Five9 Inc at Morgan Stanley Technology, Media & Telecom Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Meta Marshall - Morgan Stanley - Analyst : All right. Well, perfect. Despite those kind of very strong numbers, for the past year, the CCaaS market has been challenging in that people are trying to say, CCChampionS, you're demonstrating that CCaaS is a beneficiary of AI, but investors have seemed to be more cautious. Where do you feel like that disconnect lies and what's the path to kind of closing that chasm?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. Why do you think that you guys are better positioned maybe particularly kind of with a more open approach versus some of your competitors?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. Barry, maybe turning to you. You saw some incremental acceleration in subscription revenue in the second half. Can you just walk us through some of the key factors that drove that improvement? And how much of that was like seasonality versus customer ramps?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. And so Bryan, how should we think about the carryover of these dynamics into 2025 could NRR expand from large customers ramping? Or are there any deals that are ramping in 2025 that we should be mindful of?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Got it. Mike, maybe turning back to you, your Q4 installed base bookings reached the highest level in eight quarters. Just what's driving this momentum? And how sustainable is that?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Got it. Bryan, you noted that the $1 million-plus ARR customers were growing 26% and having kind of having a meaningfully higher D&E. Just what's driving the stronger performance in this sleeve relative to the rest of the customer base?

Question: Meta Marshall - Morgan Stanley - Analyst : Got it. Mike, at the higher level, you've indicated kind of a long-term opportunity for 20% to 30% subscription revenue growth. Just what are the key assumptions underlying this target, particularly with where we are kind of the near-term growth expectations? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 12:50AM, FIVN.OQ - Five9 Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. I mean how do you see the competitive environment today, both from kind of traditional CCaaS vendors and the number of new entrants into the space, both large platforms or large clouds and kind of smaller conversational AI specialists?

Question: Meta Marshall - Morgan Stanley - Analyst : Has there been any kind of meaningful impacts to pricing, either in that core CCaaS market or on the conversational side?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Perfect. Maybe turning to Salesforce specifically. You've been vocal about the strength of your partnership and ability to not only coexist, but kind of benefit from similar offerings like Agent Force. Just what does Five9's monetization look like in these joint opportunities? You kind of just alluded to it, but maybe kind of talking about Salesforce and Agent Force more specifically?

Question: Meta Marshall - Morgan Stanley - Analyst : And then just what does that monetization look like on the data that they need as agent forest or any of these other kind of voice tools advance?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Perfect. You noted some analysis paralysis or just kind of deal cycles taking a little longer amongst customers for AI or from AI has continued to moderate in Q2 of '24 -- from Q2 of '24. I'm sorry about that. What steps are you taking to help educate the customer on the capabilities and just kind of improve or speed up that sales cycle evaluation?

Question: Meta Marshall - Morgan Stanley - Analyst : I mean we hear from resellers a lot that there tends to be, okay, I've evaluated 1,000,000-point solutions. I just need somebody to kind of pull this together into a platform. Is that part of kind of what you started seeing at the tail end of the year was just that ability to sell a platform and kind of solve the problem for that?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. You mentioned towards the latter portion of 2024, you made some changes to the sales organization to improve execution. Are they largely complete? Or are there incremental changes that you're considering? And then additionally, what steps are being taken to kind of minimize disruption from both Barry's retirement as well as Dan Burkland? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 12:50AM, FIVN.OQ - Five9 Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Meta Marshall - Morgan Stanley - Analyst : Barry, any other comments you want to say just kind of on the transition?

Question: Meta Marshall - Morgan Stanley - Analyst : Great. So Bryan, maybe turning to you on profitability. You saw a strong exit rate on gross margins in Q4. Can you just walk through kind of expectations on the gross margin line and then maybe kind of how that carries down to operating margins?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. And then just free cash flow, maybe how to think about free cash flow? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 12:50AM, FIVN.OQ - Five9 Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Like we talked about it earlier, just in terms of you weren't seeing kind of a decrease in users or kind of agents. But you recently decided to kind of stop disclosing seat counts. Just how are you giving comfort to investors that were not seeing kind of a massive change in agent counts?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Maybe last question, Mike or Barry, I don't know which one of you guys want to take it. But a question we've been asking to everybody this week, you guys are selling a lot of AI software. Just how are you using AI internally?

Question: Meta Marshall - Morgan Stanley - Analyst : Okay. Perfect. All right. Well, excited about the story, and thanks so much for being here today.

Question: Meta Marshall - Morgan Stanley - Analyst : Yeah, definitely.

Question: Meta Marshall - Morgan Stanley - Analyst : Yeah. Let the transcript show that we're very excited. All right. Perfect. Thank you. Congrats.