Five9 Conference Call Summary Company Overview - **Company**: Five9 (NasdaqGM:FIVN) - **Industry**: Cloud Contact Center Solutions Key Points AI Trends and Platform Advantages - Five9 is witnessing a significant shift towards AI in contact centers, with customers preferring an end-to-end platform that integrates AI and human interactions [4][5] - The company estimates AI revenue to be approximately $85 million, representing about 7% of total revenue, with a growth rate of over 40% in recent quarters [6][8] - AI revenue constitutes 11% of enterprise subscription revenue, with bookings growth exceeding 80% in the last quarter [8][9] Competitive Landscape - Five9 competes with various software companies, including CRM players and LLM providers, but emphasizes its end-to-end platform as a key differentiator [10][11] - The company is open to integrating third-party AI solutions, provided they enhance customer experience [12][14] Product Announcements - Recent product announcements at the CX Summit included: - **Agentic Quality Management (AQM)**: Allows AI to evaluate 100% of interactions based on customizable criteria, enhancing monitoring capabilities [15][16] - **Genius Routing**: Utilizes AI for dynamic routing decisions, improving efficiency over traditional methods [17] Financial Performance - Subscription revenue growth slowed from 16% in Q2 to 10% in Q3, primarily due to tough year-over-year comparisons and a decline in commercial revenue [19][20] - The company expects normalization in commercial revenue and anticipates a return to historical growth trends [20][24] Future Growth Outlook - Five9 is positioned for growth with a backlog of new logo bookings and upselling opportunities within existing customers [24][27] - The company projects a return to double-digit growth in total revenue by 2027, driven by both AI and traditional CCaaS segments [30][44] Margin Expansion and Cash Flow - Five9 achieved nearly 500 basis points of adjusted EBITDA margin expansion and expects at least 100 basis points in 2026 [34] - The company is focused on improving cash flow, targeting $175 million for 2026, driven by better working capital management and reduced CapEx [36][37] Partnerships - Five9 has strong partnerships with Salesforce, ServiceNow, and Google, with significant year-over-year growth in ACV bookings from these partners [38] Leadership Transition - The company is in the process of selecting a new CEO, emphasizing the need for innovation, operational excellence, and cultural fit [41] Conclusion - Five9 is navigating a dynamic market with a strong focus on AI integration, product innovation, and strategic partnerships, while also addressing recent financial challenges and preparing for future growth opportunities [30][44]