstrated by metrics such as our strong NPS scores, consistently in the 80s and occasionally even in the 90s, and a big contributor to the strong and improving retention rates I mentioned earlier. So with that, I'd now like to turn it over to our president, Dan Berkland, to share some specific customer wins. But before doing so, I'd like to give a huge thanks to all our employees, many of whom are new to the Five9. You have all executed incredibly well and have demonstrated your unwavering dedication to our mission. We've started this year off incredibly strong as a result of your contributions. So from the bottom of my heart, thank you. Dan, over to you.

Thank you, Rowan. As Rowan mentioned, we continue to execute upmarket with larger and more complex businesses globally. It is clear that the largest enterprises in the world are now embracing CCAS and Five9 in particular. Our Q1 new logo bookings set an all-time record for any quarter, and our install-based bookings set an all-time record for any Q1. Our pipeline continues to grow to an all-time high and our ecosystem of partners once again influenced over two-thirds of our deals. And now I'd like to share a few key wins for the quarter. The first example is one of the world's largest parcel delivery services companies. They're moving their entire global contact center operations to the cloud with Five9 and have contracted with us for a five-year term. This transition from Cisco, Avaya, Genesis, all premise-based systems over to Five9 is designed to allow them to greatly improve efficiency, consolidate to one common platform, and reimagine their customer experience through innovation and automation. This includes IVAs, WFO, and integrations to their ServiceNow, Salesforce, and their proprietary CRM solutions. They also recognize the trust that Five9 has built in the market to deliver high touch, around the clock customer service along with dedicated technical resources to support them 24 by 7 throughout all corners of the world. This global company is standardizing on our platform and has placed an initial order for an anticipated $14 million in ARR to 5.9. The second example is a large systems integrator who recently spun off their IT infrastructure services business with over 90,000 employees to form a new company. They chose Five9 to replace their Cisco and Avaya solutions to provide them with the flexibility of the Five9 platform so they can accommodate the unique requirements of each of the enterprises they serve. This customer plans to use our IVA not only for self-service, but also for more advanced dynamic call routing. They will also be leveraging a complete omni-channel solution, our comprehensive WFO solution, as well as integration to both ServiceNow and Salesforce CRMs. This will enable them to service clients from more than 20 contact center locations throughout the world. We anticipate this initial order to result in over $6 million in ARR to Five9. Our third example from the quarter is a major commercial airline based here in the United States. They chose Five9 in order to innovate and differentiate the customer experience and deliver self-service options to their passengers, crew, and partner communities. They were using a hosted genesis solution, which did not give them the functionality, the real-time visibility, nor control over their contact center operations. Now with 5.9, they will have a full omnichannel solution, our WFO suite, including workforce management, QM, performance management, speech and text analytics, and integration to their custom CRM. Our advanced workflow automation solution will also provide them with SMS alerts to notify passengers of flight status, upgrade notifications, and other important changes. We anticipate this initial order to result in approximately 2.4 million in ARR to 5.9. And now as I normally do, I'd like to share an example of an existing customer who's expanded their use of 5.9. This healthcare facility network with over 45 hospital campuses, over 80,000 employees, and serving over 5 million patients annually has been a Five9 customer for over three years. During this time, they had accumulated several other hospital networks and were running on many disparate platforms. Five9 had already expanded to more than 50% of their contact center agents. It was now time to consolidate to a single provider to help them deliver an innovative and consistent patient experience while also improving efficiency by being on one system. They recently added over 750 seats to complete this consolidation and are anticipated to increase their spend from nearly $2 million to over $3 million in ARR to Five9. So as you can see, global enterprises of all sizes and complexities are recognizing that Five9 delivers the reliability, scale, innovation, and global support required for their contact center operations. It gives us great pride to be able to help our customers reimagine the experience they deliver to their clients and the mission critical role that Five9 plays in this effort. With that, I'll hand it over to Barry to share our financials. Barry?