Slide 1: Q1 2020 Investor Presentation
Q1 2020 Investor Presentation Five9 (NASDAQ: FIVN) © 2019 Five9, Inc. All rights Reserved. Proprietary and Confidential to Five9 Inc.
Slide 2: Safe Harbor
Safe Harbor This presentation is proprietary and is intended solely for the information of the persons to whom it is presented. It may not be retained, reproduced or distributed, in whole or in part, by any means (including electronic) without the prior written consent of Five9, Inc. This presentati
Slide 3: Leader in Cloud Software for Contact Centers
Leader in Cloud Software for Contact Centers Annual Revenue ($M) Adj. EBITDA Margin Since IPO 382 328 33% 15% CAGR 258 (2009 – 2019) 200 162 129 64 84 103 43% 43 Adj. EBITDA 19 26 Margin Expansion (percentage point) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (28%) (G) Q2'14 Q1'20 10
Slide 4: The Problem: Consumers Dislike Customer Service
The Problem: Consumers Dislike Customer Service • Difficulty speaking to an agent 84% • Depersonalized and disconnected experiences • Labyrinthian IVR trees Of end customers say being treated • Long wait times like a person, not a number, is very important to winning their business Source: State of
Slide 5: Customer Service Must Transform
Customer Service Must Transform (one of the most important parts of Digital Transformation) Of service decision makers 82% say their company’s customer service must transform to stay competitive Source: State of Service, Salesforce Research, Mar 2019 5
Slide 6: Five9 Enables Companies to Engage Better
Five9 Enables Companies to Engage Better 1 Serve customers in the channel(s) they prefer 2 Unify customer information into a single view 3 Modern engagement platform 6
Slide 7: Serve customers in the channel(s) they prefer
Customer 1 Live Interactions Serve customers Email Web in the channel(s) they prefer Social Chat • Fully blended, omnichannel platform System of • Any channel, voice or digital Voice SMS Engagement • Any interaction, live or live-ish • Anytime and anywhere 7
Slide 8: Unify customer information into a single view
Business 2 Unify customer Computable Interaction Data Sales cloud information into a single view Marketing cloud • Hand-in-glove CRM integration • Enrich CRM insights with Five9’s computable interaction data System of CRM Data Service Engagement cloud • Personalize service across the customer journe
Slide 9: Modern engagement platform
Customer Business Live Computable 3 Interactions Interaction Data Agent Assist Intelligent Routing Modern APIs engagement Smart Dialer Chatbot platform Live interaction interaction++ customer customer data • Intelligently route customers to data agents that best address needs Integration | Provision
Slide 10: The Market is Strong
The Market is Strong Digital Legacy to cloud transformation 10
Slide 11: Large and Underpenetrated Market Opportunity
Large and Underpenetrated Market Opportunity $24B Contact center software market opportunity 15% Cloud penetration of contact center software market Current addressable market opportunity Source: Company estimates; Gartner estimates, Oct 2018; MZA estimates, Oct 2018 Note: 15% penetration represents
Slide 12: Longer-Term Expansion into the Market for Contact Center Labor Spend
Longer-Term Expansion into the Market for Contact Center Labor Spend $234B $24B contact center software + $210B contact center labor spend 16% $58B $24B contact center software + $34B automated contact Percentage of customer service center labor spend representatives that will be displaced $24B due
Slide 13: Why Enterprise Customers Choose Five9
Why Enterprise Customers Choose Five9 • Full Feature Set: ACD, IVR, dialer, • Reliable: 99.99% uptime inbound, outbound, blending, omni- • Secure Architecture: Security zones, channel, WFO, reporting, APIs… IPS / IDS, Next-Gen Firewalls • Superior User Experience / • Compliant: PCI DSS, HIPAA, CPNI,
Slide 14: Five9 is a Leader in Cloud Contact Center Software
Five9 is a Leader in Cloud Contact Center Software Five9 Named a Leader for the 5th Year Five9 Named a Leader in The Forrester in a Row in Gartner Magic Quadrant Wave™: Cloud Contact Center Contact Center as a Service Source: Magic Quadrant for Contact Center as a Service, North America, Gartner, Oc
Slide 15: Vibrant Partner Ecosystem
Vibrant Partner Ecosystem Systems Technology / Master Agents / CRM ISV Integrator WFO / UC Resellers 15
Slide 16: Multiple Vectors for Long-Term Growth
Multiple Vectors for Long-Term Growth Add Expand Add Expand Extend Leverage Data Selective New Enterprise Existing Channel Internationally the Platform Advantage & AI Acquisitions Logos Customers Partners Advancements 16
Slide 17: Leadership Team
Leadership Team Rowan Dan Barry Kimberly Jonathan Ryan Trollope Burkland Zwarenstein Lytikainen Rosenberg Kam CEO President CFO General Counsel and CTO and Head of AI CMO Chief Compliance Officer David Scott Anand James Tricia Pickering Welch Chandrasekaran Doran Yankovich EVP, Engineering EVP, Clou
Slide 18: Strong, Consistent Revenue Growth
Strong, Consistent Revenue Growth Annual Revenue ($M) Quarterly Revenue ($M) 328 92 95 84 77 258 72 75 65 59 61 200 55 50 162 47 48 44 41 38 39 129 32 36 103 28 30 30 84 24 24 25 26 19 20 21 64 16 18 43 14 15 19 26 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 19: Enterprise Driving Strong Growth and Profitability
Enterprise Driving Strong Growth and Profitability Enterprise Customers $1M+ ARR (Q4’19 Ann.) Strong Unit Economics Cumulative 59 Profit $6 Truncated 5 Years Customer Acquisition Cost 3 $1 Q2'14 (IPO) Q4'19 Note: Unit economics calculated as estimated cumulative profit from Enterprise customers over
Slide 20: Exceeding "Rule of 40" Despite Increased Investments
Exceeding “Rule of 40” Despite Increased Investments 53% 50% 49% 45% 46% 44% 42% 42% 38% 38% 23% 20% 34% 34% 21% 33% 16% 19% 18% 15% 31% 16% 6% 29% 29% 29% 12% 13% 3% 27% 7% 14% 21% 6% 10% 4% 15% 1% 7% 6% 5% 27% 26% 28% 27% 25% 25% 28% 30% 31% 27% 27% 28% 28% 28% 22% 23% 20% 25% 23% 25% 23% 24% 23%
Slide 21: Margin Expansion and Operating Leverage
Margin Expansion and Operating Leverage Non-GAAP Adj. Gross Margin Non-GAAP Opex (% of revenue) Adj. EBITDA Margin 12.6% expansion 30.1% improvement 42.7% expansion IPO Today IPO Today IPO Today 79.3% 64.1% G&A 21.4% 51.5% 49.3% 9.3% S&M 37.5% 27.4% 14.9% R&D 20.4% 12.5% (27.8%) Q2’14 Q1’20 Q2’14 Q1
Slide 22: Long-Term Operating Model
Long-Term Operating Model Non-GAAP % of Long-Term Revenue 2014 2015 2016 2017 2018 2019 Q1’20 Model Subscription / PS margin Adj. Gross 53% 59% 62% 63% 64% 64% 64% expansion and increasing 70%+ Margin subscription mix Continue to invest in GTM S&M 35% 31% 31% 31% 25% 26% 27% 26% – 30% in line with r
Slide 23: Balance Sheet
Balance Sheet Quarter Ended $ in Millions March 31, 2020 December 31, 2019 Cash, cash equivalents and marketable investments $326.3 $319.9 Working capital 322.9 315.3 Total assets 503.7 482.4 Total finance leases 3.1 4.3 Total debt 212.9 209.6 Total stockholders’ equity $206.5 $196.5 23
Slide 24: Investment Highlights
Investment Highlights Largest 100% Cloud Contact ~$380M Revenue Run Rate (Q1’20) Center Provider Disrupting Large Market $24B current addressable market 33% Growth in LTM Enterprise Strong Revenue Growth Subscription Revenue Marching to Long-Term 27%+ Powerful Business Model / Adjusted EBITDA Excell
Slide 25: Appendix
Appendix 25 © 2019 Five9, Inc. All rights Reserved. Proprietary and Confidential to Five9 Inc.
Slide 26: GAAP to Adjusted Gross Profit Reconciliation
GAAP to Adjusted Gross Profit Reconciliation Q2’14 – Q1’20 Quarter Ended Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 GAAP gross profit 11,216 12,365 13,734 15,496 16,004 17,475 20,398 21,405 22,122 23
Slide 27: GAAP to Adjusted Gross Profit Reconciliation
GAAP to Adjusted Gross Profit Reconciliation 2014 – 2019 Year Ended 2014 2015 2016 2017 2018 2019 GAAP gross profit 48,441 69,373 95,156 117,121 153,630 193,495 % GAAP gross margin 47.0% 53.8% 58.7% 58.5% 59.6% 59.0% Depreciation & amortization 5,138 5,950 6,573 6,300 7,808 10,856 Stock-based compen
Slide 28: GAAP Net Inc. (Loss) to Adj. EBITDA Reconciliation
GAAP Net Inc. (Loss) to Adj. EBITDA Reconciliation Q2’14 – Q1’20 Quarter Ended Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 GAAP net income (loss) (8,659) (11,435) (9,372) (8,903) (7,369) (6,048) (3,51
Slide 29: GAAP Net Loss to Adjusted EBITDA Reconciliation
GAAP Net Loss to Adjusted EBITDA Reconciliation 2014 – 2019 Year Ended 2014 2015 2016 2017 2018 2019 GAAP net income (loss) ($37,786) ($25,838) ($11,860) ($8,969) ($221) ($4,552) Non-GAAP adjustments: Depreciation and amortization 6,463 7,388 8,390 8,314 10,274 14,374 Stock-based compensation 6,753
Slide 30: GAAP to Non-GAAP COR and OpEx Reconciliation
GAAP to Non-GAAP COR and OpEx Reconciliation Q2’14 – Q1’20 Quarter Ended Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 GAAP COR 13,469 13,504 14,540 14,778 14,270 14,812 15,635 16,610 16,764 17,790 15,7
Slide 31: GAAP to Non-GAAP COR and OpEx Reconciliation
GAAP to Non-GAAP COR and OpEx Reconciliation 2014 – 2019 Year Ended 2014 2015 2016 2017 2018 2019 GAAP COR $54,661 $59,495 $66,934 $83,104 $104,034 $134,511 % of revenue 53.0% 46.2% 41.3% 41.5% 40.4% 41.0% Depreciation & amortization (5,138) (5,950) (6,573) (6,300) (7,808) (10,856) Stock-based compe
Slide 32: GAAP Op. Loss to Non-GAAP Op. Inc. Reconciliation
GAAP Op. Loss. to Non-GAAP Op. Inc. Reconciliation Three Months Ended March 31, 2020 March 31, 2019 Loss from operations $ (4,956) $ (322) Non-GAAP adjustments: Stock-based compensation 13,794 8,686 Intangibles amortization 1,090 88 Legal and indemnification fees related to settlement — 292 Acquisit
Slide 33: GAAP to Non-GAAP Net Income (Loss) Reconciliation
GAAP to Non-GAAP Net Income (Loss) Reconciliation Three Months Ended March 31, 2020 March 31, 2019 GAAP net loss $ (7,437) $ (1,924) Non-GAAP adjustments: Stock-based compensation 13,794 8,686 Intangibles amortization 1,090 88 Amortization of discount and issuance costs on convertible senior notes 3
Slide 34: Summary of Stock-Based Compensation, Depreciation and Intangibles Amortization
Summary of Stock-Based Compensation, Depreciation and Intangibles Amortization Three Months Ended March 31, 2020 March 31, 2019 Stock-Based Intangibles Stock-Based Intangibles Compensation Depreciation Amortization Compensation Depreciation Amortization Cost of revenue $ 1,989 $ 2,850 $ 1,090 $ 1,22
Slide 35: GAAP to Non-GAAP Net Income (Loss) Reconciliation
GAAP to Non-GAAP Net Income (Loss) Reconciliation Guidance Three Months Ending Year Ending June 30, 2020 December 31, 2020 Low High Low High GAAP net loss $ (16,692) $ (15,692) $ (45,438) $ (42,438) Non-GAAP adjustments: Stock-based compensation 16,300 16,300 62,465 62,465 Intangibles amortization 2
Slide 36: Capital Expenditure and Free Cash Flow
Capital Expenditure and Free Cash Flow 12 mo ended $ in Thousands Q1'19 Q2'19 Q3'19 Q4'19 12/31/19 Q1'20 Net cash provided by operating activities $11,190 $6,789 $17,676 $15,566 $51,221 $10,394 (Refer to cash flows from operating activities in cash flow statement) Capital expenditure Purchases of pr