Five9 Inc Q2 2025 Earnings Call Transcript

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

Question: Terry Tillman - Truist - Analyst : Yeah, sorry about that. Hopefully, you can hear me okay. First of all, Mike, congratulations on being able to get to a more balanced life. That's awesome and good luck with everything in the future. And Bryan, congratulations as well. So my question is, and it's a tough question to answer, but the stats on your Enterprise AI business are impressive. So for me, a thought is the sustainability of this goodness. And so what kind of visibility do you have in your pipeline? And just whether it's the new logos that are attaching well your AI capabilities or the installed base and now you have the AI Agent stuff, just how should we think about the sustainability of well-above corporate average growth for just the whole portfolio of AI products?

Question: Siti Panigrahi - Mizuho Securities USA LLC - Analyst : Great. I also echo my congrats to both Bryan and Mike, our best wishes for your good health and retirement, Mike. Just looking at beyond AI momentum, it's good to see all the momentum you talked about -- last quarter, you talked about some kind of deal elongation on the Enterprise side and slowdown in international market. How is that momentum going this quarter? And what's your assumption for the second half? Especially when I look at your guidance, second half implies 7% to 8% growth. And Bryan, if you could cover your assumption on the subscription side, that would be great, and especially Q4.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : Perfect. Thank you. Congrats from me as well, Mike and Bryan. I hope me rejoining didn't cause Mike to kind of say, I'm out of here.

Question: Raimo Lenschow - Barclays Services Corp - Analyst : I wanted to more -- ask a topical question. We just saw a news flow of investment of some of the guys that you work with, like a salesperson CRM, one of the players in your market. You could see it as a very nice strong endorsement of your industry because there's a lot of questions about it. Like those who invest in come that's kind of a strong endorsement. How do you see it in terms of like -- but also still partnering with the other players as well? So maybe just kind of frame it more from a bigger picture perspective?

Question: Raimo Lenschow - Barclays Services Corp - Analyst : They just announced it, I think, yes.

Question: David Hynes - Canaccord Genuity Corp - Analyst : Good to see everyone. Congrats on all the milestones and the nice print. So look, Mike, you gave some great examples of customers kind of leaning in on AI. Those that are further along, what's happening with their human agent seat count, right? I mean, I think that's the million-dollar question that everyone's trying to figure out. Are you seeing those seat count reductions that the market seems to be expecting? Are you able to make up for that with incremental AI spend? Like how is this all shaking out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 8:30PM, FIVN.OQ - Q2 2025 Five9 Inc Earnings Call

Question: David Hynes - Canaccord Genuity Corp - Analyst : Yeah. I mean, we've heard some of the like digital channel native vendors talk about 70% deflection rates. I assume it's different in voice, right? It's got to be a lot lower. Like what is that percentage that they can deflect the agent seating today?

Question: Billy Fitzsimmons, CFA - Jefferies LLC - Analyst : This is Billy Fitzsimmons on for Samad. First, from a vertical perspective, anything to call out there in terms of strength or weakness and any verticals growing faster in terms of AI adoption at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 8:30PM, FIVN.OQ - Q2 2025 Five9 Inc Earnings Call

Question: Billy Fitzsimmons, CFA - Jefferies LLC - Analyst : Okay. And then if I could expand a little bit, anything to call out in terms of commercial customers? I know you guys give us the Enterprise's percent of revenue on a trailing 12-month basis. If we kind of back that out and apply as commercial has been down kind of the last three quarters on a rolling basis, and obviously it's a smaller piece of the business, less important, Enterprise is growing faster, but just want to better understand what's kind of happening there.

Question: Seth Gilbert - UBS AG - Analyst : Hi. This is Seth Gilbert on for Taylor. The acceleration in subscription revenue and inflection in NRR was solid. Maybe can you walk us through kind of what drove the upside and what the trend line in subscription revenue growth has been excluding AI? And then maybe I'll press a little bit on some of the earlier questions on the AI side. Can you touch on what AI could scale to as a percentage of Enterprise subscription revenue growth over, say, the next year or two? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 8:30PM, FIVN.OQ - Q2 2025 Five9 Inc Earnings Call

Question: Scott Berg - Needham & Company LLC - Analyst : Everyone, really nice quarter. Mike, 3x. That's what I heard a few years ago, 3x.

Question: Scott Berg - Needham & Company LLC - Analyst : Agreed. And Bryan, it's been like 10 or 11 years looking forward to the next 10 or 11 or whatever the number is.

Question: Scott Berg - Needham & Company LLC - Analyst : I guess my question is probably directed a little bit towards Andy. You made the comments, I think pipelines are at elevated levels right now. But I think one of the questions I get frequently from shareholders and others is talking about the overall industry kind of pipeline activity. It's been a little on the light side or maybe a lot on the light side at different periods over the last one, two, or three years. But how does activity really kind of compare to maybe what you saw in '21 or early '22 before the industry saw some slowdown? Are we back at a normal cadence? And obviously, AI is part of that. Or are we still trying to build up to those levels?

Question: Scott Berg - Needham & Company LLC - Analyst : Excellent. Congrats again.

Question: Meta Marshall - Morgan Stanley - Analyst : And I'll echo my congrats. Maybe just wanted to spend a second on, you guys had mentioned Professional Services becoming a smaller portion of the revenue. I know you guys had put an emphasis on kind of building out that channel and kind of utilizing them for Professional Services. But REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 8:30PM, FIVN.OQ - Q2 2025 Five9 Inc Earnings Call just any update on that, particularly since you noted that customers are starting to ramp faster than expected, just kind of what traction are you seeing there and are there levers that could still be pulled to kind of speed implementations?