Five9 is betting that the contextual data layer above AI models will be just as critical to enterprises, and potentially be the difference in return on investment.
Executives at the customer experience and communications as a service company, which reported better-than-expected fourth quarter results, fielded the typical questions about how agentic AI would impact its business. Five9 has key partnerships with the likes of Salesforce and ServiceNow. Why wouldn't the AI spoils go to Five9's much larger partners?
Five9 CEO Mark Burkland said contextual data is critical for future-proofing AI and driving returns. Here's what he said:
"Brands are learning that if they want to offer AI-driven self-service, AI agents need to be accurate and personalized. CCaaS platforms like Five9 are uniquely positioned to deliver these accurate and personalized AI agents. This is our moat and this is why we believe we will continue to win in AI for customer experience."
He said AI agents need four ingredients to deliver.
- Access to large language models, which are being commoditized.
- Contextual data about the consumer and the brand.
- Historical data on consumer interactions with the brand.
- Channels to connect consumers via self-service and an escalation path to a human.
Burkland said Five9 has taken an LLM agnostic approach to focus on the AI application layer. He said:
"We believe Five9's approach allows our customers to future-proof their AI decision. And when it comes to our competitive moat, it's clear that the layer above these engines is what matters. And that layer includes our AI applications that require business logic, that require workflows, that require important data and integrations to back-end systems. The second ingredient, contextual data is what is fed into the LLM in real time and provides true context around an interaction. This includes customer-specific details as well as brand-specific knowledge, both of which are often distributed across many back-end systems."
Burkland added that Five9 typically connects to more than 20 back-end systems in a deployment to harvest historical data as well as current customer experiences.
Five9 has partnered with Salesforce, ServiceNow, Microsoft, Verint and Google on agentic AI to combine humans and digital agents. The game plan for Five9 is to meld its CX suite with its partner platforms--CRM for Salesforce, Now Platform for ServiceNow and Verint's bot army.
Will those larger partners cut Five9 out over time? Burkland is betting they won't. He said:
"It's about contextual data. AI is only as good as the data it has access to. And our platform is a control point for a lot of that contextual data. Not just information about the customer and about the brand but also about recent interactions between that consumer and the brand.
The question at hand is whose AI is the customer going to choose. It's going to be a mix. We're very convinced of that. And the good news for us is, even if in each use case, for a given business unit that organization wants to use Salesforce for their AI. The good news is they still need access for that AI to do its job, they need access to all the contextual data in our platform."
Burkland added that big partners are helping Five9 land larger deals across verticals.
- Five9 acquires Acqueon, cuts Q3 outlook
- ServiceNow launches AI governance tools, contract management, Five9 partnership
- Unlocking the Power of AI in Customer Experience: Lessons from the Five9 CX Summit
The results
Five9 projected 2025 revenue of $1.14 billion with non-GAAP earnings of $2.58 a share to $2.62 a share. First quarter revenue will be between $271.5 million to $272.5 million with non-GAAP earnings of 47 cents a share to 49 cents a share.
For the fourth quarter, Five9 reported net income of $11.6 million, or 13 cents a share, on revenue of $278.7 million, up 17% from a year ago. Non-GAAP earnings in the fourth quarter were 79 cents a share, 9 cents better than estimates.
Five9 said its 2024 revenue topped $1 billion for the first time. The company reported a 2024 net loss of $12.8 million, or 17 cents a share, on revenue of $1.04 billion, up 14% from a year ago.
The company said separately that CFO Barry Zwarenstein is retiring and Bryan Lee will become interim CFO.
Constellation Research's take
Constellation Research analyst Liz Miller said Five9's AI strategy is focused. Here's her take:
"The real Five9 story here is the AI strategy and continued march upmarket with continued success with enterprise customers working to resolve data, workflow and engagement orchestration across a broad range of communications channels. Five9 has been laser focused on where and how AI can make an impact on all aspects of CX delivery through customer service and contact center environments, including how to leverage AI to enhance human workforces while scaling capacity with a new agentic workforce.
The Five9 Genius AI platform has been evolving quickly and arguably ahead of the market thanks to leaders like Jonathan Rosenberg refusing to settle for CCaaS AI to be limited to an intelligent bot or assistant. I’d also point to additions to their leadership team like bringing on a new Chief Product Officer, Ajay Awatramani, as a sign that Five9 intends to stay ahead of the market curve.
Five9 will have a big decision to make in 2025. Will it follow the service market and double down on trying to run the board on engagement tools and battle other commoditized solutions across marketing and sales platforms over who gets to "own" email campaigns and contact management? Or will Five9 really break out and bring their unique service-driven AI and data rich superpowers to other critical operations spaces that could use a shake up and a round of innovation? The reality here is that Five9 has done a terrific job securing the right partners and developed a robust marketplace and ecosystem that will allow it to shift and pivot to meet the needs of adjacent markets. The trick is going to be not to pick the limited spaces and places where the market is already oversaturated with options."
