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, expectations regarding seasonality, 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 and CCAS revenue opportunities, and current estimates regarding same company growth, enhancements to and development of our solution, market size and trends, our expectations regarding macro conditions, company market and leadership positions, initiatives, pipeline, technology, and product initiatives, including investment in R&D and AI, and other future events or results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements or simply predictions should not be unduly relied upon by investors. Actual events or results may differ materially, and the company undertakes no obligation to update the information in such statements. These statements are subject to substantial risks and uncertainties that could adversely affect Five9's future results, and cause these forward-looking statements to be inaccurate, including the impact of adverse economic conditions, including the impact of macroeconomic challenges, including continuing inflation, global tariff increases, and potential increases in announcements regarding the same, 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 captioned risk factors in L3 and 5.9'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 a 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 on the investor relations section of 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, July 31st, 2025, and may no longer be accurate at the time of 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. Please go ahead.

Thanks, Lauren, and thanks, everyone, for joining our call this afternoon. I'm very pleased to report strong second quarter results. But before we go into our results, as you may have seen in the press release we issued earlier today, I've made the decision to retire from the CEO role here at Five9. The board has kicked off a comprehensive search for our next CEO. Meanwhile, I will continue to serve as CEO until my successor has been appointed. And then I look forward to continuing my service on the board as executive chairman at Five9 to ensure a smooth transition. It has been a privilege and an honor to lead this amazing team of Five9ers. While my cancer treatments continue to be effective, I recognize that it's not likely to continue indefinitely. After giving it a lot of thought, I believe it's time for me to pass the baton and get back to a more balanced lifestyle. That said, until we appoint my successor, I'm committed to working my tail off as we continue to transform 5.9 to drive top-line growth and bottom-line profitability. As you know, we have made a series of changes over the past several quarters to position the company for the future, and we are beginning to see the positive impact of those changes in our results, including strong bookings, AI momentum, and increased profitability. So now let's dive into our Q2 results. As I mentioned earlier, we had a very strong second quarter, which exceeded our guidance across all key metrics. Subscription revenue, which now makes up 81% of total revenue, accelerated to 16% year-over-year growth. This was primarily driven by enterprise AI revenue growth accelerating to 42% year-over-year in the second quarter, now representing 10% of enterprise subscription revenue. Additionally, we were very pleased to see strong momentum in our sales execution as we had the highest quarterly total ACB bookings in two years, excluding the one financial services mega deal we did in Q1 of last year. And enterprise AI bookings more than tripled year over year in the second quarter. In terms of profitability, adjusted EBITDA grew 63% year over year, reaching an all-time record margin of 24% in the second quarter. helping drive Q2 records for both operating and free cash flow. Our increased profitability is a direct result of our execution against transformation initiatives as we work toward the Rule of 40 and beyond. And now I'd like to spend a few minutes on our AI success and innovation. Let's start with the three key drivers underlying our strong momentum in AI. enterprises continue to see Five9 as their core CX platform, including AI. For instance, two large healthcare customers extended their contracts with us during the second quarter to five-year terms, with one expanding its anticipated ARR with us by nearly 40% to over $11 million, and the other expanding its anticipated ARR with us by more than 2X to over $5 million. Both enterprises decided to continue their partnership with us long-term as they view Five9 as their single, comprehensive platform provider for CX. Second, enterprises are turning to Five9 as they make their long-term decisions around AI, given that we are the core CX platform and we have the AI expertise, products, and integrations. For instance, one of our customers in the airline industry worked with our AI experts to evaluate the potential ROI of increasing their self-service capabilities. As a result, they decided to expand their AI portfolio with us in the second quarter, increasing their anticipated ARR with 5.9 by more than 2X to over $7 million. Similarly, one of our customers in the pest control industry decided to add new AI capabilities on our platform in Q2, increasing their anticipated ARR with 5.9 by more than 30% to over $4 million. And third, enterprises are achieving significant and tangible ROI with our AI solutions. For instance, a customer in the healthcare industry said, who deployed our AI solutions a year ago, has been achieving significant improvements, including an 80% reduction in abandonment rate, a 50% plus increase in containment rate, and a 60% plus improvement in post-interaction work time. Another example is a digital health company focused on simplifying medical data to improve patient care outcomes, who deployed our AI solutions four months ago. In this short period, they've already realized a 19% improvement in self-service containment. Not only was self-service improved, but critical CSAT metrics were improved as well, driven by a 50% reduction in abandonment rate and nearly a 50% reduction in hold time. As you can see, we are well positioned to enable enterprises to unlock real value with AI, and we expect to build on this momentum as we continue to invest in driving innovation within our genius AI suite. For example, we made big news at CCW in Las Vegas in June, where we launched a Gentic CX with AI agents that can reason, decide, and take action. We also launched AI Trust and Governance, our solution to make AI enterprise ready. Let's first discuss our new agentic AI agents. With this launch, the Five9 Intelligent CX platform now delivers agentic AI agents to drive CX and AI at scale. With powerful new capabilities designed to reason, decide, and take action, Five9 ushers in a new era of agentic CX for our customers. Part of our Genius AI suite, AI agents provide accurate, hyper-personalized experiences for consumers that are secure, seamless, and context-aware. Our Agentsic AI agents can do so much more than prior generations because they have flexible, advanced self-service capabilities that adapt at any stage of AI maturity through five key features, including innovation. AI summary node, which auto-summarizes voice and digital interactions with language-selectable summaries. Intent detection and entity extraction, which enables seamless, natural dialogues, ensuring the quickest path to resolution. Knowledge node, which uses retrieval augmented generation, or RAG, to generate contextual answers based on enterprise knowledge. Rebuilt templates, which make it easy to deploy with starter kits that allow customers to quickly build new AI agents for their specific needs. And lastly, CodeCrafter, which leverages the capabilities of LOMs to generate high-quality JavaScript functions, reducing development and implementation effort from weeks to hours. Additionally, our agentic AI agents are able to provide context and facilitate handoffs to human agents for those cases where it may be required. They can be configured to transfer to a human agent and quickly summarize the conversation in real time to promote a seamless handoff. This reduces handle time and is designed to eliminate the need for consumers to repeat themselves, reducing frustration and improving the experience. Also, as our customers are learning how to operationalize AI within their CX solutions, we're developing new practices to serve as their trusted expert in building their agent ops capabilities. AgentOps is an emerging discipline for managing the deployment, monitoring, and optimization of AI agents. And a critical component of deploying AI agents is to provide granular guardrails for AgentOps personnel to tailor AI models and outputs for different use cases, keeping AI-powered consumer experiences reliable and safe. This is where 5.9 AI Trust and Governance comes into play. As we enter this new era of agentic CX, agentic AI is continuing to shape the entire customer journey from accurate and personalized self-service to agent assistance, process automation, and managerial insights. And it is essential for agentic AI to behave ethically and consistently. With our five-night AI trust and governance suite, enterprises are scaling AI safely with capabilities such as granular guardrails to better customize AI behavior across channels, proactive monitoring and response to risks such as prompt injection attacks, better AI observability with comprehensive reporting and dashboards, and hallucination detection to easily detect and correct AI behavior if needed. As you can see, our ongoing investments in our genius AI suite continue to fuel innovation and strengthen our leading position as a trusted partner to help enterprises navigate through this rapidly evolving world of AI. This is also why we're once again ranked as having the best AI solutions in the semiannual Baird survey that was recently conducted in July. Now I'd like to touch on the momentum we're seeing with some of our key partners. In the second quarter, we had very strong performance across multiple routes to market. We also continued to gain significant traction with technology partners during the quarter. For example, with Salesforce, we're having a lot of success in the field, working hand-in-hand with the Salesforce sales teams through joint selling and value positioning. As a result, we saw a significant increase in bookings, as well as a meaningful increase in the pipeline for 5.9 Fusion for Salesforce. With Google Cloud Marketplace, Pipeline once again doubled this quarter, and we closed multiple $1 million-plus ARR deals through this partnership. With ServiceNow, we doubled our bookings quarter over quarter, and we also published our certification and alignment to their Yokohama release, their most recent platform update focusing on AI, showcasing our deep partnership. And lastly, with regard to Epic, We are excited to share that 5.9 is now listed in the Epic showroom as a toolbox solution. Epic is one of the largest healthcare CRM providers and is a key partner for us as we continue to deepen our healthcare vertical integrations. We are offering a digital patient experience solution, embedding our capabilities into Epic. And this is one of the many planned native integrations with them as we continue progressing our joint roadmap. which includes AI agents, agent assist, and other AI solutions. In summary, we are very pleased with the momentum in our business and the progress we're making on our transformation initiatives for both top and bottom line. We remain at the forefront of developing leading agentic CX solutions to help reshape the AI-driven customer journey and experience, and I'm extremely excited about the future of 5.9. I am confident that we have the platform and the experts to drive long-term, durable growth as we continue to capitalize on our massive market opportunity. And before I turn it over to our President, Andy Dignan, I would like to discuss some changes in our leadership team. For starters, following a comprehensive CFO search, I am thrilled to congratulate Brian Lee on his appointment. Brian has been a key member of the finance organization at Five9 for 11 years, and he has been instrumental in helping us achieve our operational and financial goals, and I have so much confidence in Brian. In addition to Brian's appointment to CFO, we made additional changes to our leadership team by realigning our executive org structure in order to maximize alignment, ownership, and operational efficiency. As part of these changes, we promoted Tiffany Merriweather from Chief Legal Officer to Chief Administrative and Legal Officer, where she will now also lead HR. In addition, we promoted Matt Tuckness to Chief Revenue Officer. Matt is a 12-year veteran at Five9 who has risen through the sales ranks, leading various sales orgs, and has had a significant impact on our go-to-market organization and our bookings re-acceleration. In this role, Matt will also lead our marketing team. And with that, I will turn it over to Andy.

Thank you, Mike, and good afternoon, everyone. As Mike mentioned, we are very pleased to see strong bookings across the board in the second quarter, reaching the highest quarterly total ACV bookings in two years, excluding the one financial services mega deal we did in Q1 of last year. Most importantly, we had triple-digit year-over-year enterprise AI bookings growth in Q2, with enterprise AI new logo bookings more than doubling year-over-year, and our enterprise AI install-based bookings more than quadrupling year-over-year. Once again, AI bookings made up more than 20% of enterprise new logo ACV bookings, and we attached AI to virtually all of our $1 million-plus ARR new logos. Also, we continue to see significant momentum with our AI Blueprint program, which is helping us accelerate expansion within our enterprise install base. And outside of AI, our non-AI bookings grew significantly for both new logos and install base. Additionally, we had a healthy mix of million-dollar-plus ARR new logo wins along with robust channel activity both domestically and internationally. That drove strong new logo bookings during the second quarter. and install-based bookings hit an all-time high, driven by continued momentum in upsell and cross-sell initiatives. Looking ahead, we remain optimistic about the future as our pipeline and RFPs continue to remain at elevated levels. And now, as we normally do, I will share some examples of key wins during the quarter, in addition to the $2.8 million new logo we won in April, which we discussed during our last earnings call. The first example is a global data and analytics company who selected Five9 through a reseller to modernize from a rigid legacy platform that has stalled prior transformation efforts. They needed a scalable, AI-powered CX solution to elevate customer engagement and drive operational efficiency. With Five9, they're activating all digital channels along with intelligent routing and post-call surveys to capture real-time customer sentiment. Agent Assist will empower their team with contextual guidance and automated conversation summaries. Deep CRM integrations, including Salesforce, ServiceNow, and a proprietary CRM system, are designed to ensure voice and digital AI agents, as well as human agents, have instant access to the contextual data they need, reducing friction and improving resolution times. They will also use AI insights to uncover key trends, optimize both AI agent and human agent staffing, and drive smarter business decisions. We anticipate this initial order to result in approximately $3.3 million in ARR to 5.9. The second example is a national mortgage services provider who selected Five9 through a reseller to modernize from an inflexible on-prem system that was limiting agility and contributing to client churn. They needed a cloud platform that can support inbound and outbound engagement, integrate with a complex CRM stack, and elevate their customer experience. With 5.9, they're enabling all digital channels and voice, integrating with both Salesforce and their proprietary mortgage platform to service customer data instantly. Microsoft Teams gives agents real-time access to subject matter experts, while Agent Assist transcribes and summarizes conversations for continuity across interactions. They'll also use WFA to automate tasks like sending mortgage payoff statements, streamlining operations, and improving both agent productivity and customer satisfaction. We anticipate this initial order to result in approximately $1.2 million in ARR to 5.9. The third example is a global veterinary services provider with over 2,000 locations across 20 countries who selected Five9 through a reseller to consolidate fragmented on-prem systems and elevate both the customer and agent experience. Rapid growth through acquisition had left them with no visibility into the full customer journey and no ability to proactively engage clients with reminders for appointments or refills, resulting in missed revenue opportunities. With 5.9, they're unifying their contact center on a modern cloud platform, activating voice in all digital channels. Voice and digital AI agents will now handle common tasks like appointment rescheduling and prescription refills, while post-call summaries and Zendesk integration help both AI agents and human agents understand context and continue conversations seamlessly. Microsoft Teams integration gives agents real-time access to non-contact center experts like clinic staff when a call requires specialized input. With AI insights, they'll now have a clear visibility into performance trends, training needs, and AI agent and human agent staffing, turning insights into action across the organization. We anticipate this initial order to result in over $1.1 million in ARR to 5.9. And now I'd like to share an example of an existing customer who expanded their business with us. A leading academic health system significantly expanded its partnership with Five9 by signing a new five-year agreement. The organization initially deployed Five9 to support its patient access team, improving the patient experience using our AI agents. After three years of success, they committed to a long-term strategy built on flexibility, integration, and scalability. This expansion is comprised of new business units and an increase in our AI agents, including the use case where Five9 and Epic are integrated to streamline clinical workflows as well as additional AI agent use cases. Additionally, they are leveraging Five9 Fusion for Salesforce. They also expanded their use of technical account management to include specialized AI expertise. This extended agreement reflects a deeper value-based partnership focused on expanding patient access, improving operational efficiency, and supporting long-term growth. With this add-on order, we anticipate the ARR to 5.9 will increase from approximately $2 million to over $5 million. And now, I'd like to turn it over to Brian to take you through the financials. Brian?