Five9 Inc at William Blair Growth Stock Conference Transcript

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

Question: Arjun Bhatia - William Blair & Company - Analyst : Thanks, Barry. So maybe to start off Mike, I think it would be helpful if you can just lay out a little bit of background on Five9 where you fit into the broader contact center space and as you look at your growth over the last couple of years. What are maybe some of the major factors that have been impacting the growth story?

Question: Arjun Bhatia - William Blair & Company - Analyst : So I certainly wanted to. Yeah, we'll dig in, I think a lot more to the AI theme. I think before we get there, I want to go back to the last kind of platform shift that happened and intact, which was cloud. And I think the CCaaS space is pretty unique because there is a big install base of on-prem contact center solutions. And now we have cloud that's been around for a while and we have generative AI that's taking off so. What are you seeing from that legacy installed base of customers that are at some of your competitors? Is there a greater impetus to move to cloud as a kind of steady state. What are you seeing from those customers?

Question: Arjun Bhatia - William Blair & Company - Analyst : So if we were to and just compare today to five years ago, let's say just as an example, like our this is the quality of the customers that are coming off of on-prem, are those deployments now getting more complex and how is that impacting your implementation times for these customers that are saying, we want to go to Five9 because we want to go to cloud and we want to get the benefit of AI, how is that changing? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 5:40PM, FIVN.OQ - Five9 Inc at William Blair Growth Stock Conference

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay. Is there anything that you as you think about what you can control? Is there anything that you can do to help them with their business trans? Like is there more professional services? Is it getting partners? And SIs involved. How do you -- how can you mitigate that obtain a little bit of upgrading to better CX?

Question: Arjun Bhatia - William Blair & Company - Analyst : I wanted to go to AI because I know that's certainly on top of everyone's mind, and it's been a big initiative for you as well. I think you've shared some metrics in the past about AI related bookings. So it's clearly something that customers are investing in. But as you think like take a step back and think broadly about the customers that you want to serve and sell AI capabilities to where do you think they are just in terms of readiness to be able to actually adopt AI capabilities, because there's business our transformation is that they need to meet and there's data readiness and we hear about a lot of these things. So where are we in that process at this point?

Question: Arjun Bhatia - William Blair & Company - Analyst : So right now it's 5%,10%, potentially 5%, 10% by labor reduction by you're seeing --

Question: Arjun Bhatia - William Blair & Company - Analyst : But you're seeing a 2x uplift on price. So your revenue is increasing at a rate that's greater than whatever the seat reduction might even be.

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay, interesting.

Question: Arjun Bhatia - William Blair & Company - Analyst : And is your pricing model for your AI capabilities already adjusted such that if it's an IVA that it's usage-based and there is a consumption elements to it.

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay. I think one of the other debates that investors have about the CCaaS market is this element of build it yourself? And you talked about this a little bit, but I think there's been some early examples thus far of businesses saying we'll build a bot ourselves and deploy it at with OpenAI integration or whatnot, whatever it is and what are the like -- what are the challenges that kind of a deployment might be overlooking? What might not be able to address the Five9?

Question: Arjun Bhatia - William Blair & Company - Analyst : Can you on the ROI side of the equation? Can you talk about when you're going to market with your AI capabilities, is the ROI pitch today more about cost savings from a labor perspective because we do see sometimes tens of thousands of seats deployed in contact centers is a better CX like which one resonates more with customers as they're looking to?

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay. Can we -- if we can talk about competition for a second? Because I'm certainly I think the AI use case is pretty compelling in the CCaaS market, but you have competitors in the market that have similar AI capabilities. When you think about maybe you'll debate that but the -- what is the differentiation and what is the competitive advantage the Five9 has over others in the CDS market, especially related to AI?

Question: Arjun Bhatia - William Blair & Company - Analyst : Barry, maybe I want to bring you into this, and I think it's been an interesting time. I think in tech and software in general, the we've seen some choppiness in the demand environment from other companies that have reported. I think you've called out some verticals that have been more challenged than others as well as can you talk about just what you're seeing now in terms of getting deals across the finish line? Is it getting harder? Is it are you still able to close deals on time, what's happening with sales cycles? Just give us some sense of what the demand environment looks like? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 5:40PM, FIVN.OQ - Five9 Inc at William Blair Growth Stock Conference

Question: Arjun Bhatia - William Blair & Company - Analyst : That's very helpful. And the other the other piece I want to touch on is I think just as I've looked at the shape of your guidance for the remainder of the year? It seems like there is a an inflection ramp kind of baked into the back half of the year, and you've talked about backlog and there's some deals that you won that you're just getting implemented and live. And what is your sense now just on timing of those go-lives? Are those implementations still on track. How do you feel about that back half ramp that's kind of implied in the guide?

Question: Arjun Bhatia - William Blair & Company - Analyst : Perfect, Mike, maybe I want to actually this might be for both of you, but if we now just think about if we fast-forward three years, let's say, and your AI bookings are a bigger portion of your business AI as a bigger portion of your revenue, there's a lot more demand. What does that mean for margins for Five9? Is that margin accretive to your business?

Question: Arjun Bhatia - William Blair & Company - Analyst : Okay. Is there any sort of -- does the usage component is that the mechanism that ensures your margins stay higher?

Question: Arjun Bhatia - William Blair & Company - Analyst : Right, perfect. Well, that's all the time we have today. Mike, Barry, thanks so much for joining us. Really appreciate it. For anybody that has follow-up questions. We are doing a breakout upstairs in Jennie B, so please feel free to join us.