Five9(US:FIVN)2024-11-08 01:30Financial Data and Key Metrics Changes - Subscription revenue growth accelerated to 20% year-over-year, while total revenue growth accelerated to 15%, reaching a record of $264.2 million in Q3 [6][25] - Adjusted EBITDA margin was 19.8%, up 3.2 percentage points sequentially and 1.9 percentage points year-over-year [29] - Operating cash flow was a record $41 million, equivalent to 16% of revenue [6][31] - Non-GAAP EPS was $0.67 per diluted share, up $0.15 from Q3 2023 [31] Business Line Data and Key Metrics Changes - AI revenue grew 40% year-over-year, with Agent Assist experiencing 158% year-over-year growth [27] - The average ARR of new logo deals that included AI was over 5x larger than deals without AI [8] - AI bookings grew over 50% year-over-year in Q3 [8] Market Data and Key Metrics Changes - Telecom usage revenue made up 13% of Q3 revenue, declining year-over-year in the low single digits [28] - Professional services accounted for 7% of revenue, expected to remain stable or decline over the long term [28] Company Strategy and Development Direction - The acquisition of Acqueon is seen as a significant milestone to enhance the intelligent CX platform [14] - The company aims to drive long-term durable subscription revenue growth in the 20% to 30% range [17][36] - The focus on AI products is central to the company's strategy, with a strong emphasis on transforming customer experience [7][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential for subscription revenue growth despite current macroeconomic challenges [42][44] - The company is navigating a learning curve regarding AI adoption among customers, but remains confident in the long-term benefits [47][48] Other Important Information - The company opened a new data center in India, which is expected to unlock significant opportunities in the contact center market [67] - Five9 was named a leader in the Gartner Magic Quadrant for CCaaS [16] Q&A Session Summary Question: Insights on AI adoption from early adopters - Management noted that AI is central to customer experience, with many companies integrating AI to enhance both automation and human agent support [38][39] Question: Long-term subscription revenue growth expectations - Management remains excited about the potential for subscription revenue growth in the 20% to 30% range, emphasizing the importance of this metric [42][43] Question: Changes in consumer retail exposure and expectations for Q4 - Management observed a slightly better environment in Q3 across most verticals, with cautious expectations for Q4 due to economic indicators [51][52] Question: Competitive pricing pressure and deal closures - Management indicated no significant changes in competitive pricing pressure and noted that some medium-sized deals pushed into Q4 were successfully closed early in October [79][82]