According to a Market Data Forecast report published earlier this year, the global cloud-based contact center market is estimated to grow at 26% CAGR to reach $31.25 billion by 2025. Five9 (Nasdaq: FIVN), a leading provider of cloud software for contact centers, recently announced its quarterly results that surpassed market expectations.
For the third quarter, Five9’s revenues grew 34% to $112.14 million, ahead of the market’s forecast of $101 million. Adjusted EPS was $0.27 per share, ahead of the market’s forecast of $0.18 per share.
For the fourth quarter, Five9 expects revenues of $114.5-$115.5 million with an EPS of $0.22-$0.24. The market was looking for revenues of $115.2 million for the quarter with an EPS of $0.23.
During the quarter, Five9 announced plans to acquire San Francisco-based Inference Solutions. Inference Solutions offers a widely deployed Intelligence Virtual Agent (IVA) platform that aims at automating mundane contact center tasks. An IVA is fast becoming a fundamental requirement in enterprise deals for contact centers. Given the current pandemic, it is not always possible to hire and train more agents quickly. Customers are now open to digital labor, a demand that is being met by IVA.
Additionally, Inference’s products are also easy to deploy. Unlike traditional IVA solutions that are either professional services-centric or developer-centric, Inference Solution’s offering can be deployed in a few days with minimal people involved.
Finally, the acquisition also brings forth considerable go-to-market synergies. Inference is already trusted by a large number of Tier 1, 2, and 3 telecom providers around the world, including AT&T in North America and Telstra in Australia. Five9 sees tremendous opportunities in leveraging Inference’s global presence and introducing them to its partners, systems integrators, and other resellers.
Five9 plans to leverage Inference’s acquisition to meet the increased demand of IVA capabilities and deliver an enhanced customer experience. Overall, the acquired technology will allow Five9’s customers to conduct tasks like book confirmations, get SMS reminders, get status of rides, and take follow-up surveys through the IVA. The acquisition will help accelerate Five9’s leadership position within AI-based contact center services.
Terms of the acquisition were not disclosed. Inference Solutions was a privately held company prior to the acquisition and had raised $20 million in two rounds of funding. Its financial details are not publicly disclosed. The acquisition will be closed by January 2021.
Five9’s Product Growth
Besides acquiring new technologies, Five9 is also expanding its product offerings. Recently, it announced the release of Agent Assist, a new solution that captures real-time call transcripts and generates accurate time-saving call summaries. These summaries are automatically synced with the CRM platform to help improve agent efficiency. Agent Assist uses natural language processing technology that has been developed by Five9 and has received strong reception.
Five9’s PaaS Strategy: Platform or API
Five9 has strong CRM and partner integrations and continues to invest in making its platform increasingly open through enhanced APIs and SDKs. Last year, it launched an App Marketplace to enable organizations to leverage its platform.
Five9’s PaaS Strategy: Developer Community
Five9’s ISV ecosystem showcases its partner integrations and provides tools in over 10 categories such as providing customers with access to services ranging from AI-support, CRM, unified communications, workforce optimization, and messaging.
It has over 80 partners on its ecosystem that continue to innovate and provide new apps and integrations. A recent use case of such innovation is of a media streaming API called VoiceStream. VoiceStream enables the building of apps that access real-time call audio and enable businesses to conduct processes such as authenticating a caller’s identity to voice biometrics, coach agents while they’re on a call, and utilize speech and sentiment analysis. The service helps contact centers improve agent performance while also delivering a better customer experience.
In a unique move, Five9 is implementing VoiceStream in its own products while also creating a platform capability that makes it easier for its partners to build AI apps for the contact center.
Five9’s PaaS Strategy:Marketplace and Metrics
Five9 does not share metrics about its apps or developers. I would like to get more insight into metrics such as how many apps they have, how many developers are developing apps on their platform, how do the developers make money, etc.
Five9’s stock is currently trading at $146.16 with a market capitalization of $9.6 billion. It touched a 52-week high of $167.17 earlier this month and a 52-week low of $52.51 in March this year.