Five9, Inc.

Thank you for joining us today. On the call are Mike Berkland, Chairman and CEO, Dan Berkland, President, and Barry Zworenstein, 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, customer growth, industry size and trends, our expectations regarding macroeconomic conditions, company market position initiatives and expectations, technology and product 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 information in such statements. These statements are subject to substantial risks and uncertainties, that could adversely affect Five Nine's future results and cause these forward-looking statements to be inaccurate, including the impact of adverse economic conditions, including macroeconomic deterioration, 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, the impact of the Russia-Ukraine conflict, the impact of the COVID-19 pandemic and the other risks discussed under the caption risk factors and elsewhere in five nights annual and quarterly reports filed with the Securities and Exchange Commission. In addition, management will make reference to non-GAAP financial measures during this fall. 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 currently available in the investor relations section on Five9's website at investors.five9.com. And now I'd like to turn the call over to Five9's chairman and CEO, Mike Berkland.

Thanks, Emily. And thanks everyone for joining our call this afternoon. I'm pleased to share that we closed out the year with strong results for the fourth quarter and 2022. Fourth quarter revenue grew to $208 million, up 20% year over year. For the full year 2022, revenue grew to $779 million, an increase of 28% year over year. Our enterprise business, which accounts for 86% of total revenue, continues to drive this increase, with LTM subscription revenue growing at 32% year over year. Fourth quarter adjusted EBITDA came in at 22% of revenue, helping drive another record quarter for free cash flow of 25 million or 12% of revenue. These results clearly demonstrate that not only do we continue to be a leader in delivering on this massive under-penetrated opportunity, but we also believe our business model supports a very attractive combination of strong growth and profitability. Let me illustrate what I mean when I say massive and under-penetrated. Based upon trusted industry sources, there are over 16 million contact center agent seats worldwide with approximately 20% or 3 million of those agent seats having already migrated to the cloud. This leaves an opportunity of about 13 million seats. To put this into context, as one of the leaders in the industry, we had approximately 440,000 named seats at the end of 2022. In spite of the current macroeconomic backdrop, we remain very optimistic about our long-term opportunity in this market, especially at the upper end, which is the largest and least penetrated part of the market and the fastest growing category of our business. Our confidence in this opportunity is based on three key trends. First, the viability and desirability of cloud solutions are no longer questioned. Legacy vendors are retrenching, forcing enterprises to develop concrete plans with an even greater sense of urgency to replace their on-premise contact center solutions. Second, companies are enthusiastically pursuing digital transformation initiatives to enhance customer experience. According to multiple industry analysts, CX technology budgets will increase in the next 12 months. Enterprises know that the sooner they move to the cloud, the sooner they can take advantage of the benefits that come from game changing technologies to differentiate their customer experience. And third, AI and automation have become front and center in the CX market, providing an attractive and tangible ROI, thus becoming a significant catalyst for enterprises to shift to the cloud. This labor arbitrage opportunity is especially important in tough economic climates and tight labor markets. Now I'd like to discuss what we view as the three main growth drivers for our business, namely our platform, our march-up market, and our continuing international expansion. Let's begin with platform. As we talked about last quarter, we continue to make investments to enhance our platform with the objective of delivering ongoing reliability, deployment at scale, and continuous innovation. Our recent enhancements fall into two categories, each of which we believe plays a central role in the future of the contact center and customer experience markets. The first category is analytics. Our recently launched Five9 Analytics product marks a turning point for reporting and analytics in the contact center industry. To truly optimize CX performance, contact center managers need the ability to define unique business metrics for success. Five9 Analytics allows customers to perform deep data discovery, explore trends in their contact center, create their own dashboards, and fulfill their custom reporting requirements in a self-service manner like never before. Today it is crucial for contact centers to unify and analyze customer interactions across self-service and live channels to transform data into a winning customer experience strategy. Five9 Analytics integrates state-of-the-art business intelligence with operational data to create a contact center intelligence platform. Users can gain performance insights across all channels to identify where workflows can be added or improved. To help customers gain instant value from this offering, we provide a built-in library of over 250 metrics, modern visualizations, and a robust data analysis engine. The second category is generative AI, such as ChatGPT. As you know, we have been leading the market with our AI and automation solutions, and we are now further strengthening our portfolio with the inclusion of GPT-3. we are pleased to announce two new product offerings that leverage GPT-3 from OpenAI. The first offering is AI Insights, which uses real-time transcription to automatically interpret interactions and cluster them into categories, which then allows customers to identify opportunities for automation and process improvement without the need for professional services or tuning. Five9 AI Insights is the latest example of what we call practical AI. The second offering is AI summaries, which is offered as part of our agent assist product line. AI summaries allows customers to auto summarize call transcripts in seconds and publish them in real time into their CRM. Again, this new offering requires little to no professional services or tuning, meaning the time to value is much quicker. These offerings come to market as we see AI continuing to gain momentum, especially in the enterprise. For example, in the fourth quarter, 41% of RFPs that came into our strategic and enterprise sales organization cited AI as the main or auxiliary reason for issuing an RFP. Our industry leading AI and automation portfolio of products now has eight distinct modules, including speech analytics, workflow automation, Voice IVA, Digital IVA, Agent Assist, and now Five9 Analytics, AI Insights, and AI Summaries. We believe that AI and automation are at the core of the modern contact center and that generative AI based on large language models is game changing. Overall, our portfolio of omnichannel solutions plus our AI and automation offerings, including these recent additions that I just spoke of, creates a platform to deliver what we refer to as Fluid CX. Fluid CX enables consumers to move through the most efficient and personalized path across channels and between virtual and live agents, keeping context and creating a frictionless customer journey. Enabling this is critical in the modern Enabling this is critical as the modern consumer continues to demand an integrated and seamless customer experience from the brands that serve them. Now turning to the next growth driver, our March up market. We continue to see strong momentum up market and exited 2022 with 161 customers that are each generating over 1 million in ARR up from 134 customers a year ago. This cohort now makes up slightly more than 50% of our recurring revenue. Another key factor driving our success upmarket is the growth of our channels and partner ecosystem. The channel, long beholden to the legacy vendors, has pivoted to the cloud. And as a result of our focus and investments, we are executing and gaining leverage with an expanding list of partners. We have a balanced route to market strategy with direct sales being complemented by VARs, distributors, technology solution brokers, global service providers, and importantly, systems integrators. These channel partners love how easy Five9 is to work with. And our partners appreciate how their enterprise customers can easily make the migration to Five9 with tools we have developed to replicate and easily transfer their configuration data, routing logic, and reporting information from their legacy solutions to Five9. Before turning to international, I want to mention a factor that I believe is key to our overall success. Not just upmarket, but across all customer categories, and that is the trust we have built up over the years. Due to significant and sustained investments in professional services and customer support, we have consistently delivered exceptional experiences through strategic implementations that help customers accelerate time to value and ongoing worldwide support designed to optimize and improve efficiencies. As a result, we continue to set the benchmark for the industry with NPS scores in the 80s and 90s. Lastly, I'll briefly discuss our international expansion. We have been making significant investments internationally, and we continue to enter new markets, including Germany, Spain, and several other countries. These investments are paying off as our 2022 international revenue grew 44%. Additionally, our partner certifications for sales and implementation services are gaining significant momentum globally, but especially in international regions where the number of total certified partners more than tripled in 2022. As a result of our broadening global reach, driven by both direct and channel expansions, our international bookings grew 87% year over year in Q4. In closing, let me reiterate my enthusiasm and excitement about the opportunity ahead for 5.9. I believe we are extremely well positioned with our industry-leading platform combined with the best team of people that will enable us to continue executing against this massive under-penetrated opportunity. With that, I will turn it over to our President and Chief Revenue Officer, Dan Berkman. Dan, go ahead.

Thank you, Mike. I'm pleased to report another strong bookings quarter in Q4, driven by our continued momentum in $1 million-plus ARR new logo deals and unprecedented leverage from our channels, who are now participating in not only sales but also implementation and ongoing services, particularly in the international markets, as Mike mentioned. Customers are clearly seeing the benefits of transitioning from on-premise to the cloud, and we believe they are more motivated than ever given what we are seeing from legacy providers. As a result, this is driving more opportunities, growing our pipeline to another all-time high. While we are continuing to see macro headwinds in our install base and in new logos in the mid-market, that softness is being offset by overachievement upmarket in our strategic accounts and strong growth in our international bookings. And now, as I normally do, I would like to share some examples of key wins for the quarter. The first example is a global business process outsourcer, or BPO, based in Spain and Latin America, serving retail, telecommunications, and financial customers. Five9 was chosen to replace many of their Avaya solutions where they do not have the flexibility and full suite of applications that Five9 can provide, including omni-channel, IVA, and automation solutions their clients are demanding. We anticipate this initial order to result in over $4.3 million in ARR to Five9. The second example is a Fortune 500 clinical laboratory providing healthcare diagnostic testing and services throughout the U.S. They take inquiries into their contact centers from patients and healthcare providers to schedule tests, check results, and collect payments from patients and health insurers. They were operating primarily on Avaya and could not add the innovation, automation, nor analytics they required. After evaluating several CCAS providers, they chose Five9 for our complete and fluid omnichannel solution with analytics, insights, and deep integration to ServiceNow. They will also use our digital IVA, voice IVA, and email as additional channels to offer self-service for scheduling appointments, finding locations, and requesting test results. We anticipate this initial order to result in over $3.8 million in ARR259. The third example is a global company focused on partnering with physician-owned radiology facilities to build and equip them with state-of-the-art, high-quality imaging systems and related technologies. They were using both Cisco and Avaya as a result of prior acquisitions and lacked the reporting, integrations, and omni-channel solutions to effectively serve their customers. Five9 was chosen due to our end-to-end technology suite, our innovation and AI roadmap, and our quality high-touch implementation and ongoing managed services. We also partnered very closely with Salesforce, while our key competitor aligned with a different CRM they were considering. With QM, Interaction Analytics, and WFM, they can evaluate agent efficiency and recognize areas for improvement. They are using our advanced IBA to allow self-service for appointment scheduling, appointment confirmation, outbound reminders of appointments, and to process payments. We anticipate this initial order to result in over $2.3 million in ARR to Five9. And now, as I normally do, I'll share an example of an existing customer who expanded their use of Five9. This is a leading financial services company for consumers and they've been a customer of Five9 for over two years and are currently utilizing a full suite of solutions on our platform and had been piloting our IVAs. Due to the success they experienced with our initial IVA use cases, they are now expanding to include a broader, more advanced set of use cases. This additional IVA order is expected to add an incremental $1.8 million in ARR. bringing their total annual spend with Five9 to over $6.7 million. As we've demonstrated, Five9, along with our partners, continue to bring comprehensive end-to-end CCaaS solutions to our customers with the analytics and insights to improve their contact center operations while giving them the flexibility to deliver exceptional customer experiences to their end users. And now I'll hand it over to Barry to cover the financials. Barry?