Five9 has shared more insight on its recent job cuts, which affected four percent of its workforce.
That represents approximately 120 employees let go.
The CCaaS stalwart first confirmed these layoffs via a statement to CX Today in April.
Now, its leadership has asserted that the layoffs impacted “most” of its departments and centered “mainly” on the US.
Bryan Lee, Interim CFO at Five9, shared this insight during the company’s latest earnings call.
The CFO also touched upon the motivations behind the move, highlighting that it came after an “extensive operational review”. He added:
Our goal is to increase long-term profitable growth and surgically invest in key areas such as AI and go-to-market initiatives in order to capitalize on our massive TAM (total addressable market) opportunity that is further expanding with AI.
The layoffs will represent a net reduction of $20-25MN in annualized compensation, much of which Five9 will pump into these initiatives.
In doing so, Five9 also hopes to bolster its “long-term competitive position” and re-establish itself as a Rule of 40 company.
Such a company achieves a growth rate and profit margin that combine to exceed 40 percent.
“We’re being very surgical about it,” added Mike Burkland, Chairman and CEO of Five9. “There are some really exciting marketing initiatives that we’re in the midst of, I would say, piloting.”
Five9 has taken this approach amid activist investor pressure, with it conceding a board seat to Anson Funds in December 2024.
Earlier in the year, the investor publicly encouraged the CCaaS vendor to sell up.
However, its revenue growth rate continues to exceed much of the market, despite a decline in its stock price of 55 percent year-to-date.
Indeed, the CCaaS vendor achieved 13 percent year-over-year (YoY) revenue growth last quarter, earning $279.7MN – beating analyst estimates.
As such, the external pressure and stock price drop likely come from concerns over hyperscalers entering the CCaaS market and the prospect of AI removing a chunk of that per-seat revenue.
These challenges are far from unique to Five9, and many market rivals will likely undertake similar operational reviews to ensure long-term competitiveness.
More News from the Five9 Earnings Call
During the earnings call, Five9 also spilled the tea on its biggest enterprise wins from the quarter.
The most notable was a deal with a Fortune 50 financial services company, worth $2.8MN in annual recurring revenue (ARR). It chose Five9 to deploy compliant voice solutions integrated with Salesforce, replacing its legacy systems.
Five9 hopes to secure more cooperative wins with Salesforce after the two CX giants recently made a unified CRM-CCaaS offering generally available.
The Five9 Fusion for Salesforce solution will embed Five9’s voice and routing capabilities into Service Cloud, with digital channels to come.
Five9 announced a similar offering with ServiceNow last year. Burkland also shared an exciting update on this partnership during the earnings call.
“ServiceNow is also integrating its metadata to enrich Five9’s workforce engagement management (WEM) solutions,” said the CEO.
“This will reduce operational overhead for managers by streamlining routing management across both platforms, making it easier to adjust staffing dynamically during peak demand periods.”
In other partnership news, Burkland attributed $35MN in annual contract value (ACV) pipeline added over the past two months to Five9’s recent availability on the Google Cloud marketplace.
Meanwhile, he also highlighted how Five9 has teamed up with IBM to integrate Watson X into its Genius AI platform. That will allow customers to leverage Watson X as their preferred LLM when developing AI-powered solutions.
All these announcements underpin Five9’s strength in establishing productive relationships with big tech, which boost business and customer outcomes.
