Financial Data and Key Metrics Changes - The company reported total revenue of $300 million for Q4, representing an 8% year-over-year growth [21] - Subscription revenue grew by 12% year-over-year in Q4, now making up 82% of total revenue, up from 79% a year ago [22] - Adjusted EBITDA margin increased to 26%, while free cash flow more than doubled year-over-year to a margin of 22% [10][24] - For the full year 2025, total revenue was $1.15 billion, growing 10% year-over-year, with subscription revenue growing 13% [25] Business Line Data and Key Metrics Changes - Enterprise AI revenue growth accelerated to 50% year-over-year, contributing significantly to the overall subscription revenue [21][22] - Core CCaaS subscription revenue growth accelerated to 8% year-over-year [22] - The company achieved a record in enterprise AI bookings, which more than doubled year-over-year [9][16] Market Data and Key Metrics Changes - The market for traditional CCaaS is expected to grow at a 9% CAGR, while the GenAI customer service market is projected to grow at a 34% CAGR through 2029, reaching a combined annual spend of $48 billion [11] - The company is well-positioned to capitalize on these growth drivers, leveraging its data advantage in conversational data [11][12] Company Strategy and Development Direction - The company aims to lead in AI-powered customer experience (CX) by enhancing its platform capabilities and expanding its partnerships, particularly with Google Cloud [14][15] - The focus is on creating a unified CX platform that addresses both agentic and traditional human needs, driving efficiency and elevating customer experiences [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for continued success in 2026 and beyond, driven by strong demand for AI solutions [10] - The CEO emphasized the importance of operational excellence and the potential for significant growth in the AI-driven CX market [9][10] Other Important Information - The company completed a $50 million accelerated share repurchase on February 2, buying back approximately 2.6 million shares, reflecting strong cash generation [29] - The company plans to host an Investor Day in late 2026 to provide additional details on strategic priorities and long-term financial outlook [29] Q&A Session Summary Question: Breakdown of AI revenue growth - Management indicated that AI revenue growth is driven by both new logo acquisition and penetration into the existing customer base, with both segments growing significantly [33][34] Question: Product strategy and potential changes - The new CEO highlighted the opportunity for transformation within the CX space, focusing on increasing the total addressable market (TAM) through AI and traditional CCaaS [40] Question: Contact center industry outlook - Management discussed the ongoing shift to cloud solutions and the significant AI opportunity, emphasizing the company's end-to-end platform advantage [46][48] Question: Sector performance and customer pain points - The company noted strong adoption in healthcare and retail sectors, with customers focusing on improving their data strategies to enhance AI capabilities [54][89] Question: AI revenue composition - The company clarified that the $100 million in AI revenue is primarily consumption-based, with significant traction in AI agents and agent assist solutions [67][75]

Financial Data and Key Metrics Changes - The company reported headline revenue growth of 17% and adjusted EPS growth of 46% in Q2 FY 2026, with revenue reaching $164.2 million, a 16.7% increase from $140.7 million in the prior year quarter [4][13] - Net income increased to $12.2 million from $9.3 million in the prior year quarter, driven by growth in higher-margin offshore regions and reduced SG&A expenses as a percentage of revenue [16][17] - Adjusted EBITDA reached a record of $20.7 million, or 12.6% of revenue, up from $16.5 million, or 11.8% of revenue in the same period last year [19] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by the health tech vertical, which grew by 35.1%, travel, transportation, and logistics by 20.2%, and retail and e-commerce by 17.2% [14] - The telecommunications vertical saw a decline of 23.1%, marking it as one of the smallest verticals [14] - Health tech now accounts for 17.4% of total revenue, up from 15.1% in the prior year quarter, while telecommunications decreased to 8.7% of revenue from 13.1% [20][21] Market Data and Key Metrics Changes - Offshore revenues grew by 16.2% compared to the prior year quarter, while nearshore locations grew by 8.5%, and onshore regions expanded by 27.5% [15] - The company’s highest margin offshore revenues comprised 52.3% of total revenue, reflecting a strategic focus on higher-margin delivery locations [15] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities and strategic market presence, positioning itself as a leader in AI-powered customer experience [9][10] - The expansion into India is highlighted as a key growth vector, with plans to continue scaling operations in the region [8] - The company aims to maintain its leadership in BPO 3.0 by investing in talent and resources to support AI-driven growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company’s ability to sustain growth momentum, with expectations of further revenue and adjusted EBITDA guidance increases for the fiscal year [25][26] - The company anticipates a more consistent revenue flow throughout the year, moving away from historical seasonal spikes [33] Other Important Information - The company repurchased approximately 78,000 shares for $2.9 million during the quarter, with a total of 170,000 shares repurchased for $5.6 million in the fiscal year [24] - The company ended the quarter with a net cash position of $14 million, consistent with the previous fiscal year [24] Q&A Session Summary Question: Demand and impact of AI on the company - Management stated that the company has established itself as a leader in AI, which aids in winning new clients and enhances operational execution, contributing to market share growth [28][30] Question: Changes in revenue patterns due to business mix - Management indicated that the mix shift towards higher-margin sectors may lead to a more consistent revenue flow throughout the year, reducing the historical seasonal decline [32][34] Question: Gross margins and operating expenses - Management acknowledged that while gross margins have decreased year-over-year, SG&A expenses are growing at a slower rate than revenue, which is favorable for long-term margin trajectory [36][37]

Financial Data and Key Metrics Changes - In Q3 2025, Five9 reported revenue of $286 million, representing an 8% year-over-year growth [19] - Subscription revenue, which constitutes 81% of total revenue, grew by 10% year-over-year, primarily driven by enterprise AI revenue, which increased by 41% year-over-year [20] - Adjusted EBITDA grew by 37% year-over-year, achieving a margin of 25%, while free cash flow increased by 84% year-over-year, reaching a margin of 13% [5][23] Business Line Data and Key Metrics Changes - Enterprise AI bookings grew over 80% year-over-year, contributing to a healthy backlog [5] - Telecom usage accounted for 12% of revenue, while professional services made up 7%, both categories are not growth drivers and are becoming a smaller percentage of total revenue [20] - The commercial business represented 9% of total revenue but declined in the teens year-over-year as the company focuses on the enterprise market [21] Market Data and Key Metrics Changes - Gartner forecasts the traditional CCAS market to grow at a 9% CAGR and the GenAI customer service market at a 34% CAGR through 2029, leading to a combined annual spend of $48 billion [6] - Five9's dollar-based retention rate was 107% in Q3, down from 108% in Q2, attributed to tough comparisons from previous periods [21][22] Company Strategy and Development Direction - Five9 aims to maintain operational improvements while investing in AI and go-to-market initiatives, targeting the Rule of 40 by 2027 [5][28] - The company is focused on building strategic partnerships, with significant growth in ACV bookings with ServiceNow and Salesforce [12][19] - Five9 is positioned as a leader in the AI-powered customer experience market, leveraging its platform to integrate AI and human agents [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's foundation for the next decade, emphasizing the importance of AI in customer experience [12][13] - The CEO search is progressing well, with a focus on finding a leader experienced in product innovation and operational excellence [14] - The company anticipates a return to double-digit revenue growth in the second half of 2026, driven by strong install-based bookings and new logos [26][27] Other Important Information - Five9 announced a $150 million share repurchase program, reflecting confidence in long-term growth opportunities [19] - The company expects Q4 revenue to be approximately $297.7 million, indicating a sequential growth of 4% [24] Q&A Session Summary Question: What happened in the quarter regarding guidance? - Management noted that the growth environment is transitioning, leading to expectations of smaller beats in guidance. Subscription revenue growth was impacted by tough comparisons and a decline in commercial revenue due to underallocation of demand and a gap in sales capacity [30][31] Question: Why is it taking so long to translate install-based bookings to revenue? - Management explained that install-based bookings have longer implementation cycles, and revenue conversion will ramp up throughout 2026, particularly in the second half of the year [35][36] Question: What is the current state of the bookings environment? - The company reported strong bookings momentum, with AI bookings up 80% year-over-year and record install-based bookings [40][41] Question: Are there any pricing pressures on core live agent seats? - Management indicated that there is no significant pricing pressure at renewal time, and customers are looking for pricing models that incorporate AI [79][81]