Five9(FIVN) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Five9 reported record third quarter revenue of $112.1 million, representing a 34% year-over-year growth and a 12% sequential growth, both all-time highs as a public company [6][37] - Adjusted EBITDA margin reached 21.5%, also a record for Q3 [7][39] - Recurring revenue accounted for 92% of total revenue, with a dollar-based retention rate increasing to 107% from 105% in the previous quarter [38] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 35% on a last twelve months (LTM) basis, making up 82% of LTM revenue, while the commercial business represented 18% [37][38] - The company experienced strong bookings across both commercial and enterprise segments, with significant contributions from systems integrators [29][39] Market Data and Key Metrics Changes - International bookings in EMEA grew 3x and in Latin America grew 4x year-over-year in Q3 [22] - The company is seeing increased demand for agents working from home, driven by the COVID-19 pandemic [16][17] Company Strategy and Development Direction - Five9 announced a definitive agreement to acquire Inference, which will enhance its AI portfolio and provide effective digital labor for contact centers [7][9] - The company is focusing on expanding its go-to-market strategy, including partnerships with telecom providers and systems integrators [18][20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the ongoing transition to cloud solutions and the imperative for digitized customer experiences as key market drivers [15][16] - The company expects to maintain strong growth, projecting fourth quarter revenue guidance of $115 million, representing a 25% year-over-year growth [41] Other Important Information - The acquisition of Inference is expected to close no later than January 5, 2021, with a total purchase price of approximately $48 million, subject to adjustments [40] - The company raised its annual revenue guidance for 2020 from $400 million to $522 million, indicating a growth rate increase from 22% to 29% [41] Q&A Session Summary Question: What has changed in the business momentum since the last quarter? - Management noted strong momentum across the enterprise business, with record seat turn-ups and a decline in churn post-COVID [49] Question: What workflows is the Inference solution best suited for? - Inference is designed for mass deployment and can handle various customer service needs across multiple industries [52][54] Question: What does the fully loaded ARPU look like now? - The average ARPU is around $204, with a fully loaded ARPU reaching up to $400 per digital agent per month [57][59] Question: What is the strategy for international growth? - The company is investing in Latin America, Canada, and Western Europe, seeing significant growth in these regions [63][64] Question: How is the partnership with AT&T progressing? - The partnership is yielding significant growth, with a pipeline exceeding expectations and contributing to both enterprise and commercial bookings [72]