Five9 Stock

Five9, Inc. and its wholly-owned subsidiaries provide intelligent cloud software for contact centers.

The company’s purpose-built, reliable, scalable and secure Virtual Contact Center, or VCC, cloud platform delivers a comprehensive suite of easy-to-use applications that enable the breadth of contact center-related customer service, sales and marketing functions. The company has become an established leader in the cloud contact center market with more than 3,000 clients. The company’s ability to combine software and telephony into a single unified platform that is delivered in the cloud creates a significant advantage.

The company’s solution, consists of its VCC cloud platform with native AI and automation capabilities, including Interactive Virtual Agent, or IVA, Agent Assist, Workflow Automation, or WFA, Workforce Engagement Management, or WEM, AI Insights and AI Summaries, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through its application programming interfaces, or APIs. The company’s VCC cloud platform matches each customer interaction with an appropriate agent resource and delivers relevant customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and improve agent productivity. The company’s solution ensures its clients always have the latest version of its software. Delivered on-demand, the company’s solution enables its clients to quickly deploy agent seats in any geographic location with only a computer, headset and broadband internet connection, and rapidly adjust the number of contact center agent seats in response to changing business requirements. Unlike legacy on-premise contact center systems, the company’s solution requires limited up-front investment, can be rapidly deployed and is maintained by it in the cloud.

The company’s sales model consists of a field sales team that sells its solution into larger opportunities and a telesales team that sells its solution into smaller opportunities. The company has developed a proven, high velocity, metrics-driven sales and marketing strategy, designed to effectively identify, qualify and close sales opportunities. To complement this go-to-market strategy, the company has developed a strategically-built ecosystem of technology alliances, solution providers and system integrator partners, which also provide sales leads, and independent software vendors to help increase awareness of its solution in the market and drive additional sales opportunities with new and existing clients. The company has also established, and are continuing to increase, its network of technology solution distributors who provide sales leads and resellers that integrate its solution into their service offerings to new clients. The company’s partner ecosystem has helped it access new routes to market and increase its penetration in domestic and international markets.

The company provides its solution through a software-as-a-service, or SaaS, business model with recurring revenue made up of subscription revenue, based primarily on the number of agent seats, and usage, based on minutes, as well as the specific functionalities and applications its clients deploy such as virtual agents.

Solution

The company delivers a comprehensive, end-to-end cloud software solution for contact centers. The company’s solution is designed to enable its customers to increase and improve the efficiency of their operations, increase revenue opportunities and business agility, and provide insights into the behaviors of their workforce and customers as it relates to customer experience. The company’s platform facilitates this through key capabilities, such as interaction routing and prioritization across channels, automation and integration of back and front end systems and the ability to leverage the power of AI through IVA and more. The company’s solution also empowers agents and supervisors through WEM. Organizations of a broad variety of sizes use its solution to improve customer service and create customer loyalty. These capabilities are offered across a wide variety of engagement channels from chat and SMS to e-mail and voice. Consumers are able to engage using their channel of choice and clients are able to facilitate fluid experiences that drive digital transformation.

The company’s agent interface is an intuitive modern browser-based design that provides easy visualization of customer profiles, context and cross-channel history. The company’s solution is built on a modern SaaS architecture, leveraging both its own global data centers and public cloud deployments in a scalable, secure, and redundant manner. The company’s VCC platform is based on a modern micro services-based open enterprise architecture built with representational state transfer, or REST, APIs and software development kits, or SDKs, that enable customers, partners and developers to bridge any operational gaps within their unique systems. AI is an embedded part of its platform. The company provides high quality inbound and outbound voice services leveraging its global network infrastructure, key strategic carrier partnerships, complex real time call routing, and wide range of customer connectivity options for secure, resilient interconnectivity to its network. The company’s complete end-to-end capabilities include Computer-Telephony Integration, or CTI, IVA, Interactive Voice Response, or IVR, WFA, Agent Assist, AI Insights, AI Summaries, Automatic Call/Contact Distribution, or ACD, with skills-based routing, reporting, dashboards, agent and supervisor desktops, outbound dialer, pre-built third-party integrations, quality management, speech and desktop analytics, customer surveys and workforce management.

Clients

The company has a large, diverse and global client base consisted of more than 3,000 organizations as of December 31, 2023. The company’s client base spans organizations of all sizes across multiple industries, including banking and financial services, business process outsourcers, retail, healthcare, technology and education.

Sales and Marketing

Marketing: To build client awareness and adoption of its solution, the company’s lead generation activities consist of a mix of organic activities, such as social, digital presence and search engine optimization, and paid for activations, such as search engine marketing, internet advertising, digital marketing campaigns, content syndication, trade shows, industry events, co-marketing with strategic partners, account-based marketing, client referrals and other promotional campaigns. In addition, its industry analyst, press and media outreach programs, and web site marketing initiatives are designed to build brand awareness and preference for its solution. The company offers online self-service demos and instructional videos to help prospective clients learn about the features and functionality of its cloud platform. The company also offers proof of concept service packages and trial opportunities, which include return-on-investment analyses conducted by third parties, to allow prospects to experience the quality and ease-of-use of its cloud solution and quantify the potential benefits of its deployment model.

Direct Sales: The company’s sales model consists of a field sales team that sells its solution into larger opportunities and a telesales team that sells its solution into smaller opportunities. The company’s field and telesales teams are also responsible for selling to existing clients that may renew their subscriptions, increase the number of agents using its cloud solution, add new applications from its solution and expand the deployment of its solution across their contact centers.

Indirect Sales: The company has cultivated strong partner relationships with technology solution distributors, global system integrators and resellers to drive sales of its solution. The company has established, and continue to increase, its network of technology solution distributors, which provide sales leads, global system integrators, which also provide sales leads and help integrate its solution with its client systems, and resellers, which sell its solution to new clients. This network has helped it attracts additional clients, and the company continues to empower these partnerships to participate in the delivery of its solution and extend the total customer value gained from unique integrated value propositions.

Professional Services: The company offers global comprehensive professional services to its clients to assist in the successful implementation and optimization of its solution. The company’s professional services include application configuration, system integration, and education and training. The company’s clients may use its professional services team for implementing its solution or, in many cases, they may choose to perform these services themselves or engage with one of its certified implementation partners to perform these services. The company’s cloud solution allows it to eliminate the need for lengthy and complex technology integrations, such as deploying equipment or maintaining hardware infrastructure for individual clients. As a result, the company is typically able to deploy and optimize its solution in significantly less time than required for deployments of legacy on-premise contact center systems.

Research and Development

The company’s research and development expenses totaled $156.6 million for the year ended December 31, 2023.

Technology and Operations

The company’s platform consists of in-house developed intellectual property, open source products and commercially available hardware and software. The company’s platform is designed to be redundant.

The company delivers its services globally from third-party co-location data center facilities located in the United States, the United Kingdom, Europe and Australia and from public cloud locations in Canada, the United Kingdom and Europe. The company also hosts some of its voice services on the public cloud in Europe, Asia, South America and Australia, as well as additional core services in Europe. The company’s infrastructure, including its third-party co-location facilities, is designed to support real-time critical telecommunications, applications and operational support systems. The company’s infrastructure is built with redundant, fault-tolerant components divided into distinct security zones forming protective layers for its applications and customer data.

The company has designed and maintain an operations, capacity and security program to monitor and maintain its platform, ensure efficient utilization of its platform capacity and protect against security threats or data breaches. The company’s global operations team monitors its data centers for potential performance issues, unauthorized attempts to access secure data or applications and the overall integrity of the platform.

Competition

The company competes with large legacy vendors that offer on-premise contact center systems, such as Avaya Inc., or Avaya, and Cisco Systems, Inc., or Cisco. These legacy telephony vendors are increasingly supplementing their traditional on-premise contact center systems with competing cloud offerings, through a combination of acquisitions, partnerships and in-house development. Additionally, the company competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software, such as Genesys Telecommunications Laboratories, Inc., or Genesys, and NICE Ltd., or NICE. The company also faces competition from many smaller contact center service providers, such as Content Guru and Talkdesk, as well as vendors offering both unified communications and contact center solutions, such as Zoom. In addition, Amazon.com, Inc., or Amazon, Twilio Inc., or Twilio, and most recently, Microsoft, have introduced solutions aimed at companies who wish to build their own contact centers and/or contact center components with developers.

Intellectual Property

As of December 31, 2023, the company’s intellectual property portfolio included three registered U.S. trademarks, two pending U.S. trademark applications, 16 issued U.S. patents, one pending U.S. patent application and one registered U.S. copyright. As of December 31, 2023, outside the U.S. the company also had 10 trademark registrations, five issued patents and three pending international Patent Cooperation Treaty, or PCT, patent applications. The expiration dates of its issued patents range from 2030 to 2041. In general, the company’s patents and patent applications apply to aspects of its VCC cloud platform.

Seasonality

During 2023, 52% of the company’s total revenues were generated in the second half of each year. This is due to increased activities in retail, healthcare and education in the second half of each year (year ended December 31, 2023).

Regulatory

Since its business is regulated by the Federal Communications Commission (FCC), the company is subject to existing or potential FCC regulations relating to privacy, disability access, Enhanced 911 access, porting of numbers, automatic number dialing, contributions to the federal Universal Service Fund and related funds, or USF, and other requirements. The Federal Trade Commission, or FTC, also has jurisdiction over some of the company’s business practices, including advertising, trade practices, privacy and telemarketing.

The company must comply with numerous federal regulations, including Telephone Consumer Protection Act of 1991 (TCPA); the TRACED Act and corresponding regulations from the FCC; the Communications Assistance for Law Enforcement Act (CALEA); KARI’s Law and RAY BAUM’s Act; contributions to the USF; payment of annual FCC regulatory fees based on its interstate and international revenues; rules pertaining to access to its services by people with disabilities and contributions to the Telecommunications Relay Services fund; FCC rules regarding Customer Proprietary Network Information (CPNI); Federal Trade Commission Act and rules promulgated thereunder; and state privacy laws require compliance with privacy frameworks and include disclosure obligations to consumers for whom it holds or processes personal data (including The California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020, or the CCPA, which took effect on January 1, 2023; Virginia Consumer Data Protection Act, or the VCDPA, which took effect on January 1, 2023; Colorado Privacy Act, or the CPA, which will take effect on July 1, 2023; Connecticut Data Privacy Act, or CDPA, which will take effect on July 1, 2023; and Utah Consumer Privacy Act, or the UCPA, which will take effect on December 31, 2023).

History

Five9, Inc. was founded in 2001. The company was incorporated in Delaware in 2001.