Five9, Inc. Q1 FY2026 earnings call

Amit Mathradas outlined four priorities: building a performance-driven culture, optimizing operations, stabilizing and strengthening the core business, and winning in AI-empowered customer experiences. On culture, he emphasized the need for accountability, transparency, and clear metrics. On operations, the company has been executing an operational review to improve efficiency, and is leading deep dives across the product portfolio. On AI, customers are reallocating labor spend to fund AI and enhanced CX, and Five9 provides a complete customer experience platform. Brian Lee discussed transparency in reporting, capital allocation with share repurchases, financials, and outlined guidance for Q2 and full year 2026. Andy Dignan joined for Q&A.

Q1 revenue was $305 million, up 9% year over year. Subscription revenue grew 13% year over year, driven by CCaaS revenue (8% growth) and AI revenue (68% growth to an annual run rate of over $125 million, representing approximately 13% of total subscription revenue). Adjusted gross margin in Q1 was 64% compared to 62% in Q1 last year. Adjusted EBITDA was $74 million, or 24% of revenue, compared to $53 million, or 19% of revenue, in the same quarter last year. Cash from operations was $64 million, or 21% of revenue, and free cash flow was $49 million, or 16% of revenue.

Q2 total revenue midpoint is $306 million ($303 million - $309 million range). Non-GAAP EPS midpoint is $0.67 per diluted share ($0.65 - $0.69 range). Full year 2026 total revenue midpoint is $1.26 billion ($1.254 billion - $1.266 billion range). Non-GAAP EPS midpoint is $3.26 per diluted share ($3.22 - $3.30 range). Anticipate annual adjusted EBITDA margin to exceed 24% and annual free cash flow to be approximately $175 million.

Adverse economic conditions, lower growth rates within installed base of customers, failure to manage technical operations infrastructure, unsuccessful development of AI solutions, failure to maintain and develop contact center solutions, failure to achieve anticipated benefits of share repurchase activity, and other risks discussed in Risk Factors and annual/quarterly reports.

Q: Sitikantha Panigrahi asked about concrete milestones and customer AI adaptation.

A: Amit Mathradas discussed culture and market progress, and customers' AI excitement.

Q: Giancarlo Secchiano asked about contact center seat counts.

A: Brian Lee and Amit Mathradas said seat counts growing healthily.

Q: Raimo Lenschow asked about cloud migrations and AI.

A: Amit Mathradas and Andy Dignan talked about on-prem AI testing and concurrent cloud migration.

Q: Catharine Trebnick asked about Jay Lee's hire.

A: Amit Mathradas discussed Jay's data background and unified go-to-market.

Q: Scott Berg asked about AI winning and sales pipelines.

A: Amit Mathradas and Andy Dignan talked about AI momentum and elevated sales pipelines.

Q: Rishi Jaluria asked about AI impact on migration and RFPs.

A: Amit Mathradas talked about AI in on-prem and platform needs.

Q: Analyst asked about backlog and deployment.

A: Brian Lee discussed backlog conversion and growth.

Q: Peter Marc Levine asked about consumption model and 2027 guide.

A: Amit Mathradas and Andy Dignan talked about revenue commitment model.

Q: Analyst asked about AI upside and pipeline.

A: Brian Lee discussed incremental revenue and backlog.

Q: Tom Blakey asked about AI volatility.

A: Brian Lee talked about backlog ramping.

Q: Jackson Ader asked about AI spending paralysis.

A: Amit Mathradas talked about trust and governance in customer decisions.