Q4 2025 Five9 Inc Earnings Call [BACKUP]

February 19, 2026

Mike Burkland: His leadership style and his proven track record of leading through evolving market conditions align perfectly with Five9's culture and the tremendous opportunity ahead of us. I have the utmost confidence in Amit's leadership, and all of us here at Five9 are extremely excited to start this new chapter with Amit at the helm. With that, Amit, I'll turn it over to you to share a few of your initial thoughts on Five9 and our opportunity ahead.

Amit Mathradas: Thanks, Mike. I am thrilled to join my first Five9 conference call, and would like to express my gratitude to the leadership team and the board for putting their trust in me as Five9's next CEO. I officially started on 2 February, and in the past two weeks, I have spent time meeting partners, customers, listening to employees, reviewing roadmaps, and getting deeper into the operational cadence. And what I have seen so far has reinforced why I took this role. I joined Five9 for a simple reason. That is, I believe we have a large opportunity in front of us, and that we have the right foundation to capture more of it. I strongly believe that over the long term, customers will look to Five9 for a unified CX platform that can solve their agentic and traditional human needs.

Amit Mathradas: This multi-agent world uniquely positions Five9 to drive efficiency, elevate customer experience for all our customers. From a communication standpoint, you should know that I will be clear on what's working, what is not, and what we are doing to improve it. With that, I'll turn it back to Mike to discuss our fourth quarter and full year performance. Mike?

Mike Burkland: Thanks, Amit. We're pleased to report solid Q4 results. We had an exceptional bookings quarter, achieving a Q4 record, highlighted by enterprise AI bookings more than doubling year-over-year, contributing to healthy increases in backlog. In terms of top line, we finished the year strong, with fourth quarter total revenue coming in at $300 million. Subscription revenue, which now makes up 82% of total, accelerated to 12% year-over-year growth in Q4. This was driven by enterprise AI revenue growth accelerating from 41% to 50% year-over-year, and core CCaaS subscription revenue growth accelerating from 7% to 8% year-over-year. I'm also excited to report that our enterprise AI annual run rate revenue surpassed $100 million in the fourth quarter.

Mike Burkland: On the bottom line, we achieved all-time records in Q4, with adjusted EBITDA increasing to a margin of 26% and free cash flow more than doubling year-over-year to a margin of 22%. These results demonstrate our commitment to balanced growth and operational excellence. I'm incredibly proud of our team's execution, and with our strong positioning in AI-powered CX, we believe we're set up for continued success in 2026 and beyond. Turning now to our business updates. Today, I'd like to focus on three key topics. First, our large and growing market opportunity. Second, our differentiated position in AI-driven CX. And third, our strong partner momentum. We are in the early stages of a long-term transition in the CX industry, with multiple secular growth factors driving a significantly expanding addressable market for our platform.

Mike Burkland: As a reminder, Gartner forecasts the market for traditional CCaaS to grow at a 9% CAGR, and the GenAI customer service market to grow at a 34% CAGR through 2029, to a combined annual spend of $48 billion. We believe that both of these growth drivers will create a powerful tailwind for Five9 as we continue to execute against this durable multi-year opportunity. Importantly, we believe Five9 is well positioned to lead in this new era of AI-powered CX. At the core of our advantage is data, more specifically, conversational data. We capture every customer interaction across voice, digital, and AI-driven channels. Therefore, our platform remembers every conversation, whether it was with a human agent or with an AI agent, through voice or digital. This creates what we call a relationship-based experience, where every engagement feels personal, contextual, and connected.

Mike Burkland: Our end-to-end platform serves as a real-time orchestration engine for customer interactions, whether handled by a human agent or by an AI agent, enabling seamless collaboration between the two. Each interaction strengthens the next, and this continuous learning loop compounds over time, creating a powerful data flywheel that drives higher performance, accuracy, and personalization. This is a significant advantage that only an end-to-end platform can deliver. Our platform advantages are also driving significant momentum in product innovation. At our CX Summit in November, we announced a suite of new AI-powered solutions designed to help enterprises elevate their CX, including our AQM, which is a next generation agentic quality management solution, our AI-powered Genius Routing engine, our One View unified analytics and reporting platform, and our no-code adaptive digital engagement solution. These innovations showcase how Five9 continues to lead in AI-driven CX and further strengthen the power of our end-to-end platform.

Evolving market conditions align perfectly with <unk> culture, and the tremendous opportunity ahead of us.

I have the utmost confidence in Omics leadership and all of US here at five nine are extremely excited to start this new chapter with him at the helm with that I'll turn it over to you to share a few of your initial thoughts on five nine and our opportunity ahead.

Thanks, Mike I'm thrilled to join my first five nine conference call and would like to express my gratitude to the leadership team and the board for putting their trust in me and five Nines next CEO I officially started on February 2nd and in the past two weeks I've spent time meeting partners customers listening to implore.

He is reviewing roadmaps and getting deeper into the operational cadence and what I've seen so far has reinforced why I took this role.

Mike Burkland: In addition to our product innovations, we continue to double down on partnerships as a key driver of differentiation in both our products and our go-to-market. That's why we're excited about the expansion of our partnership with Google Cloud and the launch of our joint enterprise CX AI solution, which we announced in January. We were an early adopter of Google's AI technology, and it continues to pay off for us by accelerating innovation across our CX and AI portfolio.... Our joint solution brings together the Five9 AI-infused Intelligent CX Platform and Google Cloud's Gemini for customer experience, to deliver faster time to value, seamless end-to-end orchestration across the customer journey, and more personalized interactions. Customers can move beyond pilots and deploy AI in production faster, grounded in real customer context and built for enterprise scale.

I joined five nine for simple reason that is I believe we have a large opportunity in front of us and that we have the right foundation to capture more of it I strongly believe that over the long term customers will look to five nine for a unified CX platform that can solve the agent taken traditional human needs.

This multi agent world uniquely positions five nine to drive efficiency elevate customer experience for all our customers.

From a communication standpoint, you should note that I will be clear on what's working what is not and what we're doing to improve it.

And with that I'll turn it back to Mike to discuss our fourth quarter and full year performance Mike.

Thanks Aman, we're pleased to report solid Q4 results, we had an exceptional bookings quarter, achieving a Q4 record highlighted by enterprise AI bookings more than doubling year over year contributing to healthy increases in backlog in terms of topline. We finished the year strong with fourth quarter total revenue coming in at $300 million.

Mike Burkland: That's why we're already seeing strong traction with some of the largest brands in the world leaning in to the combined power of Five9 and Google. And before I turn it over to Andy, I want to thank our incredible team of Five9ers for your passion, dedication, and commitment to excellence throughout my tenure as CEO. Together, we've built something truly special. As I transition the CEO role to Amit, I'm more excited than ever about Five9's future. We have a differentiated platform, proven expertise, strong customer momentum, and the right leadership to capitalize on the significant opportunity ahead. And with that, I'll turn it over to our president, Andy Dignan, to share more details on our go-to-market performance. Andy?

Subscription revenue, which now makes up 82% of total accelerated to 12% year over year growth in Q4.

This was driven by enterprise AI revenue growth accelerating from 41% to 50% year over year and core CCAR subscription revenue growth accelerating from 7% to 8% year over year.

I'm also excited to report that our enterprise AI annual run rate revenue surpassed $100 million in the fourth quarter.

On the bottom line, we achieved all time records in the fourth quarter with adjusted EBITDA, increasing to a margin of 26% and free cash flow more than doubling year over year to a margin of 22%.

Andy Dignan: Thank you, Mike, and congratulations on your well-earned retirement. And Amit, I look forward to working with you as we build on Five9's strong foundation. We were pleased to deliver an exceptional quarter of bookings. As Mike mentioned, total bookings represented a Q4 record, driven by enterprise AI bookings more than doubling year over year, and our install base bookings achieving another all-time high for the third consecutive quarter, driven by ongoing strength in upsell and cross-sell activities. In addition to strong execution by our sales teams, a key driver of our success is our partner strategy. Partners expand our reach. They bring us into more enterprise buying motions and speed up time to value for customers. Five9 has been partner first for years, and today, more than 80% of our business is partner influenced. Our balanced route to market model is working.

These results demonstrate our commitment to balanced growth and operational excellence.

I'm incredibly proud of our team's execution and with our strong positioning in AI powered CX. We believe we're set up for continued success in 2026 and beyond.

Turning now to our business updates today I'd like to focus on three key topics first our large and growing market opportunity second our differentiated position in the AI, driven CX and third our strong partner momentum.

We are in the early stages of a long term transition and the CX industry with multiple secular growth factors driving a significantly expanding addressable market for our platform.

As a reminder, gartner forecast the market for traditional C test to grow at a 9% CAGR and the general customer service market to grow at a 34% CAGR through 2029 to a combined annual spend of 48 billion.

Andy Dignan: Partners are leading complex transformations, accelerating AI adoption, and delivering outcomes faster than ever. In 2025, Five9 doubled year-over-year the number of partners certified to implement Five9 services, showing just how mature and essential our ecosystem has become. Building on Mike's comments about the multiple secular growth vectors expanding our market, we're seeing customers lean into both sides of that transition at once, modernizing onto CCaaS while accelerating adoption of AI. The first example is a global power management company with over 85,000 employees that selected Five9 to modernize from an on-prem platform to a CCaaS foundation. They chose us based on our native integrations with Salesforce and ServiceNow, and our AI Agents and Agent Assist capabilities to improve self-service and drive higher agent productivity. We expect this initial order to result in approximately $2.8 million in ARR.

We believe that both of these growth drivers will create a powerful tailwind for five Knight as we continue to execute against this durable multiyear opportunity.

Importantly, we believe <unk> is well positioned to lead in this new era of AI powered CX at the core of our advantages data more specifically the conversational data, we capture every customer interaction across voice and digital and AI driven channels.

Therefore, our platform remembers every conversation whether it was sort of a human agent or with an AI agent through voice or digital.

This creates what we call our relationship based experience wherever engagement feels personal contextual and connected.

Our end to end platform serves as a realtime orchestration engine for customer interactions whether handled by a human agent or buying a H N, enabling seamless collaboration between the two each interaction strengthens the next and this continuous learning with compounds over time, creating a powerful data flywheel that drives higher performance.

Andy Dignan: Another example is a life, health, and financial services provider that chose Five9 to move from on-prem to cloud and improve workforce performance. They selected Five9 for our tight integration with their healthcare CRM and our comprehensive suite of AI solutions. We expect this initial order to result in approximately $1.1 million in ARR. The third example is a hospitality technology company migrating off of a cloud competitor. They chose Five9 for our open platform approach, which allows deep integration with their hospitality platform, their core business. They view this integration as a differentiator for their customers, including some of the highest-end hospitality brands in the world. They also chose Five9 because of our joint partnership with Google Cloud to accelerate AI-driven CX. We expect this initial order to result in approximately $3.4 million in ARR.

Accuracy and personalization.

This is a significant advantage that only an end to end platform can deliver.

Our platform advantages are also driving significant momentum and product innovation.

At our CX summit in November we announced a suite of new AI powered solutions designed to help enterprises elevate their CX, including our Ecu M, which is a next generation agenda quality management solution.

AI powered genius routing engine.

Our one view unified analytics and reporting platform.

And our no code adaptive digital engagement solution.

These innovation showcase how five nine continues to lead in AI, driven CX and further strengthen the power of our <unk> platform.

Andy Dignan: In addition to customers choosing us as their core CX solution, we continue to see our customers expand their use of Five9's AI capabilities and make long-term commitments to Five9 as their CX AI provider. One example is a healthcare provider that expanded their Five9 commitment from approximately $6 million to over $10 million in ARR, along with a 3-year commitment. They are doubling down on AI with a clear focus on leveraging AI agents to drive meaningful cost savings across the business. Looking ahead, we remain encouraged by the momentum of our business, fueled by pipeline and RFP activities, sustaining elevated levels. With that, I'll turn it over to Brian to take you through the financials. Brian?

In addition to our product innovation, we continue to double down on partnerships as a key driver of differentiation in both our products and our go to market.

That's why we're excited about the expansion of our partnership with Google Cloud and the launch of our joint Enterprise CX AI solution, which we announced in January.

We were an early adopter of Google's AI technology, and it continues to pay off for us by accelerating innovation across our CX and AI portfolio.

Our joint solution brings together the five nine AI infused intelligence CX platform, and Google clouds, Gemini for customer experience to deliver faster time to value seamless end to end orchestration across the customer journey and more personalized interactions customers.

Bryan Lee: Thank you, Andy. Before I dive into the financials, I want to thank you, Mike, for your exceptional leadership and incredible partnership over the years. Your vision and execution has positioned the company well for the future. And, Amit, welcome aboard. I'm excited to work with you as we advance Five9 to the next chapter. Now, turning to our financial performance for the fourth quarter. We're pleased to report strong Q4 results, with total revenue coming in at $300 million, representing 8% growth year-over-year. Subscription revenue growth accelerated to 12% year-over-year in the fourth quarter, primarily driven by, first, enterprise AI revenue growth accelerating to 50% year-over-year, now making up 12% of enterprise subscription revenue. Second, core CCaaS growth accelerating to 8% year-over-year.

Customers can move beyond pilots and deploy AI in production faster grounded in real customer context, and built for enterprise scale.

That's why we're already seeing strong traction with some of the largest brands in the world leaning in to the combined power of five nine and Google.

And before I turn it over to Andy I want to thank our incredible team of five nighters for your passion dedication and commitment to excellence throughout my tenure as CEO together, we build something truly special.

As I transition the CEO role to Amit I'm more excited than ever about <unk> future.

We have a differentiated platform.

<unk> expertise strong customer momentum and the right leadership to capitalize on the significant opportunity ahead.

Bryan Lee: And third, continued momentum market, where 228 of our million-plus ARR customers grew subscription revenue 24% year-over-year, now making up 59% of subscription revenue. Additionally, our concurrent seat count continued to grow at a healthy rate, both quarter-over-quarter and year-over-year, relatively in line with our core CCaaS revenue growth. Subscription revenue represented 82% of total revenue, up from 79% a year ago. We expect this mix shift to continue as we focus on high-margin subscription revenue, increasingly led by our AI solutions. Telecom usage represented 11% of revenue, and professional services made up the remaining 7%. With regard to seasonality, as expected, the sequential uptick in our consumer and healthcare verticals in Q4 was meaningfully less than last year for telecom usage.

And with that I'll turn it over to our president Andy Dignan to share more details on our go to market performance Andy.

Thank you, Mike and congratulations on your well earned retirement.

And I look forward to working with you as we build on <unk> strong Foundation.

We were pleased to deliver an exceptional quarter of bookings as Mike mentioned total bookings represented a Q4 record.

Driven by enterprise AI bookings more than doubling year over year, and our install base bookings achieving another all time high for the third consecutive quarter driven by ongoing strength in upsell and cross sell activities.

In addition to strong execution by our sales teams are key driver of our success is our partner strategy.

Partners expand our reach they bring us into more enterprise by emotions and speed up time to value for customers.

Bryan Lee: For subscription revenue, sequential growth was better than anticipated, but still less than Q4 of last year. Our enterprise business represented approximately 91% of total revenue on an LTM basis. Within this category, LTM enterprise subscription revenue grew 15% year-over-year. Our commercial business represented the remaining 9%. As a reminder, this part of our business underperformed in Q3, but the immediate actions we implemented drove favorable results in Q4, and we expect LTM year-over-year growth to return to normal historical levels next quarter. With regard to our dollar-based retention rate, our spot rate increased sequentially, while the LTM rate stepped down from 107% in Q3 to 105% in Q4, as anticipated. This is primarily due to tough compares, as Q4 2024 benefited from strong seasonality and our largest customer completing its multiyear ramp.

Nine has been partner for three years and today more than 80% of our business is partner influenced.

Our balanced route to market model is working partners are leading complex transformations, accelerating AI adoption and delivering outcomes faster than ever.

In 2025, and $5 nine doubled year over year, the number of partners certified to implement five nine services, showing just how immature and essential our ecosystem has become.

Building on Mike's comments about the multiple secular growth vectors, expanding our market, we're seeing customers lean into both sides of that transition at once modernizing undersea keds, while the accelerating adoption of AI.

The first example is a global power management company with over 85000 employees that selected five nine to modernize from an on Prem platform to seek has foundation.

They chose US based on her native integrations with Salesforce and service now and our AI agent and agent assist capabilities to improve self service and drive higher agent productivity.

Bryan Lee: In 2026, we expect LTM DBRR to remain range-bound within a small band in the first half and then flex upward in the second half. Turning now to profitability. Q4 adjusted gross margin was 63%, down by approximately 40 basis points year-over-year, primarily driven by lower gross margins in telecom usage and PS. Adjusted EBITDA margin increased by approximately 260 basis points year-over-year to 26% as we continue to focus on disciplined expense management. Additionally, we continue to boost productivity, as demonstrated by our revenue per employee, increasing 14% year-over-year. Q4 GAAP EPS was $0.23 per diluted share, representing 5 consecutive quarters of positive GAAP earnings, while non-GAAP EPS came in at $0.80 per diluted share. In terms of cash flow, we generated $84 million, or 28% of revenue, in operating cash flow.

We expect this initial order to result in approximately $2 8 million in mid air.

Another example is our life health and financial services provider that shows five nine to move from on Prem to cloud and improve performance.

They selected five nine for our tight integration with their health care CRM and a comprehensive suite of AI solutions.

We expect this initial order to result in approximately $1 1 million in error.

The third example is a hospitality technology company migrating off of a cloud competitor. They chose <unk> for our open platform approach, which allows a deep integration with their hospitality platform their core business.

They view this integration as a differentiator for their customers, including some of the highest and hospitality brands in the world.

They also chose five night because of our joint partnership with Google Cloud to accelerate AI driven CX. We expect this initial order to result in approximately $3 4 million and a R.

Bryan Lee: Additionally, we generated free cash flow of $67 million, or 22% of revenue, which represented over 10 percentage points of margin improvement year-over-year. As a result, we ended the quarter with total cash and investments of $697 million. Now for a closer look at key full year 2025 income statement metrics. 2025 total revenue came in at $1.15 billion, growing 10% year-over-year, with subscription revenue growing 13% year-over-year. 2025 adjusted gross margin expanded by approximately 110 basis points year-over-year to 63%, while 2025 adjusted EBITDA margin expanded by approximately 470 basis points to 23%.

In addition to customers choosing us as their core CX solution, we continue to see our customers expand their use of 590, <unk> capabilities and make long term commitments to five nine as their CX AI provider.

One example is a health care provider that expanded their five nine commitment from approximately $6 million to over $10 million in error.

Along with a three year commitment.

They are doubling down on AI with a clear focus on leveraging AI agents to drive meaningful cost savings across the business.

Looking ahead, we remain encouraged by the momentum of our business fueled by pipeline and RFP activities sustaining elevated levels.

Bryan Lee: 2025 GAAP EPS was positive for the first time on an annual basis at $0.45 per diluted share, while non-GAAP EPS came in at $2.96 per diluted share. 2025 operating cash flow finished at $226 million, and free cash flow came in at $162 million. Now turning to our full year 2026 and first quarter guidance. For 2026 revenue, we're initiating our guidance at a midpoint of $1.254 billion, which is in line with the high level outlook we provided last quarter. For Q1 revenue, we're guiding to a midpoint of $299.5 million, which is also consistent with the high level outlook of relatively flat sequential change we shared last quarter.

And with that I'll turn it over to Brian to take you through the financials Bryan.

Thank you Andy before I dive into the financials I want to thank you Mike for your exceptional leadership and incredible partnership over the years.

Your vision and execution has positioned the company well for the future.

And Amit welcome aboard I'm excited to work with you as being bad five nine to the next chapter.

Now turning to our financial performance for the fourth quarter. We're pleased to report strong Q4 results with total revenue coming in at $300 million, representing 8% growth year over year.

Subscription revenue growth accelerated to 12% year over year in the fourth quarter, primarily driven by first.

They are revenue growth accelerating to 50% year over year, now, making up 12% of enterprise subscription revenue.

Bryan Lee: In terms of quarterly progression, we expect Q2 revenue to increase slightly quarter over quarter, followed by momentum building further throughout the year. As a result, we continue to expect revenue to return to double-digit growth in the second half of 2026, driven by our strong backlog of both new logo and install-based bookings. With regard to the bottom line, we're guiding 2026 non-GAAP EPS to a midpoint of $3.18 per diluted share, which is higher than the high level outlook of $3.14 per diluted share that we provided during our last earnings call. We're also guiding to continued GAAP profitability in 2026, with a midpoint of $0.91 per diluted share for GAAP EPS.

And of course, the Cas growth accelerating to 8% year over year.

And third continued momentum market were 228 over a million plus are customers grew subscription revenue, 24% year over year, now, making up 59% of subscription revenue.

Additionally, a concurrency count continued to grow at a healthy rate both quarter over quarter and year over year relatively in line with of course, the cash revenue growth.

Subscription revenue represented 82% of total revenue upfront of 79% a year ago and we expect this mix shift to continue as we focus on high margin subscription revenue increasingly led by our AI solutions.

Bryan Lee: For Q1 non-GAAP EPS, we're guiding to a midpoint of $0.68, which reflects a typical sequential decline in the first quarter of the year. As for the remainder of the year, we expect relatively flat sequential move in Q2 and large improvements in the second half. Also, for other key profitability metrics, we expect at least 24% in annual adjusted EBITDA margin and approximately $175 million in annual free cash flow. Additionally, we plan to host an investor day in late 2026, where we will provide additional details on our strategic priorities, and long-term financial outlook. We look forward to sharing more with you at that time. Finally, on our share repurchase program, we completed a $50 million accelerated share repurchase on 2 February, buying back approximately 2.6 million shares.

Telecom usage represented 11% of revenue and professional services made up the remaining 7%.

With regard to seasonality as expected the sequential uptick in our consumer and health care verticals in Q4, it was meaningfully less than last year for telecom usage.

For subscription revenue sequential growth was better than anticipated, but still less than Q4 of last year.

Our enterprise business represented approximately 91% of total revenue on an LTM basis within this category LTM enterprise subscription revenue grew 15% year over year.

Our commercial business represented the remaining 9% as a reminder, this part of our business underperformed in Q3, but the immediate actions we implemented drove favorable results in Q4, and we expect LTM year over year growth to return to normal historical levels next quarter.

Bryan Lee: We have $100 million remaining under our authorization through December 2027. This reflects our strong cash generation and confidence in Five9's value creation opportunity. In closing, 2025 was a transformational year for Five9. We delivered strong financial performance, expanded our AI capabilities, and strengthened our strategic partnerships.

With regard to our dollar based retention rate our spot rate increased sequentially, while the LTM rate stepped down from 107% in Q3 to 105% in Q4 as anticipated.

This is primarily due to tough comparison as Q4, 'twenty four benefitted from strong seasonality and our largest customer completing its multi year round.

Amit Mathradas: ... and we believe we have positioned the company well for sustained profitable growth. With Amit now leading the team, we're energized about our opportunities ahead and committed to executing our strategy to deliver long-term shareholder value. With that, operator, please open the line for questions.

Bryan Lee: ... and we believe we have positioned the company well for sustained profitable growth. With Amit now leading the team, we're energized about our opportunities ahead and committed to executing our strategy to deliver long-term shareholder value. With that, operator, please open the line for questions.

2026, we expect L. P. M D. B R. R to remain range bound within a small band in the first half and then some upward in the second half.

Turning now to profitability Q.

Q4, adjusted gross margin was 63% down by approximately 40 basis points year over year.

Operator: Thank you, Brian. Before we begin our Q&A session, we ask that our analysts please be on camera and limit themselves to one question to allow for as many questions as time permits. Our first question comes from Raimo Lenschow from Barclays. I'll ask you to unmute at this time.

Primarily driven by lower gross margins in telecom usage M. P. S.

Adjusted EBITDA margin increased by approximately 260 basis points year over year to 26% as we continued to focus on disciplined expense management.

Additionally, we continued to boost productivity as demonstrated by our revenue per employee increasing 14% year over year.

Ryan MacWilliams: Hey, guys. This is Damon Cavanaugh from Raimo. Thanks for taking the question. Congrats on your retirement, Mike. And congrats, Amit, well, as well for the new role. Great to hear the continued strength with the AI portfolio, reaching $100 million ARR, accelerating 50% year over year. Can you help us understand some of the breakdown between what is greenfield, and then what is it--what is within your existing customer base? And then what is factored into the 2026 guide just from that portfolio? Thank you.

[Analyst] (Barclays): Hey, guys. This is Damon Cavanaugh from Raimo. Thanks for taking the question. Congrats on your retirement, Mike. And congrats, Amit, well, as well for the new role. Great to hear the continued strength with the AI portfolio, reaching $100 million ARR, accelerating 50% year over year. Can you help us understand some of the breakdown between what is greenfield, and then what is it--what is within your existing customer base? And then what is factored into the 2026 guide just from that portfolio? Thank you.

Q4, GAAP EPS was <unk> 23 cents per diluted share.

Representing five consecutive quarters of positive GAAP earnings on a non-GAAP EPS came in at 80 cents per diluted share.

In terms of cash flow, we generated $84 million or 28% of revenue and operating cash flow.

Mike Burkland: I'll start, and Brian, feel free to chime in, but look, this is a combination of us having a lot of success with new logo attach of AI and also penetration into our installed base. I don't think we quantified the breakdown between the two, but I can tell you both are growing at a significant rate, very strong, right?

Additionally, we generated free cash flow of $67 million or 22% of revenue, which represented over 10 percentage points of margin improvement year over year.

As a result, we ended the quarter with total cash and investments of $697 million.

And now for a closer look at key full year 2025 income statement metrics can only 25 total revenue came in at $1.15 billion growing 10% year over year with subscription revenue growing 13% year over year.

Amit Mathradas: Yeah, and if you think about the 2026 revenue guidance, we've kind of given you the shape of the curve, on a total revenue basis. And this is the first time we've given you the breakout and growth rates between enterprise AI as well as core CCaaS. So core CCaaS, obviously, that's a big portion today, and that's gonna follow the shape of the curve for the total revenue guide, which means that if you back into the enterprise AI, it's gonna still be growing at a very, very fast clip, but it'll ebb and flow through the quarter, but it's still gonna be the fastest part of our portfolio.

Bryan Lee: Yeah, and if you think about the 2026 revenue guidance, we've kind of given you the shape of the curve, on a total revenue basis. And this is the first time we've given you the breakout and growth rates between enterprise AI as well as core CCaaS. So core CCaaS, obviously, that's a big portion today, and that's gonna follow the shape of the curve for the total revenue guide, which means that if you back into the enterprise AI, it's gonna still be growing at a very, very fast clip, but it'll ebb and flow through the quarter, but it's still gonna be the fastest part of our portfolio.

2025 of adjusted gross margin expanded by approximately 110 basis points year over year to 63%.

25 of adjusted EBITDA margin expanded by approximately 470 basis points to 23%.

Plenty of 25, GAAP EPS was positive for the first time on an annual basis at 45 per diluted share on a non-GAAP EPS came in at $2.96 per diluted share.

Ryan MacWilliams: Got it. Thanks, guys.

[Analyst] (Barclays): Got it. Thanks, guys.

Mike Burkland: Thank you.

Operator: Okay, our next question comes from CT Panigrahi from Mizuho. CT, I'll go ahead and ask you to unmute at this time.

2025, operating cash flow finished at $226 million and free cash flow came in at $162 million.

Sitikantha Panigrahi: Great. Mike, it was great working with you, and wish you good luck for your next phase. And, Amit, congratulations, and look forward to working with you.

Now turning to our full year 2026, and first quarter guidance.

For 2026 revenue, we're initiating our guidance at a midpoint of one point to five $4 billion, which is in line with the high level outlook, we provided last quarter.

Amit Mathradas: Thank you.

Mike Burkland: Thank you.

Sitikantha Panigrahi: Great! Amit, I, I wanna ask you, you, you have, you know, great product experience, operation, and even you look at AI outside the industry. As you look into Five9, and I know you talked about opportunities, use, how do you see, you know, to navigate, Five9 when it comes to product, or where do you think you can, you know, bring some changes, or where do you think it's working, or do you think it is too early to talk about that?

For Q1 revenue, we're guiding to a midpoint of $299 5 million, which is also consistent with the high level outlook of relatively flat sequential change we shared last quarter.

In terms of quarterly progression, we expect Q2 revenue to increase slightly quarter over quarter, followed by a momentum building further throughout the year.

As a result, we continue to expect revenue to return to double digit growth in the second half of 2026, driven by a strong backlog of both new logos and installed based bookings.

Amit Mathradas: Thank you, CT, for that question. Look, I think, the answer is a combination of what you, what you laid out a little bit. Look, one of the reasons I took this role is I am, you know, really bullish on, on the transformation that's going to happen within the CX space. As humans, agents, systems, software all come together, I actually think this turns, you know, allows our end users and customers to have, you know, more efficiency, greater experiences, and in some cases, new experiences that haven't even been factored in as yet, right? Just like how, the internet, you know, per se, transformed retail. And so for me, I am really, you know, looking forward to unlocking that, which is, how do we actually increase the TAM by doing new things with AI and traditional CCaaS and providing customers new opportunities?

With regard to the bottom line, we're guiding 2026, non-GAAP EPS to the midpoint of $3.18 per diluted share, which is higher than the high level outlook of $3 and 14th.

Per diluted share that we provided during our last earnings call.

We're also guiding to continued GAAP profitability in 2026 with a midpoint of 91 cents per diluted share for GAAP EPS.

For Q1, non-GAAP EPS, we're guiding to a midpoint of 68 cents, which reflects the typical sequential decline in the first quarter of the year.

That's for the remainder of the year, we expect relatively flat sequential move in the second quarter and large improvements in the second half.

Also for other key profitability metrics, we expect at least 24% and annual adjusted EBITDA margin at approximately $175 million in annual free cash flow.

Amit Mathradas: To the second part of the question on where do we go from here, and, you know, which pieces, it's a little bit early. I'm still, you know, getting my feet around our product and our roadmaps. But what is really exciting is, you know, the stat we put out, which is we've already done $100 million in ARR of AI, and it's growing. So we have proof points to back up this thesis that AI is growing. It's happening fast, and it's happening both in our new logo as well as in the existing base.

Additionally, we plan to host an Investor day in late 2026, where we will provide additional details on our strategic priorities and long term financial outlook.

We look forward to sharing more with you at that time.

Finally on our share repurchase program, we completed a $50 million accelerated share repurchase on February 2nd buying back approximately $2 6 million shares.

Sitikantha Panigrahi: Great. Thank you.

Amit Mathradas: Thanks.

We have $100 million remaining under our authorization through December 2027.

Operator: Okay, our next question comes from Ryan McWilliams of Wells Fargo. You can go ahead and unmute at this time.

This reflects our strong cash generation and confidence in five nice value creation opportunity.

Ryan McWilliams: Excellent. This one's for Mike. Mike, I mean, what a great run, and congrats. I mean, I just think back to probably, you know, 15 years ago, when people said that the biggest contact centers in the world would never move to the cloud, right? And now you guys have customers that are over 10,000 seats and some of the largest Fortune 50 companies that are out there. So, people have been wrong before in the contact center industry about what's coming next. I mean, as you kinda take a step back today, what do you think people are missing right now in terms of the contact center opportunity?

In closing 2025 was a transformational year for five nine we delivered strong financial performance.

And at our AI capabilities and strengthened our strategic partnerships and we believe we have positioned the company well for sustained profitable growth.

With him is now leading the team we're energized about our opportunities ahead and committed to executing our strategy to deliver long term shareholder value.

And with that operator, please open the line for questions.

Thank you Brian before we begin our Q&A session, we ask that our analysts each be on camera and limit themselves to one question to allow for as many questions as time permits.

Ryan McWilliams: Like, I know it feels like the CX is it, the CX or question and, like, you know, where some of these interactions will be, but, like, what do you think, you know, the contact center of 5 years from now means for Five9?

Our first question comes from Raimo <unk>.

Mike Burkland: Yeah. Thanks, Ryan. Appreciate the comments. And look, I think you're absolutely right. I mean, I remember when we went public in 2014, how, you know, everyone really just questioned whether or not large enterprises would shift to the cloud. And obviously, we're, you know, we're 40% cloud today, 60% still are on-prem, and it's gonna be a multiyear, you know, opportunity for us to continue that trend. But look, things have changed. The AI opportunity is massive. We've invested. We were early in this investment with our inference acquisition.

Barclays.

Ask you too on mute at this time.

This is Dan Kaufman on for Raimo, Thanks for taking the question.

Can you retire Mike and congrats as well for the new role.

Great to hear the continued strength with the AG portfolio are reaching 100 millionaire are decelerating, 50% year over year can you help us understand some of the breakdown between what is Greenfield then what is it what is within your existing customer base and then what is factored into 'twenty plastics Guy just from that portfolio.

Thank you and I'll start and Brian feel free to chime in but like I said. This is a combination of us having a lot of success with new logo.

Mike Burkland: We've built a lot of capabilities on top of that, and I think what people are starting to realize, and I'm not sure, you know, I think we're just at the very beginning of this realization, quite frankly, across, you know, the investor set and across. I think our customers already see this, but I think the investor community is starting to learn that this end-to-end platform advantage that we have and some other players have. Think of, again, Five9 as the system of engagement or the system of interaction, the system of action, as opposed to, say, a CRM system, which is kind of the system of record. And I think it's important to understand that we're on the front lines.

Attach of AI and also penetration into our install base I don't think we've quantified the breakdown between the two but I can tell you both are growing at a significant rate and very strong yeah.

Yeah, and if you think about the six revenue guidance.

Kind of given you the shape of the curve.

On a total revenue basis and this is the first time he was giving you the breakout in growth rates between enterprise AI as well as of course he cast so of course, because obviously, that's a big portion today and.

And that's kind of a fault of the shape of the curve for the total revenue guide, which means that if you back into the enterprise that its going to still be growing at a very fast clip, but it'll ebb and flow through the quarter, but it's still going to be the fastest part of our portfolio.

Mike Burkland: We're right there at the moment of truth with a customer and a brand, and we have an unfair advantage because of that. And providing both AI-driven solutions as well as solutions for the human agents in an orchestrated fashion, that is our power, that is the power of our platform, and it results in, again, these personalized, contextual, and connected experiences that only a platform like Five9 can deliver. And I think that is what you know, it's showing up in the numbers, but I think we're starting to talk more explicitly about those numbers, Ryan. And that is, you know, our core CCaaS revenue growth accelerated from 7 to 8, and our AI revenue growth accelerated from 41 to 50, and that is the recipe for success. I'll stop there.

Got it thanks guys. Thank.

Thank you.

Okay. Our next question comes from C T plenty diary from Mizuho.

Go ahead and ask you to at this time.

Great.

Mike It was great working with you and wish you. Good luck with your next phase and congratulation and look forward to working with you.

Okay great.

I don't ask you are.

Your you have a great product experience operation and even if you look at a.

Oh, I'm sorry industry.

As you look into five nine and I know you talked about opportunities Hughes, how do you see you know to navigate a five night when it comes to a product or where do you think you can you know being some change as our work do you think its working or do you think it is too early to talk about that.

Peter Levine: And you really wanna trust the system to give you the right answer 'cause it's not fun to be on the other side of a wrong answer. But thank you, guys. Appreciate it.

Ryan McWilliams: And you really wanna trust the system to give you the right answer 'cause it's not fun to be on the other side of a wrong answer. But thank you, guys. Appreciate it.

Mike Burkland: Thank you, Ryan. Appreciate it.

Operator: All right, our next question comes from Terry Tillman of Truist. Terry, go ahead and unmute and ask your question.

Terry Tillman: Hi, guys. It's Giancarlo on for Terry, and I appreciate the question. Congrats on the strong quarter. I think that you guys were talking about the strong adoption for the newer features that you guys rolled out, and I was just wondering, you know, what sectors were seeing the highest uptake for those features? And maybe you talk about what customers are kind of saying, what's their biggest pain point, and, like, how has that changed over the last few months? Thanks.

I think you said you'd put that question look I think the answer is a combination of what you what you laid out a little bit like one of the reasons I took this role is I am really bullish on the transformation that's going to happen within the CX space as humans agents systems software all come together.

I actually think this turns you know allows our end users and customers to have more efficiency greater experiences and in some cases, new experiences that haven't even been factored in as yet right. Just like how are the internet you know per se transform retail and so for me I am really looking forward to unlocking that which is.

Mike Burkland: Yeah. Andy?

Andy Dignan: Yeah, I can go ahead and take that one. So we're seeing a lot of success in healthcare and retail, and we've talked about a lot of expansion within our customer base. And so I think what, you know, really what we're seeing is customers wanting to take that next evolution from their CX strategy to AI, and the challenges that most of them have historically seen is their data is not in a good spot, right? We've talked about this for a while. Your AI strategy is only good as your data strategy. And so we put a lot of effort into focusing on making sure that our customers understand where their data needs to be to go deliver on those use cases.

How do we actually increased the Tam by doing new things with AI and traditional cash and providing customers new opportunities to the second part of the question on where do we go from here and you know which pieces, it's a little bit early I'm still you know getting my my feet around our product and our road maps, but what is it.

Andy Dignan: And over time, as we've talked about, you know, like the customer example today, a customer expanding their AI, we've proved that time and time again over the last couple of years. And so now they're making their bets for 3- and 5-year renewals based on, you know, what we've demonstrated, our success, and their confidence in us going into the future.

Really exciting is you know this that we put out which is we've already done the $100 million and out of our of the eye and it's growing so we have proof points to back up this thesis that AI is growing its happening fast and its happening both in our in our new logo as well as in the existing base.

Terry Tillman: Got it. Makes sense, guys. Thank you.

Great. Thank you. Thanks.

Operator: Okay, our next question comes from Catherine Trebnick of Rosenblatt. Catherine, you can go ahead and unmute and ask your question now.

Okay. Our next question comes from Ryan Macwilliams of Wells Fargo. You can go ahead and on mute at this time.

Catharine Trebnick: Thank you. Congratulations, Mike and Amit, and back to the AI question. So what percentage of your enterprise base is adopting the AI, especially looking at AI Agents, Assist, and Genius Routing? What I'm trying to really understand is, what's the runway going forward for enterprise adoption? Thanks.

So.

This is for Mike, Mike I mean, what a great run and congrats I mean, I just think back to probably you know.

15 years ago, when people said that the biggest contact centers in the world would never moved to the cloud right and now you guys have customers that are over 10000 seats and some of the largest fortune 50 companies that are out there. So.

Mike Burkland: Yeah, I'm happy to start. Hello, Catherine. Look, I think it's early days in terms of kind of end-to-end full penetration within our base. Almost every single one of our customers is obviously right; every enterprise in the world is looking at AI and making AI decisions, but it's early in terms of the rollout in a lot of these cases. And again, I talked about our end-to-end platform a lot, and the fact that, you know, our customers are rolling out our AI and our CCaaS in production environments, not just in proof of concepts, not just in, you know, slick demos, but in real production environments. But it's still early days in this opportunity. As I talked about, we've crossed $100 million in ARR and AI, but we're just getting started.

People have been wrong before in the contact center industry about what's coming next.

As you kind of take.

Take a step back today, what do you think people are missing right now in terms of the contact center opportunity like I know it feels like to see is the seats or question and like you know where some of these.

Interactions will be but like what do you think you know the contact center a five years from now means for five months.

Well, Thanks, Ryan I appreciate the comments and look I think you're absolutely right I mean, I remember when we went public in 2014.

You know every one really just question, whether or not large enterprises would shift to the cloud and obviously where.

We're 40% cloud today is 60% still are on premise, it's gonna be a multiyear opportunity for us to continue that trend, but things have changed the AI opportunity is massive we've invested and we were early in this investment with our inference acquisition we've built.

Catharine Trebnick: Okay. Thank you.

Operator: Okay, our next question comes from Peter Levine of Evercore. Peter, you can go ahead and unmute at this time and ask your question.

Peter Levine: Thank you, guys. Mike, you know, best of luck, and Amit, welcome aboard. You know, maybe, you know, how do you think about the risk that, you know, the LLM native platforms bypass, you know, the traditional CCaaS, you know, architecture entirely, right? Like, in what scenario does an enterprise build their own AI agent directly on top of, like, an OpenAI, Anthropic, right? I guess the question is, like, what core functionality does Five9 provide that can't be replicated? Meaning, like, what's the hardest to kind of disintermediate from you guys? Is it the workflow, the infrastructure, the compliance, the data? Like, help us think through, like, the risk that these platforms are gonna come in overnight and replace you guys.

A lot of capabilities on top of that and I think what.

Think what people are starting to realize that I'm not sure you know I think we're just at the very beginning of this.

Realization quite frankly across you know the investors sat and cross.

Our customers already see this but I think the investor community is starting to learn that.

This this end to end platform advantage that we have in some other players have think of yeah. Again five nine is that the system of engagement of a system of interaction the system of action as opposed to say a CRM system, which is kind of a system of record and I think it's important to understand that we're on the front lines were right there.

Mike Burkland: Yeah, very good question, Peter, and I'll start, and you guys feel free to chime in. Again, we talk about our platform advantages, mainly the data. Data advantage is number one, and it's conversational data, and it's historical and real-time conversational data. It's also this orchestration capability across all channels and across any back end, you know, whether it's AI on the back end handling this interaction or whether it's a human agent. Being able to orchestrate across this entire interaction set is an absolute competitive moat. And look, we're gonna continue to have advancements by LLMs, but I've said this even two years ago, you cannot run a customer service organization on an LLM. LLMs are a foundational technology that we're all leveraging to deliver applications, solutions for customer experience, and the bar is set. The bar is always going to be-

At the moment of truth with a customer in a brand.

And we havent unfair advantage because of that and providing both AI driven solutions as well as solutions for the human agents in an orchestrated fashion that is our power that is the power of our platform and it results in mechanics, personalized contextual and connected.

<unk> says that only a platform like five nine can deliver and I think that is what it's showing up in the numbers, but I think we just we're starting to talk more explicitly about those numbers Ryan and that as you know of course, he has revenue growth accelerated from seven to eight and our AI revenue growth accelerated from 41 to 50 and that is the rest.

Speak for success I'll stop there.

You really want a trusted system to give you the right answer.

It's not fun to be on the other side of a wrong answer.

Thank you guys.

I appreciate it.

Alright. Our next question comes from Terry Tillman of Twist. Terry go ahead and ask your question.

DJ Hynes: ... you know, there's an orchestration capability of these on-premises solutions that we replace. They're supporting thousands of human agents and now thousands of AI agents in the future. And that orchestration capability is really isolated to these end-to-end platforms like Five9.

So as John Carlin on for Terry and I. Appreciate the question congrats on the strong quarter and I know.

You guys were talking about the strong adoption for the newer features that you guys rolled out and I was just wondering you know what sectors were seeing the highest uptake for those features and maybe you can talk about what customers are kind of saying was their biggest pain point and like how has that changed over the last few months.

[Analyst] (Evercore): Good. Maybe, Brian, can you just help us understand the $100 million in AI revenue, what percentage of that is, like, seat-based, usage-based? Like, just help us understand what makes up that $100 million.

Yeah, and yeah, I can go and take that one so we're seeing a lot of success in health care and retail and we've talked.

Bryan Lee: Yeah. So our $100 million of enterprise data revenue is all consumption or capacity-based. So the way it works is that we charge for a block of committed units, whether that's minutes, or gigabytes, or whatever it may be, and then anything above that would be overage. So it is absolutely consumption-based, and yeah, and gaining a lot of traction there.

But a lot of expansion within our customer base and so I think what it really what we're seeing is customers wanting to take that next evolution from their CX strategy to AI and the challenges that most of them are have historically seen as their data is not in a good spot right. We've talked about this for a while.

[Analyst] (Evercore): Thank you, guys.

We had to use only good as your data strategy and so we put a lot of effort into focusing on making sure that our customers understand where their data needs to be to go deliver on those use cases and over time as we've talked about like the customer example, today a customer expanding their AI. We've proved that time and time again over the last couple of years and so now they're making their bets for three and five years.

Operator: Okay, our next question comes from Samad Samana from Jefferies. Samad, you can go ahead and unmute at this time.

Samad Samana: Good evening. I'll echo the words of my peers. So congrats, Mike, and great to be working with you, Amit. Just, I guess a question, Brian, as I think about the guidance and how you're thinking about the kind of the first half versus the second half, how much of that is influenced by the timing of either large logos that were still in the backlog, whether you know, so let's call it the large pharmaceutical company or the large logistics company being fully live, versus how much of that is AI revenue ramping? And have you made any adjustment to the guidance algorithm to account for maybe the change in revenue being more consumption-based versus seat-based? Just help us understand kind of the guidance mechanics.

Based on what we've demonstrated in our success and their confidence in us going into the future.

Got it makes sense guys. Thank you.

Yeah.

Okay. Our next question comes from Katherine Cabinet erosion, but how soon you can go ahead and ask your question now.

Thank you congratulations Mike and I met and now back to the AI question. So what percentage of your enterprises adopting the AI, especially looking at AI agent assist N genius routing.

Trying to really understand is what's the runway going forward and for our enterprise adoption. Thanks, Yeah, I'm happy to start Hello, Kathryn what I think it's early days in terms of kind of end to end full penetration within our base almost every single one of our customers is obviously right.

Bryan Lee: Yeah, absolutely. If you think about $1.6 billion revenue, we're guiding to a midpoint of $1.254 billion. That essentially, for the year, implies incremental revenue of $105 million. I'll kind of talk about that in the form of the contributions from, you know, DBRR versus backlog versus new logo bookings for the year. If you look at DBRR first, the LTM rate, we exited 2025 at 105%, and we expect that to stabilize in the first half with minor fluctuations in either direction, but then inflect in the second half, right? That alone makes up about two-thirds of that $105 million of incremental revenue. The remaining third is actually fully covered by the backlog that we have. Essentially, there's...

Every enterprise in the World is looking at AI, and making decisions, but it's early in terms of the rollout and a lot of these cases and again I talked about our end to end platform a lot and the fact that you know our customers are rolling out our AI and our CCAR in production environments.

Not just in proof of concepts not just in you know select demos, but in real production environments and.

Bryan Lee: And that has contingencies built in as well. So there's essentially no dependencies on the new logo bookings for the year. And the backlog, as you said, it is combined with both new logo bookings that we've already won, as well as install-based bookings that we've won that have ramp associated with it, and those are turning into revenue throughout the year. We have great visibility into those, but every single customer in that backlog has a unique schedule of ramp. And, and it's this year happens to be much more back-end loaded, which is why there's that acceleration to double-digit growth in the back half of the year.

But it's still it's still early days in this opportunity.

As I talked about we've crossed 100 million in a R. R and AI, but it's we're just getting started.

Okay. Thank you.

Okay. Our next question comes from Peter Levine of Evercore. Peter You can go ahead and unknown at this time and ask your question.

Great. Thank you guys, Mike Best of luck and Amit Motherboard, you know maybe you don't.

How do you think about the risk that you know the MLM native platforms bypass the traditional see Cas architecture entirely right.

Bryan Lee: If you think about, you know, consumption versus seat-based, so our AI portfolio is all consumption and capacity-based, as I talked about earlier, and that's gonna continue to be a significant driver of growth throughout the year. It's got ebb and flow, as I mentioned earlier, but it'll be the fastest growing part of our portfolio.

What scenario, there's an enterprise build their own AI aging directly on top of it like an opening items tropics right. I guess my question is just like what core functionality just five nine provide that can't be replicated, meaning like what's the hardest to kind of listen for me for you guys is it the workflow and infrastructure the complaints data like Hell.

Samad Samana: Then maybe just a follow-up. On the AI revenue, the $100 million for enterprise AI rev is very impressive. Can you just maybe help us understand how much of that is maybe allocated toward, let's call it, like, next-gen solutions that you guys have rolled out and maybe, like, call it the last 12 to 18 months, versus maybe what was foundationally from, like, an inference or something that you had kind of in a prior period, just to help understand where the momentum is inside of the portfolio. Thank you again for taking my questions.

US think through like the risk that these platforms are going to come in overnight to replace you guys. Yeah very good question, Peter and I'll start and you guys feel free to chime in.

Talk about our platform advantages, mainly the data the data advantages number one and it's conversational data and its historical and real time conversational data. It's also this orchestration capability across all channels and across any backend you know whether it's AI on the backend.

Bryan Lee: Yeah, I'm happy to start, and then others can chime in. So if you look at the composition of our AI revenues, the two biggest ones are our AI Agents as well as Agent Assist, and then followed by, you know, workflow automation and a lot of other smaller products that are growing very fast, but still very small in nature. So and AI Agents, of course, we're gaining significant traction in terms of, you know, the GenAI base, as well as Agent Assist that's using GenAI as well. So we haven't given the exact mix, but of course, there's really strong momentum and acceleration that is happening across the board.

Handling this interaction or whether it's a human agent being able to orchestrate across this entire interaction sat is an absolute competitive moat and luck.

We're going to continue to have advancements by L. O EMS, but I've said this even two years ago.

You cannot run a customer service organization on an L. L. M. L. L. M. So our foundational technology that we're all leveraging to deliver applications solutions for customer experience and the bar is set the bar is always going to be.

Operator: All right, our next question will come from DJ Hynes of Canaccord. DJ, you can go ahead and unmute at this time and ask your question.

There's a there's a there's an orchestration capability of these on premise solutions that we see that we replace their supporting thousands of human agents and now thousands of AI agents and in the future and that orchestration capability is really isolated to these end to end platform.

DJ Hynes: Awesome. Hey, guys. Well deserved, Mike. We'll miss you on these calls, but I know clearly you still have an impact on the business from the chairman seat, so look forward to that. Amit, good to see you again. Look forward to working with you. I got two questions. Brian, I'm gonna start with you. The AI revenue growth acceleration, I suspect that's just a function of what we talked about last quarter, right? That lag between bookings to kind of when it hits the PNL. And if that's right, I mean, AI bookings have been growing quite a bit faster, right? I think 80% last quarter, 100% this quarter. That tells me AI revenue growth should continue to accelerate. So is that correct?

Arms like five nine.

Maybe Brian can you just help us understand $100 million AI revenue what percentage of that is like sea based UC space, but just help us understand what makes up that.

So our $100 million of enterprise data revenue is all consumption or capacity based so the way. It works is that we charge for a block of committed units, whether that's minutes gigabytes or whatever it may be and then anything above that would be overage. So it is absolutely consumption based and yeah in Guinea.

DJ Hynes: And then the second question, I don't know if it's for you, Mike or Andy, but just talk a little bit more about the Google partnership, right? Like, what that could mean for the business. What are they using from you? What are they-- What role does Gemini play in that? Just how do the pieces fit together and what it could mean.

A lot of traction there.

Thank goodness.

Okay.

Bryan Lee: Yeah, so I'll start, DJ. So thanks for the question. So yes, you're exactly right. We've been talking about enterprise AI bookings growing, you know, either 80%+ for the last 3 quarters, and we said, if we string together multiple quarters like that, we'll start to see the acceleration happen, and we are starting to see that in Q4, where it accelerated from 41% to 50%. Now, going forward, as I mentioned earlier, there will be ebbs and flows, but we do anticipate that if we can continue that momentum on the booking side, you know, they sit in backlog for a little bit, and then they start converting into revenue, and that's what's baked into our guidance. And, you know, the acceleration that we're seeing in the back half of 2026-...

Okay. Our next question comes from.

Samad Samana Jefferies. Some of them you can go ahead Amit.

Jim.

Good evening I'll Echo the words of my peers, So congrats Mike and great to work with you on it just a I guess a question Brian as I think about the guidance and how you are thinking about the kind of the first half versus second half how much of that is influenced by the timing of either large logos that we're still in the back.

Log whether you know let's call it the large pharmaceutical company with a large logistics company being fully lives.

Versus how much of that is AI revenue ramping and have you made any adjustment to the guidance algorithm to account for maybe the change in revenue being more consumption base versus seat base. So just help us understand kind of the guidance mechanics.

Bryan Lee: It's driven by not just AI, though also by, of course, CCaaS in our backlog that's converting to revenue as well. So we're seeing momentum on both sides.

Mike Burkland: And I'll start on Google, Andy, please chime in, and, I'll just give you one high-level comment. DJ, thanks for the comments, too. Look, it's been a pleasure, working with you and the rest of the analyst community. Look, the Google partnership, in my opinion, is something very significant for Five9, and, what I love about the partnership is it was born out of success that we were having together in the market with large enterprises, and it was more than just, an alignment on paper. This was driven, as I said, by success in the market that we're having with them, and that's, in my opinion, at least, those are the kind of partnerships that really flourish long run, in the long run. So Andy, feel free to-

Yeah, absolutely. So if you think about 0.6 revenue, we're guiding to a midpoint of one point to five $4 billion. So that essentially for the year implies incremental revenue of about $105 million. So I'll kind of talk about that in the form of the contributions from the D. V. R R versus backlog versus new logo code gets for the year. So if you.

You look at DVR first the LTM rate, we exited 2020, 505% and we expect that to stabilize in the first half with minor fluctuations in either direction, but then inflect in the second half and that alone makes up about two thirds of that $105 million of incremental revenue. So the remaining third.

Andy Dignan: Yeah, if I look at the technical side of it, you know, the solution, and this is real joint solution. This is hands-on keyboards, engineers at Google and Five9, building this joint solution together. We've already had, you know, to Mike's point, success. And, you know, we look at the opportunity that filling the pipeline from this coming together is really, really strong. And so you're gonna-- obviously, it's gonna be our CCaaS environment. We've been leveraging the Google and Gemini applications and foundational models to build our own AI products, and so we're gonna continue to build out what that joint solution looks like together.

It's actually fully covered by the backlog that we have and so essentially there's.

That has contingencies built in as well so there's essentially no dependencies on the new logo programs for the year and the backlog as you saw.

It is combined with both new logo bookings that we've already won as well as installed based bookings that we bought that have a ramp associated with it and those are turning into revenue throughout the year, we have great visibility into those but every single customer in the backlog is that you need to schedule a brand.

Arjun Bhatia: Excellent. Thank you, guys.

Operator: Our next question comes from Will Power of Baird. Will, you can go ahead and unmute and ask your question at this time.

And it's this year happens to be much more backend loaded which is why there is that an acceleration to double digit growth in the back half of the year and if you think about consumption versus.

[Analyst] (Baird): Great, thanks. This is Yanni Simolis for Will Power, and I'll echo the congratulations to Mike and Amit. And I'd love to hear a little bit about what you're seeing across the different verticals that you serve. You know, if you could just discuss if any are strengthening more than others, or if there are any that you expect to help power that second half acceleration more than others. And in particular, like, for some of your bigger verticals, like your health vertical and maybe consumer, it'd be great to get an update on what you're seeing, and then what you're factoring into the guide for 2026.

C pace so our portfolio is.

All consumption capacity.

I talked about earlier and that's going to continue to be a significant driver of our growth throughout the year, there's kind of ebb and flow as I mentioned earlier that'll be the fastest growing part of our portfolio.

And then maybe just a follow up on the AD revenue had a 100 million for enterprise era of his very impressive can you just maybe help us understand how much of that is maybe allocated towards let's call. It like next Gen solutions that you guys have rolled out and maybe like call. It. The last 12 to 18 months versus maybe what it was foundational it from like an inference or something.

Bryan Lee: Yeah, Yanni, so thanks for the question. And seasonality, if you look at our consumer and healthcare vertical in Q4, which are the two seasonally strongest ones, typically. Now, if you recall, we mentioned that we were expecting minimal seasonal uptick in Q4. In reality, what happened was the uptick was a little bit more favorable than what we were anticipating, but still weaker if you compare it to Q4 of 2024. And if you break that down between subscription and telecom usage revenue, the usage portion, telecom usage portion, was much weaker than last year, which is why, as a percent of revenue, you saw it step down by 1 percentage point quarter to quarter, versus rewind back to Q4 2024, it actually stepped up as a percent of revenue, right?

And then that you had kind of been a prior period just to help understand where the momentum is inside of the portfolio. Thank you again for taking my questions.

Yeah, I'm happy to start and then others can chime in so if you will.

Look at the composition of our revenue the two biggest ones are our agents as well as agent assist and then followed by workflow automation and a lot of other smaller products that are growing very fast, but it's still very small in nature. So and agents of course, we are gaining significant traction in terms of the Jennie O U S.

Well as agent assist us using gen as well so we haven't given the exact mix but of course there is.

Bryan Lee: But these dynamics means that in Q1, the seasonal downtick that always happens in those two verticals are actually going to be a little bit more muted than what we saw a year ago, and that's exactly what's baked into our guidance. If you look at our Q1 revenue guide, the sequential change is flat this year. But if you compare that to a year ago, it was -2% sequential guide, right? And so going forward for the rest of 2026, and by the way, all the other... We track 17 verticals, the other 15, they're pretty much in line with typical sequential growth rates for Q4. And going throughout 2026, what we're assuming is that the seasonality, the macro conditions are all very similar to what we saw in the fourth quarter.

Really strong momentum and acceleration that's happening across the board.

Yeah.

Alright, our next question will come from DJ Hynes of Canaccord did you you could go ahead and at this time and ask a question.

Awesome, Hey, guys well deserved Mike we'll Miss you on these calls, but I know clearly you still have an impact on our business from the the chairman seat. So look forward to that and it's good to see you again and look forward to working with you.

I've got two questions, Brian I will start with you that the AI revenue growth acceleration I suspect.

That's just a function of what we talked about last quarter right that lag between bookings to kind of when it hits the P&L and if that's right I mean, <unk> bookings have been growing quite a bit faster right I think 80% last quarter and represent this quarter that tells me AI revenue growth should continue to accelerate so is that a is that correct and then the second question I don't know if it's for you Mike.

Andy Dignan: I can add in on some of the segments. I mean, our three biggest verticals are financial services, healthcare, retail, and we're truly seeing the adoption in those spaces, right? I think what it points to is the platform advantage that we do have. Healthcare, financial services, just from a regulatory perspective, security, you know, integration. We talk about the complexity of the CCaaS deployment. On average, you know, we do 24 integrations, you know, up to 100 integrations at times, and so I think the bar is really high for them to adopt AI. I think it just shows, you know, the fact that we're building true scalable enterprise AI solutions. It's, you know, it's a testament to the success the teams had building the products.

Or Andy, but just talk a little bit more about the Google partnership right like what that could mean for the business what are they using from you what are they what role does Gemini play I'm not just how the pieces fit together and what it could mean.

Yes, I'll start D. J. So thanks for the question. So yes, you're exactly right we've been talking about enterprise AD bookings growing either 80% plus for the last three quarters and we said if we use trained together multiple quarters like that will start to see that acceleration happen and we are starting to see that in Q4, where it accelerated from 41% to 50%.

[Analyst] (Baird): Thank you.

Operator: Our next question comes from Jackson Sennet of KeyBanc. You can go ahead and unmute at this time and ask your question.

Mike Burkland: Hey, guys, this is Jack Nicholson for Jackson Sennet. Thanks for taking the question. I was wondering if you could talk about new logo, large customer pipeline, and how influential, Five9's AI features, help land new customers. And then, as a follow-up, could you talk about how AI helps, dollar-based retention and then the dynamics of upselling in, renewal contracts?

No going forward as I mentioned earlier, there will be ebbs and flows but we do anticipate that if we can continue that momentum on the bookings side. They sit in backlog for a little bit and then they start converting into revenue that's what's baked into our guidance and the acceleration that we're seeing in the back half of 'twenty six.

It's driven by not just say I, though also by of course he turns in our backlog that's converting to revenue as well so we're seeing momentum on both sides.

Andy Dignan: Yeah, we feel good about our, you know, in terms of our, our large deal pipeline, we feel good about, you know, the levels continuing to be strong. And obviously, AI is a big part of why they're choosing Five9. And so both in landing new logos, and then as you've heard us talk about, you know, $10 million plus deals over the last couple of quarters that are expanding their spend with us. And so I think it's kind of across both, both segments.

And I'll start on Google and please chime in and then there's.

Just give you one one high level comment D. J. Thanks for the comments to what it's been a pleasure working with you and the rest of the analyst community.

The Google partnership in my opinion is something very significant for five nine and what I love about the partnership as it was born out of success, we were having together in the market with large enterprises and it was more than just an alignment on paper. This was driven as I said by success in the market that we're having with.

Bryan Lee: Yeah, and I'll just say from a financial perspective for DBRR, when we talked about enterprise AI bookings doubling during the quarter, it wasn't just on the new logo side, it was both new logos and install base. So we're seeing a lot of momentum there, and that's part of what's going into the backlog and then driving that acceleration on a total revenue basis, but also from a DBR perspective in terms of an inflection upward in the second half.

And that's the same in my opinion at least those are the kind of partnerships that really flourish long run in the long run so Andy feel free to if I look at the technical side of it the solution and this is real joint solution. This is hands on keyboards engineers at Google and five nine building. This joint solution together, we've already had you know to Mike's point success and you know we look at the.

Mike Burkland: Thanks, Jack.

Bryan Lee: Thank you.

Operator: Our next question comes from Arjun Bhatia. Arjun, you can go ahead and unmute and turn on your camera at this time.

The opportunity that that are filling the pipeline from this coming together is really really strong and so you're going to I was just gonna be RC has environment, we've been leveraging that Google and Gemini.

Arjun Bhatia: All right, perfect. Thanks, guys. I had two, I guess, two quick questions. First, just on the NRR or uptick,

Applications and.

Foundational miles to build our own AI products and so we're going to continue to build out what that joint solution looks like together.

[Analyst] (William Blair): ... how, like, you know, when you're expecting to inflect in the back half, obviously, that's a trailing twelve-month metric, but where exactly kind of are you seeing the upsell, cross-sell? Is that coming through on the AI front? Is it core CCaaS continuing to pick up pace or, you know, on-prem migrations, right, from legacy, kind of Cisco, Avaya? And then, just a follow-up on the Google question. Are you like, is it exclusive with Gemini, are you using multiple models? Can you just talk about how you've built your stack a little bit?

Excellent. Thank you guys.

Our next question comes from will power of Baird well you can go ahead and ask a question at this time.

Great. Thanks. This is John it's Melissa for Willpower, and I'll Echo the congratulations.

Mike and I met them and I'd love to hear a little bit about what you're seeing across the different verticals that you serve.

You could just discuss if any are the strengthening more than others or if there are any of the you expect to help power that second half acceleration more than others and in particular like for some of your bigger verticals like your home vertical maybe consumer it'd be great to get an update on what Youre seeing and then what you're factoring into the guide for 2026, yeah Yeah.

Bryan Lee: Yeah, Arjun, I'll answer the first part of the question. So if you look at DBRR, I do wanna point out that the spot rate in Q4 actually stepped up from Q3 to Q4, and that was driven by the conversion of install-based bookings in our backlog to revenue during the quarter. So even though the last twelve months coming into the last quarter actually stepped down on a rounded basis from 107 to 105, which in actuality was only a little bit over 1 percentage point, that was more of a calculation where, you know, that's an LTM figure, like you said, right? Where it was dropping off Q4 2024, where it benefited from very strong seasonality and our largest customer finishing its multi-year ramp at that time.

Thanks for the question and seasonality.

If you look at our consumer and health care vertical in Q4, which are the two seasonally strongest ones. Typically now if you recall, we mentioned that we're expecting minimal seasonal uptick in Q4. It in reality what happened was the uptick was a little bit more favorable than what we were anticipating but still weaker compared to Q4 of 'twenty.

Florida, and if you break that down between subscription and telecom usage revenues. The usage portion telecom music portion was much weaker than last year, which is why as a percent of revenue you saw a step down by one percentage points quarter to quarter versus reverting back to Q4 2004, it actually stepped up as a percent of revenue right, but these dynamics.

Bryan Lee: So we're already going into the year with a step up in, from Q3 to Q4. And of course, you know, it'll stabilize and fluctuate in either direction slightly. But the driver of that inflection upward is really driven by both core CCaaS and AI. So we saw the momentum in Q4. We've been talking about the acceleration on both sides. And if you look at the backlog, yes, AI has been gaining significant momentum, and it's consistently been above 20% of enterprise net new bookings. But core CCaaS, it's always attached to core CCaaS in a vast majority of deals, and that's also sitting in our backlog. So really, the acceleration will be coming from both.

It means that in Q1, the seasonal downtick that always happens in those two verticals are actually going to be a little bit more muted than what we saw a year ago and that's exactly what's baked into our guidance. If you look at our Q1 revenue guide the sequential change is flat this year, but if you compare that to a year ago was negative 2% sequential guy right.

Andy Dignan: On the LLM question, the Gemini, I mean, we made a decision seven years ago, and that rings true, that we believe that sort of a multiple engine, multiple LLM is the way to build the products. You know, we sort of saw where this was going, which is these LLMs are continuing to kind of one-up each other, right? And, you know, the other thing that's really important is each one of them sometimes deliver specific capabilities, right? You could have a single use case and use multiple LLMs as part of that. Now, certainly as part of the joint go-to-market with Google, we're gonna be leveraging the Gemini, right? It's had a lot of really strong performance. We have a team within engineering and our services teams that are constantly benchmarking these LLMs as well.

Going forward for the rest of 2026 and by the way at the non all the other week track 17 verticals. The other 15, they're pretty much in line with typical sequential growth rates for Q4 and going throughout 2026, we're assuming is that the.

The seasonality the macro conditions are all very similar to what we saw in the fourth quarter.

And I can add in on some of the segments I mean, our three biggest verticals are financial services health care retail and we're truly seeing the adoption in those spaces right and I think what it points to is the platform advantage that we do have health care financial services, just from a regulatory perspective security integration that we talk about the complexity of the C cap deployment.

Andy Dignan: And so that brings us really to allow us to really continue to innovate, you know, on top of what's going on in the market.

On average we do 24 integrations, you know up to 100 integrations at times and so I think the bar is really high for them to adopt AI I think it just shows you that with the fact that we're building true scalable enterprise AI solutions.

[Analyst] (William Blair): All right. Perfect. Appreciate the color. Thanks, guys.

Andy Dignan: Thank you.

Operator: Our next question comes from Eli- Elizabeth Porter of Morgan Stanley. You can go ahead and unmute and ask your question at this time.

Elizabeth Porter: Great. Thank you, so much for taking the questions, and I just wanna echo the congratulations to, to Mike and Amit. I guess, yeah, the question from our side is, like, I think in the past, you guys have described kind of an AI fog, among enterprise customers that having kind of lifted through 2025. I guess just in light of some of the splashy announcements from the Frontier labs or some of the upstarts in the space, you know, has that fog stayed clear as we, we enter 2026, or are you seeing any sort of lengthening in sales cycles as a result?

That was a testament to this gets us the teams had built in the products.

Thank you.

Yeah.

Our next question comes from Jackson Ader of Keybanc you can go ahead and at this time and ask a question.

Okay.

Hey, guys. This is Jack Nicholson from Jackson Ader. Thanks for taking the question I was wondering if you could talk about new logo large customer pipeline and how influential five names AIG features helped land new customers and then as a follow up could you talk about how AI helps our dollar based retention and in the dynamics.

Mike Burkland: Yeah, I'll start, and Andy, please chime in. Look, I think it's safe to say that every company in the world is prioritizing their AI decisions, right? And that's not going away. The fog that we saw, you know, predominantly in the kind of middle of 2024, or sorry, yeah, a while back, was really just the lack of CCaaS decision-making because of that. But we still obviously, you know, every enterprise out there is thinking about AI first, and we're now part of those conversations. It's so important for us to be front and center in the CX part of those AI decisions, and our sellers have become the experts.

Of Upselling in our renewal.

Renewal contracts.

Yeah, we feel good about our you know in terms of our large deal pipeline, we feel good about the levels continuing to be strong and obviously AI is a big part of why they're choosing five nine and so both in landing new logos and then as you've heard US talk about you know $10 million plus deals over the last couple of quarters that are expanding their spend with us and so I think it's.

It kind of across both the segments and I'll, just say from a financial perspective for a D var or when we talk about enterprise bookings doubling during the quarter. It wasn't just on the new logo side. It was both new logos and install base. So we're seeing a lot of momentum there and that's part of what's going into the backlog and then driving that acceleration on the total revenue.

Mike Burkland: We've got solutions that we can lead with from an AI perspective, and it's a great way for us to go to market to a market that is pulling a lot of attention around AI.

[noise] basis, but also for our D var perspective, and parents about inflection upward in the second half.

Andy Dignan: Yeah, in terms of the lengthening of sales cycles, I mean, you know, outside of that fog, which was a lot of times customers were coming off and doing a lot of proof of concepts, right, that weren't successful. We kind of saw that as an opportunity, like Mike said, to really up our game in terms of enabling our teams, but really more so very focused on having specific vertical-driven outcomes that we have. You know, we have customers who deployed it before, and so that, that's allowed us to, in my opinion, sort of accelerate some of our sales cycles both on the new logo side and obviously, you know, the install base side, customers continuing to just buy more of our AI.

Thanks Jack.

Thank you.

Our next question comes from Zoom Vasil.

You can go ahead and.

And then on your camera at this time.

Alright, perfect. Thanks, guys.

I had two I guess two quick.

Two questions first just on the NR or uptick.

How like when you're expecting to inflect in the back half obviously, that's a trailing 12 month metric, but where exactly you kind of are you seeing the up sell cross sell is that coming through on the AI front is of course, the cash continuing to pick up pace or on Prem migrations right from legacy <unk>.

Elizabeth Porter: Great. Thank you so much.

Operator: Okay, our next question comes from Gil Luria of B.A. Davidson. Gil, you can go ahead and unmute and ask your question at this time.

[Analyst] (D.A. Davidson): This is Clark Wright on for Gil Luria. Thinking about the medium-term financial framework, you already are effectively in line with all the metrics, excluding gross margins and revenue growth. How do you think about the impact of AI adoption on revenue growth and the increasing costs that can weigh on gross margins going forward?

Cisco Avaya and then just a follow up on the Google question are.

Are you like is it exclusive of Gemini or using multiple models can you just talk about how you built your stack a little bit.

Yeah, Arjun I'll answer the first part of the question. So as you know.

D var or I do want to point out that the spot rate in Q4 actually stepped up from Q3 to Q4 and that was driven by the conversion of installed based bookings and our backlog to revenue during the quarter. So even though the last 12 months coming into last quarter actually stepped down at around the basis from one of them for one five which in actuality.

Bryan Lee: Yeah, so I'm happy to answer that. So if you think about enterprise AI revenue growth, what we've always said is that there's a significant opportunity out there. We've been very successful in terms of the bookings growth rate that you've seen, and if we can continue that, it's definitely upside to the revenue forecast and guidance that we have out there. And it's a huge TAM expander for us, right? And we continue to execute very strongly there. Now, in terms of margins, if you look at our AI agents, which is the biggest part of our enterprise AI portfolio, they actually we have gross margins in the high seventies and eighties. And so, and that-

It's only a little bit over one percentage point that was more of a calculation where you know that's an LTM figure like you said right, where it was dropping off Q4, 'twenty four where it benefited from very strong seasonality and our largest customer finishing its multi year round at that time, so we're already going into the year with Mr.

From Q3, and Q4 and of course, you know that will stabilize and fluctuate in either direction slightly but the driver of that inflection upward is really driven by both of course, he has and yeah. So we saw the momentum in Q4, we've been talking about.

[Company Representative] (Five9): ... AI portion, as it becomes a bigger mix of our revenue, we expect that to be a accretive part of our overall gross margin trajectory going forward.

Celebrate on both sides and if you look at the backlog, yes, AI has been gaining significant momentum and has consistently been above 20% of enterprise net new bookings.

Mike Burkland: Thank you.

Operator: This concludes the Q&A portion of our call. I will now hand the call back over to CEO, Mike Burkland, for closing remarks.

Of course, so you can it's always attached of course he has invested in a vast majority of deals and that's also sitting at our backs.

Mike Burkland: Chairman, to be correct, Amit is our new CEO. And, look, I just want to thank everybody for joining us. I also want to just say, personally, thank you to all the analysts and all our shareholders. It's been a pleasure, my pleasure, to work with all of you. And, Amit, welcome aboard again. I am so bullish on our future, and a big part of that bullishness is because you're here as our next CEO.

So really the acceleration will be coming from both.

And I don't know on the L. O M question. The Gemini I mean, we we made a decision to seven years ago that brings true that we believe that a sort of a multiple engine multiple L. O M is the way to build the products and we sort of saw where this was going which is these are llm's are continuing to kind of one off each other right and you know the only thing that's really important is each one of them sometimes delivered.

[Company Representative] (Five9): Thank you.

Mike Burkland: Welcome. Welcome. Thanks, everyone.

[Company Representative] (Five9): Thank you.

I think the capabilities right you could have a single use case and use multiple.

L O M as part of that now certainly as part of the the joint go to market with Google, We're gonna be leveraging our Gemini right. There's a lot of really strong performance, we have a team within engineering and our services teams that are constantly benchmarking. These ela lens as well and so that brings us really to allow us to really continue to innovate on top of what's going out in the market.

Alright, perfect I appreciate the color thanks, guys.

Our next question comes from Elizabeth quarter with Morgan Stanley You can go ahead and ask a question at this time Chris.

Chris. Thank you so much for taking the questions and I just wanted to echo the congratulations to it to make it happen I guess the question from our side is like I think in the past you guys have described kind of an AI fog.

Enterprise customers that haven't kind of lifted through 2025, and I guess just in light of some of the splashy announcements from the frontier labs or some of the upstart in this space.

At Fox T as clear as we enter 2026 are you seeing any sort of lengthening in sales cycles as a result.

Yeah, I'll start and Andy please chime in look I.

I think it's safe to say that every every company in the world.

<unk> is prioritizing their AI decisions right and that's not going away.

Fog that we saw you know predominantly in the kind of middle of 'twenty four is that Oh, sorry, yeah.

Yeah.

A while back was really just the lack of C cast decision, making because of that but we still obviously.

Every enterprise out there thinking about AI first and we're now part of those conversations. It's so important for us to be front and center in the CX part of those AI decisions and our sellers have become the experts we've got solutions that.

Can we can lead with from an AI perspective, and it's a great. It's a great way for us to go to market to a market that is that is pulling a lot of attention around AI, yeah and in terms of the lengthening of sales cycles I mean outside of that talk which was a lot of times customers were coming off of doing a lot of proof of concepts right that weren't successful.

We kind of saw that as an opportunity like Mike said, you're really up our game in terms of enabling our teams, but really more so very focused on having specific vertical driven outcomes that we have you know we have customers who deploy it before and so that really kind of came through and so that's allowed us to my opinion sort of accelerate some of our sales cycles, both on a new low.

Beside and obviously you know the installed base of customers continuing to just buy more of our yeah.

Great. Thank you so much.

Okay. Our next question comes from Gil Luria of D. A Davidson go you can go ahead and ask a question at this time.

That is correct right on for Galleria They give it the medium term financial framework you already are effectively in line with all the metrics, excluding gross margins and revenue growth. How do you think about the impact of AI adoption on revenue growth and improved zinc costs that can weigh on gross margins going forward yes.

Yeah, So I'm happy to answer that so if you think about enterprise AI revenue growth. What we've always said is that there's a significant opportunity out there we've been very successful in terms of the bookings growth rate that you've seen.

If we can continue that is definitely upside to the revenue forecast and guidance that we have out there and we it's it's a huge Tam expander for US right and we continue to execute very strongly there now in terms of margin if.

If you look at our agents, which is the biggest part of our enterprise AI portfolio. They actually we have gross margins in the high Seventy's and Eighty's and so and that.

A portion as it becomes a bigger mix of our revenue, we expect that to be a.

A accretive part of our overall gross margin trajectory going forward.

Thank you.

Yeah.

This concludes the Q&A portion of our call I will now hand, the call back over to CEO, Mike Brookman for closing remarks.

Chairman to be correct.

And as our new CEO and I look I just want to thank everybody for joining us I also want to just say it.

Personally thank you to all the analysts and all our shareholders. It's been a pleasure my pleasure to work with all of you and welcome.

Welcome welcome aboard again, I am so bullish on our future and a big part of that Bullishness is because youre here as our next CEO. Thank you I'll come welcome. Thanks, everyone. Thank you.

Okay.

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