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Five9, Inc. misses on earnings expectations. Reported EPS is $0.24 EPS, expectations were $0.69.

Operator: Good day, and thank you for joining us today. On the call from Five9, Inc. are Amit Mathradas, Brian Lee, and Andy Dignan. During today’s conference call, certain statements will be made that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our Q2 2026 and full year 2026 guidance, expected improvements in operating and financial metrics, CCaaS and AI revenue growth trends, industry trends, including with respect to AI, our strategy, priorities and execution, our product roadmap and technology investment, our markets, customer demand trends, our market position and opportunity, our capital allocation strategy including our share repurchase programs, and other future events or results.

Such statements are simply beliefs and predictions and should not be unduly relied upon by investors. Actual events or results may differ materially, and the company undertakes no obligation to update the information in such statements. These statements are subject to substantial risks and uncertainties that could adversely affect Five9, Inc.’s future results and cause these forward-looking statements to be inaccurate, including the impact of adverse economic conditions, lower growth rates within our installed base of customers, failure to manage our technical operations infrastructure, unsuccessful development of our AI solutions, failure to maintain and develop our contact center solutions, failure to achieve the anticipated benefits of our share repurchase activity, and the other risks discussed under the caption Risk Factors and elsewhere in Five9, Inc.’s annual and quarterly reports filed with the Securities and Exchange Commission.

In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and a reconciliation of our GAAP versus non-GAAP results and guidance is currently available in our press release issued earlier this afternoon, as well as in the appendix of our investor deck that can be found in the Investor Relations section of Five9, Inc.’s website at investors.five9.com. Also, please note that the information provided on this call speaks only to management’s views as of today and may no longer be accurate at the time of a replay. Lastly, a reminder: Unless otherwise indicated, financial figures discussed are non-GAAP. I will now turn the call over to Five9, Inc.’s CEO. Please go ahead, Amit.

Amit Mathradas: Thank you, and welcome, everyone, to our first quarter 2026 earnings call. We delivered an encouraging start to the year, and I am particularly pleased to report an acceleration in subscription revenue growth with top and bottom line results coming in above the high end of the guidance ranges. While we are still early in our work, this quarter marks an important step in showing that our actions are beginning to translate into better business performance, with the indicators we care about moving in the right direction again. This is my first full earnings call as CEO. I want to frame our work around four priorities that I believe are essential to driving long-term value at Five9, Inc. First, building a performance-driven culture rooted in accountability and transparency.

Second, optimizing operations. Third, stabilizing and strengthening the core business. And fourth, winning in AI-empowered customer experiences. Let me start with our first priority: culture. Over the past three months, I have spent a significant amount of time with our teams and leaders across the company and had frank conversations with employees across functions and geographies. What is clear to me is that Five9, Inc. has talented people, highly strategic assets, and a real desire to win. But winning also requires clarity of mission, high standards, urgency, and accountability. We need a culture where performance is measured rigorously, decisions are made quickly, and leadership is held to a high standard. That starts with me. Transparency with the investor community is equally important.

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Over time, our story has become harder for investors to underwrite than I believe it should be. Some of that was about how we executed, how we communicated, and how clearly we translated our strategy into measurable progress. Going forward, we will demonstrate progress through clearer, relevant, and trackable metrics that help investors assess the health of the business and hold management accountable. We understand that investors want evidence, not ambition. And our job is to convert our vision into results that are quantifiable. Turning to operations. Over the past year, and with the support and oversight of the board, the company has been executing a significant operational review designed to improve efficiency and simplify execution. This work, which was well underway before I joined, helped drive the 470 basis points increase in EBITDA margin from 2024 to 2025.

This foundational work is crucial, but it is only the beginning. We are now in a better position to move faster and reinvest in critical areas. Building on this foundation and with the support of external advisors, I am leading a series of deep dives across the product portfolio to align investments with our long-term competitive priorities. To help accelerate this effort, we are filling gaps and making changes in leadership and adjusting our organizational design, including reducing spans and layers, to improve focus, speed, and accountability. These changes will help us operate more efficiently and effectively and build a more disciplined foundation for innovation, growth, and continued operating leverage over time. An example of this was our recent hire of Jay Lee, our new chief marketing and growth officer.

In this newly created role, Jay will unify global marketing with revenue strategy and operations to build a more aligned, insights-driven go-to-market engine that delivers a seamless experience for customers and partners. Let me shift to my point of view on the strategic outlook for our industry and our business specifically. AI is one of the most important shifts underway in our industry, and customer experience is one of the most compelling application areas. In my conversations with customers, I am consistently hearing that AI is fundamentally increasing the importance and value of every customer interaction. Historically, contact center spending has been overwhelmingly weighted towards labor, creating a difficult trade-off between lowering costs and delivering better experiences.

AI is acting as a catalyst to change this. Customers now see the potential to reallocate a portion of their labor spend to fund the combination of AI and enhanced CX, better addressing the trade-off between cost and quality. This makes the move to a modern cloud-based platform more urgent than ever. This shift is forcing a critical decision: customers must now consider how AI is incorporated into their CCaaS platform because they want to avoid a sprawling collection of disparate AI tools that cannot seamlessly coordinate with their human agents. This means that AI point solutions are not enough because they only solve a fraction of the problem. Enterprises are looking for a complete customer experience platform they can trust to handle the entire lifecycle—the orchestration, the data, the integrations, and the governance needed to run reliably in production.

This is precisely what Five9, Inc. provides. What is interesting is that as AI handles a large share of routine customer requests, the role of agents is elevated, not eliminated. People become experts who manage complex escalations and provide essential oversight, a necessity in several regulated industries. A platform infused with AI and CX technology empowers these agents with real-time guidance and suggested next steps while simultaneously giving supervisors unprecedented visibility into every interaction, not just a sampling. Importantly, human-based intelligence and case resolution provide a critical feedback loop for training AI agents, which in turn drives continuous performance improvements of the entire unified platform and further differentiates Five9, Inc.

This evolution is about more than just efficiency; it is about value capture. As AI reduces the customer’s traditional labor spend, that budget shifts towards technology. We believe this fundamentally expands our monetizable surface area by enabling entirely new use cases and more customer experiences. Our path to success is no longer about simply selling seats. Instead, it is about selling a complete solution based on capabilities and consumption. This is where we believe our category is going, and we plan to lead it by pairing these and other powerful agentic capabilities into our platform that has the trust and governance that enterprises seek. But we are not assuming success here; we must earn it. And we will measure ourselves not by demos, but by production, adoption, and customer outcomes.

We are seeing signs that our strategy is working. In the first quarter, we posted our second consecutive quarter of year-on-year accelerating subscription revenue growth, an important indicator that the core business is strengthening. We are also seeing customers adopt our AI solutions in production as an integrated part of our CX platform, leading to multiple quarters of strong AI revenue growth. This effort is amplified by the strength of our platform and our ecosystem. Our cloud-native CCaaS platform is built for high reliability and features open integrations, which has allowed us to build an ecosystem of over 1,400 partners. Our deep strategic relationships with market leaders within this ecosystem are critical, serving to validate our technology, strengthen our go-to-market reach, and accelerate enterprise adoption.

This is a large opportunity, and we believe Five9, Inc. is one of the few key players truly positioned to capture it. We intend to do so with both urgency and discipline. Before I hand it over to Brian, let me say a few words about capital allocation. We take our role as stewards of shareholder capital seriously. Our approach will be disciplined, return-oriented, and balanced. This includes investing organically in our business, evaluating inorganic opportunities against a high strategic and financial bar, and, when appropriate, returning capital to shareholders. On the last point, reflecting our confidence in the company’s intrinsic value, we intend to complete the remaining amount of our $150 million share repurchase authorization by the end of Q3.

In addition, our board has authorized an additional $200 million share repurchase program. We see this as a compelling use of capital, and Brian will provide more details in a moment. Since joining in February, it has become even clearer to me that Five9, Inc. has talented employees, a portfolio of highly strategic assets, and significant upside potential. It has also become clear to me that we must operate with greater urgency, better execution, and higher accountability as we build toward an AI-driven future. That work is underway, and I intend to drive meaningful change as we work to turn Five9, Inc. from a good company into a great business, with a disciplined focus on creating long-term shareholder value. With that, I will turn the call over to Brian.

Brian Lee: Thank you, Amit, and good afternoon, everyone. I would like to begin by underscoring our commitment to transparency in our reporting. To that end, starting today, you will find supplemental metric disclosures in the investor relations section of our website. While many of these metrics have been disclosed previously, we believe this new format will help simplify your modeling. As Amit noted, we have taken decisive action on returning capital to shareholders. After repurchasing $10 million of shares in the first quarter, we intend to enter into an accelerated share repurchase program for the remaining $90 million under the current authorization, which we expect to be completed by Q3. The board has also approved a new share repurchase program of $200 million, which we expect to execute opportunistically.

These actions reflect our deep conviction in our long-term opportunity and confidence in continuing to generate strong free cash flow while also providing ample strategic flexibility. Now turning to our financials. Q1 revenue was $305 million, up 9% year over year. Of the total for the quarter, the contributions from subscription, telecom, and professional services were approximately [inaudible], respectively. Our subscription revenue grew 13% year over year. This was driven by our CCaaS revenue, which grew 8%, and our AI revenue, which grew 68% to an annual run rate of over $125 million. For clarity, please note that this AI revenue figure now includes both enterprise and commercial, providing a complete view of this growth driver. Our AI revenue now represents approximately 13% of total subscription revenue, compared to approximately 8% a year ago.

And the year-over-year growth rate accelerated from 49% in Q4 2025 to 68% in Q1 2026, primarily driven by our backlog ramping earlier than anticipated. Looking ahead, we expect total subscription and CCaaS growth to trend with our overall revenue guidance. AI revenue growth is expected to fluctuate quarter to quarter given varying ramp schedules, with full year 2026 growth anticipated to exceed 40% year over year. LTM dollar-based retention rate, defined in our filings as the retention rate of recurring revenue from subscription plus telecom, was 105%, which is the same as Q4 2025. Given our focus on subscription revenue going forward, we will transition our DBRR disclosure to LTM subscription DBR, which came in at 107% in Q1, compared to 106% in Q4 2025.

Please refer to the previously mentioned supplemental metric disclosure on our investor relations website with nine quarters of historical dollar-based retention rates. As anticipated, both DBR metrics stabilized in Q1, and we expect Q2 to be at relatively similar levels, plus or minus one percentage point, before inflecting in the second half of the year. Adjusted gross margin in Q1 was 64% compared to 62% in Q1 last year. Adjusted EBITDA was $74 million, or 24% of revenue, compared to $53 million, or 19% of revenue, in the same quarter last year. In terms of cash flow, cash from operations was $64 million, or 21% of revenue, and free cash flow was $49 million, or 16% of revenue. These profitability and cash flow margins benefited by slightly more than one percentage point in the first quarter from a one-time discount negotiated with a key vendor that we do not expect to recur in future periods.

From a balance sheet perspective, we ended the quarter with $724 million in cash, cash equivalents, and short-term investments. On to guidance. For the second quarter, we are guiding total revenue to a midpoint of $306 million with a range of $303 million to $309 million. For the same period, our guidance for non-GAAP EPS is a midpoint of $0.67 per diluted share, with a range of $0.65 to $0.69. The largest driver of the sequential decline versus Q1 is the one-time discount I mentioned a moment ago that benefited Q1. Additionally, this guidance includes an estimated 3.6 million shares being retired through our accelerated share repurchase. For the second half, we continue to expect total revenue growth to accelerate to double digits driven by our backlog of both new logo and installed base bookings.

For non-GAAP EPS, we expect steady sequential increases in the second half. For the full year 2026, we are guiding total revenue to a midpoint of $1.26 billion with a range of $1.254 billion to $1.266 billion, up from our initial midpoint guidance of $1.254 billion. Our guidance for 2026 non-GAAP EPS is a midpoint of $3.26 per diluted share, with a range of $3.22 to $3.30, which is up from our initial midpoint guidance of $3.18 per diluted share. Additionally, we continue to anticipate annual adjusted EBITDA margin to exceed 24% and annual free cash flow to be approximately $175 million. That said, our organizational design initiatives are expected to initially result in higher temporary expenses that provide longer-term cost efficiencies along with improved focus, speed, and effectiveness.

To assist with modeling, please note the following. Purchases of PP&E are expected to be approximately 3.5% of revenue for 2026 due to a global data center refresh. Please refer to the presentation posted on our investor relations website for additional estimates including share count and taxes, as well as GAAP to non-GAAP reconciliations. We will now open the call for questions. I would like to ask our president, Andy Dignan, to join us for Q&A. Operator, please go ahead.

Operator: We will begin with Sitikantha Panigrahi from Mizuho. Please go ahead and unmute at this time.

Amit Mathradas: Great.

Sitikantha Panigrahi: Thank you, and congrats on a good quarter. Amit, thanks for outlining all those four priorities. Just wondering, what are the two or three most concrete, measurable milestones you think investors should track over the next twelve months to assess the progress of each of those areas?

Amit Mathradas: Thank you, Siti, and thank you for the question. As I am going deeper into the business, the number one thing that I mentioned is I am spending time really diving deep into the market, our tech, and our products, and where Five9, Inc. should be positioned. One benchmark you should be looking for is, in the near future, me coming out and laying that out for you all and being very clear with how that is progressing and where we are taking the business. There are two or three other major areas I have been diving into. One is culture—how we drive more accountability, more ownership, and organizational design improvements within spans and layers, faster location strategy, and reducing a lot of the bureaucracy and processes internally.

The right measure of that should be reflected in the pace that we bring to the market in terms of delivery, as well as underpinning metrics such as margin improvements and growth improvements. That is probably the best way to hold us accountable, and we will be laying that out for you.

Sitikantha Panigrahi: That is helpful. And then one more follow-up. You must have talked to customers and partners over this quarter, and AI is moving much faster than any other trend we have seen before. What are your customers doing in terms of adapting to this faster pace on AI? And what is your assessment of Five9, Inc.’s opportunity there, and why do you think Five9, Inc. is well positioned versus some of the other emerging vendors?

Amit Mathradas: Another good question. As I have been talking to customers, it is clear that everyone is excited about AI, what it can do, and where it is going, particularly in the contact center. The big thing customers are realizing is that AI is allowing for greater interactions and driving an increase in their ability to connect with customers—maybe tier two, tier three—who they had relegated into different channels because of OpEx. Customer experience is a reflection of your OpEx. I know how to make hold times go to zero—double your OpEx. It is challenging. As AI comes in, there is one big thing happening. As AI replaces seats, those dollars are not leaving the contact center; they are getting reallocated towards software.

Companies are looking to platforms like us that can marry voice, digital, and AI and present it in a format where it is all connected under one roof, allowing them to get far larger outputs in efficiency through that system. That is where AI is going. That is why Five9, Inc. is well positioned because of this shift. The TAM for CCaaS plus support AI is nearly 2x the displacement of seats that will happen, and so we now get to play in a much larger market as we evolve and build into this platform.

Operator: Our next question will come from Terrell Frederick Tillman from Truist. Please unmute and ask your question at this time.

Giancarlo Secchiano: Hey, guys. Thanks for taking the question. This is Giancarlo on for Terry. You mentioned seat counts, and we were wondering how the end market has been for contact center seat counts. Are we seeing it stay stable, growing, or declining? And what are customers sharing in terms of their plans for seats as we look into the next six to twelve months?

Brian Lee: Let me start on the actual seat count, and then Amit can chime in as well. We mentioned that the seat count continues to grow at a healthy rate, relatively in line with the CCaaS revenue growth that we had provided. That was commentary we provided last quarter, and it continues to be the case. If you look at the backlog of our customers that we have already won, there is a large portion that is CCaaS-oriented and a smaller but fast-growing portion that is AI. So definitely, the seat growth from a customer perspective has been healthy.

Amit Mathradas: To the second part of your question around what customers are telling us, it is what I mentioned to Siti, which is as they see the ability to get more efficient with their human agents, they want to start investing into software tools, platform tools, and AI tools that allow overall efficiency to grow and for them to increase overall interactions. A number of customers that we are working with today are exactly in that use case.

Giancarlo Secchiano: Got it. Thank you. Appreciate it.

Operator: Our next question will come from Raimo Lenschow from Barclays. Please unmute and ask your question.

Raimo Lenschow: Hey. Thank you. Can you hear me okay?

Brian Lee: Yes.

Raimo Lenschow: Perfect. Congrats. Great start, Amit. Quick question. If you think about the industry at the moment, there is all this talk about AI disruption. But one thing we pick up when we talk with people in the field is how much of the call centers are still on-premise and how we need to think about first cloud migrations and then AI. What have you picked up in your customer conversations in your first three months on that dynamic because for many years, you were the cloud provider that had the structural tailwind? In theory, that should be coming your way even more now given that people have to modernize finally.

Amit Mathradas: Thank you for that question. There are still a vast number of customers on-prem, and eventually they will have to make that decision to move to the cloud. A lot of them are testing out AI right now and asking if they can deploy AI on-prem. We have seen a pickup of those requests. They want to come in and test AI first. The results have been a mixed bag. When you are on-prem, the Achilles’ heel of AI working is data and architecture and how it is connected to the rest of your ecosystem. In some cases, it works; in others, it does not. You will see more customers testing AI on-prem. My hunch is that for some it may be okay, but a lot will realize that you have to move to the cloud for best-of-breed, full adoption, and the scalability they want. Andy, anything to add?

Andy Dignan: The only thing I would add is we are seeing more of those conversations. Throughout the process of working an opportunity, customers often worry that they need a year to move to the cloud and only then get AI. We have done a lot within our product and our delivery processes so we can deliver AI at the beginning and migrate them at the same time. They can get the best of both worlds, which is really what they are looking for.

Raimo Lenschow: Thank you. That is very clear. And then, Brian, thanks for tightening up disclosure—that is really helpful. On guidance, it is Q1; usually people think, do I change my annual guidance or not? Can you talk a little about the puts and takes for you to change annual guidance a little bit as well and why you took the level? Thank you. Congrats.

Brian Lee: Absolutely, Raimo. Let me take that in two parts. First, Q1: subscription was the key driver of revenue growth—the second quarter of acceleration to 13%. Breaking that down between CCaaS and AI, CCaaS was stable at 8%, and AI accelerated to 68%, primarily driven by the strength of backlog converting to revenue. For modeling purposes, I want to point out that this time the AI revenue disclosure is different from past periods in the sense that we are including enterprise and commercial to give you a full picture of our AI revenue as well as total subscription. AI as a percent of total subscription revenue a year ago in Q1 2025 was approximately 8%, and it stepped up by roughly one percentage point each quarter to 9%, 10%, and 11% in Q2, Q3, and Q4.

The most recent quarter was 13% of total subscription revenue. Going forward into Q2 and the rest of the year, revenue is really driven by the backlog we have been talking about. It is growing at a healthy rate. We have great visibility into it. It is comprised of both new logo and installed base bookings that are converting to revenue, and every customer has a unique ramp schedule. It just happens to be back-end loaded, which is driving the acceleration to double-digit growth in the second half. The visibility we have gives us the confidence to increase the midpoint of our annual guidance from $1.254 billion to $1.26 billion, essentially covering all of the Q1 beat plus a little bit more.

Operator: Our next question will come from Catharine Trebnick of Rosenblatt. Please unmute and ask your question.

Catharine Trebnick: Thank you very much. Nice quarter. You hired a new chief marketing officer—Jay Lee. I noticed he has a really strong data background, so it does not look like your typical branding type of marketing person. Can you give us some details on why this particular hire with that background?

Amit Mathradas: Thank you for that question. We are super excited to have Jay here. We also adjusted his title to reflect what he is here to do: chief marketing and growth officer. Jay brings a tremendous amount of experience not only in marketing but also in analytics and data and piecing those together. As we look at driving a unified go-to-market and improvements in efficiency in how we serve our customer, you have to look at the full lifecycle. That implies that we all need to be working off one sheet in terms of the data, in terms of the funnel, in how it translates into revenue operations, and the strategies tied to it. Under one roof, you are going to have one go-to-market strategy, one go-to-market delivery mechanism, and one measurable dataset that drives all of that.

Operator: Our next question will come from Analyst. Michael, you can go ahead and unmute at this time. Michael, you can go ahead and unmute at this time. Okay. Next question will come from Scott Berg of Needham. Scott, you can go ahead and unmute at this time.

Scott Randolph Berg: Nice quarter here. Amit, in your four priorities, one of them was winning in AI. It is obviously the key question most investors are asking on Five9, Inc. given the state of the contact center environment. How do you see the company today, and do you think you are winning effectively? Is this a product item? Do you think you need to lean into product or potentially lean into distribution more to really capture what is a pretty interesting AI opportunity today?

Amit Mathradas: Thank you, Scott. Starting with performance of our AI capabilities today, looking at the 68% year-on-year growth, the acceleration, and the full-year view, I feel like we have strong momentum in what we are doing. That said, the market is moving fast, and we have announced some new products in beta that will be coming into general availability in the next quarter or so. The question for me is how we stay on top of that and speed it up. Near term and long term, to be disciplined, we cannot serve every piece of AI in CX. We will have to be selective as to what we build into the platform and where our advantages are—whether that is done organically or inorganically—and then where we partner with other players to fill gaps, including vertical or CX-centric needs.

It is not one or the other; it is a combination of continuing to deliver and build faster, bringing more products tied to where our platform is going and where we want to own the market, and partnering to fill gaps so end users can work with Five9, Inc. because it is all available in one place.

Scott Randolph Berg: Helpful. And then my follow-up is for Andy. What are you seeing in sales pipelines today? In Q1 maybe versus a year ago in this fast-changing environment—has the composition of deals substantially changed in terms of feature functionality, etc., or has it stayed pretty steady?

Andy Dignan: We track our RFP and pipeline levels, and they have been at elevated levels we have talked about for the last two years; that continues. In terms of the makeup, we are seeing more conversations around AI-first. We have a strong go-to-market around that, as well as a product strategy, and that will continue to play to our strength.

Operator: Our next question comes from Rishi Jaluria of RBC. Rishi, you can go ahead and unmute at this time.

Rishi Jaluria: Thanks so much for taking my questions. I will keep it to just one. Great to see the continued momentum and appreciate the greater transparency. One thing we are all trying to figure out is the impact of AI broadly—whether that is your portfolio, DIY, or third party. I appreciate that you are talking about not doing everything yourselves and partnering where it makes sense. To what extent has that had an impact on the nature of conversations you are having with net new customers around migrating from on-premise to cloud? How has that changed some of your competitive dynamics in the RFP process? And is there a point at which AI in contact center becomes widespread enough that it actually starts to speed up some of the sales cycles?

Amit Mathradas: In the on-prem solutions, what we are getting a lot of requests for are AI apps that augment humans—like Agent Assist and some of our AI agents—while they contemplate voice changeouts. My view as a new set of eyes on this business is that as AI replaces humans over time, those dollars go back into software, making both humans and AI more efficient. Fast-forward six to twelve months: people may think about point-solution AI as a solve, but most customers are saying if they will still have humans, they need it all on one platform. There are certain functions that cannot be done effectively through point solutions. Agent Assist does not work unless it is in real-time conversations. For AI voice—agentic scenarios—think about what a platform offers.

If someone chooses to speak to a human and goes into hold time, that hold time becomes a window in which AI agents can perform checks or get the call ready for the human—things that cannot happen with independent point products. As humans get elevated, human agents will start monitoring AI agents. If an AI agent is stuck on pronouncing Mathradas, my last name, and does it three or four times, a supervisor can see something go yellow and step into that call and take it over. That cannot happen with point products; it has to happen on a platform. Everyone is talking about agentic; at Five9, Inc., we are talking about “humanic,” which is the combination of humans and agents doing things that have not been thought about before. That is the direction we are going, and that is where I see this all coming together.

Operator: Our next question comes from Analyst. You can go ahead and unmute at this time. DJ, you can go ahead and unmute at this time. Okay. Our next question will come from Analyst. Elizabeth, you can go ahead and unmute at this time.

Analyst: Great. Thanks. This is Jamie on for Elizabeth. Congrats on the strong results. Going back to some of the earlier commentary, I think I heard you say that some of the strength you saw this quarter was from more of that backlog coming in ahead of expectations. Could you unpack that a little bit more? Was that more attributable to strong execution on your side? Was it customers accelerating deployment timelines? And how has that influenced your thinking for the path of those deployments for the rest of the year for what is still in the backlog?

Brian Lee: It was a combination of factors and not just one customer; it was many customers. As I mentioned earlier in the year, we did have some contingency built into our guidance. Part of it is timing coming in earlier than anticipated. Also, our professional services resources are always there and ready to deploy as quickly as the customer wants. Sometimes customers align faster internally, and the deployment cycle speeds up. We saw some of that. The deployment was strongest on the AI side this quarter, which is why you saw the acceleration from 49% to 68% year-over-year growth. Going into Q2 and beyond, the total revenue guide implies 9% in Q1, [inaudible] in Q2, and then double-digit growth acceleration in the back half.

The CCaaS portion from the backlog will more or less mirror that shape, and AI will fluctuate up and down because of varying deployment schedules. For the annual number, we are anticipating AI revenue growth to exceed at a minimum 40% year over year.

Operator: Our next question comes from Peter Marc Levine of Evercore ISI. You can go ahead and unmute at this time.

Peter Marc Levine: Thank you very much for taking my question. Amit, you made a comment in prepared remarks about not really selling seats anymore and moving more toward a consumption model. Walk us through what that progression looks like. What are you hearing from your customers, and how does the model change over time if it becomes more consumption? And second, Bryan, last quarter we talked about the guide for 2027 being anywhere from 10% to 15%. Is that still the path forward as you think about the business now and as we go into the second half?

Amit Mathradas: Thank you, Peter. We have started to transition with all our new logos, and with existing customers as they renew, to more of a fixed revenue commitment model. They are committing to a revenue number. That brings predictability to them and to us. The thesis is that as seats potentially compress over time, customers get the option to fill that committed revenue with our AI tools and others. They love it because it brings predictability, and they are also betting on our roadmap—saying that as new products come in, they will keep consuming those AI tools to make the human-and-AI combination more efficient. We are seeing that starting to happen. A lot of our business is starting to move this way. It is early days, but it is picking up.

This ties to my original comment: as seats compress, customers are saying those dollars are not leaving the contact center; they will be utilized in other forms of AI and software tools, and that is what they are committing to.

Andy Dignan: We have seen strong traction out of the gate. Customers have great interest in buying into that motion. Often they are making three- and five-year decisions. Their belief in the roadmap—what we have today and what we will deliver—gives them the confidence to sign up for three to five years and make these revenue commitments. It helps protect our downside and makes it easier for Bryan to forecast.

Brian Lee: On your 2027 question, we are not providing 2027 guidance today. We have our 2026 guidance, which keeps us on the path toward double-digit growth exiting the year and expanding EBITDA margin. We are in the middle of deep dives across the portfolio, and we have our new chief marketing and growth officer. We want to let that process play out before revisiting the longer-range framework.

Operator: Our next question comes from Analyst.

Analyst: Hi, guys. This is Ryan on for Jim Fish. Congrats on the quarter. As you think about the guide going forward and your backlog that is driving that guide, how much upside do you have and view into pipeline through the end of the year? How much of that is go-gets versus what you already have in the pipeline?

Brian Lee: If you break down our guide for the last three remaining quarters, it implies we need to get about $80 million of incremental recurring revenue. Roughly two-thirds of that will be coming from our DBR, which we said will stabilize in the second quarter, plus or minus one percentage point, and inflect upward in the second half. The remaining third is coming from new logos—but all from our backlog that is converting to revenue. Each customer has a different schedule, and it is more back-end loaded. There is essentially no dependency on new-logo go-gets for the rest of the year.

Operator: Our next question comes from Tom Blakey of Cantor. Tom, you can go ahead and unmute at this time.

Tom Blakey: Thank you for taking my questions. I want to talk about that AI volatility. Brian, thank you for all the extra color—it is very helpful. Maybe start with what is driving that volatility in terms of a dynamic inflection in AI usage across the space?

Brian Lee: This is really the way bookings have come into our backlog from 2025 and the deployment schedules of each of those customers. AI is a fast-growing part of our business but still small—13% of total subscription revenue. When customers ramp at different times throughout the year, it causes lumpiness. When we say it will fluctuate up and down throughout the year, we are looking bottoms-up at every customer in our backlog and their deployment schedules; that is how it plays out for the rest of the year.

Tom Blakey: As a follow-up, was there an element of use cases or seasonality or non-recurring type of revenue in the AI line?

Brian Lee: No. Not at all. There was no seasonality. It was more on new-logo AI backlog ramping.

Operator: Our next question comes from Jackson Ader of KeyBanc. Jackson, you can go ahead and unmute at this time.

Jackson Ader: Evening, guys. Thanks for taking our questions. We have seen in some other areas of software that the pace of AI innovation has led to some spending paralysis as customers feel it is too early and things are changing too quickly, making them nervous to pick a winner too early. Since customer experience was an early environment for AI to infiltrate, did you feel like you saw that, and did it play out in your base? And if so, are we starting to get past that where there is no longer this uncertainty about picking winners, and it is time to act and spend and deploy?

Amit Mathradas: Given the use case for CX and AI, the number of startups in this space is mind-boggling, and customers are inundated daily. There are early adopters who try a few things, but what they appreciate from companies like Five9, Inc. is that what we bring is tried and tested, with security and governance. It may not be the bleeding edge of everything, but it works and drives meaningful outcomes. That is why many customers pick us over time versus the hundreds of options out there. My sense is you are going to see more of this where trust and governance, especially in large organizations, become a more meaningful part of decision-making.

Operator: Okay, this concludes the Q&A portion of our call. I will now hand the call back over to CEO, Amit Mathradas, for closing remarks.

Amit Mathradas: Thank you all for participating in our Q1 2026 earnings call. As you can see, we have had a good start to the year, but there is more work to be done. We will continue to build upon this momentum and look to capitalize on the larger market opportunity for AI and CX. We look forward to updating you as the progress unfolds throughout the year. Thank you.

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