Five9, Inc. (FIVN)

Analyst Day 2019

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Nov 12, 2019

Good morning, everyone. Welcome to Five9's Analyst Day. I'm Lisa Laukkanen. It's nice to see so many familiar faces. And I also want to extend a warm welcome to those of you joining us on the webcast. I'd like us to take a look at the safe harbor language and if this will cooperate. Little preview. So before we get started, let's take a look at the Safe Harbor statement. As a reminder, during the course of today's presentations, Five9's management team will make forward looking statements regarding future plans, industry trends, company initiatives and expectations around financial performance. Our actual results may materially differ from what we discuss today and you should not unduly rely upon such forward looking statements. Please refer to our most recent Forms 10 ks and 10 Q under the caption Risk Factors and elsewhere in the company's filings with the SEC. We undertake no obligation to update any such forward looking information. Additionally, you can find reconciliations of our GAAP to non GAAP results in the appendix of this presentation. The deck will be available on our Investor Relations website at the conclusion of today's presentations. We've got a great day ahead, and I'm going to begin with introducing Rowan Trollope, CEO of Five9. He'll introduce the leadership team and tell you what they're going to focus on today. So I'll turn it over to Rowan Trollope, CEO of Five9. All right. Thank you, Lisa. Thanks, Lisa. So thank you all very much for coming and braving the little bit of rain. I heard there's going to be snow later, so we may have you for longer than you were expecting. But we do appreciate all of you spending your time with us today. We do have a lot to talk about. Some of you were here at the last Analyst Day that we did, I guess, 2 or 3 years ago. So appreciate you coming back. And frankly, thanks for all of your support, all of our many investors for the over the years. That really means a lot to us. So as Lisa mentioned, I wanted to start out the day by introducing our new leadership team. So we have added quite a few new faces to the organization as we prepare and ramp up for this next phase of growth in the company. And we brought them all here and they're all here. Some of them will be speaking and sharing some of the deep dives on the strategy and what we're doing with the products and our go to market. But then we'll also have them up for Q and A and then at the lunches. So you get a chance to meet the new leaders. So without further ado, let me just introduce them 1 by 1. I'll start out with the man, the legend, Dan Burkland, our President, who leads our go to market organization. So Dan has been with the company for 10 years and really created the Five9 that we know today, along with Barry Zwarenstein, who is our CFO. So many of you know Barry. And so Barry is here as our CFO. Jonathan Rosenberg, CTO and Head of AI. So Jonathan has joined us about 10 months ago. And you're going to hear from Jonathan talk about AI coming up. Ryan Kam, who is under Chief Marketing Officer, you can see some of our new branding around here. David Pickering, our new Head of Engineering, okay, is going to talk about products. Scott Welch, our Head of Operations, keeps everything running. Scott's in the front here. Anand Chandrasekaran, our Head of Products. Anand is going to share with you the product deep dive. James Doran, our Head of Strategy and Operations. And then Tricia Yankovich, our Head of HR in the front. So we've clearly added quite a few new faces and we did that because there is a big opportunity in front of us that we want to go execute. So we're going to share that with you. But before I do that, I'd like to start out just with a quick note on the vision of the company. If you were to you're going to get a chance to meet 10 of the leaders of the company today. But if you were to talk to any of the 1,000 plus employees at Five9, you would probably hear that it's a mission or purpose driven company. People have been in this industry for a long time. We've had this idea that customer service should be better than it is. And that we're all users of and sort of consumers of customer service and most of us don't like it. And I don't know about you, but I certainly don't. And we all sort of feel that it should be a much more human experience that we want to be treated like people not like numbers. And that the only way we can make that happen and I go back all the way to my days in the contact center, the only way we can make that happen at scale for businesses all over the world is by using technology to drive efficiencies in these organizations. And so that's what we're all about. We're all about doing this and you'll find that it's a very purpose and mission driven company. So just a bit of an overview. Now if you stand back and look at the Five9 story, 3 things really, really stand out and it's actually very simple, not complicated. The story we're going to tell you today, 1st is we have an absolutely massive market opportunity in front of us as the on premises contact centers transition into the cloud and as millennials and Gen Z enter the workforce demanding better customer service experiences and digital transformation, it's just a massive and long term opportunity for us to continue to grow and we're in the first innings. The second thing that you should know about Five9 is we have a strong and proven execution engine. We've been executing reliably and consistently for years and that's going to continue for years into the future. And I'll take you through all of these. That will be sort of what some of the meat of the presentation is and you'll hear mostly from my leadership team as we talk about their specific execution plans that we've put in place over the last year or so. And then finally, Barry will close out the day talking about growth and profitability. We have a balanced approach to running the company, focusing on growth and profitability. I think you'd like to say that profitability is a quaint idea, Barry. But we really do focus on growing the company in a responsible and digestible way and doing that in a balanced approach. So those are the sort of the 3, I think the 3 things that to me stand out about Five9. Incredible opportunity in front of us, proven execution engine and a balanced approach to growth. So I'm going to start out and take you through the market opportunity and give you a little more detail and I'll do that in 3 parts. The first is the key trends. So what do we see as the drivers and the trends in the industry? What's changing over time? 2nd, I'm going to talk about the positioning of Five9 in the market, why well positioned and how we're positioned. And then 3rd, I'll talk about the addressable market and the expanding TAM story that we've been sharing with you for some period of time. We'll share a little more color on that. In fact, as we do that, we'll even dive in later in the day into a demonstration of the technology that we've talked to you about so many times. We can actually show it to you and we can even have a customer on stage who can tell you what they've been thinking about it. So I'll start it with the key trends. And with this beginning idea that what I call the CX paradox, the customer experience paradox, and that is that companies globally are spending nearly a $250,000,000,000 in customer service. And they're spending a $250,000,000,000 to deliver something that basically no one likes. I mean, we do surveys and we talk to customers and we talk to end users, consumers, all of you can probably reflect on your own experience. Anytime you call customer service, it's usually not a delightful experience. And it could be, and it should be, and that's what we want it to be. But it isn't today. So this is the backdrop in which we're executing. And so it's a lot of money spent to do something that no one likes, and we don't think that that needs to be that way or that it should be that way over a long period of time. So what is it that people don't like? And this is again one of the key trends in the industry as you're seeing this change over time. 84% of people say that they don't like being treated like a number or being treated like a person not a number is very important to winning their business. And if you just dive into the very high level things and again you can relate this to your own experiences, what is it that we don't like about the current way that businesses implement customer service? It's hard to talk to someone. It's very frustrating when you need to talk to someone. If you can get the answer online, if you can self serve and or find out from the community, it's awesome. But if you can't and they don't and the company doesn't make it easy to talk to them, that's a real problem for people. I personally have had that experience numerous times in the last year personally. Depersonalized and disconnected experiences. Businesses are complex. They know a lot about their customers. But when you connect into a customer service contact center and they don't know that you just called an hour ago saying that you were upset and want to return the product, they shouldn't be upselling you on the next time you get a hold of them, right? And so that is something that's very and even things that are as simple as you call into a call center and they people use technologies to sort of have customers jump people use technologies to sort of have customers jump through all kinds of hoops to avoid talking to them. So this is really some of the things and of course you can expand on this in your own mind, but this isn't an option anymore for businesses. It might have been fine to do this when your customers had no choice about what product they would get or the switching costs were super high, but this isn't an option and this is becoming less and less of an option for businesses to allow bad customer service to exist because we are all empowered as consumers. Empowered consumers, we can write reviews, we can complain online, we have a voice and we've got choice. And when you think about this just from an economics perspective, it's switching costs are going down. In virtually every industry, there is more choice than there's ever been. And it's easier than it's ever been to switch around. I don't think you have to look any further than your own mobile phone. Start with your mobile phone and look at how many food delivery apps have you are you using or have you tried. Now maybe I'm biased because I live in San Francisco, there's a lot of them. But if you're in New York, there's a lot of them. In the retail space, it's similarly true. Travel, I mean, every category, it just seems like there's endless choices. And it's 2 taps in 20 seconds to delete 1 and get another. And a very, very low switching costs for consumers. So all of that means that businesses recognize, uh-oh, we've got to do something about this. And that increased choice is driving the expectations amongst the consumer way higher. 84% of customers say that the experience a customer a company provides is as important as its products and services. And now that doesn't necessarily, I think resonate if you're as much apparently if you're a boomer, but for the more modern generations, experiences are more important than products in many cases. And 7, you can see that here. 70% has the increasing expectations for customer service. And so that is something that businesses are waking up to. Customer business owners, business operators, service professionals realize, in fact 82% of them say that their company's customer service has to transform to stay competitive. So this is one of the tailwinds that's driving our buyers. 82% of people in our industry recognize they've got to do something differently. What they're doing is not good enough. And so it's not just the cloud that they need to get on to from a technology perspective. There's a very, very critical business need for them to solve. And that's where Five9 comes in. So let's now pivot and actually talk about Five9's positioning. So lots of market trends pushing this market in our favor towards we need a modern platform to help us transform the customer experience. And that's what Five9 is. I mean, we are essentially a modern engagement platform that lets you deliver the thing that you know you need to deliver, a much better customer service experience. So how do we do that? I'll just kind of dive in a little bit here. On the left hand side, you have the way that I think about this anyways is that there's sort of 2 parties in this picture. There's the customer and the business. And the customer has needs. You can all put yourself in these shoes. What is it that you want when you think about customer service? Well, number 1, you want to be able to use any channel that you're comfortable with. So you might want to be able to SMS or you might want to make a phone call if something is more complicated, you might want to send an email, you might want to get service by yourself online and not talk to anyone at all, you might want to hit the company's website. The point is that you want flexibility and you want to be able to get service anytime and anywhere, however you want to get that service. So that takes a modern platform. You can't solve that with a phone system. And that's what most companies have. It's just a phone system and a bunch of disconnected experiences. So we bring all of those together, all of them together into something that's very simple and seamless and easy to use. On the right hand side is the business and they need to deliver. They have the imperative to deliver better and better service every year. How do they do that? Well, they have to it's a complex story. They have to take lots of operational data from lots of back end systems. Increasingly those systems are moving to the cloud and they've got to take all that together and weave it together to deliver a journey for the customer that is very seamless. And so those are the 2 players. So, customers in the channels they prefer. We're going to deep we serve the customers in the channels they prefer. We're going to deep dive actually in this on in Anand section. We talk about the next generation, actually reimagining what is called in the industry today omni channel technology. So we're going to talk about that. But we are one of the best at bringing all these things together from a consumer lens. 2nd is unifying the customer information into a single view. So I'll dive into that in one second. And the third is really having a modern platform that can move flexibly and quickly for the internal constituents, the people that deliver service. Let me take you through each one of these. The first one is on the customer side is all about serving customers in the channel they prefer, as I mentioned. And I won't dwell on this slide because Anand is going to cover it in-depth. But suffice to say, we have a plan to reimagine how this is done in business and we're executing on that and we'll be delivering in one of our in fact in our very next upcoming release in the first half of next year. So we've got really great thinking coming into the company, new fresh ideas. In fact, Anand joined us from Facebook, where he worked on Facebook Messenger for business. As you know, that's one of the was sort of like it is one of the most modern ways that people want to engage with business. They want to use whatever tool and whatever platform they're already in. And so we've got a lot of fresh thinking in this and we're driving that forward. So that's part 1. Part 2 is unifying all of it into a single view. If you walk into today, a contact center and you walk into into today, contact center and you watch what actually happens, you will see basically people that have headsets on sitting around in front of computers and what are they doing? Well, they're handling inbound requests from customers and what customer service professionals sort of the main thing that they do is they're trying to enable that agent to deliver great service, whether it's live, like on a phone call or a messaging platform or what have you, or non live, whether it's like email or servicing customers in your hands on. So what our platform is a flexible and open platform that lets companies bring all of that data together into a single pane of view for the agent. Of course, we're experts at powering agents. We sell software by the seat for agents. And that UI, which we'll actually share some pictures of with you today, it brings that unified view together. And in fact, the acquisition that we announced this morning that Anant is going to share more about is all about making this even more seamless and letting us do more and letting businesses do more here. So the 3rd area and the 3rd real constituent in solving this problem is the internal customer service team themselves. And what they need is analytics and reporting and dashboards and the ability to do very the ability to start to plug in chatbots to automate conversations, whether it's in messaging or in SMS or what have you. So there's a huge surface area of capability that Five9 has built up over time to deliver the right level of engagement to the service delivery professionals in that whole organization. And there are many different types of roles that exist there from quality management to supervisors to the agents themselves. And so there's just lots and lots of people that have to be solved and we have unique user experiences and UIs that help them do that. And increasingly, you're seeing us expose that up one level to the business owners, because business owners sort of are now able to directly tie the journey of the customer back to things like revenue. And you want to be able to get a view of, okay, how are we actually doing in terms of driving revenue or retaining our customers or upselling our customers or and so forth. So that's the third part of the picture and we are doing very well at that. We've been doing this for a long time. We'd like to say it's a 2 horse race or duopoly in this industry. And that was reaffirmed this year in Gartner's latest Magic Quadrant, as you see on the left, where 59 again for the 5th year in a row is a leader. And in Forrester's Wave, where we also show up as a leader. And I would also point out, because I'm going to come on to this next around addressable market that Gartner's Magic Quadrant does not list the 2 market leaders by seat size, Avaya and Cisco. You can see that there's no Avaya and no Cisco dot on there. Why is that? It's because of Gartner has concluded that the future is cloud. It's an open and shut case. And if you don't have a cloud platform, you don't get onto the Magic Quadrant. And so while those companies are continuing to serve their base and their existing customers, any customer who's looking to transform customer experience that calls Gartner is going to be told, well, if you don't have a cloud strategy, you need to get one. So that's very much working in our favor. So let's now talk about with the sort of positioning of Five9 at the high level out of the way. Now I want to talk about the addressable market for our company, which I had mentioned is expanding. Now if you've been following the Five9 story, you're familiar with something that looks like this picture, right? We operate in a really big market, a $24,000,000,000 market that is barely moved to the cloud. It's just at the very first innings of transitioning to the cloud, 15%. A new stat for you is that while the 15% is estimated by Gartner and others, the large enterprise transition to cloud is sub 10%. I think the number is 9%. So large enterprises are even further behind average businesses and we're seeing that in our numbers. You'll see that in every earnings call that what's really driving our business is large enterprise transition to the cloud. So this is our current market opportunity and that's going well. And here's the expanded market opportunity that we've been talking to you about. And to explain this, I'll give you the backdrop. We started out talking to customers and asking them what help did they need. Now that you've got Five9, our customers, now that you've got Five9 deployed, what else can we do for you? And what emerged from and some of them are here today, so you get to hear from them. What emerged was it's great that your software is now installed and it's working. And the first thing we need for you is keep it working and keep doing what you're already doing. The second thing that we need is help make us more efficient. We know that we need to go back to what I said earlier. We know that we need to deliver a better experience to customers, but we can't just go spend lots and lots of money. We have to be very efficient with our spend. And so if there's anything you could do to help us automate some of the calls that we get and increasingly do that, that would be very helpful. And so we put 22 together, that plus AI. We said, well, we think this is a big opportunity. Again, we're going to give you a demo. But what this chart shows is essentially that the $24,000,000,000 that we normally talk about with the red dot being our penetration and the big black bubble is all of the spend in the contact center. That includes labor. So take the $24,000,000,000 plus $210,000,000,000 annually in labor globally. Now McKinsey issued a did a study recently and said that by 2,030, 16% of customer service reps will be displaced due to automation. They believe based on looking at the workloads in lots of companies that we should be able to see around 16% displacement of agents. So what does that mean for Five9? On the one hand, you ask me all the time, well, isn't that bad for you because there's fewer agents? Well, it's only bad for us if we're not participating in the technology arbitrage that labor, which we intend to do. We intend absolutely to help make businesses more efficient by doing that. And we think we're really well positioned to do it. So if we do the math, 16% of the $210,000,000 in labor equals $34,000,000,000 in automation opportunities or savings that are available for customers. So that could be the value creation in this market. And then the question that we're obviously going to be exploring as we move forward with launching our products is, what is our opportunity to capture that value, that $34,000,000,000 So great opportunity to create value in the world and what can we capture as a company, we're working on that. So very, very exciting, more than double potential opportunity for us to go after, not just in the existing market that we're already in. In fact, this problem becomes bigger, the bigger you get. The larger enterprises have this problem at scale and it's worth solving. In the smaller businesses, it's much less worth solving. But for a large company, you're going to hear from 1 of them or 2 or 3 today, it's really worth solving. It means 1,000,000 and 1,000,000 of dollars per year if you can do simple, simple automations and we're really well positioned to do that. Jonathan will tell you about it. So that's the first section on the market. I had to sum it up, it's strong. There's 2 tailwinds and I've been in tech for 30 years now and I've seen industry transitions where there's one tailwind and there's clearly been this massive secular tailwind of just the legacy technology needs to move to the cloud and that exists in our space. Sometimes we get the question about the why are we so poorly penetrated in this space, like what exactly is going on with that. And I've been explaining to some of our investors who've asked this question that what we've been seeing in the market and hearing from customers is that the first wave of B2B SaaS apps that started in the 2000s and kind of are continuing to now, were really the non real time apps, Salesforce being a great example sort of out market leading there. And those were much easier to adopt because they didn't need a lot of heavy lifting on the infrastructure side to make happen. It's a website. You know, you move your CRM those were much easier to adopt because they didn't need a lot of heavy lifting on the infrastructure side to make happen. It's a website. You move your CRM records, you got to deal with all the security issues and the trust issues and the remoteness issues and all those other things, but it wasn't like you needed gigabits of bandwidth into your building in order to make that work. That was not true of the real time apps. So the real time apps that are now getting traction and accelerating like Zoom or RingCentral, those require much better Internet connections for average businesses and us too. If you're going to plumb us in, we need a solid and reliable Internet connection to make that happen. In fact, part of our business is actually helping businesses get their networks up to snuff, so that they can support voice over IP. In fact, we have up to snuff, so that they can support Voice over IP. In fact, we have the co founder of the Voice over IP protocol working for us, Jonathan. So we've done a lot to really help customers get there. But what's happening is essentially globally because just the Internet is getting more and more plumbed in and the infrastructure is getting more and more robust, it's helping our market. So that's one thing that's driving the 2nd wave of B2B SaaS apps, the real time apps. The second tailwind is digital transformation. That's everything we talked about at the beginning. But when you start to talk about digital transformation, what becomes obvious is customer service and customer experience is sort of one of the main, if not the main pillars that business owners think about when they think about digital transformations. How do I transform the experience that my customers get with me? So we have these really nice two tailwinds driving our business. So that's the market. That customer service is not an option anymore. Customer service professionals know that they have to transform. This represents a large and expanding market opportunity for Five9 and we are very, very well positioned to capitalize on these tailwinds. So that's the market. Now I want to move and talk about the Five9 execution engine, somewhat legendary in terms of its consistency and reliability. And I'll just take you through a few points and then I'm actually going to have some of my leaders come up and take you through even more detail and double click on these. So obviously on the proven leadership team, we have retained the leadership team who was at Five9 before. Actually just texted with Mike Birkland, who is on a beach in Mexico. He sends his best and he's here in spirit. But he built an amazing leadership team. And we've extended and added to that leadership team with enterprise experience, people that are experienced in the enterprise space and also deep technical expertise. So we've really built the bench of this company to drive growth. 2nd is we have a differentiated strategy, which I'll actually touch on next, but we've been working very hard to create that differentiated strategy that led to one decision that we made this morning, which was the acquisition of Wendoo. So we'll share more about that coming up. We, of course, have a market winning product. I shared that the proof is in the pudding on that front in terms of winning deals, but also being recognized by analysts. So it's not like we're starting from scratch here. We're building on an already market leading product. And we've been extending our robust cloud platform to deliver the kind of quality that is required in contact centers. And it's unlike by the way just about any of the other real time workflows, contact centers are much more demanding than meetings and calling infrastructure in terms of their demands. Because the contact center when it goes down, businesses are losing money or they're getting customers complaining on Twitter. And if a business loses their phone system, voice or IP phone system, like people can jump on their mobile phones, knowledge workers, it's not that big of a deal. It's absolutely critical that you deliver that. So we've got a cloud strategy that I've talked to a lot of you about that's extending from our existing infrastructure into the public cloud. So we're now moving into a blended world and we'll actually demonstrate one of those products that's built on our new cloud architecture today. And then finally, we've got an incredible and I would say world class go to market machine that we are building and expanding upon. So we'll share some new developments. Dan will share some new developments on that front around things that we've changed in the organization and new faces that we brought on board. So I'll close out just by sharing with you the 5 pillars of our strategy and then I'm going to turn it over to Anand. But the first pillar is all about product. For those of you who know me, I am a product leader. It's really important in a market where innovation is a differentiator that you've got a great product. And what you're going to see from us is investment in product. You saw that last year. We began to invest more in R and D than we had previously and the results are paying off. And so we're going to be able to share those results with you and show you what the team has accomplished. The second, of course, is executing against the longer term opportunity that we see with artificial intelligence. And I'm a big believer that every tech company will become an AI company. That's nowhere more true probably in the contact center. That won't happen quickly, but it doesn't it will happen slowly, then it will happen quickly. And we're investing in it in advance of that. We want to be at the forefront of making that transition happen. But because we're a relatively small company, we're not Google, we have to be laser focused. And so you're going to hear that from Jonathan. We need to expand our go to market engine. As customers are if they're increasingly making the decision to move to the cloud, we've got to have the coverage, the feet on the street, the right relationships, leveraging channels, expanding our strategy there. So you're going to get a deep dive on that from Dan there. And then finally, investing in our employees and culture. When I talk about the market opportunity, it's a 10 year horizon of people moving off of the prem to cloud. So we've been building a leadership team and focusing on getting great talent into the company and retaining that talent. We have a world class retention levels in this company. I mean, the attrition rates are very low. We do a lot to maintain that and we've been doing a lot to attract even more world class talent. So we're bringing that talent on and investing in the culture because this is a long term growth opportunity for us and we want to see this company flourish over the next decade decades beyond. So those are the pillars of the strategy. And now what we'll do is we'll introduce the leaders who will take you through each of the pillars in more detail. So with that, with no further ado, let me introduce and bring to the stage our Head of Products, Anand Chandrasekaran. Anand? Hi, my name is Anand. I lead product at Five9, and great to meet you all. And I'm going to start the deep dives from a bunch of leaders and walk through the product road map and product vision. So by way of introduction, I wanted to talk about my journey to Five9. So just before Five9, I was at Facebook. Over there, I was leading our efforts on Messenger for Business, which was the business platform on top of the Messenger app. So we grew from about 150,000,000 people to business messages. So people to business messages are basically just like you would message your friends on the friend graph, you would message your business and get a response back, right? So we'd count two way messages. We went from about GBP 150,000,000 a week to about GBP 8,000,000,000 a week on the back of sort of customer care, right? So and that was just one channel. So I got to see firsthand the sort of explosive growth of consumers wanting to message businesses when that makes the most sense and get a response back. And before that, I built an e commerce product called Snapdeal, where among other things, I ran customer care for about 20,000,000 users. And one of the things I'm really excited about is this opportunity that Rowan talked about where we can make customer service more human and I'm going to talk to you a little bit about how we're doing that. So let me start with a recap of what Rohan talked about, right? This is there's a lot in here, but the recap was Rowan talked about 3 big things. He talked about the need to serve across the channels that customers cared about and want to engage on. He talked about unifying the data into a single interface and he talked about modernizing this platform of engagement, right? So this is where the customer side Five9 and the business comes together to deliver these pieces and that's being delivered in the product today. And I'd like to walk through sort of what we're doing today as well as where we're going from here. What I wanted to start off by doing though is talk about how we're growing the investment in R and D. So for those of you who've been following Five9's investment in R and D, we're going from about a 3% year over year growth in R and D investment in 2016 all the way to about 27% year over year growth in R and D Q3 twenty nineteen, the YTD year to date. And this is largely driven by our enterprise customers, which now comprises about 80% of our total revenue. And so a lot of what we're focused on in terms of our road map is building for this large enterprise demand as we're being pulled up market by that segment. So to summarize where we're investing these R and D dollars, what we have done is focused on delivering a greater number of enterprise grade capabilities as we're getting pulled and we're seeing even more demand by large enterprise customers. And then I'm really excited to also share where we're going, which is accelerating this large enterprises transition into the cloud that Rowan just talked about, which is we've barely scratched the surface off. All right, you guys ready? So let me talk first about where we have covered a bunch of ground in 2019. So we've been busy. So the engineering team has grown significantly and Dave will talk a bit more about that. And this team has been incredibly busy. We've launched in a series of releases 90 plus new features for our large enterprise customers. And our one of the things that I got really excited about when I joined Five9 is that our NPS is at about 58%. So by comparison, enterprise software NPS is about half of that, right? So it's in the early 30s on the high end. And our NPS is almost 2x that and we're definitely feeling that love from customers in response to these releases and features that we're building on the back of a large market leading product. And we've been focusing on enterprise scale, voice modernization and open platform and partner integrations. I'm going to get into a bunch of those things in the coming slides. So if I can take a moment to focus on the enterprise scale, that's one of the areas that we're very clearly focused on. And we're now tested with a pretty robust system, thousands of concurrent agents on a single domain with multiple channels and with the full application stack. So this is both the scalability features as well as the add on applications like performance dashboards, gamification, QM, WFM, speech analytics, etcetera, and were tested for thousands of concurrent agents at this point. We have several customers here who have deployed these in production. And we recently got the validation from Gartner in the MQ that came out earlier this year that we offer expanded scalability to support thousands of agents on a single domain. So really excited about that. Secondly, our customers are moving us into global deployments. So one thing we're seeing is both their customers are global their consumers, I mean, that call them as well as their agents are global. So in this environment, it's really important we have a global system and we call it FJV, Five9 Global Voice, and this is one of the features that we got out recently. It's got a global set of points of presences, all built on a modern architecture on top of AWS. And so this is sort of how we support both a follow the sun need as well as a global need that our customers have. So really excited about doing this for our enterprise customers. We're also really proud we have Scott over here and Scott's team works really hard on this. We're really proud of our platform availability. We're 99.991 percent uptime the last 12 trailing months. And for those of you sitting out there doing the math, that's less than 4 minutes of accumulated downtime a month. So really excited about that. And this is one of the reasons that customers move to the cloud because they don't have to sacrifice the uptime that they may have with on prem. Not just uptime, but also security. The data that is stored in the cloud, we take extremely seriously and we keep that secure through a set of things that we do, certifications and attestations. So this is everything from AICPA SOC compliance, PCI DSS Level 1 certification, etcetera, regulatory compliance. So we're HIPAA compliant as well as we're compliant with GDPR, which is required for most global deployments. And now there's also a California equivalent of GDPR, which is called CACPA, which is also sort of rolled out now and we're compliant with. And then in terms of best practices, we're compliant with the CIS as well as CSA compliance for our data centers. So we take this stuff very seriously. And one thing I wanted to call out here is that this is important, especially the regulatory compliance because we're becoming compliant as a platform. So each of our customers don't have to get compliant by themselves, right? So this is extremely important for our customers. So to summarize, we've covered a lot of ground in 2019 and in the past years. We're delivering an even greater set of enterprise grade capabilities, covering enterprise class scale, covering global deployments and all of these features that we talked about, and we have an NPS of just under 60. I'd like to transition now and talk a little bit about this effort that we're doing to accelerate the transition to the cloud of our large enterprise customers. So we find from talking to a lot of our customers, so since I've been at Five9, we've been talking to a lot of our existing customers, a lot of the new customers that are coming on board. It really comes down to these four things in terms of what is driving their acceleration to the cloud. Number 1, we need to enable them to be where their customers are. Rowan talked about that, and that's a very key part of this transition. Number 2, we need to play well with the other tools and the other platforms that customers have deployed. We need to play well with others. Number 3, we need to elevate our platform flexibility even more, and we have some exciting announcements there. And then number 4, Rowan talked about the expanding market opportunity in terms of AI and Agent Assist. My colleague Jonathan Rosenberg is going to get into the deep dive and a demo, a video demo of how this works. And I'm hoping today is the day when there are no Star Trek references, although I wouldn't hold my breath around that. So number 1, let's jump in into omnichannel, right? So as our own consumer experience shows, we all live in an omnichannel world, right? These numbers reflect what we all experience personally from our consumer behavior. 54% say that they've experienced that they've used email as a primary customer service channel in the last 12 months. This is from Forrester. 50% of consumers say that providing a seamless experience across multiple channels is the most critical issue during customer care. This is from Insight Group. And then 40% of people say that when they talk to an agent, they have to talk to a real person if it's a complex situation or a complex interaction. This is from Amex, right? And this reflects our own personal behavior. The other channels only go so far. And one channel alone that just doesn't work for us given how we work. And this is only getting worse with a new demographic, which is mobile first, mobile only in most cases coming online, right? So we're reimagining what omnichannel is. So today, the way the industry thinks about it is you take the incident, you route it in an omnichannel way to the right agent and that's it. That's what's called omnichannel today is routing the incident. We think that because of this pressure from consumers, our businesses are being driven to actually route the customer and we need to build a much more comprehensive set of features. In fact, we're building over 50 features to actually support omni channel, and this is a huge focus for us. Let me talk to you guys a little bit about what we're doing in this area. So we're investing, as I said, in a pretty comprehensive set of features covering a bunch of channels, applications, features and platforms, and it covers these 10 major areas. And this is just a very quick summary of what we're delivering across these four areas. We support all of these channels to be primary channels for consumers. We're delivering on all of these applications. If you imagine being inside a contact center, all of the omnichannel interactions need to be tracked by the supervisor. It needs to integrate into WFO. The joke that we hear all the time that Dan told me when I joined Five9 is that when something doesn't get tracked in supervisor, they don't know the difference between an agent supporting a customer on omnichannel or they take a smoke break, right? You don't know because it's not connected with a supervisor console. And so these applications are extremely important in a market leading product and that's part of our road map there. All these features that you talk about in terms of delivering integration into the systems that they integrate with as well as encryption at rest, which is extremely important, and then all these platform features. So that's number 1. We're doing these incredible set of features to reimagine omni channel. Number 2, we have a strong track record as many of you here know of playing well with others, right? So this goes from our CRM partners, Salesforce, ServiceNow, Microsoft, Zendesk, etcetera, Oracle, and we have market leading integrations with all of them. We recently announced a product expansion of our integration into Salesforce to support the Einstein bot, and we have the ability to escalate from an Einstein bot integration to an agent or a supervisor on Five9. So really proud of where we are with our CRM integrations. Similarly, we have market leading integrations into UC partners like Zoom and Microsoft as well as WFO partners like Verint. So this is across the board and these are part of the prioritized 90 plus features that we released to actually deliver on not just CCaaS features but also integration into these systems of record, if you will. And we're also making it really easy for our partners. So yesterday, a bunch of you may have noticed the launch of the App Marketplace, right? This is a step in that direction. So we've had UC and CRM SDKs available, and we've done the integration into Salesforce and Oracle and a bunch of our strategic partners, we also have a CRM SDK, which the smaller CRM vendors have integrated into directly like Pegasystems and Freshworks, etcetera, have been live with our CRM SDK. And now we've given them a single merchandising window to be discovered. This is extremely important, and Dan will touch upon this a little bit more. This is important when customers are evaluating the solution. They need to know what ISV partners are available and they need a single merchandising window to look at all of the solutions, and that's what you see on the right. We have over 55 partner solutions live today and available to integrate into Five9. And this, as you can imagine, provides a virtuous cycle for our partners to leverage the Five9 incumbency and actually integrate into the solution. So that's number 2. Number 3, as we've been talking, we are seeing large enterprises deal with some challenges as they migrate to the cloud, right? We've been talking about that. Rowan talked about this acceleration and where it is today. It's only at 15%. And as we peel that onion and look at the layers, what we find is on prem solutions that they might have, have deeply integrated workflow with their in house information systems, right? They all have some custom system or they all have some system of record that are integrated into within their in house systems. And the current approaches give them sort of a false choice, right? On one end, you've got approaches which are low customizability, but they're easy to implement. On the other hand, you've got solutions that are you can do whatever you want, but you got to call developers and you got to get 20 people to come in and build that solution. Of course, we all know in most enterprises, say, with very rare exceptions, you don't have developers lying around waiting to do these projects, right? So these are false choices where you only get one and you don't get the other. And that's one of the biggest reasons we feel enterprises find it challenging to move to the cloud, right? So we've been talking about all of these features that we've been building to help our large enterprises migrate to the cloud. And today, we're really excited to announce another big step in helping our customers do this. Today, we're excited. You probably saw the announcement this morning, and Rowan touched about it in his talk track. We're excited to we signed a definitive agreement to acquire Vendu. So Vendu is a small technology company based in California that's an Ipaas system that helps large enterprises accelerate their adoption of the cloud. So really excited about this. How does Five9 and Vendoo work? I'd like to talk about that for a minute or 2. So we help solve 2 major problems, right? We just talked about how challenging it is. Number 1, we help large enterprises migrate to the cloud. How do we do that? Number 1, there's over 50 out of the box application connectors that large enterprises can use to maximize the cloud contact center investments by having these integrations, and we'll get into how that works in a second. Number 2, we make it easier to integrate Five9 into their existing environments. We just talked about how that's a huge part of on prem deployments and carry forward their customized workflows as they migrate to the cloud. So really excited about this and this is a huge step forward in easing the pain to migrate to the cloud. Number 2, once these large enterprises get to the cloud, they're really excited to do more, right? So we're seeing the rise of what we call citizen developers, right? So these are basically someone who took like some programming in high school or college. They're technical enough, but they're not a developer. They're not hired in the company as such. But they're usually the business analysts, they're the supervisors, they're technical people in the contact center who can actually write a bunch of workflow to make their integrations work and to make these disparate systems come together in real time, right? So we're building this integration between Five9 and Vendu to actually deliver a bunch of features for the citizen developers to connect information systems in real time. So let me show you how this works, right? You're probably wondering what a low code system is. So let's take the example that you need to follow-up with a lead in moments, right? So this is a very typical example that most large enterprises have to deal with between a CCaaS system and a system of record, right? In this case, this is the actual workflow on Vendu that you can create in a matter of minutes, right? So we took 8 of the large systems that we've built out of the box application connectors into, and you can actually just literally plug the logic. As you can probably intuitively guess, the logic is when something happens, do something, right? That's why you have when do. And so when something happens, which is a company's name is mentioned, categorize it, see if it's a support request or a sales inquiry, see where the sentiment is, create a case, treat out a response on the same channel. And if the sentiment gets even worse, then and it's getting really negative, mark it as a high priority and call the customer ASAP. So if you think about it, this previously would take 1,000,000 of dollars and maybe 6 to 12 months to develop and it would need actual developers. And with this no code visual application workflow, it can be done in days, if not hours, and it can be done by a non developer, right? So this is just one example. You could actually go ahead and do all of these other integrations like escalate omnichannel support, and that's the workflow for that. Monitor SLAs proactively and take action if you miss SLA, add overflow agents doing during demand spurts and respond to mentions on social channels, etcetera. So you probably got a little taste of this. This leverages out of the box connectors into all of these well known systems. You probably recognize a bunch of the logos. Really excited about the simplicity and the elegance that this brings as we ease the migration to cloud. And this also really helps turbocharge the Five9 partner ecosystem. We just talked about playing nicely with others. There's already 55 partner solutions live. Yesterday, we announced the app marketplace. It's live today. It's in production. And we talked about all of these strategic integrations. Windu turbocharges that with 50 plus out of the box application connectors, all of these logos that you see, many of whom I'm sure you recognize. So really excited about what this does, not just to the customer ecosystem, but to the partner ecosystem as well. All right. To summarize, in terms of where the ground that we've covered, we've been delivering a greater set of enterprise ready capabilities, and where we're going is working on these four things that we talked about: omnichannel, integration into partners, platform flexibility and now I'm excited to invite up Jonathan Rosenberg, our Head of AI, to talk about our agent assist and AI roadmap. Thank you. All righty. Thank you, Ynon. Thanks everyone for joining me today and for joining us here. I'm really excited pretty relevant to what I'm going to talk about. So I came from Cisco, as you heard from Rowan and I ran our AI initiatives there as well as was a full technologist behind the Spark and WebEx Teams Technologies and Cloudifying on premise software. Before that, I was a Chief Technology Strategist. And my main claim to fame is that I've been working in the Internet Standards bodies. This thing called is this not working? Yes, webcast. For the webcast. All right, double mic'd. I've been working for over 25 years in the Internet Standards community, where I'm known as the primary author and co inventor of a technology called SIP, which is now the foundational telecommunications technology. You'll use it every day. It's built into every cell phone on the planet and runs every single phone call pretty much that you probably make. And I've written a lot of Internet technologies. I'm the 3rd most prolific author of Internet Standards. I went and I put it in a spreadsheet, 2,559 pages of documentation that I've written in my career on how to do things on the Internet. I don't know whether to be like a shame, I'm like, that's a lot of stuff, that's a long time to read, it's pretty boring too. But anyway, so I've worked in this area for a long time and I've seen the waves and the changes in technology. And so when I came here, I was sort of really excited by the mission that the company was on. And you heard from Rowan, it's to make customer experience more human. And so the first question to ask is, well, what's our AI strategy? Well, sorry, it's exactly the same thing to make let's see what I'm doing here. It's to make customer service a more human experience. It's the same. It's not something different. How do we use AI to accomplish this task? So the opportunity really from technology side is kind of exciting. If you look at what we've been doing since the launch of Voice over IP when we published it in 1999, we've mostly been looking at moving the voice bits from one phone to another phone. And the network in the middle didn't really do anything with the bits, it just moved them around. What we're seeing now with the arrival of technologies like speech recognition and natural language processing in a cost effective scalable way is the software can now play a role in analyzing the content and take this dark data that we've never had visibility to and start to bring value to it. So that's a technology opportunity. And the product opportunity is the one Rowan already talked to you about, right? This is an area where a lot of people who use the software and use products, they don't actually like it. And that just means there's opportunity for improvement. And I think in fact, to give you some examples of things like these will probably resonate with all of you, right. So what are these pain points like if you've ever who here has called a contact center? I mean, come on, raise your hand, right. This guy over here, you've never called a contact center. Okay. Yes. Just like just looking at me dead on, no hand. Alright. So why do I why do I have to say who I am like 3 times? Why why don't they know why I call? Like, you just got a thing that says, hey, your bill is overdue and you paid it. You call them up. It's like, thank you. Can we add a subscription to your service? I mean, come on, you know, why don't you know? You send me the notice, right? Why don't they know what steps you've already taken? Probably my favorite example is that call to the cable company and they tell you to, you know, your cable box is broken, have you restarted it, unplugged it, replugged it in? I mean, come on, I did that like 3 times already. Why don't they know that? Why do you get put on hold all the time? Why do you need to repeat everything? We have to wait for the agent to type things. I call this the clickety clock effect. The agent asks you a question like, hey, what's your name? You say, Bob. And then they type for like 10 seconds, clickety clack, clickety clack, what are they typing? Well, I said it was Bob. So it's there's this long wait you have to take and then you don't get a response quickly. It takes a while to resolve the issue. Sometimes the agent is not empathetic and friendly. Sometimes you have to call back. These are the pain points and there's so many of them that there's just lots of opportunity to make this better. So our strategy to capitalize this is to use AI. Now if you look at what people are doing with AI in the contact center, broadly seeing speaking, you'll see the market and products splitting into 2 categories. The one you're probably most familiar with that gets probably most of the buzz is this one here, which is Intelligent Voice Assistants, also known as IVAs or voice bots. This is sort of the next generation of your voice response systems where you're talking as a customer, you're talking to a machine that's answering your questions and interacting with you in a natural way. The other is it's sort of lesser well known stepbrother called Agent Assistants. And with agent assistance, it's different. When you finally do connect, you can still talk to an agent. It's a human to human conversation. But what we do is we have the AI listening in on the call, processing it and providing guidance and input to the agent. So that's agent assistance. And so when we went to look at our strategy is, we actually decided that we're going to focus on agent assistance. And there's a bunch of reasons for that. I think probably the most important one gets back to the end user, the customer. There's a real risk, we think, that overuse of voice bots is going to lead to cases where people are frustrated. They call up, the voice bot doesn't understand and everyone's going to just say agent, agent, representative, you know, like just like we do in IVR systems today, right. See, you laugh, I could tell you're one of those people. So with a voice bot since we're still going, there's a risk it gets worse with agent assistance it does not. We're still talking to a human and it's important to understand especially for folks, artificial intelligence systems, machine learning systems always make mistakes. They are not 100% accurate. And as a result, it's not a question of if, it's a question of when. When these systems do not do the right thing, what is the impact on the experience? With Agent Assistant, the answer is there's no negative impact. So we kind of like that. It also, like voice bots, also saves money for the customers, which is critically important to deploy these technologies by reducing what's called handle time, how long it takes the agent to handle the call. And most importantly, because of this blue line right here, there's a feedback loop from the agent back to our software that allows it to be self learning, a feedback loop that is absent interestingly in the VoiceBot case. And it leverages our strong services capability that you're going to hear more about from Dan. And what we're doing, what we're not doing, because as you heard from Ron, we have to be laser focused. So we're not building our own voice spot. We're going to partner with them and allow them to integrate into our system and there is a market for that, no doubt about it and it will find use cases, but we actually think the much more exciting and larger opportunity ultimately is this one. We're also not building our own AI models. I think there's this mis perception that in order to do anything AI, the first thing you have to do is hire 30 PhDs from Stanford or MIT. And the fact is you do not anymore. What we've seen is that this technology has become commercialized by vendors like Google. Yes, I actually have a PhD from MIT, which is well, Columbia, but that's why they're laughing. So but anyway, so totally threw me off. Thank you for that. So the point is companies like Google and Amazon and IBM, they're taking this technology and they're making it available as a software as a service platform so that you don't have to have these armies of experts, you can use their tools effectively. AI is becoming commoditized and democratized. And we're leveraging those platforms to reduce the engineering investment we require, yet taking advantage of all that they have, which is a lot. So that's what our strategy is. And you could think about what we're trying to solve with a diagram like this. So here we have our agent in the middle, the customer on the left and we have some software here. And what happens is the customer will call up the agent and ultimately they have a question or an issue and they want an answer or resolution. That's the fundamental problem the agent has to solve. How does the agent solve it? Well, they ask lots of follow-up questions to get more information. They start to gather information from the user that's called up and they combine that with their training and of course while exhibiting empathy. What they do is they enter the information in these back end database systems and software applications, tons of them. In fact, agents are notorious for having 10, 20 tabs open in their browsers as they take information from one website, put it in another, get something back, ask you as a customer follow-up question, hear what you say, go into another back end system, get the result, that's all that clickety clacketing. In fact, every time you go on hold, that's the agent doing something like that, unless they're just bored and are doing Facebook or whatever. But most of the time, they're not doing that. They're doing this kind of data entry. And so in a lot of ways, sort of our market opportunity is at least equal to the amount of time people spend on hold in the contact center, because we can take that and we can automate our way through that. So what we're going to do is we're going to take all of this, right, which is ultimately taking this human voice from the customer and translating the back end systems and we're going to take that and we're going to turn that into the AI. So the AI is going to interact with the agent and then when the agent says okay, push all this information into these back end systems and interact with the agent in the process. So, let me give you an example. Calling the cable company, when something doesn't work, which is calling the cable company, when something doesn't work and I have to find people resonate a lot of people resonate with this problem, right? I personally have this problem. So what you're seeing here is a screenshot of the software that we're developing and let me explain to you what this is. This is what the agent will This is not what you as a consumer would see when you call the cable company. So the agent is looking at. And here we have on the left is a live transcript. So as the agent and the customer are talking to each other, this shows up over here, but that's actually not the important part. The important part is our natural language processing technology is analyzing that conversation and it is figuring out information to present to the agent. And the agent clicks these suggestions and it brings up what we call push cards. And these cards contain important information, guidance and actions, more importantly for the agent. So in this case, the customer calls up and says, hey, I'm having trouble setting up my new DVR. And in this particular case, when the software hears setting up trouble and DVR, our natural language processing system says, up, I think I know what's going on. So through automation, it looks up the customer record in the database, it goes to the IoT and device management platform that the cable operator has, looks at the status of the DVR, sees that it was just rebooted 10 minutes ago, Relevant information. Provides this information right to the agent, so they don't have to tell you to do something you've already done. And then it runs a troubleshooting script which goes through the steps that the agent would otherwise normally go through in a manual way. And the next thing it checks is, is the firmware out of date? And it turns out that the firmware is out of date, and so it surfaces that information to the agent and then tells the agent, this is what you do, just press that button and the automation will then go and update the firmware in the system. So the conversation goes like this. So the customer would say, Hey, I'm having trouble setting up my new DVR. And the agent says, Oh, I see you've just rebooted it. Your firmware is out of date. Can I fix that for you right now? And as an end user, it'd be like magic, right? I mean, you didn't even finish your sentence and the agent already knew what you did and has your fix ready to go with your confirmation. And the agent hits reboot now. Now the system also knows that in this case, the best thing time to upsell to a customer value services like HBO or something is while they're waiting for these processes to complete. So in this case, it analyzes the customer propensity to buy and what have you and it recommends the agent to ask the customer if they would be interested in HBO. So this is a really exciting capability that we've been working on. To make it even more real, what I'd like to do is to bring up on stage one of our customers who's working with us on this program and that is Ed Albertson, Director of Voice Solutions and Audit. Ed, would you please join me on stage? Give a warm welcome, Fred, please. Thanks, Ed. Thanks for joining me here and thanks for coming and being such a great customer. I don't know that everyone is familiar with McKesson, although gosh, they probably should be. But tell us a little bit about McKesson and your business. Okay, great. Thanks. And good morning and I'm excited actually to go through this exercise with you. And so most of you know McKesson as the Fortune 788 year old company that distributes pharmaceuticals and medical and surgical supplies. So what we're going to talk about here today is the division of McKesson that focuses in on the patient, specifically on the patient and the interaction between the patient and our agent. And this really is the representation of the pharmaceutical manufacturer and that's really they think they're calling the pharmaceutical manufacturer when they reach our agent. And in this particular case here, the interactions between the patient and the customer are being essentially done with our agents and handled by our agents. And so with what you're going to see here shortly, this is really a game changer for our business. And in today's business, we are required to and record and report PAEs and PAEs are potential adverse events. You generally would know them as side effects. And so these are a requirement and keeping in mind that the average duration of our calls are about 20 minutes. And in that 20 minutes, there's a tremendous amount of information that goes between the patient and the agent. The agent is required to document that and whether they're typing, as you had said before and all the clickety and clackety in there, whether we know the patient and we have the patient information in advance or not, these are all things that vary on the program and the duration of the program. So I would say that in looking at that information that is actually transcribed into or the agent has to type in, we're really looking at this opportunity here to, a, collect that information so that we're in compliance on it and then also to speed up the call. So it's a matter of the accuracy and then being able to document all that information is extremely important to us. Great. Thank you. And it's been great to work with you and excited to share with you where we've come. So Ed, thank you so much. Much appreciated. Thank you, Ed. This is fabulous and thank you very much. It's been a pleasure and just to let a few more comments and I get a little bit more speak later, but we've been a customer of Five9 since actually 2013. We transitioned our data center over in 2014. We are in 8 different locations across the U. S, but the most important thing is that we've grown with Five9. And I know I'll get a little chance to talk a little bit later on there, but I wanted just to add that in there that we are one of those early adopters of the cloud in an enterprise setting. And I think that we were way ahead of our time at that time in 2014 for an enterprise business like McKesson. So I'm happy that we've been able to progress not only with AI, but all the other services we'll be able to talk about later. So thank you. Thank you. Thank you. Much appreciated. Alright, without further ado, let's actually see it in action. I'm not going to do a live demo. We record for time purposes. So I've got a recording that I've broken up into a snooze snippet. So we're going to start and hopefully everything works. Good morning. Thank you for calling the Ketoprofen support program. How can I help you? All right. So what you again just you saw now the start of this, the patient called up the agent and they started to speak and you saw how it was transcribing nice and fast in real time. And what happened is because this was the Ketoprofen helpline and we knew this information about this customer, we already before just as they started to talk, figured out that this is a case where we need to surface these key pieces of information to the agent, namely collect their reaction, talk about the drug that they're taking and general customer information. And this is what we call the reaction push card, and that has all the information there that the either exists or the agent needs to collect for the purposes of this call. Now what you're going to see next is this critical moment, all right, where the patient is going to talk about their side effect and today the agent would have to clickety clack through that whole thing, type it up and delay the conversation, especially when it's a lengthy side effect and see what happens here. This is where the agent would otherwise type this. Watch what happens. Hi, my name is Taylor Smith. I've been taking ketoprofen now for a while. I just developed a rash underneath my arm. I'm supposed to take my next dose this morning, but I'm not sure if I should. I'm sorry to hear about your rash, Mrs. Smith. There you go. Automatically pulled that out of the transcript and put it in the right place, so agent didn't have to do anything except just look make sure it's correct, as it is in this case. And so that's an example of a form fill. Again, we just saved a bunch of time. The next piece I want to share with you is confirming information, right. So in this case, we have to check the email address and the phone number and all that kind of information. Our automation has also gone and pulled that information out of the CRM. There's tons of information in that customer relationship management database. It's surfaced just what the agent needs to see in one little click. We'll see that portion next. I am required to let you know the information you provide today regarding your experience will be reported to our safety department. Also, a Ketoprofen representative might want to reach out to you by mail. Do you prefer to be contacted by email or physical mail? Oh, sure. I prefer email. Is your email still taylorsmith59.com? Correct. So again, there you see just a simple confirmation, nice and fast. The information was all there at the agent's disposal. Now the last part I'll share with you again is automating the collection data. In this case, the agent is missing a critical piece of information, which is the dosage. So we're going to hear the patient speak the dosage and it's going to automatically put that in the form too. And if I ask the reason you take the medication and the dosage that you take? Sure. I take it for my rheumatoid arthritis and I take a 25 milligram tablet 3 times a day. Thank you. In this case, we aren't equipped to make specific recommendations to you. Your doctor who So I'll just cut it off, so we're done. So this was not staged. I mean, it looks like someone was just typing mechanical turking and absolutely not the case. We just did a video recording of it. So what and then the last step of this would actually be the real, real awesome part, which is the big green button of happiness. The agent just hits that button and under the hood, it goes and it pushes that information to the FDA databases, to the McKesson internal databases that have to collect and process all this information today, a process that's extremely time consuming and tedious. So what we've done with this thing is we've just saved the agent a ton of time, which saves McKesson a lot of money. We've made the patient experience much better and at no time were we putting anyone under risk of incorrect information. The agent, if something was wrong, this is what I mean about like what happens if it messes up. If this had said 35 milligram here, the agent can still correct it. Just imagine in other cases, if there was no human being confirming, we could have serious problems. So that's why we're really excited about it. And at its core, what we're doing is we're taking 3 totally different capabilities that exist in other parts of the contact center industry. Like I've shown you some AI speech recognition and natural language processing. We're not first to do speech reco and natural language processing in a contact center, but we've taken that bit out of other products that do that. And then what we've done is we've looked at automation, right? There are there's lots of products that do automation and workflow, but we've taken some automation capabilities here. And then scripting, this is a feature of most contact center systems. Our current product has it too, of course, that allows the prevents presenting forms and guidance to the agent and that's existed for a while, but it never had anything to do with the live voice content of the conversation. And that's what's new here. By taking all these three things together and making them work in real time, we're actually creating something entirely new. And so we're really excited about this. And I'm excited about it. I view this as the next stage in the really the revolution that has been monitored telecommunications. It's going to start in the contact center and expand from there. So where are we? Well, we locked down this strategy many, many months ago now. We validated with both industry analysts and with customers in our advisory board meeting back in the spring. I went and we hired a team and we've been ramping up. It's a small team. This is not an army, right? And we signed up a bunch of Alpha customers of which you've heard just from one of them, which is McKesson, and we're currently going through this alpha trial process. We're actually building this product in conjunction with these customers to make sure it absolutely meets their needs. And we'll continue to develop it and work on it and we're really excited about the opportunity it brings. And of course, a big part of how we're able to do this is because we're using a modern and agile engineering engine that I'd like to bring my colleague David Pickering up on stage to talk to us about. Dave Pickering? I don't know if I need this or not. Man behind the curtain? Okay. My name is Dave Pickering. I've been at Five9 for about 11 months. I'm the EVP of Engineering, And here's my journey to Five9. So I did not come from Cisco. I came from Intuit, where I ran QuickBooks Engineering for about 6 years through a period of really strong growth in that sort of core SaaS business. We grew about 10x to 2,600,000 customers. And while doing that, we also went through the transition to get into the public cloud to get dockerized and containerized to get automated to push our releases to we would release about 300 times a month, just my team. Before that, I worked at Tapjoy, which was a smaller company that was large scale sort of targeted marketing alternative payments processing. Before that, Oracle, where I started their interaction center platform, way back, I don't know, 20 years ago or so. So my key objectives when I got to Five9 were, 1st, Five9 has a great track record of delivering software, delivering on time, delivering on quality, uptime, all of those kind of things. So number 1, keep the trains running. Don't mess anything up. Number 2 was grow the engineering team. As Anand talked about a little bit, we're looking to expand the engineering team, expand our capabilities, grow that team, get some world class people in to add to our already existing talent. And then number 3, those 2 both were sort of referred to by others. Number 3 was accelerate the speed of delivery and update our engineering platform. So that's the one that I'm going to focus on most in the next few slides. So I am maybe coming at this from a different angle than most people. I'm an engine guy. I like building teams. I like building development capability. I like horsepower. I like cornering, those kind of things. What you want to build with it, I'm interested, but that's not my primary focus. My primary focus is how to get horsepower, how to get cornering. And this is the basic answer to how you get horsepower and how you get cornering in a modern SaaS platform. So, public cloud, get on to public cloud, public cloud strategy, maybe you have your own cloud, we do, we have that for good reason, but you need public cloud as well. Containers, this is Docker and Kubernetes. It's how you deploy architecture in a modern system. Decompositions, you can release individual parts of the product, roll them back, roll them forward, those kind of things. Data that feeds all the AI strategy, it weaves through everything, particularly when you're a cloud company. Interfaces and APIs and automation. So these are the things that allow us to accelerate to go faster to corner. And critically, it's what turns the traditional release train that you wait for and it comes once a year into more of a release Uber where when that individual piece of software is ready to go, you call it, you ship that piece of software. If there's any sort of a problem, you can ship it again. You can iterate. You can solve your customer much faster. So why does this matter? Okay, just deliver more customer benefit. You get more output when you do this stuff. You deliver more stuff. It's collaborative. So again, the release Uber model. So when we're working with McKesson on something for AI, we can release that independently. We don't have to wait for 11 months or 4 months or 2 months or any other months for a release vehicle. And that's important to us. Be humble. You need multiple shots on goal. You do not get one shot on goal and actually nail it in the real world. So you need multiple attempts at it, you need to work with customers, you need deep expertise. And then the modern innovation engine, which I'm going to go to a little bit more into the next slide. Okay. So this this is platform as a service over here where it says service mesh. This is effectively all the stuff that we don't write, okay? And that's basically what modern platform as a service is about, is I don't want to write release, I don't want to write Docker, I don't want to write Kubernetes, I don't want to write a PubSub bus, I don't want to write any of that. I want Google to write that stuff. I want to sit on top of Google. I want to sit on top of open source. That's what all this service mesh is. That's effectively the stuff we don't write. Over here where it says 59 Core IP, notice that's in the 59 cloud and that's really important. Public cloud, 59 cloud, all that functionality is accessible to me when I'm building a new component. So when I build a new component, oh, great, agent assist, Jonathan just talked about it. I'm sitting on top of both, right? I'm building it using PubSub and using Kubernetes using Docker and using containers, using all of these things that I'm not using my engineers to write. So I can have my engineers do our differentiated software, the things that we do better than anyone else in the world. It sits on top of this core IP, the deep roots that we've been building up for 15 years. It sits on top of Google and AWS, all of these reusable components. And that allows us to go much, much faster and use our software and use our people much more efficiently. So here's the result, right, which you just saw from Jonathan. So in 3 months, we went from a customer advisory board where we're having a meeting with McKesson. Jonathan is presenting this. This is a mock up of what we later made. Who's interested? Does this fit anybody's bill? Anybody want to work with us on it? McKesson says, yes, we do. Fantastic. Some other people did also. We're able to build this, take it from concept, delivered in 3 months. Why is that? There's no way I would have been able to do that except I'm sitting on top of Google, I don't have to invent all the stack. And we've got all of these core capabilities that are in the cloud from 59 from 15 years of doing this stuff that I can leverage. Right? That's the key. It's that's an amazing efficiency that all comes about from modern SaaS, and that's a really big deal, and that's why I'm here at 59. Dan Berthwind? Thank you, David. There you go. I've been informed that this will suffice. So very glad to be with all of you this morning. Lots of familiar faces. As most of you know, I've been at Five9 for almost 10 years. It will be 10 years next month and very excited to share with you this morning about our go to market and service delivery. So let's get right to it. First of all, why are we confident? Why are we so excited about our future? And I'm going to take you through this in really 2 different ways. 1 is to look at it from a customer perspective. What do our customers go through in their lifecycle and working with Five9? And then we're going to talk about how we can scale this go to market engine to really capitalize on the opportunity that Rowan shared with you earlier and the tremendous upside that we have in the years to come. And we think we're well poised and positioned better than anyone to take advantage of that. So first, let's jump in on our real customer lifecycle. For those of you who are familiar with us, you've heard me talk for years about our ability to continue to capture and land larger and larger enterprise customers. And that hasn't always been the case. Our industry was challenged years ago with when is this going to take off? When are we going to a lot of you asked those questions. When are you going to be successful in really working into the large enterprise space? And we'll talk about what those challenges were and what we've done to overcome them and be successful today and set ourselves up for the future to go even larger. We'll also talk about the adoption phase. Really, what do we do to enable customers to really take advantage and get the value out of the partnership and the technology that we're delivering to them. And that includes not only the technology stack itself, but really what we do with it and how we tailor it to the customers' needs. We'll also take you through the expand phase, right? We talk about land and expand, a term everybody throws around, every SaaS company talks about the importance of doing that. But it's not done automatically. It's done with a very concerted focused effort. And we believe we have a formula for success with our clients that's unparalleled in the succeed with our customers. And it results in really that retention and the retaining of our customers. And again, that's not done automatically. It's not done with technology. It's done in many parts with people and very experienced people that can come in and consult and work with the organizations. So let's jump into that piece of it and talk about first the land. I talked about it hasn't always been the case where we could just go in and land large enterprise customers. We talked with Gartner and other analysts early on 5 to 10 years ago and said, what is it going to take for us to be successful upmarket? And they helped us formulate really these 5 key points that are so important. And scale means a lot of things to a lot of people. It doesn't just mean building a capacity in the platform that meets the needs of that client Because remember, large enterprises, many of them are going to go through M and A, they're going to go through organic growth and they've got to be protected for in many cases, not only 2x growth, but 3x, 4x and so on. So we've got to build a highly scalable platform, which Anand shared with you earlier that we've done. We also need to develop and deliver platform reliability. Scott's organization and the cloud ops is making sure that we have an architecture that is always on, an achievement that is very difficult for enterprises to accomplish on their own. But being able to bring the redundancies, the failovers and the ability to make sure that for a mission critical application like contact center that we're allowing customers to keep that platform always on and always available. Security and data protection, whether it's compliant reasons for what Anand talked about with PCI or HIPAA compliance or just making sure we encrypt and store data in a safe method that gives customers the ability to trust that we have their data and that we're going to take care of it as well if not better than they can, okay? And then feature parity. No one's going to move to the cloud if they lose or compromise capabilities that they've had historically in their existing premises based solutions. So we had to emulate all the feature sets from all the leading providers historically in the space and only then can you give them a platform that will allow them to then enhance that and innovate beyond what they've done. So these were kind of prerequisites that we knew we had to accomplish before we could go up market. And the good news is we've checked all these boxes or in this case circles. But we've checked all those. We're there and we're executing flawlessly in that area. So very excited about that. So let's talk about the adoption phase. Once somebody signs on and says we're going to do business with Five9 and we love what you guys are doing, we do things a little differently. When I first came to the company, a lot of businesses were saying, oh, it's in the cloud, there's nothing to install, you don't need to go on-site. And I insisted and Barry knows this very well, insisted for years, we're going to go on-site for every customer over 50 seats. It's going to cost us more upfront and we know that it's going to affect our margins on the PS side, we know that. But what it's going to do is it's going to set us up for success. And that's due to having been in this industry for almost a little over 30 years now, knowing that enterprises expect that, but they also see the value in that. They want to know that you're going to come in, work with their business leaders, understand what they're trying to accomplish in the experience that they're delivering to their customers. And that's so important to do to understand that and know how they want to deliver it. No 2 companies want to deliver that experience the same way. Everybody has their individual nuances. And so we've got to be in there working with them, co designing and developing and really setting them up with the right design and workflows because those are so unique in every environment. So our 100 plus professionals that do this on a regular basis have a proven methodology and they get certified at Five9 to be able to deliver on that promise and be able to go through that 6 step process where they're doing discovery, they're doing joint design, they're there for UAT testing, go live, the launch and then they optimize the system to see what's working and what's not. And that's a very unique hands on approach that Gartner has given us credit for that not all of our competitors are doing. And we believe that sets us up for long term partnerships and great success. And it also allows us to do back office integrations and customizations with a lot of their systems that are unique so that the agents can be empowered to deliver a better experience. Anand talked about a great new tool, the platform, the WENDU platform that's going to allow us to do that much, much quicker and more efficiently, both ourselves as well as our partners that do take on services for us. Okay. So let's talk about expanding. One way is we come into an enterprise, especially when we go up larger to larger and larger enterprises that have in some cases, they'll land with us in one department or one location. And what we do is we make them successful and then we oftentimes will use that success to reference sell into other departments or just take organic growth within that one department and take us up to provide additional seats. We do project based optimization reviews. And these are key because we can bring professional services experts into a business and do an audit. A system, if you kind of turn your back, it can get stale. It may not it may have been set up initially and designed very, very specifically for what they needed. And then over time, as their business changes, if you don't change the platform to adapt to that change, then you may lose some of that efficiency. And we come in and do projects for our customers. And oftentimes the results of those projects are we see new applications, we see new partner and ISV applications that we can deliver to them, and we see new services that we can deliver. And so it's very important for us to again have that engagement with our customers on an ongoing basis. And then the retention, it really comes down to any SaaS business, right? It's about expanding and retaining those customers. Every one of our customers has a CSM, a customer support manager, customer success manager. That's great. And most competitors and everyone else will have those as well. But what's unique here is that we also offer as an opt in service, the ability for them to purchase a technical account manager through our premium support offering. That technical account manager is an expert who can log into the system and assist with whatever the customer is trying to do. These TAMs work with a handful of accounts. They know them on a first name basis. They talk to them on a weekly basis and they're helping them build custom reports, analyze certain data elements, understand why things are happening within the IVR and what they can do to fine tune and optimize that on an ongoing basis. So very powerful in the retention strategy to have those individuals responsible for taking care of that account. So that's really looking at it. And what does this result in? Anand mentioned earlier, our net promoter scores, nearly double that of the industry benchmarks than the other SaaS companies. And I think this is done through our effort and through our people. And when we hire individuals into the organization, we're looking for people that stand for our company values, not only have some expertise and some knowledge within contact center, but really we look for people that are customer first. They're going to be looking towards what do I want to do to help this customer be successful. That has to be genuine. That has to come from within. That's not something that we just want them to do their job and move on. It's about helping customers succeed in accomplishing their business goals. And that's extremely rewarding. If it's not rewarding, it's probably not the right person for our business. So that's very key. The other thing that it's done is it's created this. And if you take nothing else away from today, in my for my presentation, take this away. And it's the powerful slide that if you look back at our IPO 5.5 years ago, we had 3 customers that were generating over $1,000,000 or providing Five9 with over $1,000,000 annually. Okay, 3, okay. Today, we have 49 that are $1,000,000 ARR and up. So you see a tremendous amount of adoption suddenly within large enterprise that we didn't see before. And again, it was because those prerequisites and those hurdles that we had to overcome in order to gain the trust. We now have that. And so we've gone from 3 to 49 customers in the $1,000,000 ARR bucket and it's gone from $6,000,000 of ARR to $88,000,000 of ARR, now nearly 25% or roughly 25% of our revenue coming from this segment. So the largest growing segment and also the segment that we're focusing the most on when I talk about our go to market model. So let's talk about that. If you look at the go to market engine, we're looking at how do we accelerate to capitalize and take advantage of the opportunity that's in front of us. As Rowan mentioned, the percentage penetration in large enterprise is single digits. So think about the opportunity and the TAM that's available to us just for this. So going up market is key. How do we get to them? We know what to do with them once we land them. We've got a proven recipe for success with our customers, okay? So how do we get involved in more opportunities and get involved in making sure that we can capitalize on all the business that's going on out there in the world? And it's done a variety of ways. One is we continue to scale our go to market direct sales organization. We talk about that a lot on the calls that we're on with all of you about, oh, gee, every year we're growing and expanding in correlation with our growth rate, our direct sales organization. Well, 2019, we took the opportunity to make some very key investments and we decided to invest into areas that would allow us to broaden our reach and increase our market share. And what those key areas are, is really expanding the technology ecosystem is really application or we might have the scripting application or something unique and we'd knock on doors of companies that would want to add to it. Now they're knocking on our doors. In fact, they're lined up ready to go. They want to work with our customers and add their solutions to what we do. We also looked at deepening and investing and strengthening our partnerships with the global SIs, okay. We'll talk about that and the ones that we're replicating our work that we've done with Deloitte over the years and replicating that across others. And then we'll talk about scaling the channel in general, and how we're going to really take advantage of that worldwide and increasing our international footprint and expanding internationally. That's something that we've been cautious to do because of the LTV, the CAC rate, returned on enterprise business here in the U. S. Is much higher and much greater than you can achieve in going into a brand new market, because you got to get started and it's very costly. So first, let's talk about our go to market engine. You've all heard us talk about our direct sales being 2 buckets. We have our inside team or our commercial team that works really 50 seats and below. And then we talked about our enterprise team. And that's great. Well, enterprise was great when it was 50 to 200, 300, 500, but now it's well over 1,000 for many companies. Well, that's a different sales motion, right? The individual that can go out and sell to 100 seat contact center requires a very different skill set and that's more transactional compared to the 1,000 plus seat global enterprise. And so we've created a within the enterprise field team, we've created a strategic accounts organization that we're building out right now to focus exclusively on those large global companies, because we know that takes a different skill set and we want to make sure we have experienced individuals. One of the things we've noticed this year is people can go up market and get big eyes and go, hey, I want to work on 1,000 seat deal and neglect 100 seat deal. So we've got to create swim lanes and keep people in their business segment that they're successful with and that they have the skill set for. Okay. And that goes with not only pre sales, but in the post sales model and the ongoing support model. So very, very important. So now that we're hitting on all cylinders in all those areas, we're looking at where how do we have to be nimble and work with different constituencies. If you think about this for a moment, the stakeholders that are making decisions within contact center aren't just turning to a software vendor like us necessarily, okay. And they're not just turning to a VAR like they may have traditionally, but they're also talking to consultants, they're talking to SIs to help them come in and build out their digital transformation strategy and then work with companies like us to help implement and deploy that and be successful with it. So the first thing we've done in 2019 is bolstered our and really taken on new management as Rowan referred to earlier that had been there, done that. I got here and we grew the business from $20,000,000 to $300,000,000 and now it's important that we have leadership that can help take us from $300,000,000 to $1,000,000,000 plus. And so the individuals that we're bringing in have all had the experience of what it takes and they've run businesses that have over $1,000,000,000 of revenue in this space. And that's very, very important that we have that. Brought in Andy Dignan a little over a year ago. He's running our global channels and services business. And he was able to help us attract Jake Butterbaugh who ran the go to market channel business for Cisco, another Cisco person. And he really had that whole route to market for the entire collaboration business unit in North America. The key there is between him and then when I talk about Brian Atkinson, who is our VP of International based in London, okay. He took Cisco's contact center business in 4 years from $0 to $150,000,000 almost exclusively through channels. So between Jake and Brian, the experience and the relationships that they had in many cases decades long trusted relationships with have allowed us to open those doors into new channels and open those doors very quickly because the channels have worked with them for many years. The channels are starting to realize that their customers are asking for cloud, their partners are asking for cloud. And all of a sudden rather than us knocking on channels door saying, hey, will you carry 59? Will you go put us in at your customer? And they say, yes, we'll sign up. We might need it. The customer insists on it and they put it in their back pocket. That's how it's been for in years past. And so we've been primarily a direct organization, okay? What they bring to us now is these channels that are leaning in and the real sign of a channel leaning in and wanting to lead with cloud. They start investing their own dollars and put skin in the game and sending their people to get certified on our platform. And that's what's happening today. We have a full room every week with people coming in and getting certified and trained on our platform, not only for pre sales, but for implementation and support. So very, very important there. And Andy Cezera came to us from Genesis, spent 17 years there running their PS organization, the last 4 years running Global PS, the 13 years before that running PS for the Americas. So again, having the experience of a proven leadership team that's been there, done that sets us up for great success as we move forward. So for them, it was stepping down to the $300,000,000 company and helping lift us. And that's great. We're looking forward to that. Expanding technology ecosystem and this is continuing with the app market place being announced and launched yesterday as was referred to earlier. We not only have our CRM partners, vast array of partners, but also an immediate adjacency that's oftentimes bundled with our solution is the WFO piece. And that includes the workforce management, which is scheduling and forecasting software that you need to figure out how many agents you're going to need to have on online at 3 pm next Tuesday, as well as the QM and speech analytics and some of the more automated solutions that are so important to us. And we've partnered very well with CSI and Verint and others in that space. If you look at the ISV partners, that community just continues to grow, especially as we publish easy to use APIs and SDKs for them to write to and be able to integrate their products to ours. And we have a certification process and we charge for them to have an integration with us, which is a great program. And then we have our UC partners, as mentioned before, Zoom and Microsoft Teams, as well as others for those customers who want to integrate to their back office systems and have seamless integration between front office, back office. Okay. The deepening partnerships with SIs, most of you have heard me talk if you've been on our calls together about Deloitte and what we've done with Deloitte for about 4 years now and really learning how to help them with really their sales force practice. They needed to have a contact center or CCaaS offer with that and bundled with it. If you go to any Deloitte Digital Customer Experience Center around the world and you say contact center, they're going to demo Salesforce with Five9 for you. They've even OEM some of our solutions for things like healthcare with a patient connect offering that they have. So they're leaning in and they've invested and now we're turning to Accenture, and several others, Slalom, IBM and replicating what we did with Deloitte in those environments. And we're seeing great benefits from that already. And the time is now where that pendulum has swung over and they're being called on to help customers make that transition. The traditional channels, just looking at resellers, referral partners and master agents. Again, a short time ago, they represented in 2015 only 9% of our bookings, overall bookings. Today, it's over a third of our bookings. So again, we're getting great traction, great mileage and great pull out of these folks. And the international piece, we're growing our footprint. We've had great focus here in North America, in the U. S. And Canada. Okay? And okay? And then now we're continuing to expand the capabilities, build in multilingual localization of the product, provide things such as local currencies as they're needed as we move forward. So there's investments to be made there to deliver in those countries, but it gives us the ability to expand our global footprint much more effectively. And we believe you can go into some of those markets prematurely and end up spending a whole lot more. And we believe and we're feeling the case that the timing is perfect right now to be in those markets and to expand. So that really gives you a feel for the customer. And we believe we've created an environment that can scale and bring customers on board and our formula or recipe for success is something that we've worked through the years to refine and we believe it's the best in the industry and it's reflected in our dollar based retention rates. And we also believe we have a go to market ability to reach and get to more opportunities through our partner ecosystem and our investments we're making in those different routes to market. So with that, I'm going to pause and we're going to take a 15 minute intermission. And when we get back, going to have our distinguished panel members, Ed, you met earlier and we have 2 other customers that will be up here. I'll ask them a few questions and then we'll open it up to all of you to ask them questions as well. So thank you. And for those of you who are tuned in remotely, this is Dan Burkland. I'm going to continue now with a customer panel. We've got 3 distinguished customers of ours that have been kind enough to come spend this morning with us. And before I bring them up on stage, by way of introduction, I wanted to make sure that you all had an opportunity to understand a little bit more about their backgrounds and their businesses and then we'll bring them on stage. The first guest is going to come up and I'll do the introductions and then bring all 3 of you up at once so you're not sitting in front of the video. But you met Ed Albertson earlier from McKesson and they've been a longtime customer and grown up to several 1,000 seats on our platform and replaced a lot of those legacy platforms. And once I ask a few questions, we'll open it up for all of you to ask questions of them as well and ask them about their journey and experience with Five9. But one thing we want to do is I'm going to play a short video that's going to introduce you to Gina Wiley from DoorDash and then also to introduce via video, Teddy Liao, CEO of NextRep. So without further ado, please fix your eyes on the video, which I have to click one more time. DoorDash is a logistics technology platform that allows customers to download our mobile app or go online and order from their favorite local merchants. We're really passionate about allowing our customers to have more eatable moments and moments at home with their family so that they don't have to waste time cooking or cleaning. They can spend more time doing the things that they love. What we're seeing more and more is that customers really want to be able to choose the platform in the way that they engage with any support team. They don't really have time to chat in or email in. They really want to be able to call in. The contact center is really at the heart of a customer experience. There are always things that might be out of anyone's control, such as weather or traffic, things that might get into the way of a perfect delivery. And really the contact center is there to help a customer, a dasher or merchant feel like DoorDash is there for them at every step of the way and resolve the issue as fast as possible. With a previous vendor, stability was really a big issue, especially when it's lunch peak time or dinner peak time. When we switched to Five9, we were really able to get that stability and have just that assurance that we would be able to within a matter of 30 days. And Five9 within a matter of 30 days. And Five9 was able to accommodate our needs and our changes and hit the deadline and have a very smooth cutover process so that our agents didn't feel impacted, that our customers, dashers and merchants didn't feel impacted. At DoorDash, we are really all about listening to our customers and hearing their feedback. And in working with Five9, we've really been able to see that exact same interaction. Whenever I have any question or any feedback, they make sure they bring in all the right people to address that feedback, which really is a testament to the great culture and alignment that we have as companies. In working with Five9, we're helping our agents help our customers. We're helping our sales individuals make our merchants more money and we're helping our internal teams get the data that they need to do their everyday jobs. NexRep is not a technology company, we're workforce company. The NextRep contact center is different from other contact centers and that 100% of our agents are virtualized at home. What we are able to do is take people that are stay at home moms or people that are veterans or disabled folks, people that are working in all parts of America, and we're able to route contacts, whether it be voice, emails, chats or SMS or even social media through the cloud directly to the homes of our agents. Netro's culture is all about service. We differentiate ourselves by looking at how we treat our people. They're people. They're human beings. They're not just a number. We're here to help them do a great job. And in keeping them happy, we know that ultimately we're going to deliver better customer experiences to the consumers that we're serving. Everything is consumer driven. And where consumers want to go is where technology and services and solutions have to go. What consumers want is they want to be able to access a plethora of information at their fingertips. They want to sometimes talk to an agent. Sometimes they don't want to talk. They want to have that choice. Oftentimes, with more challenging interactions, they do want a human being, somebody who actually understands what they want and can deliver what they need. The world of contact centers is absolutely at an inflection point. It's more exciting than ever before. So having vendors that play well together is incredibly important to the future. But beyond that, everything is moving towards a data driven world. We as providers need to be able to understand our consumers. We need to understand the agents. We need to make sure that the right agents are interacting with the right consumers. We need to make sure that consumer dynamics are being understood. I'm so excited about the future because finally at a point in history, we've got the explosion of the gig economy. We've got 50% of millennials that are already living in the gig economy. And when we talked about the future of the work, well, it's actually here. It's the present. We sleep well knowing that we've got Five9 to power our technology, to be there when we need, to make sure that as we embark on doing things that have never been done before, that Five9 is there lockstep with us to give us everything we need. We see them as partners, not just vendors. Excellent. So please welcome to the stage Ed Albertson, Gina Wiley and Teddy Liao. Thank you. Okay. So I'll get us started with a couple of questions. And thank you again for doing those videos. Those videos are on our website, if you want to see them again or refer folks to them. So thank you for doing that. And thank you, Ed, for your time in here with a proof of concept for our AI technologies in addition to all the rest of the stuff we've done over the years. But I thought it'd be a great opportunity. Perhaps I'll start with you Gina, to spend a moment and talk. You've mentioned eatable moments in your video. And tell us a little bit more about how Five9 helps your different constituents both the dashers, the consumers and your merchants all working together and what you've done over the time we've been together to help scale that business? Yes, sure. Hi, everyone. Thanks for having me here. So for DoorDash specifically, we see a lot of peaks and values in our volume that we get. So lunch is just extreme high peak times. Dinner is also an extreme high peak time. And what we really need is a customer contact center that enables us to grow and flex along with that. So especially with food delivery, when you are getting you have your order outstanding. If there's an issue, if you have a question, if there's a problem, time is really of the essence in that. And the nature of people and what we're seeing is that a lot of people do want to still call in. They do want to reach a representative right away, because when it comes to getting your food in 30 minutes, 40 minutes or less, getting it hot and making sure it's the right order. It's really important and a lot of people do rely on this meal to help serve the rest of their day or their kids or family and make sure that they are connecting with the ones they love most. So I remember when you first reached out to us, you were on a different cloud platform that was serving much smaller companies and you felt you had outgrown it. And the call was, hey, 59, can you help us? How quickly can you get us up and running? You referenced in your video the 30 days online. And at that time, we had about 600, 650 agents that we deployed immediately. What's I know your business is growing. Where are you at today with that scale? Yes, we have been growing just in general, the space has been growing so much and our volume has grown. We've grown to more cities. We're now international. And so for our particular use case, we were having a lot of stability issues before. And these stability issues, they would come during the peak times. They come on the weekends. They come during nighttime. And so when you're someone like me, you don't want to be on call at all times over the weekend, every single moment of the day. So ensuring that stability was up and running at all times was really important to us, ensuring that there was also a platform that allowed our agents to connect with our Dashers customers and merchants in an empathetic way was really important. And so we've been able to handle all of those peak concurrent calls. And Five9 has really been able to flex and grow with our scale and help define some of the roadmap items that do help customers like us. Great. Thank you, Gina. Teddy, you've taken an industry that really is used to filling rooms somewhat like this large office buildings with hundreds of agents sitting with PCs and headsets and working at that. And you've taken that approach and kind of turn it on its turn it on its head and really taken a very unique approach to delivering customer service for your clients. Tell us more about that and how you've done that? Yes, super exciting for us because we believe that over the last several years, there was this movement of that was all cost driven, right? Everybody's moving to India and the Philippines and offshore or near shore because of cost. And then there was this evolution of, well, we can't the quality is terrible. Okay. People don't want to talk, especially American consumers do not want to talk to people overseas. So then they tried nearshore and it's like, the quality is still not there. It's a little bit better, but now like how do we actually find a solution where you can get high agent performance and a marriage of cost. And we have found through our model that we're doing we're able to deliver that. We can have an entire ecosystem of contact center agents where we don't have to buy land or lease land or erect facilities and drop wiring, cabling and do all these old fashioned things. We can have thousands of agents from their home and we can empower people. And the other secondary benefits of that are you have higher loyalty, you have lower attrition, you have higher commitment and all that results in better performance. So now the consumers are getting what they want, which is they want a domestic agent, they want performance, they want someone who understands their culture, you have cost savings passed to the companies and to the brands and then you have ultimately agents that are just thriving in ways that otherwise would not be possible without technology like 599. Right. So one thing we do with Teddy's organization, because he has an elastic workforce, agents can log in and take calls when they want or when they're asked to. And so they can flex up and down very easily and pay their agents by the hour. One thing, Teddy contacted us, I think it was about 4 years ago, to help with something that's very unique and that is and for a great cause. The Stand Up to Cancer Telethon is a one evening event. It raises $125,000,000 last year and we have a scalable, flexible elastic platform that can scale up to thousands of ports or thousands of lines, if you will, in a very quick period of time. And he can bring on his talent to volunteer for that one evening to help raise money for a great cause. And so for the last 4 years in a row, we've been the technology and he's been the people behind that stand up to cancer telethon that you see on TV every year. And it's a great way for us to help them raise such a great amount of money and do it with something that can flex up in one day and flex down the next and is really a great model for what we can do together. So Gina, you're in the thousands of agents at your peaks. You've done thousands of agents both for the telethon and for your clients. And then Ed, coming to you with McKesson, I think we started with 40 seats back in 2013 with McKesson. Again, talk about land and expand. We came in with a small operation that needed a specific application to do some outbound dialing. And the next thing we knew, it was, hey, what else can you do for us? And we grew it from there and you're up to near 5,000 seats with us today, right? Correct. Yes. We peak out during our seasonal time at about 5,000 seats and possibly pushing a few more this seasonal. So share that journey, if you could, with your legacy platforms in specialty health part of life sciences and then how that's blossomed into other areas if you can share that? Yes, sure. I think in the case that you had put together here where you're looking at these large enterprise operations that have premise based equipment And that was our previous situation and we really had actually more than one platform. And we were on Aspect and we had Avaya and we had Cisco. And we were using all three of those platforms and mostly because the Aspect hardware piece of it was just brutally expensive. And the licensing on that is a fixed license on there and we had some seasonality to our business. So and keep in mind also that we were somewhat of a dynamic business with these pharmaceutical programs and there's constantly new drug programs being brought in. And then the FDA mandates changes to existing programs. And one of the issues that we saw was our speed that we could deliver that those changes. And in those cases where the FDA mandated that we make these changes, it became an urgent situation with our Telecom IT groups. And so in looking at the overall situation, we decided first that the cloud was the right place to move to and then did an evaluation and you're right and actually it was 20 seats that we did and it was strictly an outbound program that we launched on there and then the people and the service and how easy it was for us to work on that platform really kind of opened our eyes up to bigger opportunities on it and then expanding and growing from there. And over the course of the last 5, 6 years on there, we've, of course, acquired multiple companies and we've been rolling them into these platforms and just growing and expanding the business. Great. Excellent. So now I'd like to open it up to the audience to ask questions. We've got several microphones that are floating around. For the remote folks, it's important to use the microphone so they can hear your question as well. Thank you. Yes. Yes. Thank you for giving us your insight and perspective. I guess a 2 part question. Just as you look into 2020, what kind of expansion do you see with Five9? And then secondly, with the acquisition they announced earlier today, is that applicable to your business? Thank you. Yes, I can go first. So yes, I think our space is growing. And so for me, it's like a business applications person, it's really important. Someone was talking to me earlier, is that we're able to find vendors that can grow alongside us. So definitely in 2020, I think growth is for DoorDash specifically is in the books as we expand to more markets. Secondly, as far as the acquisition, today was kind of like the first time that I saw any of those flows. And really, I started out as the 1st and only administrator of the system, along with all of our other applications. So I wasn't really like a call center person. I've never done that before. But kind of with the flows of being able to build all of those things, 59 does already have kind of a flow builder. But seeing that one that's able to integrate with other applications such as Salesforce and things like that is really important for us. And even now, if you ask me to build a phone line for a new partnership, I'm able to do it probably in 5 minutes, which is really great. But I think that flow will be really important because what's really becoming increasingly important in the industry is that all of our applications talk to each other. So I'm really excited for it. Great. Yes. So we're seeing a tremendous growth. And I think from a macro level as well as and I'll go into the macro specific to next step. But from a macro level, what we've observed is there's this mass migration in the BPO space moving back onshore, number 1. Number 2, we see a mass migration of moving at home. So a lot of publicly traded companies, a lot of consumer electronics companies, including the largest fruit company in the world, has made a migration, you know who I'm talking about, has made a migration to U. S.-based at home. So number 1, that's great. Number 2, for us, our business is growing tremendously. We have had tremendous growth in the last several years and 100% of that is with the cloud and through Five9 and virtual solutions because we have no facility. So I think the other thing that's a little bit different from us versus these guys is that we're a BPO. So we serve as an array of different clients that all have their technologies, their own solutions. So the ability to be nimble and fast and integrate with my clients and then their various numerous amounts of technology is super important because I need a client to come in and I need to be able to turn them up because it helps me, it helps you, it helps them. Right. Yes. And your question, it's that they've just seen this today for the first time as well, obviously, because that's confidential. But we're really excited to come out, Teddy, to your point and share with you how we can help you integrate to your clients' back end systems much more easily. And I'll just I can't speak to any growth that we have or any acquisitions. However, I can tell you that what we're really looking at is to optimize what we have today. And this is really focused in on the AI that you saw today. How can we make our agents more efficient? How can we provide higher quality services that again it's that customer experience. In our case, it's the patients, the patients that are calling in and sometimes doctors and pharmacists and health care professionals in general. How can we make that better? So I mean, my focus into 2020 would be more the optimization and getting better and optimizing WFO and how can we work specifically the AI is what we're really excited about. Next question. Yes, Scott. Hi, good morning. Scott Bergman, The Needham and Company. So the question is on scalability. If you look at Gartner's recent Magic Quadrant, the NOC, if you want to call it that on Five9 is its ability to scale relative to the other cloud vendor or well known cloud vendor in the space. Can you all talk about your experience because you're with larger, obviously, organizations on the platform's ability to scale and then maybe compare that against your prior technology experiences? Yes. Let me start off with that, because that was one of the primary reasons why we moved to the cloud is because of that. And as I've mentioned before, having premise based hardware. And so we typically and are seasonal will add anywhere from 1500 to 2000 agents and we normally launch that in the month of December and we run that through March. And we have the ability of scaling that up in the various domains, building those campaigns and then as the season starts to roll down, we start to roll agents off. And again, it's a subscription based. It saves us 1,000,000 of dollars by the ability to be able to add and delete licenses. Yes, I would just to say to add on to that, it's the same thing for us as far as the peaks and values of what we experience in any day. And then as we have promotions or things where there is more interest in something, I think for us the ability to just be serve all those customers and add agents or use up the licenses that we only use is really important. I mean the story that Dan alluded to illustrates that perfectly. So if you don't know what Sand of Cancer is, it is a telephone where 50 plus TV stations all call truce. For one night they completely stopped the programming and then they showed the same exact telephone, right, to raise money for cancer research. So we're talking about a TV show that Bradley Cooper hosted last time and at 7:59 there are literally 0 phone calls. The 800 number is not public, nobody has anything. At 8 o'clock the television goes on, there's music, Bradley Cooper goes on And by 802, there's 5,000 ports completely full. So to go from 0 to 5000 ports completely full is absolutely absurd. And I don't think it's really anything that happens anywhere else, right? So anybody who's watching TV that night is probably watching that show other than ESPN because they're jerks and they care more about showing their programming. But every other show, like every other channel is broadcasting this, right? So it's super powerful and that this only happens with Five9. I will say an interesting thing, sir Ken Robinson, who is the single most viewed TED Talk person ever, right, in the history of the platform. And he talks about these things called unintended consequences. And he talks about Galileo and especially in technology where all he wanted was a telescope so he could observe the moon. And it turned into human and mankind completely debunking what we think about in terms of our role in our solar system, in the entire universe and we end up realizing that we're not the middle of everything. And we talked about Steve Jobs in 2007 when we made the iPhone and 2010 the iPad. There's no way that he knew that there would be apps like Uber or DoorDash sitting on top of that platform. And he sure as heck didn't know that people will be spending 8 hours a day on the tablet and the phone. There's no way unintended consequences. When Five9 came out, I think they look to tackle the contact center space. I don't think they realized that they would be a part of raising $125,000,000,000 in one night for cancer research. I don't think that was the intention, but it sure as heck was the unintended consequence. I think moving forward and looking to the future technology, especially with how we're doing things is so exciting with Five9 because we're going to unleash business practices that have never been done well before. What I mean by that is for an organization nonprofit like Stand Up Cancer say, you know what, in one night I want to have thousands of agents. That wasn't possible before. I think businesses are going to change their behavior. They're going to be able to do promotions. Literally 40% of our country or our population is going to be affected by snowstorms in November. Florida is getting snow like WTF, this is crazy stuff. Stuff. So there's so many things out there and how businesses are allowed to flex their behaviors and interactions with customers is going to be so transformative beyond just these slides up here and the cloud powers that. I could go on forever about that. I was going to say. I thought I had energy and passion about this, right? Next question, yes. So just curious, hey, you're obviously sharing some super insights here about Five9. There is other cloud peers out there who say they can scale, they can migrate you to cloud obviously. What do you see makes Five9 stand out from its cloud peers? And you've kind of touched on it, kind of integration with Salesforce and obviously ability to scale, but again, other people say they can integrate with Salesforce and scale too. So just curious on your opinion. Yes. I'll start off with that one there and I'll let you guys add on to it on there. But I would say from the very beginning and just to preface what you had said here, we actually did a very formal RFP and we looked at the entire landscape and the big three that you see in the Magic Quadrant, there are ones that we looked at. But we found something very unique about Five9 that we did not find with any other supplier that was out there. And basically, it's their culture and it's their ability to listen. And we from our perspective, we really needed something that was custom built and unique and they made us feel that way. And I know the platform is adaptable and there's many other uses of it throughout the Five9 enterprise today. But I think that each customer and you can pull them all individually probably feels that well, Five9 built this just for me. Like this is just this is mine and that's the way I feel. And I think that if you were to look at how we use the product and how we interact with the people. And in our particular case, we actually have on sites, badged people from Five9 that are on our site that help us administer the system, help us optimize the system. They know us. They know our business practices. It's a very special situation that we have and a unique relationship that is very personal to me. And I would say not just Ed, but the people that actually run the contact center. Yes, for me, I'm definitely like a technology agnostic person. I'm a DoorDash person, so I'm always looking for what's kind of the best tool that we can use. So I've seen a lot of the demos, even kind of continuously evaluating all of these things. And just based off of the criteria that we have as far as requirements, Five9 is really the only one that's been able to satisfy every single one of those requirements. And if there is kind of customer pinpoint that I bring to them, there is kind of immediate action on that or a game plan that set out, hey, these are some resources, this is what we can do. We do use the technical account manager and that has been extremely useful for our entire team to have someone who knows the system so intimately that they're able to give us recommendations and be there at any time of the day. I even text my TAM, I text my account manager when I have questions or if things are going off, but it's been really valuable to have a human to talk to and really have the partnership there too. To Rowan's dismay, because I am a BPO, I am forced sometimes to use other vendors. And oftentimes, I wish I could port all my business over and Dan would be happy and Ron would be happy and very Shirley would be happy, but I can't. So I'm stuck using a plethora of different platforms out there. And you would think that all these cloud platforms are the same and they're just delivering a cloud based system and they're not. And when they display the full suite of services that they have, it's super important to understand the layers of this. At a bare basic level, they've got to have reliability and stability and a lot of these other guys just don't have the same level of reliability and stability. Fact. And you could go ask everybody about what their uptime is and that's a really important stat that they put up earlier. The second thing is the ability to have everything in a one stop shop for the agents, reliable reporting. I mean reporting is so bad with so many other places to be able to export out data, be able to pull in data especially when you're working and interfacing with so many other platforms. And the Play Nicely comment that Dan talked about earlier is so important. I mean it goes to playing well nicely with other vendors. But really with us, I think what keeps us coming back when there are issues and there sometimes are is really their commitment to client success and services. The TAM program is completely defining and different. And I hope that they continue to keep it as it's been historically. But the people that they have that worked on our setup to making sure that we're using it properly, we're deploying it fully and to making sure that it's reliable is just unparalleled out there. Yes, Meta. Just a quick question. Are you primarily using it for telephony based? I know you guys kind of all gave telephony based agent answers, but telephony based agents. And then are you using them in omni channel where you would be able to see if somebody emailed and called in as well? That would be yes for McKesson. It's very unique to the actual pharmaceutical program though. We use Salesforce as we're a big Salesforce shop, so we use like Salesforce's omnichannel, but Five9 plugs into that. Yes, as well. And we actually use them and they don't know we use this for time tracking also. So sometimes we have really crappy other solutions that we have to use. So we actually use them for payroll and because we rely on them. So we actually use it for virtual time tracking. Thanks in the back. D. J. Hynes from Canaccord. So maybe for Ed, since you seem to be furthest along with the AI strategy, I'm curious how you see AI kind of evolving in your contact center. I mean, we heard Five9 talk about today that they're going down the path of agent assist versus IVA. How do you see that playing out? And then we also heard stats that 16% of seats could be automated away over the next 10 years. So how do you see that playing out in your contact center? And then what do you think are the right mechanisms to pay for that type of technology? Yes, that's a great question because it's more than just the agent assist on the front end because if you look at a call and the fact that if an agent without AI today makes a mistake on a call, when we go back to the QA, which I'm going to address here in just a minute for you, we have to we basically have to put together when our quality management system gets in and starts to look at it and we QA the call and we find that we missed the PAE, we've got to put together a campaign and it becomes a capa for us and we have to log that capa and investigate, call the patient back, get more information. So if we can make that call experience and capture everything upfront to make it an A call on the very beginning, there's really no need for us to do quality on the back end. Now think about that, if you know contact center and the way that our contact center works today is, believe it or not, we do 4 QAs per agent per month. That is an insignificant it's a small sampling, but the cost to do a higher percent is just prohibitive and the customer won't pay for it. But if we can QA that call while it's happening and make that experience perfect from the very beginning, this is where our cost saving comes in on the back end. We don't need to have 189 QA people in our contact center and we have that experience upfront. We capture all of the PAEs upfront and we address that and the patient experience is taken care of on the first call. 1st call resolution, if you're in the contact center business, is a big deal. You've got to get it right the first time and AI moves us closer to that nirvana when it comes to that experience. Did I answer your question? And one other point on that and I'll add to it is, we're really not looking at the contact center from a standpoint of reducing headcount. We're looking at really bringing on more business. And that's the way that we're looking at it is from that perspective is how much more business can we do, how much more efficient can we be and then be a differentiator we do have competitors out there. We believe that thank you, Jonathan. We believe that the AI will make us that much better than our competitors. So one last very quick question that Lisa indicated. We have time for one more. I think somebody over here had one. Is that right? No? Okay. If you do have questions, they can take them afterwards privately. They'll be here for lunch as well. So thank you all very, very much for your business and for coming here today and sharing your experiences with our audience. This was wonderful. Ken, thank you very much. Thanks, Dan. Our pleasure, by the way. So now so without further ado, the one the only, Barry Swornstein, take us through the numbers. Barry? Thanks, Teddy. Thanks, Dan. Thank you. Well, good afternoon, everybody. Just want to add my welcome to what Rowan said earlier today. And just to say how heartening it is to see the growth in this audience over the last 3 years since we had our last Analyst Day. So thank you for your interest. So we're going to start by talking about our financial commitments. And those of you who know us even a little bit know that this is a management team that takes its financial commitments very seriously. And why are they? 1st of all, sustained 30s enterprise subscription revenue growth. 2nd of all, a continuity of the disciplined execution. Rowan at the outset talked about the fact that we're riding 2 waves, the replatforming of America and the rest of the world to the cloud and second of all, digital transformation with contact customer experience prominently in that. And doing that with the frugality and the pragmatism that we customarily exhibit. And finally, doing it with the balance of the top and the bottom line, We still subscribe to this quaint notion that profits and cash flow matter. And so we strive for that balance. Taking a retrospective back to the Q2 of 'fourteen, we're in public to now. We've maintained, in fact, slightly improved revenue growth from 27% to 28% LTM. And we've had a massive expansion in the bottom line, 44 percentage points. And almost all of that is reflected in operating cash flow given our working capital efficiency. And if Teddy will forgive me with all due respects, this is an intended consequence. So what's driving it? Well, it's enterprise business. That enterprise business is now 80% as we've talked about before. When we went public, it was 60% of the total and it's immensely profitable. On a truncated 5 year basis, the unit economics, the LTV to CAC are 6:one And that is something that I'm told even many people would be happy with a 3:1. So it's a really solid business. And this here is the entire enterprise business. Remember, there are 3 components, the subscription, the usage and the professional services. By drilling down particularly into the subscription part of it, we've demonstrated consistent growth in the enterprise subscription in the 30s. And it should be as no surprise when you're growing in the 30s and the corporation as a whole are growing in the 20s, the eventually, and we've now reached that stage, the enterprise subscription is now more than half of our revenue. When we went public, it was 34% of the total. Dan was very proud justifiably for the work that him and his team have done to take us from $3,000,000 ARR customers up to $49,000,000 And by the way, no customer concentration. All of our customers are important, but none of them account for more than 3% of our revenue. And what we did is in any given quarter and what we did is we looked at those 49 and did some additional cuts. We're talking about truly massive corporations. I mean, McKesson is prominent, but there are others. The average revenue, dollars 10,000,000,000 and the employees, dollars 12,000. A question we've frequently asked as a management team is, well, what about we understand that you get a lot of your revenue from new logos, majority of it. But what about your installed base? Well, for three reasons, that is growing in importance. First of all, the base is getting bigger. 2nd of all, the metrics show that the amount that they can afford, the bigger customers, they buy the extra SKUs, is higher than the ones from the lower end of the scale. And thirdly, the MRR proceed is going up due to the this new management this new product team, Jonathan, Dave and Anand. They just inhabit a different universe from what we used to have and they're being properly funded and the additional SKUs and features are going to be showing up increasingly in our bottom line. So what you're going to see now is to help you get an impression of how successful we've been in terms of expanding in the installed base. So on the left hand side over here are those 49 customers that we're talking about. On the right hand side is a CAGR since they in billings since they joined the platform. And now you're going to see a sort of Minecraft type situation where the green is the initial booking or subsequent booking. And here it goes. Oh, no. There we go. So obviously, you want to have a high persistent rate of green to white, which is what is amply demonstrated over here. And it just keeps on going and just keeps on going. And when you average out all of those CAGRs, it turns out to be a very respectable 67%. So we're growing very nicely in the installed base. There's a disclaimer in the financial community that past results are not the indication or proper commitment for future results, but they do have some relevance. And so we're very proud to show our Mona Lisa slide over here. Blue is the revenue growth by quarter. The red is the improvement. And you'll see that we went from a negative 6 under the rule of 40. We peaked in the Q4 of last year at 53%, so an improvement of 59 percentage points. At that point, we decided given the strength that we were seeing in the market that we wanted to meaningfully start increasing our investment in both go to market and in R and D as both Anand and Dan talked about. So and I'm extremely happy that we did that. We went down to step down and now we're starting a new staircase, but from a much higher base much higher starting point. Operating cash flow, I alluded to this earlier on. We've now had 15 consecutive quarters of positive operating cash flow, driven by the EBITDA, driven by the fact that we only have 31 days of sales outstanding and driven by the fact that with over $206,000,000 in federal NOLs, we're not going to be paying any cash taxes anytime soon. The long term model. So the model you see over here is a model that we have in our current investor deck. So we're reaffirming it at the moment. We have the us going from the current 18% up to 27% over the next 5 years and where we draw a lot of confidence is that the 2 biggest drivers for the upcoming improvement are ones that don't require a whole lot of creativity or new ideas or anything like that. It's a continuation of what's happened in the past, namely on gross margins and G and A. In terms of gross margins, there are three reasons why our gross margins improve. The biggest one though, which I'll talk about now is a very simple fact that our subscription revenue grows in the 20s, a blend between the 30s that you saw for enterprise and the single digits for commercial, while the cost of that subscription revenue grows typically in the teens. And so it's slow, but very steady. And then in terms of the G and A, where most of the rest of it, the increase will come from, we've built this big fat pipe with the excellent staff and systems and we can run a lot more through there without increasing that to any meaningful extent. So with that, I'd like to turn it back over to Rowan to wrap up and to handle the Q and A. Thank you, Barry. So in summary, just to take you back to where we began, we have a huge market opportunity in front of us, which we see as expanding, given some of the technologies that you saw today and some of the interest that we've had from our customer base. We see this very large opportunity being consistent and also growing over time. We're confident in our execution engine as we hope we demonstrated today with the new leadership that we've added and some of the plans and the progress we've already made over the last year. And finally, as Barry alluded to, we're going to continue to grow the business over the next decade and more profitably and continue to drive the growth as you've seen us do. So with that, I think it would be great if we could just open it up to Q and A for my leadership team. So I think we're going to bring a few stools onto the stage here and then we also have we won't bring everyone up because there's not enough room, but all of my leaders are in the room and so you can ask questions of anyone or the group as you like. Thank you, Chris. All right. So we have mic runners in the audience again. And yes, open to your Q and A. Thanks. Sterling Auty with JPMorgan. Thanks for having us. So Ronan, on the comments that you made in prepared remarks and also the Q and A came up during the panel about the shift that AI is bringing along. So we think about chatbot support, conversational commerce, etcetera. Kind of curious from your perspective, how you see the portfolio of products today being positioned to handle that? What's left to fill in? And how does that change the go to market motion with your customers moving forward? Yes, I'll start it and then maybe turn it to Anand or Jonathan who can comment here. So there's a bunch in the question that you just asked. There are several new technologies that have been coming about like chatbots. So on that specifically just yesterday or the day before? Soon, recently, we announced support and an integration with the Einstein chatbot technology. And that's an automated chatbot. So it's purely you're just talking to a robot or a computer that's trying to give you automated answers. What we announced in that new technology was the ability to seamlessly move from a human to computer conversation into a human to human conversation. So we want to bring that human into the loop, which is where Five9 becomes required to come into that picture. Now we're not off building our own chatbots. Again, we are very, very laser focused on making human agents more efficient. We think that's the best approach in terms of where our expertise is because we have access the one thing we have access to that no one else in the ecosystem has access to as a CCaaS vendor is the real time voice. And so we're looking at that as a moat that we can continue to deepen and widen and leverage that real time voice. So anything to add there? Yes. So I mean, again, sort of this point of moat, there's several aspects of this that we feel also make the product highly capability highly differentiated. I spoke a little bit about AI and how we're leveraging tools from Google and what have you. You still have to provide them with training data. And so what this products like this allow us to do is to take our recordings, our voice, turn them into training data and over time build up catalogs of this stuff that serves across customers. And so he who has the most customers, has the most recordings, has the most data and that helps us drive greater and greater strength. On another piece of your question too, I'll mention and I'll turn it to Anand. On the go to market, interestingly, this is also a product that works really well with channel. Like contact center in general, there is a lot of work to do to set up and implement and make it work for the customer. And as you saw with this product we showed you, it's fairly customized for McKesson. I mean, you saw a UI that was custom built for them. And so we see a great opportunity for channel partners to provide value add and to help us scale this up, and that's a really great combination as well to expand our business. Yes. I'll just add 2 in terms of capabilities. So one, as Rowan mentioned, we're integrating with wherever customers want to start. You heard Gino talk about they made the decision to have one system. We need to play well with that system. So that's a key design principle for us. But where so even for the system of the application of record, if you will, if they have a CRM system, they could work with that. If they don't, we have our user applications, right? So we have this design principle in production already with hundreds of our customers. We have the same design principle, which is we have an end to end system that will work if that's what the customer wants. If they've made choices, we'll work with that stack. The other piece I'll say is we're also building the ability to Jonathan briefly touched on that in his demo. We're building the ability to take the transcription and do a bunch of interesting stuff with it, which is a very important requirement that we're getting from customers, which is it could be I literally want the transcription in my system of record as the starting point, but it will also be the starting point for new ways of doing WFO use cases. So now that I have this system with an omni channel interaction between a client and an agent or a client and a bot, if you will, take that and still see if there is adherence to still see QM on top of that, etcetera. And we talked about Vendu that allows for those integrations to happen as well. So a lot of the building blocks are there, but we still let the customer sort of decide what their configuration is. And you've heard all the customers here talk about that earlier. Thanks, Sterling. Yes. I didn't introduce myself earlier. It's Terry Tillman from SunTrust Bank. Maybe the first question, Dan, for you or the multipart question as always do is, the strategic sales team, maybe some perspective on how big that team is? And then also in one of the slides earlier, the commentary, I think, maybe it was from Barry, I don't I may have forgotten. But the idea of new logo growth still very much fuels the growth, but there will be an increasing evolution around installed base. So I'm just curious on the go to market side, is that a more meaningful shift next year as it relates to harvesting more from the installed base? That was the second part. Thank you. Yes. So great questions, Terry. And the first one, if you look at our strategic group, it's actually just taking our enterprise sales team as it exists today and just really dividing that and making sure that we keep people focused on the opportunities that they're most suited for and skilled for. Some folks want to do multiple transactions and really have the month in month out singles and doubles and there's folks that are really good at that and want to do that. There's others that are willing to go take a risk and work with the large, large opportunities that may be year long sales cycles and may be much larger, but they're putting more eggs in fewer baskets and so there's more risk and reward there. So it really is up to the individual. So as we build out and scale, when we talk about scaling our sales teams 30% to 40% year in, year out, That includes the channels and the SI focus. It also includes taking our enterprise team and adding to that. So we're adding some experienced sales folks from outside and we're making sure that we just allocate folks to stay in their swim lanes. So it's not really this, oh, we're building it from scratch. We're just saying, take experienced people that have been successful selling those 49 accounts that you saw that are over $1,000,000 There's it's amazing. You look across and you see who's selling into those accounts and it's a handful of folks that are very experienced and have been there, done that. So they're the first folks that are making up that team. Second part of your question, boy, short term memory Selling into the base. Oh, installed base relevance, yes. So the installed base, yes, as that base gets larger and larger, ever increasing to make sure that we're doing the things to not only retain them, but expand them, grow our technology footprint. And I say that technology footprint because it's one thing to just expand and get all of their seats. But once we've got all their seats, how do we also make sure that we retain them and expand them? Well, the way you expand them in that case is new applications. And the R and D investment that Barry referred to, we're putting into R and D to build more applications, more SKUs, the acquisition of Wendu to be able to extend the platform to do a lot more. We're looking at being able to take our ARPU and increase that within our existing base on a per seat basis, so that it doesn't require organic growth, but it can require application growth. And then I'll add to that a little bit, which is looking at the spear of the applications that we deliver today and expanding upon that. There are some immediate things and adjacencies that we resell, that we can put on our paper to increase that. And we're always looking to do that where we can. Scott? Pardon me, Scott with Needham again. Rowan, I guess this is a question on your TAM slide that you had up there earlier. You had the smaller circle down below that was $58,000,000,000 TAM that include the $24,000,000,000 of the TAM that we're all familiar with, but that other $34,000,000,000 was of tools, automation tools, etcetera. You didn't explicitly say this, but I took your commentary around all your AI tools and some of the other product innovation is really kind of focused on that part of the spend in the market. Yes. Is so I guess the 2 part question is, 1, how much of your innovation efforts over the maybe the next 2 to 3 years are really focused on that area versus the core market? And then 2, now that you have some alpha customers on at least some of the products, what does pricing start to look like there? Yes. So I would say we don't know yet on the scale of the mix of the investment on sort of new versus existing. And we'll have a better sense of that next year as we begin to commercialize. So Jonathan's goal is to have this live and selling in the market by next by 2020. And so then I think we'll get a sense for that. And then in terms of pricing, I think a big part of that depends on us talking to our customers. So we don't know yet. We've had that question a bunch. It really depends on how much we can how much money we can help save these businesses and how much of that we can capture for ourselves. What I would tell you is there are products that are similar to this in the market today, some from startups. There's little bits and pieces that are out there. So you can get a sense for how some of the pricing is and it's sort of all over the map. Some of them do skin in the game pricing, how much they save you that sort of like you'll get a piece of it. Some of them do an agent based model upwards of $100 per agent per month. And so I would say, look, if you do the math, dollars 100 a month would be roughly 5% of your labor. So if you could you think have to think about can you automate 5% of the use cases or make an agent 5% more efficient to be able to afford $100 of extra savings to be able to pay for software. And you wouldn't want to capture all of it probably or I doubt businesses would give you all of it, but you should be able to get some portion of that. So at a 5% level for the average business being about $100 per agent per month, that's an interesting number we think. Sorry, in the back. Hey, guys. Mike Latimore, Northland Capital. Hi, Mark. Hi, Mike. On the agent assist, the early kind of data, what kind of savings are you seeing in terms of just agent savings? And then I guess the second question would be probably for Anand. As you look at Five9's position to broader conversational commerce messaging market, how do you see Five9 kind of evolving into that space? Yes. So on the total time save, it's dramatically dependent on use case, right? And so we I think need a lot more scale and usage across even a larger base of customers to get a good handle on that. And I think it will wildly vary. So too early to say is sort of the answer. But again, I think there's cause for optimism. If you look top down like, well, what fracture the time are calls on hold? Like that's one piece that's a lot of time. Those are probably areas that we could be able to tap over time with this. So I think at a top level, that looks pretty good, but we don't have our numbers. And there's the interesting thing about the contact center space in general is there's a tremendous amount of data out there already for us to mine. So in addition to all the calls and the transcripts and so on, the dispositions of those calls and what were they about and there's training data that's been built up. So there's already a very heavy process focus in the contact center. So the thesis here anyways is that we can leverage all of that to identify. I think if you go to most of our customers today, I mean, they'll tell you instantly what their top call driver is, what is the average handle time, what is possible if you have a trained agent with a year of experience, what are the use cases that they're working to automate or deflect away from agents? So there's we're not kind of coming at this cold. This has been a process has been being worked for 20 years or more like forever essentially. But what's new is access to these automatic triggers using AI and automation technologies that are sort of now just coming at the scale where we can put them to work. So on conversational, just not just commerce, but conversational AI and interactions in general. So I've worked with more customers than I'd care to admit about the early integrations of positional interfaces. The 2 big things that we realized, which I'm so glad we're positioned so well-to-do a much better job on is, I think customers don't want these swim lanes of interaction It's a big, big thing that we realized that they would start with Messenger because they're in a meeting and they can't take a call and they want to start some interaction or it is an interaction that is the kind where I say, what's my balance? I get an answer back and I'm happy, right? And maybe I'm not happy with something there and I want to to talk to someone, right? So that's when one channel stops scaling because it reaches its limits in terms of strengths and weaknesses. And so the fact that we're allowing this interaction across channels, I've been on multiple calls with customers where they'll say the customer will call them to say that they just e mailed them because they're so annoyed about something. And they'll just be they'll be even more annoyed that the agent doesn't know that it just emailed them, right? So the multichannel interactions really matter. And so far less kind of routing the incident and more kind of a customer view, which we talked about in terms of the omnichannel focus. The other piece is a lot of times when they reach out the second time, they're like, I told you this the last time, right? Don't you have the transcript from the last time I spoke with you? And to Jonathan's point, like why are you asking me for this again? I told you last time what plan I'm on. I told you last time sort of what my preference is. Why are you asking me if I'd like a window seat or an aisle seat? I told you what my preference is last time. So this ability to store a set of preferences for the customer in one Five9 system or in their CRM system of record and bring it back out. I think those are 2 big things. The last thing I would say is it really has to interface with the other apps that Dan talked about. We talked about the supervisor example, the same thing with WFO. If they're seeing if they're in adherence or their QM is going okay, that has to include all the channels, right? If 30% of their agents are on one channel, but WFO doesn't work for that or QM doesn't work for that, the supervisory interface doesn't work for that, that just won't work. And then the last thing I'll say is for most, if not all of our large customers, all the data at rest has to be encrypted. So we're reaching a place where the early experimentation on conversational is done and we're down to like the serious implementations. Great event, very informative. So thanks again for having us and having us draw some insights. You've talked about investing in enterprise. So I want to ask about the flip side with commercial. In the past, you mentioned you're not going to invest in commercial. And just the LTV to CAC is not as strong there. I guess, are you at least looking to optimize the cost there, bring that down, improve that ratio? And also, your expectations still fill out mid single digits as a growth rate for that? Yes, sure. So on the first part of the question, if we can improve that, we do have various programs in there, but it takes a fundamental change in the market to be able to get that 2x versus a 6x up meaningfully. And why do I say that? I say that because the biggest single driver over there is the lower retention rate or higher churn, which is just endemic to that type of business and the more experimental business models that go out of business, whatever, they don't have enough funding. In terms of the growth rate, the facts are well known. Last year 2018, we just had a spectacular year under a new leadership with a whole new selling motion that Dan can elaborate on if you're interested. And this year, we are going against that with typical compare with single digit type growth. And frankly, I would not put into the model anything above single digit for commercial. It's just the nature of that business. Great. And if I can, I'll follow-up Barry since you're answering this question. You have the long term model. You have sales and marketing. You're already there in terms of the range, you're actually on the low end. I guess with those initiatives that you're launching with channel and all that stuff, is it fair to say that there's some room to expansion in terms of the percentage of revenues? Thanks. Absolutely. The things that Dan talked about, the channel, ASIs, the international, all come with a price tag. So that's why we have it at that range and you should see it drift up. One last, we'll take the last question now. Yes. Yes. Thank you. Nandan Amladi from Guggenheim. So in the long term model, Barry, you've shown R and D at 8% to 10%. Given how fast the space is evolving and the investments you're having to make in AI and all these new technologies, Is that a reasonable investment level to stay ahead of the competition? Yes. So there may be some rejigging over the years between the different categories. What's important to us is the 27%. We believe that that's something that we should strive for over time. It won't be linear. I do remind you though that it's not always the biggest R and D budget that's going to do that. It's how focused and how disciplined you are. And secondly, the we do have a portion of our revenue. If you look at our recurring revenue, which is 91% of the total, a little under 30% of that is usage, the resale of the minutes. And frankly, there's not a lot of R and D that's involved in that. And if you normalize for that, you're somewhere in the mid teens, which is not unreasonable. But there's a healthy debate about that. Thank you. And definitely so thanks for that question. You could imagine, again, the thing to focus is the bottom line number at 27 percent and there's some puts and takes in the middle based on how we feel the business needs to be run, we would make those changes. So great. Thank you, Barry. And that was our last question. So thanks to the whole to all the eStaff members and thanks to all of you. I think we're at the end of our agenda. So I'd just like to wrap it up. Hopefully, you can get out of here in case it starts snowing. But we really, really do appreciate spending the whole morning with us. And if there are any follow-up questions, we will be here. I think we're going to spend lunch together. So we'll be spread around at all the tables. So find a place and definitely engage with us over the lunchtime period. And again, thanks all very, very much. Thank you. Thank you. Full speed warp10.

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