Five9(US:FIVN)2025-05-01 20:30Financial Data and Key Metrics Changes - Subscription revenue grew 14% year over year, now comprising 80% of total revenue [3][27] - Adjusted EBITDA margin reached 19% for Q1, with operating cash flow at a record $48 million, representing 17% of revenue [3][30] - Free cash flow also hit an all-time high of $35 million, or 12% of revenue [3][30] - Non-GAAP EPS was $0.62 per diluted share, up 29% year over year [29] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 20% year over year, contributing significantly to overall subscription revenue growth [3][27] - Enterprise AI revenue increased by 32% year over year, making it the fastest-growing category in the product portfolio [14][27] Market Data and Key Metrics Changes - The total addressable market (TAM) for the core CCaaS market is estimated at $24 billion, with ongoing cloud migrations expected to drive growth [15] - International business represents about 12% of total revenue, with some resistance noted in international regions towards US vendors [20][83] Company Strategy and Development Direction - The company aims to reestablish itself as a "Rule of 40" company by targeting adjusted EBITDA above 40 and approaching the same for free cash flow by 2027 [4][43] - Focus on AI and go-to-market initiatives to drive revenue growth and capitalize on an expanding TAM [4][15] - A recent operational review led to a 4% reduction in the global workforce, aimed at improving profitability and reallocating resources towards strategic areas [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite macroeconomic challenges, including inflation and consumer spending uncertainty [3][20] - The company is maintaining its full-year revenue guidance at $1.14 billion, with a cautious outlook due to macro uncertainties [34][80] Other Important Information - The company has deepened its partnership with Salesforce through the launch of Five9 Fusion, enhancing AI-powered customer experiences [7][66] - The AI blueprint program has shown promising results, with 50% of customers participating purchasing AI products [15][60] Q&A Session Summary Question: Will Q1 be the trough for subscription revenue growth this year? - Management has not provided specific guidance on subscription growth but maintains the annual revenue guidance unchanged at $1.14 billion, reflecting stable macro conditions [38][39] Question: Can you elaborate on the longer sales cycles in the enterprise market? - Longer sales cycles are primarily observed in larger enterprise deals, with some deals slipping into the next quarter due to macro conditions [48][51] Question: How does the Genius AI play into the current environment? - The AI revolution is prompting companies to accelerate their AI initiatives, with significant momentum in decision-making and ROI delivery from AI solutions [55][60] Question: What is driving the growth in BYOT (Bring Your Own Telephony)? - The growth in BYOT is driven by Salesforce's investment in AI and the simplification of the go-to-market strategy through Five9 Fusion [66] Question: How has the international business been affected by recent geopolitical events? - International business represents a small portion of total revenue, and while there is some resistance, confidence remains strong among existing customers [83][85]