Contact-center-as-a-service provider Five9 Inc. broke the billion-dollar revenue run rate mark today as it posted second-quarter sales of $252.1 million, up 13% from a year ago and surpassing analysts’ expectations.

Even more promising as it focused on larger customers, its enterprise subscription revenue grew 21%. Its adjusted profit of 52 cents also beat estimates.

Investors, however, focused on weaker-than-expected guidance, as shares fell nearly 11% in after-hours trading. Five9 forecast third-quarter revenue of $254.5 million to $255.5 million, well below the $266.4 million analyst consensus. Moreover, the company lowered full-year revenue guidance to $1.013 billion to $1.017 billion, from the previous $1.06 billion estimate, though the company customarily is conservative in its forecasts.

“We are reducing our annual revenue guidance by 3.8%, reflecting recent bookings trends and the uncertain economic conditions,” said Chief Executive Mike Burkland. “We remain confident in our massive market opportunity and are committed to driving balanced growth and profitability.”

But the earnings report wasn’t the only news today, and arguably the least important. The company also announced Five9 Genius AI and its end-to-end artificial intelligence suite during the call. The company is determined to eliminate poor customer experiences by launching new generative artificial intelligence tools that make customer interactions more seamless and personalized. The goal is to integrate gen AI into CX, so it becomes a natural part of the process rather than a separate technology.

Five9 has been developing and deploying AI for years, enhancing its capabilities through research and acquisitions. In 2018, Five9 launched Genius, an AI-powered contact center tool that uses data from emails, chats and web searches to predict why someone is contacting customer support. Genius matches customers with agents, guiding them through their issues.

Five9 Genius AI includes a four-step process for leveraging AI to improve CX. The steps work together to make the most of customer data, including interactions, real-time information from business systems, and internal knowledge. By integrating AI, companies can better understand their data and improve how they serve customers across different channels, Matt McGinnis, Five9’s vice president of product, industry and solution marketing, explained to me in a prebriefing on AI news.

Genius AI helps companies start by listening, analyzing, tailoring and applying AI to CX. First, the “listen” step uses Five9’s technology to gather customer interaction data from calls, chats, emails, and social media, among others. Five9 even offers application programming interfaces for streaming into apps with TranscriptStream and VoiceStream. Next, the “analyze” step examines this data to provide insights and recommendations for enhancing self-service and providing insight to contact center managers.

By following the third step, “Tailor,” companies can tap into their data to meet specific requirements. This step focuses on customizing AI models using contextual data. Finally, the “Apply” step puts the customized AI models into action.

Five9’s Intelligent CX platform is flexible and supports everything from automated services like chatbots to human-agent interactions. It can mix approaches using existing Five9 tools like AI Agent Assist and AI Summaries, providing customers with tailored experiences.

“We’re driving toward more personalized, human-like self-service agents empowered with real-time knowledge,” McGinnis said. “The AI insights happening within the contact center are expanding and enhancing the reporting and analytics capability, which drives better business outcomes.”

An addition to the Five9 Genius AI Suite, a new product called AI Knowledge, is in preview and will roll out in the fourth quarter of 2024. Unlike old systems that relied on pre-written FAQs, AI Knowledge understands and responds to questions using data from a company’s various information sources. It provides the most relevant answers whether the customer is talking to a virtual assistant or a live agent.

The main benefit of AI Knowledge is that it lets companies employ data they already have without creating a new knowledge base from scratch. The tool uses gen AI to answer customer questions by tapping into existing information in PDF, Microsoft SharePoint, Google Drive documents and the like.

The data can be organized, tagged, categorized and used in Five9’s GenAI Studio, which powers all of Five9’s AI applications. GenAI Studio helps create custom AI and inferences with large language models. It works with different AI models, enabling companies to test the ones that work best for their needs. This helps speed up the process of building self-service and agent-assist features.

“We’re not curating structured knowledge in the sense of ‘here’s the question, here’s the answer'” he said. “This says: give me the source URL and the LLM will take it from there. We’re producing an inference, and then that inference can be used across any Five9 AI-enabled products or services. We see this as disruptive from more traditional knowledge management systems.”

Capping off the quarterly call, Five9 announced the acquisition of privately held Acqueon, which operates in the revenue execution segment. This acquisition is strategic to Five9 for a few reasons. First, it brings more data into the Five9 platform to help its AI suite find better CX-related insights. Understanding the end-to-end customer journey is the Holy Grail for all brands, but no one vendor can help companies today.

The customer journey covers everything from the first mouse click on a company website to product retirement. It encompasses marketing, commerce, sales and support, the last of which is Five9’s domain, although it also offers sales and marketing intelligence. Acqueon is used by sales and commerce and gives Five9 a deeper set of data to apply AI to derive better insights.

Though it’s true that good data leads to good insights, most companies have silos of customer data which leads to fragmented insights. This acquisition can help eliminate some of the silos, although not all, but one can see the direction the company is going. Its tag line is “To Bring Joy to CX,” which is a monumental task and will be built on data, which Acqueon brings.

Another benefit is that it can expand the addressable market for users of Five9 software. The majority of Five9 seats are sold to contact center agents, many of whom could disappear if AI in the contact center is successful, which has investors spooked. I believe many agents’ jobs will disappear, although AI revenue will more than offset the lost seat dollars.

A bigger factor in the Five9 growth story is that contact center software is now used by other customer-facing individuals, including sales, marketing, customer success and even field service. Acqueon strengthens its ability to sell its core contact center software to salespeople, further expanding Five9’s total available market.

One of the interesting aspects of this acquisition is that Acqueon is a current technology partner of Five9. This follows the same playbook as when Five9 bought Aceyus, another ecosystem partner. This lets Five9 take a “try before you buy” approach and ensures both companies are highly familiar with one another, ensuring a smoother transition and minimizing customer disruption.

Though Five9’s quarterly numbers were strong, the bigger news is the launch of the Genius AI Suite and the acquisition of Acqueon. Earnings tell today’s story, but the related news indicates where the company is going tomorrow. Investors have largely bailed on the entire CCaaS sector, but I believe AI opens the door for this industry to provide significantly more value to more users.

Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE. 

Image: Five9