Five9 Inc at Needham Growth Conference Transcript

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

Question: Scott Berg - Needham & Company - Analyst : You know, in this, in the contact center space over the last couple of years, we're I think we're all reading a lot about new startups that are, kind of more point solutions that are, that are coming up in the space with maybe different types of A I functionality. But can you discuss how or why a platform player like 59 wins against these point solutions in these A I based scenarios? And then maybe over the longer term, why will or why should 59 be an A I winner against whether it's the current ones or maybe new ones that come up over the next couple of years?

Question: Scott Berg - Needham & Company - Analyst : So I was out of the company's headquarters a month and a half ago, sat with both of you got a chance to look at your new agentic platform that you released during your European conference. I think the question that's come up the most since then is why would a customer prefer to go with 59 in these particular areas versus like a salesforces agent force strategy that's out there today.

Question: Scott Berg - Needham & Company - Analyst : Very helpful there. I think with the advance of reasoning some of these technologies, it's giving customers the ability to automate more through these technologies. But when we, when I was out there a month ago, trust was a big component of our conversation, right? You know how do you get a customer to build for their trust in the technology and extract the full value of such a solution? You gave kind of the dial analogy. But you know, what does that look like? Really in action? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 7:15PM, FIVN.OQ - Five9 Inc at Needham Growth Conference

Question: Scott Berg - Needham & Company - Analyst : Last question for me on product in the industry at least is talking about pricing kind of in the space, right? We've seen pricing start to evolve over the last year. But how do you all anticipate pricing to, evolve for further, especially within the A I functionality? I mean, we've got seats, we've got some transactional components, some something else can, consumption based, I guess. What are you seeing today? And how does that maybe more more in the next three or five years.

Question: Scott Berg - Needham & Company - Analyst : Right? Moving to go to market because you certainly have some changes to the business over the last couple of years. The first thing I wanted to touch on was at your CX summit in Barcelona. The recent one here, when you announced the new A I genius A I suite, you also discussed a four step kind of strategic process to deliver A I business value to your customers. Can you maybe touch on what this approach actually entails?

Question: Scott Berg - Needham & Company - Analyst : What do these newer, I guess, what impact do these newer A I technologies have on, kind of sales cycles right now? Obviously, you have a big perpetual in, install base out there that's ultimately got to move to the cloud. But are you seeing any impact maybe over the last couple of quarters on those sale cycles, either faster or slower?

Question: Scott Berg - Needham & Company - Analyst : I know if you go back to last year, I believe it was on the first quarter call you all kind of formally announced winning what I believe was the largest deal ever in the, in the contact center space right now, you've had a couple of transactions that have been in a similar zip code at least, right? 35 $40 million. So maybe that part of it is not new, but maybe can you help everyone understand why are you winning these deals now? And what else do you have to do to continue winning deals of this size? Because if you went back two years ago, this is, this is new territory for you all.

Question: Scott Berg - Needham & Company - Analyst : I know over the last couple of years, the company continues to get more excited about how you engage with partners, in these, in these cycles. And I think it was when I was on site there last month, you all talked about some excitement around your large European partner, specifically in Europe, kind of, momentum getting behind all of you. But, but I guess maybe help us understand how important these are to your business today, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 7:15PM, FIVN.OQ - Five9 Inc at Needham Growth Conference maybe how does that evolve? And are your partners really equipped to, help with this A I journey that you're on because part of it is new for them as well?

Question: Scott Berg - Needham & Company - Analyst : I guess lastly, on some of the go to market stuff here at the moment. You also noted that you anticipate fed ramp approval, at some point relatively in the near future here. But can you talk about some of the incremental benefits that you've already received from starting this process and you know, what type of maybe t opportunity does, does the federal government unlock for you all?

Question: Scott Berg - Needham & Company - Analyst : We go back to the third quarter results. You know, after a tough second quarter bookings environment, right? You all talked about it, you certainly discussed it here briefly earlier. You had mentioned business commentary was was better in Q3 that, that you're pleased with some of the some of the traction there, I guess kind of a two part question there is, is one, how do we get comfort with, that that trajectory continuing to improve further from here? And then secondly, is, what really improved? Was it really just, comfort in some of these A I technologies and understanding what they can do or is there maybe something else in the end market that you're seeing customers need?

Question: Scott Berg - Needham & Company - Analyst : I've got probably two or three financial questions here for Barry or anyone else that would like to ask questions, feel free to input them into the questions window on the, on the webinar page or email them directly to me. I've already received a couple but happy to take a couple more as time permits. Barry, you had a kind of an interesting nr number in the third quarter, right? It was, it was the same as it was in Q2. It was unchanged for the first time quarter over quarter after seeing some deceleration for, a period of time before that. I guess what sort of factors do you need to see to actually have this kind of bottom out or start to inflect upward and maybe it has bottomed out, but one quarter is not a trend for me like to see it for at least a couple of course.

Question: Scott Berg - Needham & Company - Analyst : I know in the third quarter as well, you saw the company saw some really nice expansion in margins 130 basis point improving quarter over quarter in gross margins. And I believe it was 190 points on the operating margin side is gross margins have been a focus of yours last quarter too. Talking about how you're going to get some improvement there. You know, I guess what are your expectations for, for gross margins over the next? I don't know, 1 to 2 years, you're not guiding to fiscal '25 obviously at this point, but, how should we expect them to maybe trend?

Question: Scott Berg - Needham & Company - Analyst : All right, with that, we will take a few questions here from the audience. The first one kind of touches on the component with salesforce that you mentioned before. But the question is, is can you talk about some of your excitement around, your partnerships with Microsoft CRM and, and service? Now, as eventual growth lovers, you already talked about sales force, but maybe touch on your partnerships with the other two because you've certainly spoken about them positively.

Question: Scott Berg - Needham & Company - Analyst : Next questions on some of the A I guess success that you're having is how often do you think your A I products win versus other ones in sales cycles? It's probably early there. I don't know if you have any data, to date in terms of what you've seen out there. But I guess the question is probably you had 10 deals today. How many of them do you think you're winning versus maybe some of these point solutions or other vendors?

Question: Scott Berg - Needham & Company - Analyst : I kind of like the next question here is the question is on usage mix, Barry, you kind of talked about what the mix was here, so far in the in the third quarter. But does usage mix ever trend to zero or should it just kind of slowly bleed lower as you have more successes upmarket? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 17, 2025 / 7:15PM, FIVN.OQ - Five9 Inc at Needham Growth Conference

Question: Scott Berg - Needham & Company - Analyst : I guess probably the last question here is within your voice conversations today. What percentage of those conversations do you think the agents or your agentic platform can have success automating today from what you've seen.

Question: Scott Berg - Needham & Company - Analyst : Fair enough. I think that's a great place to end. Mike and Barry certainly wanted to thank you for your time today and participating in the conference. And I think you got a couple more here left today in terms of the small group meetings. But thanks again, good luck and we will chat more on the fourth quarter.