Five9, Inc.

Thank you for joining us today. 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 and related metrics, expected ARR from certain customers, 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, our AI revenue opportunities and current estimations regarding SAME, 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 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 Five-Nine's future results and cause these forward-looking statements to be inaccurate, including the impact of adverse economic conditions, including the impact of macroeconomic challenges, including continuing inflation, uncertainty regarding consumer spending, high interest rates, 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 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 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 that can be found in the investor relations section on Five9's website at investors.five9.com. Also, please note that the information provided on this call speaks only to management's views as of today, May 1, 2025, and may no longer be accurate at the time of a replay. Lastly, a reminder that, unless otherwise indicated, financial figures discussed are non-GAAP. And now, I'd like to turn the call over to Five9's Chairman and CEO, Mike Berklins.

Thanks Emily, and thanks everyone for joining our call this afternoon. We are pleased with our first quarter results which exceeded our guidance across all key metrics. Subscription revenue, which now makes up 80% of total revenue, grew 14% year over year. This was primarily driven by LTM Enterprise subscription revenue growing 20% year over year. Adjusted EBITDA margin was 19% for the first quarter, helping drive a Q1 record operating cash flow of $48 million, or 17% of revenue, and an all-time record of free cash flow of $35 million, or 12% of revenue. Today I'd like to start off by providing key highlights of an extensive operational review we recently conducted across the company. We believe the transformation initiatives we're executing will help bolster our long-term competitive position and re-establish ourselves as a Rule of 40 company as we continue to drive profitable growth. As we pursue this evolution, our goal is to deliver increased profitability while prioritizing investment in key strategic areas including AI and go-to-market initiatives to drive revenue growth and capitalize on our massive TAM that we believe is significantly expanding with AI. The transformation will take time, but we're moving quickly and driving cross-functional alignment across the entire organization to achieve our goals. As a result, in 2027, we are targeting to be above the Rule of 40 on an adjusted EBITDA basis and be approaching the Rule of 40 on a free cash flow basis. Bryan will provide more details on this in a moment. Now I'd like to dive deeper into our AI-powered platform and how it's well positioned to empower brands to elevate their CX and how they're realizing meaningful benefits through our Genius AI suite of products. As I touched on last quarter, in order to deliver personalized and accurate self-service using GenAI, you need four key ingredients. First, you need access to LLMs, and it's critical to enable brands to easily change the underlying engine to leverage the latest, high-performing models. We believe our engine agnostic approach allows brands to future-proof their AI decision, and our AI application layer above these engines acts as the key competitive advantage. Second, you need contextual data, which includes consumer specific and brand specific information that is distributed across a large number of back end systems. Our platform typically integrates into 20 plus systems, which enables contextual data to be fed into the LOM in real time in order to provide true context around an interaction. Third, you need historical interaction data. Our CCaaS platform is the system of record for interactions between a consumer and a brand across all channels, including those handled by AI agents as well as human agents. And fourth, you need a platform that provides all channels such as voice, text, email, web chat, and social to connect consumers to an AI agent as well as to provide a seamless escalation path to human agents. The market demands AI agents that work across all of these channels, but providing a voice channel globally at scale is a huge barrier to entry. These are key reasons why AI point solutions and third-party AI vendors are strongly leaning in to partner with us and integrate to our platform. As a result, our platform acts as a control point where we are successfully monetizing that access through our voice stream and transcript stream APIs. To further enhance the value of our platform, we announced that Five9 is deepening our Salesforce partnership with the launch of Five9 Fusion, a best-in-class native integration with Salesforce to deliver better AI-powered customer experiences. With Five9 Fusion, we combine Five9's real-time system of interaction together with Salesforce's system of customer record to create a fully integrated, AI-elevated solution for customer experience. With these new product bundles, which are available today, this enhanced integration helps businesses deliver better customer experience, hyper-personalize self-service, and achieve smarter results with a future-ready foundation to drive meaningful business outcomes for our joint customers. Also, we continue to see significant AI momentum driven by real ROI that we are delivering for our customers through our Genius AI suite of products. This in turn drives our subscription revenue growth as demonstrated by the following three customer examples. The first is a fast food chain with over 3,000 restaurants globally. Following the deployment of our AI agents, they experienced a nearly 40% improvement in containment rate. Concurrently, they implemented our agent assist solution, which reduced after-call work time by 35%. As a result of these efficiency gains, they estimate their labor savings to be approximately $1.1 million per year. And since deploying our AI agents, their ARR with 5.9 increased by 37%. The second example is a global payment processing provider in the UK. They deployed our AI agents and experienced a 10% increase in self-service in the first year as well as a 50% containment rate. They also recently deployed our AI Insights product in the first quarter of this year to identify even more use cases to generate additional ROI with our suite of AI products. Since deploying our AI agents, their ARR with Five9 increased by 49%. The third example is a personalized healthcare company that provides patients with easy access to medical equipment and supplies covered by insurance. Following the deployment of our AI agents, they have driven a 15% reduction in call volume by automating common questions such as medical equipment delivery status and insurance guidelines. They also expanded the use of our AI solutions by adding chatbots and agent assist to gain further efficiencies. Since deploying our AI agents, their ARR with 5.9 has more than doubled. Additionally, we continue to lead the CX market with key AI innovations as demonstrated by our recent announcement of a new offering called Spotlight for AI Insights, which is designed to help brands unlock the voice of their customers hidden in troves of interaction data. AI Insights leverages GenAI to mine customer conversations at scale and understand emerging topics, top trends, and root causes of issues through a powerful visualization interface. Spotlight takes AI Insights to a whole new level by harnessing the power of GenAI to discover specific trends and metrics that are typically very difficult to identify in an automated fashion. We believe this will not only provide key insights for contact center operators, but also empower lines of business leaders with valuable data and tailored intelligence to continuously improve their business through increased sales, enhanced products, elevated CX, and more. Another AI capability that is becoming a key part of driving AI agent adoption is our dial of trust. This allows brands to scale the level of Gen AI that is incorporated into our AI-enabled solutions. Gen AI is becoming more powerful and more accurate by the day. However, there is a trust spectrum for brands that will vary by different topics and different industries when using AI to confidently provide customers with accurate information and answers. Our dial of trust enables brands to manage this risk through a continuum where the level of Gen AI infusion can be modified for various use cases. We believe that this tooling is essential for delivering trusted AI. As a result of our leading position in AI, we continue to see significant momentum in our AI business as evidenced by virtually all of our $1 million plus ARR new logos continuing to attach AI. and AI making up more than 20% of enterprise new logo ACV bookings. Additionally, our enterprise AI revenue grew 32% year over year in the first quarter, making up 9% of enterprise subscription revenue. We also continue to further penetrate our install base by leveraging our revolutionary AI blueprint program, It's still early days, but preliminary results are very promising. For instance, in the last several months, we have been collaborating with a growing number of our customers to help them build their AI roadmap and identify use cases to generate significant ROI with our AI solutions. 50% of customers going through the AI blueprint process have purchased our AI products. We're highly encouraged by these results, and we expect this momentum to accelerate throughout the year. In addition to our AI momentum and opportunity, there remains a significant opportunity in our core CCaaS market with a $24 billion TAM as cloud migrations continue. Therefore, we remain very optimistic about our long-term durable global opportunity, especially at the upper end of the market, which is the largest and least penetrated part of the market and the fastest growing category of our business. Now I'd like to touch on the momentum we're seeing with some of our key partners. As we announced in November, Five9 and ServiceNow continue to execute on the goals of our strategic partnership. Later this quarter, Five9 Transcript Stream will integrate into ServiceNow Interaction Management, enabling agents to focus entirely on customer issues without the need for manual note-taking. ServiceNow's Now Assist powered by GenAI will leverage these real-time transcriptions to generate summaries and resolution notes, significantly reducing call wrap-up activities and average handle times. Additionally, Five9's intelligent routing engine will soon route ServiceNow digital channels and cases, ensuring seamless and efficient case management. ServiceNow is also integrating its metadata to enrich Five9's workforce engagement management solutions. This will reduce operational overhead for managers by streamlining routing management across both platforms, making it easier to adjust staffing dynamically during peak demand periods. Additionally, last quarter we announced our launch on the Google Cloud Marketplace, both in the US and internationally, and we saw more than $35 million in ACV pipeline added in the last two months. We're very pleased with the early traction and anticipate the strong momentum to continue. We also recently teamed with IBM to integrate WatsonX into our Genius AI platform to bring customers the option to leverage WatsonX as their preferred LLM when building AI-powered CX solutions. This collaboration is designed to enhance our platform's flexibility and help drive the next wave of innovation in AI-powered CX, enabling businesses to deliver more personalized, efficient, and impactful customer experiences. In summary, we are pleased with our continued momentum in AI for CX and our execution against the massive, poor CCaaS market opportunity. We believe that our differentiated approach to accelerate AI adoption as well as ongoing innovation of new AI offerings to support the entire customer journey from self-service AI agents to agent augmentation to operational efficiency are key drivers fueling the momentum in this fastest growing category of our business. Additionally, I want to thank our team of five-niners whose passion and unwavering dedication continue to be the driving force behind transforming our business to strengthen our leadership position in the industry. We're off to a strong start in 2025, and I look forward to sharing our progress as the year unfolds. And with that, I'll turn it over to our president, Andy Dignan. Andy, please go ahead.

Thank you, Mike, and good afternoon, everyone. In the first quarter, we continue to execute well against a strong pipeline, seeing an increased volume of new logo wins year over year, despite some lengthening of sales cycles on larger deals, which we attribute to the macro backdrop. From a geopolitical perspective, we are starting to see some resistance in international regions to doing business with US vendors, but we are monitoring this very closely as we are operating in a very dynamic environment. For our install-based bookings, we had the highest year-over-year growth rate for any quarter in the last three years. This is a direct reflection of the investments we've made to drive upsell and cross-sell motions into our customer base. And now, as we normally do, I will share some key examples of wins. The first example is a new business unit of our Fortune 50 financial services customer. They chose Five9 to replace legacy systems and enable scalable, compliant voice solutions integrated seamlessly with Salesforce. The solution will improve customer outreach through click-to-call, ensuring TCPA compliant call recording, and reducing call abandonment by routing branch calls to the right banking professionals. The solution aligns with their digital transformation goals, enhances the customer and banker experience, and positions Five9 as a trusted partner in secure, enterprise-scale voice modernization. We closed this deal in early April and anticipate this initial order to result in over $2.8 million in ARR to Five9. The second example is a leading vehicle mobility solutions provider that helps consumers with vehicle repair, replacement, fleet management, insurance, and legal services. They were using an on-prem solution that was difficult to manage and did not provide holistic visibility into all of their operations. As a result, they chose Five9 for our deep integrations into their ecosystem of applications, including Microsoft Dynamics and Teams. They were also looking to maintain continuity with our partner, Varent, to avoid the retraining that would have been required on other platforms. Most importantly, they selected 5.9 for our extensive portfolio of agentic AI solutions and the significant ROI they expect to generate by eliminating simple tasks with our AI agents and gain further efficiencies with our agent assist transcription and summary capabilities. We anticipate this initial order to result in over 1.7 million in ARR to 5.9. The third example is a nonprofit health plan serving roughly 400,000 members in California. They were using an on-prem system that lacked key technology capabilities. They chose Five9 to modernize their customer experience by leveraging our comprehensive suite of AI solutions, including AI Agents for self-service, Agent Assist for transcriptions, and AI Insights to identify new AI use cases and efficiency opportunities. They are also looking to enhance customer experience across text, chat, email, and voice channels, integrating seamlessly with their Jeeva patient record system and HSP claim solution for efficient call handling. They also selected Five9 for our deep integration with Microsoft Teams, our WEM portfolio to optimize their operations, and our analytics capabilities to fulfill their state-compliant obligations. We anticipate this initial order to result in approximately $900,000 in ARR to Five9. And now, I'd like to share an example of an existing customer who expanded their business with us. This leading service provider of Medicaid and other government-funded self-directed care programs have been a Five9 customer for over 10 years. This customer partnered with us to win a major state contract, resulting in a significant increase in the size of their contact center. Self-service is a major initiative with this expansion, which is why this customer selected our AI agents. With this add-on order, we anticipate the ARR to 5.9 will increase from 1.5 million to over 5.5 million. And now, I'd like to turn it over to Bryan to take you through the financials. Bryan?