Five9 Deserves a High Five

Posted by Jonathan Ting on May 22, 2018

As companies are rapidly moving to the cloud, we believe MTVX member Five9 is well positioned to replace legacy systems in the contact center software space and will greatly benefit from the shifting landscape.

Overview

Based in San Ramon, Five9 (“the Company”) is one of the world’s largest providers of cloud-based customer service management software. Their software allows clients to manage inbound and outbound calls at customer service centers through features like intelligent call routing, workforce management, omni-channel solutions, and seamless integrations with CRM platforms. The Company’s product suite currently supports 2,000 customers worldwide, and facilitates over 3 billion customer interactions a year. Customers include Citrix, Siemens, BlueCross BlueShield, and Fitbit. Five9 notably made Inc. 500’s America’s Fastest-Growing Private Companies list three times, and CEO Mike Burkland was awarded Ernst & Young’s 2017 Entrepreneur of the Year. Five9 went public in 2014 at a $330 million valuation, and has since quintupled to over $1.7 billion. Last year the Company generated over $200 million in annual revenue, up 24% year-over-year. The Company is also on a clear track to profitability. In 2014 the EBITDA margin was negative 26%, but turned positive in 2017; management expects this number to reach 20% within the next couple of years.

Offering

Five9’s Virtual Contact Center (VCC) aims to disrupt the legacy customer service center market and displace legacy on-premise systems. The product is cloud-native and covers a host of inbound, outbound, and omni-channel engagement features.

Five9

Inbound

Features Automatic Call Distribution (ACD) to intelligently route customer calls, Interactive Voice Response (IVR) with in-call language processing analytics to enable self-service, and Computer Telephony Integration (CTI) which provides customer data in real-time.

Outbound

Provides outbound sales teams with compliant auto and predictive dialing solutions to reduce dial tones and unanswered calls. Five9 claims to increase talk time per hour by over 300% versus base systems.

Omni-Channel Solutions

Allows agents to engage with customers across social media, email, video, chat, and mobile platforms. VCC includes out-of-the-box integrations into Desk.com, Microsoft Dynamics, NetSuite, Oracle, Salesforce, ServiceNow, Velocify, Zendesk, and Zoho, but also provides APIs to enable integration into proprietary applications as well.

Opportunity

Five9’s cloud applications are designed specifically for customer service centers, and have several operational advantages including faster deployment, increased scalability with changes in the number of agent seats, and integrations into popular third party cloud applications. Legacy providers like Cisco and Aspect have made efforts to maintain their relevance through this transition to cloud by leveraging big-ticket M&A to make cloud company acquisitions, while others, like Avaya which faced Chapter 11 bankruptcy in April, have struggled. Despite the extent of market disruption, Five9’s CEO Mike Burkland believes that cloud penetration has only reached 10-15% so far. As companies typically reevaluate their existing contact center systems every 8-10 years, Five9’s deep roots in the cloud model and comprehensive suite of products make it well-positioned to replace these legacy systems.

Compelling Future

Five9 had originally focused on the small to medium customer service center market, but has started to gain considerable traction in the large enterprise space. In the last five years, enterprise sales have gone from 0% of revenue to 70%. With 95% of sales in the US, future expansion plans include Europe and Asia. Taking advantage of their data centers deployed around the world, Five9 is positioned to be a future leader in global level cloud deployments. With a focus on improving the customer journey, the Company has built strategic partnerships with leading cloud CRM providers and successfully positioned itself as a complementary application. “We are going to market with companies such as Salesforce to help that change, to make it into a better customer experience,” says Burkland. These partnerships, and seamless technology integrations, deeply embed Five9 into client systems, and open the door for new sales channels into international markets. These inherent synergies also make Five9 a strong candidate for acquisition by companies like Oracle, Salesforce, Microsoft or SAP.

Tri-Valley Connection

Five9 has been awarded on multiple occasions for being among the fastest growing and largest Bay Area software companies. Originally founded in Pleasanton, Five9 relocated in 2012 to Bishop Ranch in San Ramon to expand into 80,000 square feet of office space to accommodate this growth.

For a comprehensive report on Five9 including financials, competitive landscape and more of our data, please follow this link.

Topics: Tri-Valley Research, Company Profiles

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