Recording in progress. Thank you for joining us today. Certain statements made during the course of this conference call that are not historical facts, including those regarding the future financial performance and cash position of the company, expected improvements in financial and related metrics, expected ARR from certain customers, certain expected revenue mix shifts, customer growth, anticipated customer benefits from our solution, including from AI, the extent of the anticipated TAM expansion and our ability to take advantage of any such expansion our AI revenue opportunities and current estimations regarding same, company growth, enhancements to and development of our solution, market size and trends, our expectations regarding macroeconomic conditions, company market position, initiatives and expectations, technology and product initiatives, including investment in R&D and other future events or results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are simply predictions, 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's future results and cause these forward-looking statements to be inaccurate. Including the impact of adverse economic conditions, including the impact of macroeconomic challenges, including continuing inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency exchange rates, lower growth rates within our installed base of customers and the other risks discussed under the caption Risk Factors and elsewhere in Five9'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 information regarding 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 on Five9 website at investors.five9.com. Also, please note that the information provided on this call speaks only to management's views as of today, May 1, 2025 and may no longer be accurate at the time of a replay. Lastly, a reminder that unless otherwise indicated, financial figures discussed are non-GAAP. And now, I'd like to turn the call over to Five9's Chairman and CEO, Mike Burkland.

Thanks, Emily, and thanks, everyone, for joining our call this afternoon. We are pleased with our first quarter results which exceeded our guidance across all key metrics. Subscription revenue, which now makes up 80% of total revenue, grew 14% year-over-year. This was primarily driven by LTM Enterprise subscription revenue growing 20% year-over-year. Adjusted EBITDA margin was 19% for the first quarter, helping drive a Q1 record operating cash flow of $48 million or 17% of revenue and an all-time record of free cash flow of $35 million or 12% of revenue. Today I'd like to start off by providing key highlights of an extensive operational review we recently conducted across the company. We believe the transformation initiatives we are executing will help bolster our long-term competitive position and reestablish ourselves as a rule of 40 company as we continue to drive profitable growth. As we pursue this evolution, our goal is to deliver increased profitability while prioritizing investment in key strategic areas including AI and go-to-market initiatives to drive revenue growth and capitalize on our massive TAM that we believe is significantly expanding with AI. The transformation will take time, but we're moving quickly and driving cross-functional alignment across the entire organization to achieve our goals. As a result, in 2027 we are targeting to be above the rule of 40 on an adjusted EBITDA basis and be approaching the rule of 40 on a free cash flow basis. Brian will provide more details on this in a moment. Now I'd like to dive deeper into our AI-powered platform and how it's well positioned to empower brands to elevate their CX and how they're realizing meaningful benefits through our genius AI suite of products. As I touched on last quarter, in order to deliver personalized and accurate self-service using GenAI, you need four key ingredients. First, you need access to LLMs, and it's critical to enable brands to easily change the underlying engine to leverage the latest high-performing models. We believe our engine agnostic approach allows brands to future proof their AI decision and our AI application layer above these engines acts as the key competitive advantage. Second, you need contextual data, which includes consumer-specific and brand-specific information that is distributed across a large number of back-end systems. Our platform typically integrates into 20 plus systems, which enables contextual data to be fed into the LLM in real-time to provide true context around an interaction. Third, you need historical interaction data. Our CCaaS platform is the system of record for interactions between a consumer and a brand across all channels including those handled by AI agents as well as human agents. And fourth, you need a platform that provides all channels such as voice, text, email, web chat, and social to connect consumers to an AI agent, as well as to provide a seamless escalation path to human agents. The market demands AI agents that work across all of these channels, but providing a voice channel globally at scale is a huge barrier to entry. These are key reasons why AI Point Solutions and third-party AI vendors are strongly leaning in to partner with us and integrate to our platform. As a result, our platform acts as a control point where we are successfully monetizing that access through our voice stream and transcript stream APIs. To further enhance the value of our platform, we announced that Five9 is deepening our Salesforce partnership with the launch of Five9 Fusion, a best-in-class native integration with Salesforce to deliver better AI-powered customer experiences. With Five9 Fusion, we combined Five9's real-time system of interaction together with Salesforce's system of customer record to create a fully integrated AI elevated solution for customer experience. With these new product bundles which are available today, this enhanced integration helps businesses deliver better customer experience, hyper-personalized self-service, and achieve smarter results with a future-ready foundation to drive meaningful business outcomes for our joint customers. Also, we continue to see significant AI momentum driven by real ROI that we are delivering for our customers through our genius AI suite of products. This in turn drives our subscription revenue growth as demonstrated by the following three customer examples. The first is a fast-food chain with over 3,000 restaurants globally. Following the deployment of our AI agents, they experienced a nearly 40% improvement in containment rate. Concurrently, they implemented our Agent Assist solution which reduced after-call work time by 35%. As a result of these efficiency gains, they estimate their labor savings to be approximately $1.1 million per year, and since deploying our AI agents, their ARR with Five9 increased by 37%. The second example is a global payment processing provider in the U.K. They deployed our AI agents and experienced a 10% increase in self-service in the first year as well as a 50% containment rate. They also recently deployed our AI Insights product in the first quarter of this year to identify even more use cases to generate additional ROI with our suite of AI products. Since deploying our AI agents, their ARR with Five9 increased by 49%. The third example is a personalized healthcare company that provides patients with easy access to medical equipment and supplies covered by insurance. Following the deployment of our AI agents, they have driven a 15% reduction in call volume by automating common questions such as medical equipment delivery status and insurance guidelines. They also expanded the use of our AI solutions by adding chatbots and Agent Assist to gain further efficiencies. Since deploying our AI agents, their ARR with Five9 has more than doubled. Additionally, we continue to lead the CX market with key AI innovations as demonstrated by our recent announcement of a new offering called Spotlight for AI Insights, which is designed to help brands unlock the voice of their customers hidden in troves of interaction data. AI Insights leverages GenAI to mine customer conversations at scale and understand emerging topics, top trends, and root causes of issues through a powerful visualization interface. Spotlight takes AI Insights to a whole new level by harnessing the power of GenAI to discover specific trends and metrics that are typically very difficult to identify in an automated fashion. We believe this will not only provide key insights for contact center operators, but also empower lines of business leaders with valuable data and tailored intelligence to continuously improve their business through increased sales, enhanced products, elevated CX, and more. Another AI capability that is becoming a key part of driving AI agent adoption is our Dial of Trust. This allows brands to scale the level of GenAI that is incorporated into our AI-enabled solutions. GenAI is becoming more powerful and more accurate by the day. However, there is a trust spectrum for brands that will vary by different topics and different industries when using AI to confidently provide customers with accurate information and answers. Our Dial of Trust enables brands to manage this risk through a continuum where the level of GenAI and Fusion can be modified for various use cases. We believe that this tooling is essential for delivering trusted AI. As a result of our leading position in AI, we continue to see significant momentum in our AI business, as evidenced by virtually all of our $1 million plus ARR new logos continuing to attach AI and AI making up more than 20% of enterprise new logo ACV bookings. Additionally, our enterprise AI revenue grew 32% year-over-year in the first quarter, making up 9% of enterprise subscription revenue. We also continue to further penetrate our install base by leveraging our revolutionary AI blueprint program. It's still early days, but preliminary results are very promising. For instance, in the last several months we have been collaborating with a growing number of our customers to help them build their AI roadmap and identify use cases to generate significant ROI with our AI solutions. 50% of customers going through the AI blueprint process have purchased our AI products. We're highly encouraged by these results and we expect this momentum to accelerate throughout the year. In addition to our AI momentum and opportunity, there remains a significant opportunity in our core CCaaS market with a $24 billion TAM as cloud migrations continue. Therefore, we remain very optimistic about our long-term durable global opportunity, especially at the upper end of the market, which is the largest and least penetrated part of the market and the fastest growing category of our business. Now I'd like to touch on the momentum we're seeing with some of our key partners. As we announced in November, Five9 and ServiceNow continue to execute on the goals of our strategic partnership. Later this quarter, Five9 transcript stream will integrate into ServiceNow interaction management, enabling agents to focus entirely on customer issues without the need for manual note taking. ServiceNow's Now Assist, powered by GenAI, will leverage these real-time transcriptions to generate summaries and resolution notes, significantly reducing call wrap-up activities and average handle times. Additionally, Five9's intelligent routing engine will soon route ServiceNow digital channels and cases, ensuring seamless and efficient case management. ServiceNow is also integrating its metadata to enrich Five9's workforce engagement management solutions. This will reduce operational overhead for managers by streamlining routing management across both platforms, making it easier to adjust staffing dynamically during peak demand periods. Additionally, last quarter we announced our launch on the Google Cloud Marketplace both in the U.S. and internationally and we saw more than $35 million in ACV pipeline added in the last two months. We're very pleased with the early traction and anticipate the strong momentum to continue. We also recently teamed with IBM to integrate watsonx into our genius AI platform to bring customers the option to leverage watsonx as their preferred LLM when building AI-powered CX solutions. So this collaboration is designed to enhance our platform's flexibility and help drive the next wave of innovation in AI-powered CX, enabling businesses to deliver more personalized, efficient, and impactful customer experiences. In summary, we are pleased with our continued momentum in AI for CX and our execution against the massive core CCaaS market opportunity. We believe that our differentiated approach to accelerate AI adoption, as well as ongoing innovation of new AI offerings to support the entire customer journey from self-service AI agents to agent augmentation to operational efficiency, are key drivers fueling the momentum in this fastest growing category of our business. Additionally, I want to thank our team of Five9ers whose passion and unwavering dedication continue to be the driving force behind transforming our business to strengthen our leadership position in the industry. We are off to a strong start in 2025 and I look forward to sharing our progress as the year unfolds. And with that, I'll turn it over to our President, Andy Dignan. Andy, please go ahead.

Thank you, Mike, and good afternoon, everyone. In the first quarter, we continued to execute well against a strong pipeline, seeing an increased volume of new logo wins year-over-year despite some lengthening of sales cycles on larger deals, which we attribute to the macro backdrop. From a geopolitical perspective, we are starting to see some resistance in international regions to doing business with U.S. vendors, but we are monitoring this very closely as we are operating in a very dynamic environment. For our install-based bookings, we had the highest year-over-year growth rate for any quarter in the last three years. This is a direct reflection of the investments we've made to drive upsell and cross-sell motions into our customer base. And now, as we normally do, I will share some key examples of wins. The first example is a new business unit of our Fortune 50 financial services customer. They chose Five9 to replace legacy systems and enable scalable compliant voice solutions integrated seamlessly with Salesforce. The solution will improve customer outreach through click-to-call, ensuring TCPA compliant call recording and reducing call abandonment by routing branch calls to the right banking professionals. The solution aligns with their digital transformation goals, enhances the customer and banker experience, and positions Five9 as a trusted partner in secure enterprise scale voice modernization. We closed this deal in early April and anticipate this initial order to result in over $2.8 million in ARR to Five9. The second example is a leading vehicle mobility solutions provider that helps consumers with vehicle repair, replacement, fleet management, insurance, and legal services. They were using an on-prem solution that was difficult to manage and did not provide holistic visibility into all of their operations. As a result, they chose Five9 for our deep integrations into their ecosystem of applications including Microsoft Dynamics and Teams. They were also looking to maintain continuity with our partner Verint to avoid the retraining that would have been required on other platforms. Most importantly, they selected Five9 for our extensive portfolio of agent AI solutions and the significant ROI they expect to generate by eliminating simple tasks with our AI agents and gaining further efficiencies with our agent assist, transcription, and summary capabilities. We anticipate this initial order to result in over $1.7 million in ARR to Five9. The third example is a nonprofit health plan serving roughly 400,000 members in California. They were using an on-prem system that lacked key technology capabilities. They chose Five9 to modernize their customer experience by leveraging our comprehensive suite of AI solutions including AI agents for self-service, Agent Assist for transcriptions, and AI insights to identify new AI use cases and efficiency opportunities. They are also looking to enhance customer experience across text, chat, email, and voice channels, integrating seamlessly with their Jeeva patient record system and HSP claim solution for efficient call handling. They also selected Five9 for our deep integration with Microsoft Teams, our WEM portfolio to optimize their operations, and our analytics capabilities to fulfill their state-compliant obligations. We anticipate this initial order to result in approximately $900,000 in ARR to Five9. And now I'd like to share an example of an existing customer who expanded their business with us. This leading service provider of Medicaid and other government-funded self-directed care programs have been a Five9 customer for over 10 years. This customer partnered with us to win a major state contract resulting in a significant increase in the size of their contact center. Self-service is a major initiative with this expansion, which is why this customer selected our AI agents. With this add-on order, we anticipate the ARR to Five9 will increase from $1.5 million to over $5.5 million. And now I'd like to turn it over to Bryan to take you through the financials.

Thank you, Andy. We’re pleased to report Q1 revenue growth of 13% year-over-year, primarily driven by subscription revenue growing 14% year-over-year. Subscription revenue growth was driven by first strong revenue contributions from our backlog of new logos which exceeded expectations. Second, the highest year-over-year growth rate in three years for installed-based bookings, which tend to turn to revenue quickly. And third, 32% year-over-year growth in enterprise AI revenue which continues to be the fastest growing category of our product portfolio. However, as anticipated, we experienced tough year-over-year comparisons due to a stronger downtick among seasonal customers in our consumer and healthcare verticals and significant revenue contributions from our largest customer completing its ramp throughout last year. In the first quarter, subscription revenue made up 80% of revenue while usage revenue accounted for 13% and professional services made up the remaining 7%. Enterprise revenue from subscription usage and PS combined made up 90% of LTM revenue. Our commercial business, which represented the remaining 10%, declined in the single digits on an LTM basis. Like many software companies, our commercial business is more exposed to the macro environment. Also, as a reminder, this trend is partially by design, driven by our ongoing focus on larger customers. Additionally, as expected, our LTM dollar-based retention rate came in at 107% versus 108% last quarter, primarily driven by the two tough comparison factors I previously mentioned. Turning now to profitability, we continue to generate strong year-over-year margin expansions across the board primarily due to our ongoing focus on disciplined expense management. As a result, Q1 adjusted gross margin increased approximately 160 basis points year-over-year to 62.4%, and adjusted EBITDA margin increased approximately 360 basis points year-over-year to 18.8%, which is a Q1 record. First quarter non-GAAP EPS was $0.62 per diluted share, up $0.14 or 29% year-over-year. Also, stock-based compensation decreased 12% year-over-year from $45 million to $39 million, which equated to 14% of revenue in the first quarter, and we remain highly focused on continuing to moderate stock-based compensation over time. Now I'd like to share some cash flow highlights. As Mike mentioned, I'm pleased to report that operating cash flow was a Q1 record at $48.4 million or 17.3% of revenue. This was primarily driven by our strong adjusted EBITDA and continued strength in DSO performance which came in at 33 days. Also, free cash flow reached an all-time high at $34.9 million or 12.5% of revenue, achieving a free cash flow conversion rate of 66%. As a reminder, we're planning to retire the remaining $434 million principal balance of our 2025 convertible notes in cash when it matures in June. The next maturity of our convertible notes is 2029, so we feel comfortable with our cash position. In addition, we expect our free cash flow generation to improve meaningfully, putting us on a path to being net cash positive. Additionally, we've developed a holistic framework to evaluate our capital allocation alternatives. Therefore, going forward we will have a balanced approach in assessing organic investments versus share repurchases versus opportunistic acquisitions. Before turning to guidance, I would like to provide more details on the financial impact of our transformation initiatives as well as share our perspectives on the latest macro condition and its impact on our outlook. As part of our extensive operational review, we announced a 4% reduction in our global workforce on April 3. This impacted most of our departments, mainly in the U.S. and it represented a net reduction of $20 million to $25 million in annualized compensation related non-GAAP expense. As Mike mentioned, our goal is to increase long-term profitable growth and surgically invest in key areas such as AI and go to market initiatives in order to capitalize on our massive TAM opportunity that is further expanding with AI. In combination with ongoing cost optimizations, we expect the net effect to drive at least a two-percentage point improvement in annual adjusted EBITDA margin in 2025 from the 18.8% we reported in 2024. As a reminder, we expect one-time cash expenditures associated with the RIF to range between $7 million to $9 million and non-cash expenditures of approximately one to $1.5 million, both of which are not accounted for in the non-GAAP bottom line guidance I'll be providing shortly. With regard to the macro environment, I'd like to remind you that we started 2025 with what we believed to be conservative guidance based on the assumption that macro conditions would not change materially from what we were seeing at the beginning of the year. Given recent heightened macro uncertainty, we believe it is important to take a slightly more prudent stance in terms of our guidance. As a result, we are keeping our full-year 2025 revenue guidance unchanged at $1.14 billion, and for second quarter revenue, we are guiding to a midpoint of $275 million. As for the second half of the year, we expect revenue to increase sequentially in the third quarter and slightly more in the fourth quarter. With regards to the bottom line, we are raising the midpoint of our 2025 non-GAAP EPS to $2.76, which is $0.16 higher than the guidance we provided during our last earnings call. For the second quarter, this is the first time we're guiding Q2 to a positive sequential growth for non-GAAP EPS at a midpoint of $0.65 per diluted share. This is reflective of the net savings from our recent RIF as well as disciplined ongoing expense management. As for the second half of the year, we expect non-GAAP EPS to increase sequentially in the third quarter and slightly more in the fourth quarter. Please refer to the presentation posted on our investor relations website for additional estimates including share count, taxes, and capital expenditures, as well as GAAP to non-GAAP reconciliations. In summary, we're pleased with our first quarter results. We will remain laser-focused on everything we can control in order to drive strong profitability while making strategic high-impact investments and key initiatives to further our leadership position.

Thank you. We will begin with Scott Berg from Needham.

Hi everyone. Thanks for taking my question. This is Rob Morelli. I'm for Scott. Congrats on the quarter. We'd like to just touch on the subscription revenue guide for the year. Do you believe 1Q is going to be the trough for the year? Just like to see how that's going to trend. Thanks.

Yeah, so I can help answer that. So, we haven't given specifics around the subscription growth in terms of guidance, you have our annual total revenue guidance out there. We have it unchanged at $1.14 billion from what we guided to at the beginning of the year. And what's reflected in there is that, if you kind of go back starting from Q1 throughout the year in Q1 we saw relatively stable macro conditions, although we did see consumer and healthcare seasonal downtick being stronger, which was anticipated because of the strong uptick we saw in Q4. And then going into Q2 we saw the uncertainty in macro conditions increase a bit. So, we are being slightly more prudent despite the fact that we're not actually seeing material changes in our business through April so far. So, with the slight prudence built into Q2 and the rest of the year, that's what's reflected in total revenue. And a similar type of assumption can be made for subscription.

Got it. That's helpful with color. And then when it comes to the Rule of 40 target you guys outlined, can you provide any color on the breakdown that you're anticipating? Which means either adjusting even on revenue growth and free cash flow and revenue growth? Thanks.

Yeah. Bryan, do you want to speak to the medium term?

Yeah. So, the medium term, what we have assumed for revenue growth is 10% to 15% and that's assuming a stable macro condition similar to what we saw in Q1. Now from a bottom-line perspective, we expect EBITDA margin, the 25% to 30% range. And if you kind of look at the different components there, the gross margin today we reported 62.4% and we're expecting 66% to 68% medium term model. And that's really driven by our subscription gross margin getting deep into the 70s, driven by revenue scaling against fixed and semi-fixed costs. And also, we have mixed shifts happening from our usage and professional services revenue into subscription and those have lower gross margins than 50s and break-even levels. So that's a mix shift that helps overall gross margin. And of course, we'll expect to continue to get operating expense leverage as well. And that's coming from the RIF that we just recently did and the transformation initiatives that Mike talked about where we'll be focused on various areas like automation, process improvement, percentage of our workforce, increasing lower cost offshore locations, and so on and so forth. So, we're confident that we'll get to target above Rule of 40 on an EBITDA basis and approach Rule of 40 on a free cash flow basis.

Got it. That's helpful. Thanks for the color and congrats on the quarter.

Yeah, thank you.

Moving on to Siti Panigrahi from Mizuho.

Thanks for taking my question. I want to drill into the comment about longer sales cycle in the enterprise side you talked about due to macro. Could you elaborate a bit on that? Is it particular in the international region or U.S.? When do you start seeing that? And is this only on the enterprise side or mid-market? Any color would be helpful.

Yeah, good question. So, yeah, really focused on the large end of the enterprise market. Just these bigger deals, just a little bit longer sales cycles. The teams still focused on them, obviously continuing to go forward, but it's really just in that space. International, different reason, right? A little bit what's going on in the geopolitical landscape? Some business with U.S. vendors, but we are focused on our install-based customers there which as you heard, had a good quarter.

Just to clarify, did it trigger any kind of deal slippage to next quarter or anything? Or is that ongoing trend you saw?

Yeah, that's so, so these deals just slipped into the next quarter and you know, the teams are, are still focused on those deals and things are looking good.

Great, thank you.

Moving on to Raimo Lenschow from Barclays.

Hey, good to see you guys again. The quick question for me, Mike, you and I go way back and we've seen uncertain times before. How does genius AI now play into this environment and customers making decision because it does feel like delaying it or kind of showing a lot of uncertainty might have been the old good reaction, but with AI now it feels like we kind of actually need to move faster. Can you speak to what you're seeing in the field there?

Yeah. Well, it's great to see you, Raimo, and thanks for being back on the team, so to speak. Yeah, you're right. I mean, look, uncertain times always impact decision making of any kind. Right? But I think we're also benefiting from this AI revolution that is really causing a rush in a lot of ways by a lot of these companies to figure out AI. Every CIO is being told by every CEO, go figure out AI. The good news is we've come up the learning curve as an industry, not the vendors necessarily, because we've been, we've been at this quite a long time. But I think customers are coming up that learning curve and we're seeing great momentum in terms of decision making. And it's not just in the 100% attach rate on new logo million dollar plus deals that we're doing, it’s also in our install base. I mean we have this AI blueprint program which we've been talking about and we came out with that, a couple quarters ago and it's really, really working well. 50%, 50%, 50% of the customers that go through this AI Blueprint program with us are purchasing our AI solutions. And so we're penetrating our, penetrating our install base. Excuse me, as well as attaching AI to new deals. It is, I feel like we've unlocked the opportunity with AI. But at the same time, look this, the real scale of AI use does depend on the ROI that we're delivering. And you heard about those three, just three of many customer examples where we're delivering real tangible ROI, whether it's higher containment and self-service or whether it's reduction in after-call handling time. It's an exciting time in the industry.

And then. Sorry. And then Bryan, one for you. Like if you think about the transformation you started with following the review, if you think about it, how should you think about the impact on the organization in terms of the different divisions? Was that kind of a more like take underperformance out, think about more what is needed in the new AI world versus where we had people kind of working on before. Like how should we think about the implication, the impact there? Is there like a, is there going to be like a period where everyone adjusts or how should, you know, how's that going to play out for you? Thank you.

Yeah, so I can touch on it and Mike, you can chime in. So, the reduction in force was across most departments and a majority of that was in the U.S. but what we made sure is that from a sales capacity basis, you know, it's not impacted and we continue to reinvest in that area and our go-to-market initiatives as well as our AI initiatives as well. So that's where we're focused and we'll continue to make sure that that's aligned internally, strategically.

Okay, thank you.

Thank you. And next moving on to Terry Tillman from Truist.

Great. Mike, Andy, Bryan, thanks for taking the question. This is Bobby Dion for Terry. I wanted to double click on the Five9 fusion announcement with Salesforce. Specifically, the press release mentioned that Five9's bring your own telephony adoption has doubled in 2025. What do you think is driving the growth in BYOT and why now?

Yeah, I mean I think as we've long been partnered with Salesforce. Obviously, Salesforce has been heavily investing and taking their customers on the AI journey and we've been on that journey with them collectively. And so, they've been really driving the BYOT within their customer base, within their sales teams. And so really the idea behind Five9 Fusion was to really simplify the go-to-market so that the Salesforce sellers, our sellers, and then most importantly the customers, they really understand the value proposition and which solutions you need on both sides. And certainly with BYOT, when you get to the upper end of that offering, you need our voice stream or our transcript stream and voice stream to drive Einstein. And so that's really what's kind of driving a lot of the opportunities in the install base with Salesforce and new logos.

Moving on to Peter Levine from Evercore.

Thank you, gentlemen, for taking my questions. Maybe just to double down Mike, on your earlier comments, can you maybe just talk about the transformation you're going through internally? One thing you mentioned on the call, go-to-market initiatives to drive revenue growth. Maybe just share with us, what does that entail? Is it more partners? Do you really, are you coming across new buyers given it's more of an AI kind of world? I mean is the sell. Again, talked a lot about sales cycles, but just curious, maybe just talk about, you know, what the operational view looked like and then some of the initiatives, especially around go-to-market that are changing?

Yeah, great question, Peter. And again, transformational initiatives across top line and bottom line, right. To get on that path to Rule of 40 on a free cash flow basis. And if you think about the top line and the go to market, it really is, I would say, both product as well as go to market. And so think about from a product standpoint, we're definitely investing much heavier into AI showing in our innovation. Some of the products we just announced are evidence of that. And there will be more. But it's also a continuation of some of the sales execution and sales org changes we've made. But it's also top of funnel initiatives, Peter, I mean again, I've been here 17 years and I can tell you right now there is a science to sales and marketing that we've always employed, so to speak. And you know, look, we hire sales capacity based on our ability to grow top of funnel leads and opportunities. We've got a number of really exciting top of funnel initiatives that we are investing in. Again, we're being very surgical about it, we're being very scientific about it, but there are some really exciting marketing initiatives that we're in the midst of, I would say piloting. Again we're being careful in terms of how much we spend but so far the early signs are very good in terms of lead flow increases which to me is the leading indicator that has to drive our bookings growth. So I would say it's you know everything from investments in product, top of funnel marketing initiatives, as well as sales execution initiatives and some of the things we've been working on as well as I would say upsell into our install base as well.

Really driving a lot of opportunities with our top partners. You know you've heard a continuous drumbeat on new partnerships, strengthening partnerships and so a lot of focus on the area as well.

And for you Bryan, can you maybe just share with us like how you stress tested the full year guide and I do know like the macro-sensitive, you know, segments of the market that you guys are having, consumer, I mean that drives a lot of upsell for you guys and I think it's 3Q 4Q in the back half. But again, there's still a lot of uncertainty. Right? So if you think about what you're seeing today in the pipeline, just walk us through like how you stress tested these numbers to kind of reassure us that these are de-risked?

Yeah, absolutely Peter. So if you think about it, at the beginning of the year when we set the guide, we mentioned that we were assuming the seasonal uptick in the second half of this year to be more muted than the strong seasonality that we saw in the back half of 2024. Now given the increased uncertainty we have assumed that that muted seasonality even slightly more muted than what we were originally assuming at the beginning of the year. And that's if we beat Q1 by $7.7 million against the midpoint of our guidance, and essentially, we haven't put that through. So, it gives us a little bit of that cushion. Now on the headwind side of course we have the tough comparison of the largest customer that ramped throughout, it's finishing its multi-year ramp throughout last year. So that still exists. But there's also positive factors like our 32% enterprise AI revenue growth and we expect that momentum to continue with some ebbs and flows throughout the year. So, and also as Andy mentioned, you know, enterprise installed based bookings coming in at the highest year-over-year growth rate in the last three years. So when you sort of net out all those positives and potential headwinds, that's how we landed at that unchanged midpoint of $1.14 billion.

Great, thank you for the color.

Moving on to Arjun Bhatia.

Hi everyone, I'm Willow Miller on for Arjun Bhati and thanks for taking our question. So maybe to double click on is guidance de-risked? In your prepared remarks, you talked about seeing some resistance of international companies using American vendors. How much of a risk is this? And in your conversations with these customers, are you able to reassure them enough that you can still win the deal?

Yeah, I'll start. I think, I guess if you want to call this a silver lining, you know, international represents about 12% of our business. So, it's again, it's not a large portion but it's, you know, it is greater than zero, so to speak. And again, I think it's, we're seeing it more on the net new side than we are on the install base side. And Andy, you could speak a little bit to that.

Yeah, I mean I think it's not all deals and again I think I mentioned also in the install base in international to our existing customers, there's still a lot of obviously confidence in us. And the other part is, I mean we are a strong global company, right? We have, we have coworkers and customers across the globe. And so how we treat our data, how we treat their data in terms of our architecture, we're able to have that kind of level of conversation. It seems to be right now just a little bit of a, for lack of a better term emotional in terms of just wanting to make sure that they fully understand what's going on but you know, I'm confident that as some of that starts to dissipate over time that, you know, we'll continue to execute on the international front.

And in terms of the guidance being de-risked, whether domestically or internationally, another way to look at it is breaking down the business between new logos and install base contribution to the incremental revenue that we're guiding. Right. So right now, in the last three quarters of 2025, our guidance implies $67 million of incremental revenue. And if you look at just the recurring revenue side of that, that's 93% of it, or $62 million. So if we assume that DBRR stays at 107%, which we just reported in Q1, that implies that $52 million of that $62 million incremental revenue comes from our existing base, and then the remaining $10 million is coming from new logos. But a vast majority of that is from new logos that are already in our backlog. So, we have good visibility into the ramp of those revenue throughout the rest of the year, a very small portion would come from the new logo go gets that would happen in the next month or two because the rest of it will impact 2026 revenue.

Thank you, that's helpful.

Moving on to Catharine Trebnick from Rosenblatt.

Hi, thanks for taking my question. Pressing more on international, BT, that was a nice land you guys did over a year and a half ago. How is that progressing now after this April 2 with the tariff announcement? Even though you're a software vendor, I'm just curious to see if there's any different interaction. The reason I bring it up is I spoke to a company in the U.K. that said their business really increased dramatically because they're a contact center based in the U.K. So I just would be helpful to get more color. Thank you.

Yeah, I mean our relationship with BT continues to be strong. A lot of good activity, continue to win deals. And certainly, we continue to lean heavily in international on our partners. Right. Because they sort of help balance out that story, you know, BT making the investment with us. So, you know, I think they're just, we're just going to continue to execute with them and no real major change, I would say, in the business, in the pipeline. We just got to keep executing together.

All right, thank you.

Moving on to Samad Samana from Jefferies.

Hey guys, good evening. Appreciate you taking my question maybe first just in terms of the partners that you guys mentioned, it's obviously like a really marquee list of great companies. I'm just curious, are any of these where there's a joint co-selling motion, where the vendors are actually incentivizing their own sales organizations, just trying to get a sense of how much distribution you're getting here beyond your own go-to-market efforts? And then I have one follow up question.

Yeah, I would say, Samad, that all of them have very, very healthy co-sell arrangements where we're just partnering so effectively in the field with our counterparts. I mean, we've always been good at that. We've always been great at that. And you know, there are some incentives in some of those partnerships as well. But Andy, if you want to.

Yeah, there's incentives in co-sell at both sides. I mean each, each company kind of has a different approach in how they do these, do these deals. But ultimately, you know, across all of them, I can say there's, there's incentive on both sides to deliver. And a lot of times what comes with these partnerships is dedicated people on both sides, you know, working together to make sure that they're getting out in front of their, you know, obviously these partners that we're talking about are very large sales forces and so having dedicated people on their teams to make sure that they're out there pitching the joint value proposition. So, yeah, great relationships and incentives across the board.

Very helpful. And then maybe just the medium-term operating model that's in the slide deck, I think that's new Bryan, I'm just curious what you're thinking about in terms of what the AI revenue contribution will look like as you march toward that? Maybe what assumption you've made and, and the reason I'm asking is maybe how the gross margin of that revenue stream looks compared to the current gross margin stream? And is that something that can maybe push gross margins even higher than where we are today?

Yeah, no, thanks so much. So for the medium-term target, the 10% to 15% revenue growth has sort of a general momentum of AI that we are seeing today now. So, there is further upside in terms of potential revenue growth if AI acceleration really takes off. Now from the gross margin perspective, you're right in that AI gross margin and our AI agent portfolio is a good representation of this because when we acquired Inference five years ago, the gross margin, that business is in the high 70s and low 80s. And we've maintained that, if anything, we've actually improved it further. So as AI becomes a bigger mix of revenue, that should have a tailwind to overall gross margin on the subscription margin side as well as the total gross margin.

Samad. I'll add one other data point just to consider in the mix here. Relative to AI. Again, 20% plus of our ACV Enterprise bookings were AI in the last few quarters. Right. So just, that's a, that's another good number to kind of be able to triangulate what you're asking.

Great, thank you so much.

Yeah, of course. Thank you for the presentations and the questions. We appreciate your time today. We look forward to keeping you updated and sharing information as the year progresses.

This concludes our meeting. Thank you for joining.