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, expectations regarding seasonality, 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 and CCaaS revenue opportunities and current estimates regarding same company growth, enhancements to and development of our solution, market size and trends, our expectations regarding macro conditions, company market and leadership positions, initiatives, pipeline, technology and product initiatives, including investment in R&D and AI 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 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'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, global tariff increases and potential increases in announcements regarding the same 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 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 on the Investor Relations section of Five9'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, July 31, 2025. It may no longer be accurate at the time of 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. Please go ahead.

Thanks, Lauren, and thanks, everyone, for joining our call this afternoon. I'm very pleased to report strong second quarter results. But before we go into our results, as you may have seen in the press release we issued earlier today, I've made the decision to retire from the CEO role here at Five9. The Board has kicked off a comprehensive search for our next CEO. Meanwhile, I will continue to serve as CEO until my successor has been appointed. And then I look forward to continuing my service on the Board as Executive Chairman at Five9 to ensure a smooth transition. It has been a privilege and an honor to lead this amazing team of Five9ers. While my cancer treatments continue to be effective, I recognize that it's not likely to continue indefinitely. After giving it a lot of thought, I believe it's time for me to pass the baton and get back to a more balanced lifestyle. That said, until we appoint my successor, I'm committed to working hard as we continue to transform Five9 to drive top line growth and bottom line profitability. As you know, we have made a series of changes over the past several quarters to position the company for the future, and we are beginning to see the positive impact of those changes in our results, including strong bookings, AI momentum, and increased profitability. So now let's dive into our Q2 results. As I mentioned earlier, we had a very strong second quarter, which exceeded our guidance across all key metrics. Subscription revenue, which now makes up 81% of total revenue, accelerated to 16% year-over-year growth. This was primarily driven by Enterprise AI revenue growth accelerating to 42% year-over-year in the second quarter, now representing 10% of Enterprise subscription revenue. Additionally, we were very pleased to see strong momentum in our sales execution as we had the highest quarterly total ACV bookings in 2 years, excluding the one financial services mega deal we did in Q1 of last year, and Enterprise AI bookings more than tripled year-over-year in the second quarter. In terms of profitability, adjusted EBITDA grew 63% year-over-year, reaching an all-time record margin of 24% in the second quarter, helping to drive Q2 records for both operating and free cash flow. Our increased profitability is a direct result of our execution against transformation initiatives as we work toward the Rule of 40 and beyond. And now I'd like to spend a few minutes on our AI success and innovation. Let's start with the 3 key drivers underlying our strong momentum in AI. First, enterprises continue to see Five9 as their core CX platform, including AI. For instance, 2 large healthcare customers extended their contracts with us during the second quarter to 5-year terms, with one expanding its anticipated ARR with us by nearly 40% to over $11 million, and the other expanding its anticipated ARR with us by more than 2x to over $5 million. Both enterprises decided to continue their partnership with us long term as they view Five9 as their single comprehensive platform provider for CX. Second, enterprises are turning to Five9 as they make their long-term decisions around AI, given that we are the core CX platform and we have the AI expertise, products, and integrations. For instance, one of our customers in the airline industry worked with our AI experts to evaluate the potential ROI of increasing their self-service capabilities. As a result, they decided to expand their AI portfolio with us in the second quarter, increasing their anticipated ARR with Five9 by more than 2x to over $7 million. Similarly, one of our customers in the pest control industry decided to add new AI capabilities on our platform in Q2, increasing their anticipated ARR with Five9 by more than 30% to over $4 million. And third, enterprises are achieving significant and tangible ROI with our AI solutions. For instance, a customer in the healthcare industry who deployed our AI solutions a year ago has been achieving significant improvements, including an 80% reduction in abandonment rate, a 50%-plus increase in containment rate, and a 60%-plus improvement in post-interaction work time. Another example is a digital health company focused on simplifying medical data to improve patient care outcomes who deployed our AI solutions 4 months ago. In this short period, they've already realized a 19% improvement in self-service containment. Not only was self-service improved, but critical CSAT metrics were improved as well, driven by a 50% reduction in abandonment rate and nearly a 50% reduction in hold time. As you can see, we are well positioned to enable enterprises to unlock real value with AI, and we expect to build on this momentum as we continue to invest in driving innovation within our Genius AI suite. For example, we made big news at CCW in Las Vegas in June, where we launched Agentic CX with AI Agents that can reason, decide, and take action. We also launched AI Trust & Governance, our solution to make AI enterprise-ready. Let's first discuss our new Agentic AI Agents. With this launch, the Five9 Intelligent CX platform now delivers Agentic AI Agents to drive CX and AI at scale. With powerful new capabilities designed to reason, decide, and take action, Five9 ushers in a new era of Agentic CX for our customers. Part of our Genius AI suite, AI Agents provide accurate hyper-personalized experiences for consumers that are secure, seamless, and context-aware. Our Agentic AI Agents can do so much more than prior generations because they have flexible, advanced self-service capabilities that adapt at any stage of AI maturity through 5 key features, including: AI Summary node, which auto summarizes voice and digital interactions with language selectable summaries; intent detection and entity extraction, which enables seamless natural dialogues, ensuring the quickest path to resolution; Knowledge node, which uses retrieval augmented generation, or RAG, to generate contextual answers based on enterprise knowledge; prebuilt templates, which make it easy to deploy with starter kits that allow customers to quickly build new AI Agents for their specific needs; and lastly, Code Crafter, which leverages the capabilities of LLMs to generate high-quality JavaScript functions, reducing development and implementation effort from weeks to hours. Additionally, our Agentic AI Agents are able to provide context and facilitate handoffs to human agents for those cases where it may be required. They can be configured to transfer to a human agent and quickly summarize the conversation in real-time to promote a seamless handoff. This reduces handle time and is designed to eliminate the need for consumers to repeat themselves, reducing frustration and improving the experience. Also, as our customers are learning how to operationalize AI within their CX solutions, we're developing new practices to serve as their trusted expert in building their agent ops capabilities. Agent ops is an emerging discipline for managing the deployment, monitoring, and optimization of AI Agents, and a critical component of deploying AI Agents is to provide granular guardrails for agent ops personnel to tailor AI models and outputs for different use cases, keeping AI-powered consumer experiences reliable and safe. This is where Five9 AI Trust & Governance comes into play. As we enter this new era of Agentic CX, Agentic AI is continuing to shape the entire customer journey from accurate and personalized self-service to agent assistance, process automation, and managerial insights, and it is essential for Agentic AI to behave ethically and consistently. With our Five9 AI Trust & Governance suite, enterprises are scaling AI safely with capabilities such as granular guardrails to better customize AI behavior across channels, proactive monitoring and response to risks such as prompt injection attacks, better AI observability with comprehensive reporting and dashboards, and hallucination detection to easily detect incorrect AI behavior if needed. As you can see, our ongoing investments in our Genius AI suite continue to fuel innovation and strengthen our leading position as a trusted partner to help enterprises navigate through this rapidly evolving world of AI. This is also why we're once again ranked as having the best AI solutions in the semi-annual Baird survey that was recently conducted in July. Now I'd like to touch on the momentum we are seeing with some of our key partners. In the second quarter, we had very strong performance across multiple routes to market. We also continued to gain significant traction with technology partners during the quarter. For example, with Salesforce, we're having a lot of success in the field working hand in hand with the Salesforce sales teams, through joint selling and value positioning. As a result, we saw a significant increase in bookings as well as a meaningful increase in the pipeline for Five9 Fusion for Salesforce. With Google Cloud Marketplace, the pipeline once again doubled this quarter, and we closed multiple $1 million-plus ARR deals through this partnership. With ServiceNow, we doubled our bookings quarter-over-quarter, and we also published our certification and alignment to their Yokohama release, their most recent platform update focusing on AI, showcasing our deep partnership. And lastly, with regard to Epic, we are excited to share that Five9 is now listed in the Epic showroom as a toolbox solution. Epic is one of the largest healthcare CRM providers and is a key partner for us as we continue to deepen our healthcare vertical integrations. We are offering a digital patient experience solution embedding our capabilities into Epic. And this is one of the many planned native integrations with them as we continue progressing our joint roadmap, which includes AI Agents, Agent Assist, and other AI solutions. In summary, we are very pleased with the momentum in our business and the progress we're making on our transformation initiatives for both top and bottom line. We remain at the forefront of developing leading Agentic CX solutions to help reshape the AI-driven customer journey and experience, and I'm extremely excited about the future of Five9. I'm confident that we have the platform and the experts to drive long-term durable growth as we continue to capitalize on our massive market opportunity. And before I turn it over to our President, Andy Dignan, I would like to discuss some changes in our leadership team. For starters, following a comprehensive CFO search, I'm thrilled to congratulate Bryan Lee on his appointment. Bryan has been a key member of the finance organization at Five9 for 11 years, and he has been instrumental in helping us achieve our operational and financial goals, and I have so much confidence in Bryan. In addition to Bryan's appointment to CFO, we made additional changes to our leadership team by realigning our executive org structure in order to maximize alignment, ownership, and operational efficiency. As part of these changes, we promoted Tiffany Meriweather from Chief Legal Officer to Chief Administrative and Legal Officer, where she will now also lead HR. In addition, we promoted Matt Tuckness to Chief Revenue Officer. Matt is a 12-year veteran at Five9 who has risen through the sales ranks, leading various sales orgs, and has had a significant impact on our go-to-market organization and our bookings reacceleration. In this role, Matt will also lead our marketing team. And with that, I will turn it over to Andy.

Thank you, Mike, and good afternoon, everyone. As Mike mentioned, we are very pleased to see strong bookings across the board in the second quarter, reaching the highest quarterly total ACV bookings in 2 years, excluding the one financial services mega deal we did in Q1 of last year. Most importantly, we had triple-digit year-over-year Enterprise AI bookings growth in Q2, with Enterprise AI new logo bookings more than doubling year-over-year, and our Enterprise AI installed base bookings more than quadrupling year-over-year. Once again, AI bookings made up more than 20% of Enterprise new logo ACV bookings, and we attached AI to virtually all of our $1 million-plus ARR new logos. Also, we continue to see significant momentum with our AI Blueprint program, which is helping us accelerate expansion within our Enterprise installed base. And outside of AI, our non-AI bookings grew significantly for both new logos and installed base. Additionally, we had a healthy mix of million-dollar-plus ARR new logo wins along with robust channel activity both domestically and internationally. That drove strong new logo bookings during the second quarter. And installed base bookings hit an all-time high driven by continued momentum in upsell and cross-sell initiatives. Looking ahead, we remain optimistic about the future as our pipeline and RFPs continue to remain at elevated levels. And now as we normally do, I will share some examples of key wins during the quarter, in addition to the $2.8 million new logo we won in April which we discussed during our last earnings call. The first example is a global data and analytics company who selected Five9 through a reseller to modernize from a rigid legacy platform that had stalled prior transformation efforts. They needed a scalable AI-powered CX solution to elevate customer engagement and drive operational efficiency. With Five9, they're activating all digital channels along with intelligent routing and post-call surveys to capture real-time customer sentiment. Agent Assist will empower their team with contextual guidance and automated conversation summaries. Deep CRM integrations including Salesforce, ServiceNow, and a proprietary CRM system are designed to ensure voice and digital AI Agents as well as human agents have instant access to the contextual data they need, reducing friction and improving resolution times. They will also use AI Insights to uncover key trends, optimize both AI Agent and human agent staffing and drive smarter business decisions. We anticipate this initial order to result in approximately $3.3 million in ARR to Five9. The second example is a national mortgage services provider who selected Five9 through a reseller to modernize from an inflexible on-prem system that was limiting agility and contributing to client churn. They needed a cloud platform that could support inbound and outbound engagement, integrate with a complex CRM stack and elevate their customer experience. With Five9, they're enabling all digital channels and voice, integrating with both Salesforce and their proprietary mortgage platform to service customer data instantly. Microsoft Teams gives agents real-time access to subject matter experts, while Agent Assist transcribes and summarizes conversations for continuity across interactions. They'll also use WFA to automate tasks like sending mortgage payoff statements, streamlining operations and improving both agent productivity and customer satisfaction. We anticipate this initial order to result in approximately $1.2 million in ARR to Five9. The third example is a global veterinary services provider with over 2,000 locations across 20 countries who selected Five9 through a reseller to consolidate fragmented on-prem systems and elevate both the customer and agent experience. Rapid growth through acquisition had left them with no visibility into the full customer journey and no ability to proactively engage clients with reminders for appointments or refills resulting in missed revenue opportunities. With Five9, they're unifying their contact center on a modern cloud platform, activating voice in all digital channels. Voice and digital AI Agents will now handle common tasks like appointment rescheduling and prescription refills, while post-call summaries and Zendesk integration help both AI Agents and human agents understand context and continue conversations seamlessly. Microsoft Teams integration gives agents real-time access to non-contact center experts like clinic staff when a call requires specialized input. With AI Insights, they'll now have a clear visibility into performance trends, training needs, and AI Agent and human agent staffing, turning insights into action across the organization. We anticipate this initial order to result in over $1.1 million in ARR to Five9. And now I'd like to share an example of an existing customer who expanded their business with us. A leading academic health system significantly expanded its partnership with Five9 by signing a new 5-year agreement. The organization initially deployed Five9 to support its patient access team, improving the patient experience using our AI Agents. After 3 years of success, they committed to a long-term strategy built on flexibility, integration, and scalability. This expansion is comprised of new business units and an increase in our AI Agents, including the use case where Five9 and Epic are integrated to streamline clinical workflows as well as additional AI Agent use cases. Additionally, they are leveraging Five9 Fusion for Salesforce. They also expanded their use of technical account management to include specialized AI expertise. This extended agreement reflects a deeper value-based partnership focused on expanding patient access, improving operational efficiency, and supporting long-term growth. With this add-on order, we anticipate the ARR to Five9 will increase from approximately $2 million to over $5 million. And now I'd like to turn it over to Bryan to take you through the financials.

Thank you, Andy. It's an incredible honor to take on the role of CFO. I'm deeply grateful to Mike and the Board for the opportunity, and I'm excited to continue working with the team to drive the company's next chapter of success. Now turning to financial results for the second quarter. We're pleased to report Q2 revenue growth of 12% year-over-year primarily driven by subscription revenue growth accelerating to 16% year-over-year. Subscription revenue growth is driven by first, Enterprise AI revenue growth accelerating to 42% year-over-year, which continues to be the fastest-growing category of our product portfolio. Second, strong revenue contributions from our backlog of new logos, which exceeded expectations. And third, as Andy mentioned, the highest ever installed base bookings. As a reminder, subscription revenue is the most meaningful metric for our business, as it reflects the growth in the number of customers coming onto our platform as well as the increase in the number of products they're purchasing, including our AI solutions, which are sold on a capacity or consumption-based pricing model. While our seat count continues to grow at a healthy rate, we're laser-focused on driving high-margin subscription revenue dollars increasingly led by our AI solutions. I'd also like to remind you that we are strategically deemphasizing telecom usage and Professional Services and we expect both to have growth rates lower than total revenue. For example, when it comes to telecom usage, larger customers tend to bring their own telephony, and channel partners like BT and AT&T offer their own telephony. For Professional Services revenue, our strategy is to enable our partners to take on more deployments. In the second quarter, subscription revenue made up 81% of revenue, while usage revenue accounted for 12% 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. Also, as a reminder, this trend is by design driven by our ongoing focus on large customers. Additionally, our LTM dollar-based retention rate increased to 108% versus 107% last quarter driven in part by our AI revenue acceleration. For the remainder of the year, we expect LTM dollar-based retention rate to fluctuate within a small band reflecting a combination of factors such as our AI momentum and expansions of larger customers being offset by tough year-over-year comparisons due to significant revenue contributions from our largest customer completing its ramp throughout last year and our assumption that the second half seasonality will be minimal this year due to macro uncertainty. Turning now to profitability. We continue to generate strong year-over-year and quarter-over-quarter margin expansion across the board in the second quarter primarily due to our ongoing commitment to increase profitability and drive operational excellence. Q2 adjusted gross margin increased approximately 250 basis points year-over-year and 60 basis points quarter-over-quarter to 63%. This was primarily driven by subscription gross margin expansion and subscription revenue growth accelerating to become a bigger part of the mix. As a reminder, the revenue mix shift towards subscription from telecom usage and PS provides an uplift to total adjusted gross margin since subscription gross margin is in the 70s. Q2 adjusted EBITDA margin increased approximately 740 basis points year-over-year and 520 basis points quarter-over-quarter to 24%, which is an all-time record. Second quarter non-GAAP EPS grew 45% year-over-year to $0.76 per diluted share. Now I'd like to share some cash flow highlights. As Mike mentioned, I'm pleased to report that both operating cash flow and free cash flow represented Q2 records. We generated $35.1 million or 12.4% of revenue in operating cash flow, and $21.6 million or 7.6% of revenue in free cash flow, despite incurring $7.8 million in one-time restructuring costs for the April RIF. As a reminder, we also paid off the remaining $434 million principal balance of our 2025 convertible notes in cash when it matured on June 1. 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 more meaningfully, putting us on a path to being net cash positive near term. And now I'd like to finish today's prepared remarks with a discussion of our guidance for the third quarter and full year 2025. For revenue, we're guiding Q3 to a midpoint of $284.5 million, and we're increasing the midpoint of our annual guidance by $5 million to $1.1465 billion, representing double-digit consolidated growth for the full year. Please note the following items which are reflected in our guidance. First, we're prudently assuming minimal seasonality for the remainder of the year starting in Q3 based on discussions with our top seasonal customers who are anticipating continued macro uncertainty. Second, as we mentioned earlier, we have been successful in upselling and cross-selling more software into our base, which drove the highest ever installed base bookings in Q2, but there's a longer ramp associated with these types of bookings, which will layer into revenue during the fourth quarter and next year. For non-GAAP EPS, we're guiding Q3 to a midpoint of $0.73 or a $0.03 sequential decline, which is in line with our typical guidance pattern for the third quarter and reflects lower interest income given the $434 million payoff of the 2025 convertible notes in cash as well as the reinvestments we're starting to make in AI and go-to-market initiatives. For the full year, we're raising the midpoint of our non-GAAP EPS guidance by $0.12 to $2.88. Additionally, we are raising our full-year 2025 adjusted EBITDA margin expectations to now be at least 22% compared to our previous expectations of approximately 21%. Beyond 2025, we remain committed to our medium-term operating model and achieving the Rule of 40 plus in 2027 driven by both double-digit revenue growth and continued margin expansion. 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 very pleased with the progress we're making and the momentum we're seeing across the business. We will continue to be very disciplined in managing our expenses and allocate capital to opportunities that we believe offer the highest impact on both top and bottom-line growth.

With that being said, we will begin with Terry Tillman from Truist.

Yes, sorry about that. Hopefully, you can hear me okay. First of all, Mike, congratulations on being able to get to a more balanced life. That's awesome and good luck with everything in the future. And Bryan, congratulations as well. So my question is, and it's a tough question to answer, but the stats on your Enterprise AI business are impressive. So for me, a thought is the sustainability of this goodness. And so what kind of visibility do you have in your pipeline? And just whether it's the new logos that are attaching well your AI capabilities or the installed base and now you have the AI Agent stuff, just how should we think about the sustainability of well above corporate average growth for just the whole portfolio of AI products?

Terry, thank you very much. Look, the AI bookings numbers were obviously very, very strong. The good news is, it's on net new bookings as well as installed base bookings. So our Enterprise AI bookings for the net new side of our business, right, net new logos doubled year-over-year and for the installed base, it quadrupled. So again, this is the result of a lot of things. Our AI platform being ahead of the competition, a lot of the enablement that we've been doing in our go-to-market motion and things like our Blueprint program. So we've actually deployed some strategies that are designed to help penetrate our installed base with our AI solutions, and that's what this is showing. So again, we're really, really bullish on keeping that momentum. Again, these are big numbers, but look, we're really pleased with it.

Our next question will come from Siti Panigrahi from Mizuho.

Great. I also echo my congrats to both Bryan and Mike, our best wishes for your good health and retirement, Mike. Just looking at beyond AI momentum, it's good to see all the momentum you talked about. Last quarter, you talked about some kind of deal elongation on the Enterprise side and slowdown in international market. How is that momentum going this quarter? And what's your assumption for the second half? Especially when I look at your guidance, second half implies 7% to 8% growth. And Bryan, if you could cover your assumption on the subscription side, that would be great, and especially Q4.

Andy, do you want to take the first part?

Yes. So on the Enterprise side, we didn't see the same kind of elongation we saw last time. There's always deals that slip at the end of the quarter, but nothing like we saw last quarter. And on the international side, we didn't see the same thing either. We saw strong growth through our partners internationally, which is the goal. And we didn't see the same things we saw last quarter. So I feel really good about where we're at.

Yes. And Siti, in terms of guidance, let me start off by making an overarching comment about it. So if you look at our Q2 revenue, it came in approximately $8 million above the midpoint of our guidance. And we put through $5 million of that to the annual guide. Now we kept $3 million back to be slightly more conservative given our assumption that we're expecting seasonality in the second half to be minimal, and that's based on our conversations with top seasonal customers who we survey at this time of the year generally. And they've all said that they're expecting minimal seasonality given the ongoing macro uncertainty. So that's one factor. The other factor that I want to point out is we mentioned how we have the highest installed base bookings in Q2. Well, a large portion of that was through upselling and cross-selling software, and that comes with longer ramps. So those will typically turn into revenue in Q4 and into 2026 as well. So if you kind of look at it, when you net all that out and you look at the sequential pattern of the guide, Q3 you'll see that the sequential growth is similar to how we guided last year. And then Q4 will actually show sequential growth that's slightly higher than what we guided to last year, and that's driven primarily by the installed base bookings piece of it that I just talked about. And then to your point about the year-over-year growth in terms of 8% for Q3 and 7% for Q4, there's one additional factor beyond the tough comparison of the seasonality because we had strong seasonal uptick last year and then we're now expecting minimal seasonality. But then there's the other factor, which is our largest customer who is finishing its ramp throughout last year and has significant growth. That also creates a layer of tough comparison.

Our next question will come from Raimo Lenschow from Barclays.

Congrats from me as well, Mike and Bryan. I hope me rejoining didn't cause Mike to kind of say, I'm out of here.

Nothing to do with it.

I wanted to ask a topical question. We recently noticed a news flow regarding the investment activities of some companies you collaborate with, such as a salesperson CRM, which is one of the players in your market. This could be seen as a strong endorsement of your industry amid existing uncertainties. Companies that choose to invest in this sector certainly provide a solid vote of confidence. How do you view this in relation to your partnerships with other players in the field? Could you perhaps provide a broader perspective on this?

Yes, great question, Raimo. Yes, again, we saw the same rumor if you want to call it that or print. Again, we'll see if it's real. And look, it's a great endorsement of our space. Especially Salesforce, they've invested across our competitive set for quite a while. We're a public company, so they really can't do similar things with us, and they can buy our stock if they want. But that's really not their business, right? They tend to invest in private companies. So look, it's nothing new in some respects. But look, they're going to continue to play the field. Our momentum with Salesforce and ServiceNow is stronger than ever. And quite frankly, our co-development work, our co-road map work, our co-selling efforts are working better than ever. So I don't think it'll change anything in terms of our go forward.

Our next question will come from DJ Hynes from Canaccord.

Good to see everyone. Congrats on all the milestones and the nice print. So look, Mike, you gave some great examples of customers kind of leaning in on AI. Those that are further along, what's happening with their human agent seat count, right? I mean, I think that's the million-dollar question that everyone's trying to figure out. Are you seeing those seat count reductions that the market seems to be expecting? Are you able to make up for that with incremental AI spend? Like how is this all shaking out?

Yes, that's a great question, DJ. We've discussed this a bit. Our non-AI business is continuing to grow well. You can assess it based on the percentages we've provided regarding our overall blended growth and AI growth. That gives you a solid data point. Generally, customers are focusing on utilizing our AI Agents and self-service options to manage their agent growth or maintain it at a steady level. We haven't observed many customers reducing their agent counts. This aligns with our previous statements that they aim to deflect a small percentage of interactions to AI-powered self-service, and they are doing this quite successfully. I mentioned some ROI statistics that highlight this, particularly from customers who have been engaged with AI for some time. One customer I spoke about recently joined us and also experienced excellent ROI immediately. However, we aren't seeing the expected decrease in agent numbers as suggested by the AI bear thesis. I believe there's still some revelation to come. Ultimately, the proof is in our results. Our core, non-AI business is growing, and our AI business is expanding even more rapidly, which is the most significant takeaway.

Yes. I mean we've heard some of the like digital channel native vendors talk about 70% deflection rates. I assume it's different in voice, right? It's got to be a lot lower. Like what is that percentage that they can deflect the agent seating today?

Yes. They're looking at 5%, 10% of their voice interactions. And again, digital can be higher, but again, I think that's what we're hearing from our customers and that's what we're seeing from our customers, too. So again, as AI gets better, that could go up, but that's their goal at this point.

Our next question will come from Jackson Ader from KeyBanc.

Good to see you. So Mike, the last time that we brought in, I guess, an outside CEO, it came from a communications competitor, right, like in the space. So I'm just curious, is that something that's going to be high on the priority list? Like what type of background are you really looking for? And then I've got a quick follow-up.

Yes, it's a great question, Jackson. Look, we're kicking off the search. We've formally announced it, and we have a search firm retained and we're excited to go attract the best CEO in the market. And again, it's going to be someone that has a great track record and experience of innovation, including AI. So it's going to be much more, I would say, AI and innovation focused as opposed to comms. It'd be great if they also understand the core comms space, too, but you can't have everything. And so again, it's about innovation, including AI, number one. Number two is someone with a track record of delivering operational excellence at scale. We're a growth company. We're $1 billion in revenue today. I want to bring on a CEO here that can take us to $2 billion and $5 billion and $10 billion and beyond over time. And so we want someone that's growth-oriented and has a growth mindset as well. So those are kind of some of the high-level characteristics and experience sets we're looking for. But again, we're going to go find the best CEO we can.

Got it. Makes sense. And then I guess following up on AI, when I hear about, you rattle off all these different AI capabilities, right? And some of them sound not like CCaaS, right, or like not like communications, like code generation, AI ops, right? So how much do you feel like you need to compete on a much broader set of AI capabilities versus like, hey, we're a contact center software company and we're going to develop AI for contacts?

Yes, I would say think of us as AI for CX, customer experience, today. Now again, we can go beyond that potentially, but look, we want to go deep and be the best of breed, the best solution in customer experience. So think about that as kind of contact center plus other parts of the customer journey. And obviously, part of what we do is going to be automation around processes in the back office related to customer experience. So it may not be just real-time communication driven by AI, but it's also process automation that would fulfill a customer experience situation, right? And so it does span beyond just the comms and the real-time contact center interactions into the back office in those cases.

And I think, too, if you look at some of these things are becoming table stakes to deliver AI, right, enterprise software companies and brands are looking for companies that deliver things like agent ops and Code Crafter. I mean, these things allow you to simply deliver AI, and obviously, we're focused on the CX space.

Our next question will come from Peter Levine from Evercore.

I’ll echo my congrats, Mike and Bryan. I mean, I guess, Mike, how would you assess, I think, the general level of like AI readiness across like your customer base, right? Is it technical? Is it organizational? Is it security that's maybe holding some of these customers back? It's clear there's an ROI that's been demonstrated, shown. So maybe just one is just help us understand like what the hurdle is to get you from 10% of Enterprise revenue to 20%? Is that 4 quarters? Is that 2 years? Just help us understand like the ramp and maybe what's holding customers back.

Yes, that's a great question, Peter. A key figure to consider is the proportion of our bookings that involve AI. Currently, 10% of our Enterprise subscription revenue comes from AI, but over 20% of our Annual Contract Value bookings for Enterprise are attributed to AI. This indicates a significant shift in the market. Many customers are navigating this new territory, and while we assist them throughout the process, the adoption is reflected in our results. For instance, our new logo bookings have doubled, and AI bookings from our existing customer base have quadrupled. There is considerable momentum as both we and our customers grow more adept at making decisions regarding AI. Previously, the approach was more cautious, with customers merely testing the waters—now, they are focused on scaling. We have observed an acceleration in our AI revenue growth, which increased from 32% to 42%. There is definitely a growing readiness among our customers. However, a common challenge we see is that many customers need to organize their data properly. The effectiveness of AI is directly tied to the quality of data it can access. Our larger customers, particularly CIOs on our Customer Advisory Board, emphasize the importance of having their data in order. This organization is crucial for deploying AI successfully and achieving a solid return on investment. If the data is not structured properly, the process becomes more challenging. Nonetheless, we are actively helping many customers address this issue.

If you can, can you provide some color? I know there's a lot of mixed messaging in terms of pricing that we hear from your competitors. Is it on a per seat basis, usage basis, token basis? Given where you are in this journey, like what model is working best for your customers where you actually go into a sales cycle and it's accelerating? It's not as complex in terms of what customers are willing to pay and how they're willing to pay for it.

Yes. Well, look, when it comes to AI, we've talked about this. Our AI solutions are mostly consumption-based pricing or capacity-based pricing. And the traditional products that we've been selling for years and years, the pricing model hasn't really changed. And frankly, our customers aren't looking for that to change. They really appreciate the simplicity of our pricing model. So the good news is I think we're in an evolving market and we'll continue to evolve our pricing as necessary. And you'll see some small players in certain parts of our space try to break in with disruptive pricing schemes and outcome-based pricing. But again, as a large company, you don't typically see companies of our size change their pricing to that kind of model.

Our next question will come from Samad Samana from Jefferies.

This is Billy Fitzsimmons on for Samad. First, from a vertical perspective, anything to call out there in terms of strength or weakness and any verticals growing faster in terms of AI adoption at this point?

Yes. So I'll take the verticals from a financial perspective and I'll turn it over to Andy from an AI perspective. So if you look at our overall, the 17 verticals that we typically track, there really wasn't anything substantial to note. The sequential growth there was pretty similar to what we saw in Q2 of last year. And then consumer specifically, that also was growing slightly sequentially and that's relatively in line with the historical trends that we've seen. I'll turn it over to Andy.

Yes. In terms of customers and bookings, the main opportunities are in financial services, healthcare, and retail. While there are other sectors, these industries stand out. As Mike mentioned, the key factor is data, and many companies in these areas have embraced self-service for a considerable time, which has positioned their data more effectively. This improvement is enabling them to progress more rapidly, making these the leading sectors we're currently observing.

Okay. And then if I could expand a little bit, anything to call out in terms of commercial customers? I know you guys give us the Enterprise's percent of revenue on a trailing 12-month basis. If we kind of back that out and apply as commercial has been down kind of the last 3 quarters on a rolling basis, and obviously it's a smaller piece of the business, less important, Enterprise is growing faster, but just want to better understand what's kind of happening there.

Yes, that’s a great question. As you know, the commercial segment is becoming a smaller part of our overall business over time. It hasn't been a strategic focus for us, but we still perform quite well in that area. It's important to note that we have graduations occurring, where some of our smaller commercial customers move up to the Enterprise category, which contributes to Enterprise revenue rather than commercial revenue. So there is some of that happening as well, and it serves as a way for us to enter the market for growth companies. Additionally, we believe we still execute effectively in that market opportunity with a low customer acquisition cost. Overall, while we don’t anticipate significant growth from the commercial segment over time, we still see it as a viable business.

Our next question will come from Taylor McGinnis with UBS.

This is Seth Gilbert on for Taylor. The acceleration in subscription revenue and inflection in NRR was solid. Maybe can you walk us through kind of what drove the upside and what the trend line in subscription revenue growth has been excluding AI? And then maybe I'll press a little bit on some of the earlier questions on the AI side. Can you touch on what AI could scale to as a percentage of Enterprise subscription revenue growth over, say, the next year or 2?

Sure, I can start. Subscription revenue growth increased from 14% in the first quarter to 16%, while Enterprise AI growth rose from 32% to 42%. The primary factor driving this subscription revenue acceleration was the Enterprise AI segment. Even without considering Enterprise AI, there was still growth in non-AI subscription revenue. Looking at Enterprise AI growth, our top three products—AI Agents, Agent Assist, and Workflow Automation—all saw acceleration. Overall, it was a very strong quarter. Currently, AI constitutes over 20% of our Enterprise net new ACV bookings, and we are at 10% of our Enterprise subscription revenue. This suggests a potential growth trajectory, but we haven’t provided specific forecasts for the next year or two.

Our next question will come from Scott Berg from Needham.

Everyone, really nice quarter. Mike, 3x. That's what I heard a few years ago, 3x.

You got it. I'm going back there, Scott, but not right away. We got a lot of work to do and we got to find the right next person.

Thank you, Scott.

I guess my question is probably directed a little bit towards Andy. You made the comments, I think, pipelines are at elevated levels right now. But I think one of the questions I get frequently from shareholders and others is talking about the overall industry kind of pipeline activity. It's been a little on the light side or maybe a lot on the light side at different periods over the last 1, 2 or 3 years. But how does activity really kind of compare to maybe what you saw in '21 or early '22 before the industry saw some slowdown? Are we back at a normal cadence? And obviously, AI is part of that. Or are we still trying to build up to those levels?

Yes. I mean, no, we've seen those levels consistently going back 2 years and they've kind of stayed at the same level. Obviously, AI, as we've been talking about, does continue to be a tailwind. I think you're seeing obviously that play out this quarter. And so we feel good about where we're at, and obviously as well, that's on the new logo side, we feel really good about the changes we made on the installed base side as well, both in the AI side as well as the non-AI side, we saw significant growth there. So I think we're, like I said, we're in a growth business both for our core business as well as AI. And so again, we feel good about the pipeline in the future.

Excellent. Congrats again.

Our next question will come from Rishi Jaluria from RBC.

It's Trebnick, but who's keeping score. Congratulations to both of you. I hope you enjoy your retirement, looking forward to working with you, Bryan. So my question has to go back to the decision you made regarding the 3 executives who let go on Monday. What went into that methodology and why at this point in time?

Yes, great question. We've really reorganized our executive team with several promotions, including Bryan and Tiffany Meriweather, along with Matt Tuckness stepping into the Chief Revenue Officer role. We've had some personnel changes, with some moving up and others moving out. Our aim is to enhance efficiency at the top and the decision to unify marketing and sales under a Chief Revenue Officer has opened up that opportunity. This is about cost efficiency as well as improved ownership and alignment among these key areas. We were very deliberate in our approach, which positions us well for the future. Making these changes in a coordinated manner was part of the strategy to ensure we have the right people in critical roles for the company’s growth. When I returned nearly three years ago, one of my primary objectives was to prepare the organization for what lies ahead, and that's largely what we've accomplished here.

Our final question will come from Meta Marshall from Morgan Stanley.

And I'll echo my congrats. Maybe just wanted to spend a second on, you guys had mentioned Professional Services becoming a smaller portion of the revenue. I know you guys had put an emphasis on kind of building out that channel and kind of utilizing them for Professional Services. But just any update on that, particularly since you noted that customers are starting to ramp faster than expected, just kind of what traction are you seeing there and are there levers that could still be pulled to kind of speed implementations?

Yes, that's a great question. I'll begin, and then Andy can add to it. We launched Project Pull-Through nearly 2.5 years ago, and it's been very effective in increasing the percentage of our implementations handled by third parties. This means we don't need to expand our Professional Services capacity as much, so our Professional Services revenue isn't growing as quickly as our subscription revenue. We're also seeing growth internationally, and a significant portion of our implementations is coming from domestic markets, but there's still plenty of opportunity for growth there. Additionally, our technology is helping us deploy faster. For example, with our own technology and tools like GenAI, we can implement AI Agents significantly quicker than we could six months to a year ago. Andy?

Yes. The last thing I'd say, too, I mean, you saw 3 of the new logos we announced. I mentioned that they were through a reseller. A lot of those partners that deliver those services are resellers. So I think our kind of overall balanced route to market strategy and our partner business is doing really, really well and that's kind of hand-in-hand, right, driving top line opportunities as well as helping us on the bottom line with the services.

Our final question will come from Mike Latimore from Northland.

Congrats on the strong quarter and the new roles. On Agentic AI, can you talk a little bit about the potential ARPU impact there relative to kind of what you've had to date and maybe more traditional conversational AI? And then just clarify what percent of AI is usage based. I know you said it's a strong portion, but is it 90% or the 51%? Maybe a little bit more ballpark on that would be great.

Thank you for the questions, Mike. From the perspective of Agentic AI and its impact on ARPU, we plan to offer more sophisticated AI capabilities, which will result in a higher price point. Our advanced AI Agent is now priced about 25% higher than our core AI Agent, suggesting that ARPU will trend upward as a result. We haven't specified an exact percentage increase yet. We've mentioned that our top three AI products are the AI Agent, previously known as IVA, Agent Assist, and Workflow Automation. The AI Agent operates on capacity pricing, while Agent Assist and Workflow Automation are primarily consumption-based. It's important to note that these are based on prepackaged consumption commitments, not on usage revenue billed in arrears, so they are essentially subscriptions with predetermined sizes and some overage charges for the latter two products. I hope this clarifies things, but to reiterate, two of our top three products are consumption-based, and one is capacity-based.

This concludes the Q&A portion of our call. I will now hand it back over to Mike for closing remarks.

All right. Well, thank you, everyone, for joining us today. Thanks to our employees, our customers, our shareholders, and our partners. We're excited about the future. I'm excited about the future for Five9 and we look forward to keeping you up-to-date as we progress through the year. Thanks so much.