Five9, Inc. (FIVN) Q1 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Five9, Inc.'s First Quarter Fiscal Year 2014 Earnings Conference Call. [Operator Instructions] This conference is also being recorded today, Tuesday, May 13, 2014. I would now like to turn the conference over to Lisa Laukkanen with The Blueshirt Group. Please go ahead, ma'am.

Thank you, operator, and good afternoon, everyone, and thank you for joining us on today's conference call to discuss Five9's first quarter results. Today's call is being hosted by Mike Burkland, CEO; and Barry Zwarenstein, CFO. During the course of this conference call, Five9's management team will make projections and other forward-looking statements regarding future events or the future financial performance of the company. We caution you that such statements are simply predictions, and actual events or results may differ materially. These statements are subject to substantial risks and uncertainties that could cause -- that could adversely affect our future results. A more detailed discussion of these risk factors you should consider in evaluating Five9 and its prospects are included under the caption Risk Factors and elsewhere in our filings with the Securities and Exchange Commission. In addition, management will make reference to non-GAAP financial measures during the call. Management believes that this non-GAAP information is useful because it can enhance the understanding of the company's ongoing performance, and Five9, therefore, uses non-GAAP reporting internally to evaluate and manage the company's operations. The full reconciliation of the GAAP to non-GAAP financial data can be found in the company's press release issued earlier this afternoon. Now I would like to turn the call over to Five9's CEO, Mike Burkland.

Thank you, Lisa. I'm delighted to welcome everyone to our first quarterly earnings conference call. I will begin with the discussion of the business and some key highlights in the quarter. Barry will follow with a more complete review of our financial performance and our outlook. We will then open up the call for your questions. We are pleased to report strong first quarter results. Revenue for the first quarter was a record $24.3 million, up 27% year-over-year. Before I go into more details about our performance, let me just say it's great to talk to all of you as a public company. While the IPO was the first step in our journey as a public company, it was the culmination of a lot of hard work by a number of our employees here at Five9. On behalf of myself and the entire management team, I want to thank our employees, our customers and our partners for their continued support in helping us reach this important milestone. Now back to our results. Our first quarter growth was driven by a growing demand for Five9's call center solutions, as more companies look to move away from premise-based solutions and onto cloud-based solutions. During the quarter, we continued to demonstrate our proven scalable go-to-market strategy. We experienced strong momentum in adding new customers, including key enterprise customer wins in 3 vertical markets: health care, technology and retail. For example, we've brought on a major worldwide retailer that is using Five9 to route calls to internal contact centers, as well as outsourced centers in 5 countries. Our solution is fully integrated with this retail customer's Oracle RightNow CRM system, and the number of agent seats is expected to scale beyond 700 seats in the retail season. We also closed important expansion deals with several strategic enterprise customers. For example, one of our enterprise customers in the loan servicing and lending business added several hundred seats, along with Five9 WFM and QM powered by NICE. During the quarter, we continued to strengthen our existing partnerships with leading CRM vendors, such as Oracle and Salesforce, and added Zendesk as a new partner. Five9's cloud contact center software is highly complementary with CRM solutions. Our deep integration with a number of leading CRM solutions enables our clients to have a seamless end-to-end solution for customer interactions. Additionally, we continued integrating the technology of our recent acquisition, SoCoCare, a best-in-class solution for social media engagement and mobile customer care. We believe this acquisition gives us a significant competitive advantage in 2 major industry trends: social and mobile. In addition, the core technology we acquired will enhance our multichannel solutions, such as email and chat, further extending our competitive advantages. Our performance in the first quarter is continued evidence that our innovative cloud-based approach is disrupting this massive call center market, which includes 14.5 million agents across the world. Increasingly, we are seeing customers drawn to the benefits of the cloud: low upfront costs, ability to scale on demand, rapid deployments, as well as ease of management and integration. Since this is our first earnings call, I'd like to take a few minutes to provide some background on Five9, our market opportunity and how our cloud-based solution delivers significant value to our customers. Just as other enterprise cloud software leaders like Salesforce and Workday have replaced legacy on-premise solutions by moving major business applications to the cloud, Five9's cloud solution is replacing legacy on-premise solutions in the call center market or, as we refer to it these days, the contact center market. Since our inception, we've exclusively focused on delivering our software in the cloud. We provide our solution through a SaaS business model that drives recurring and predictable revenue through subscriptions. We have over 2,000 customers that process over 3 billion customer interactions per year on Five9's platform. Contact centers are mission critical to organization's successful delivery of customer service, sales and marketing strategies. Using Gartner data and our pricing, we estimate that the global market for our solution is $22 billion, and we're at the very early stages of penetration in this enormous market opportunity. For example, cloud penetration in the contact center market in North America is expected to more than double from 5% to 13% from 2012 to 2016. There are several trends that are fueling the adoption of cloud contact center software, including, most notably, the rapid adoption of CRM within the cloud, which is pulling Five9 into more and more opportunities. Our ability to combine our robust mission-critical enterprise software in the cloud, along with telephony in the cloud, creates a significant barrier to entry. Bottom line, it's hard to do what we've done. It requires both software DNA and telecom DNA. We've invested over 800 man-years to develop our platform. Our platform is designed to enable organizations of all sizes to optimize their contact center operations by enhancing agent productivity, improving customer satisfaction and driving cost efficiencies. A comprehensive solution matches each customer interaction with the appropriate agent resource that facilitates blended, inbound and outbound customer connections, as well as multichannel interactions across voice, chat, email, web, social and mobile channels. In summary, this is a very exciting time for Five9. We've demonstrated strong growth on multiple fronts. We're gaining market share, as evidenced by the fact that our revenues are growing significantly faster than our competitors. We believe that Five9 is uniquely positioned to capture a large portion of this enormous market opportunity over time. I will now turn the call over to Barry to provide more color on the financials.

Thank you, Mike. I'd like to highlight again how pleased we are with our first quarter performance. As Mike mentioned, our revenue growth has been driven by securing new customer wins and by expanding our relationship with existing customers. I will review our results for the first quarter and provide our outlook for the second quarter and the full year 2014. But first, given that this is our initial earnings call, I would like to briefly provide an overview of our revenue model, as well as review the supplemental metrics that we currently plan to share with our investors going forward. Recurring revenue accounted for 98% of our revenues in the first quarter. Recurring revenue is made up of monthly subscription based on the number of agent seats and minutes of usage on our Virtual Contact Center, or VCC, Cloud Platform. Our subscription fees are billed monthly in advance, while related usage fees are billed in arrears. The other 2% of our revenue is comprised of professional services fees generated from existing clients in implementing the Five9 solutions and optimizing its use. We also focus on our dollar-based retention rate. This metric is derived by taking an average of the trailing 12 months of year-on-year revenue increases from customers in our installed base in the prior year, similar to same-store sales. These rates demonstrate the recurring nature of our revenue stream and a high retention rate of our customers. Our dollar-based retention rate for the period ended March 31, 2014, was 100% compared to 100% for the 2013 fiscal year. We have a diversified customer base of over 2,000 customers, with no single customer representing more than 5% of revenue. Now moving on to our financial results for the first quarter. Revenue for the first quarter of 2014 was $24.3 million, up 27% from the first quarter of 2013. Gross margin, adjusted to exclude all noncash charges, namely stock-based compensation, amortization and depreciation, was 51.1% for the first quarter compared to 43.5% for the same period in 2013. The improvements to our adjusted gross margin are primarily driven by improved usage efficiencies, continued benefits from economies of scale and the elimination of duplicate data centers in 2013. It is important to point out that while usage revenue generates gross margins below our subscription margins, usage revenue comes with very minor incremental operating expenses and, therefore, generates considerable bottom line leverage. We believe our adjusted gross margin is on track to reach 65% to 70% in the long term, driven by, in ascending order of importance: first, further improvement in usage margins late this year, as we get a return on the capital and expense investments we are currently making in least cost routing and related initiatives; second, reducing the drag on overall margins we currently bear from our professional services revenues, as we will see the benefits in 2015 and 2016 from various steps being taken in this area; and thirdly, continuing and considerable benefits from economies of scale, as revenue increases over time. Please note that a reconciliation of GAAP gross margin to adjusted gross margin, as well as other reconciliations from non-GAAP to GAAP results, is provided with our earnings press release. GAAP sales and marketing expenses for the first quarter of 2014 totaled 37% of revenue or $9 million compared to 32% of revenue or $6.1 million for the first quarter of 2013. We continue to aggressively invest in both sales and marketing to continue to gain market share. GAAP R&D expenses for the first quarter of 2014 totaled 22% of revenue or $5.2 million compared to 22% of revenue or $4.2 million a year ago. The dollar-based increase was driven by continued investments and enhancements of our industry-leading platform. GAAP G&A expenses for the first quarter of 2014 totaled 25% of revenue or $6.2 million compared to 20% of revenue or $3.8 million for the prior year period. The increase was driven mainly by preparation for the IPO and for being a public company. Adjusted EBITDA loss was $6.5 million for the first quarter of 2014 compared to a loss of $5.5 million for the first quarter of 2013. GAAP net loss for the first quarter 2014 was $8.3 million, or $1.48 per share, compared to a net loss of $6.7 million, or $1.88 per share, for the first quarter of 2013. Non-GAAP net loss for the first quarter of 2014 was $8.7 million, or $1.55 per share, compared to a net loss of $6.6 million, or $1.87 per share, for the first quarter of 2013. Included in the GAAP net loss for the first quarter of this year was a benefit of $1.7 million, equivalent to $0.31 per share, due to the revaluation of preferred and common stock warrants relating to the pricing of our IPO. Per share amount exclude the impact of our issuance of 11.5 million shares of our common stock and the conversion of 30.6 million preferred shares as a result of our IPO on April 4, 2014. Regarding our tax rate, we have substantial NOL balance that we will continue to utilize. We expect the dollar amount of taxes relating to our foreign subsidiaries to be approximately 125 -- $120,000 for the year 2014. As of March 31, 2014, cash, cash equivalents and short-term investments totaled $29.2 million. As to underwriting fees, offering expenses, net proceeds from our initial public offering were approximately $72.7 million, resulting in pro forma cash of $101.9 million. As of March 31, 2014, our debt totaled $48.2 million, comprised of a revolver, term loans, notes payable and capital leases. We maintained a strong DSO performance. And DSOs for the period ended March 31, 2014, were 22 days compared to 25 days in the prior year. Cash outflow from operations was $6.2 million, and free cash outflow was $7.1 million after taking into account $900,000 of capital expenditures in the first quarter. I'd like to finish today's prepared remarks with a brief discussion of our expectations for the second quarter and full year 2014. For the second quarter, we expect revenue in the range of $24.4 million to $25.2 million. GAAP net loss is expected to be in the range of $11.6 million to $12.6 million. And non-GAAP net loss is expected to be in the range of $9.8 million to $10.8 million. For the full year, we expect revenue in the range of $102 million to $106 million. GAAP net loss is expected to be in the range of $41.7 million to $43.9 million. And non-GAAP net loss is expected to be in the range of $36.8 million to $38.8 million. For modeling purposes, we would like to provide you the following additional information. For calculating EPS, we expect our shares to be 45 million in the second quarter, 49 million in the third quarter and 49.6 million in the fourth quarter and 34.6 million for the full year. Our CapEx is expected to total approximately $9 million for 2014. In summary, we are very pleased with our strong performance for the quarter. We remain confident in our ability to achieve our long-term operating model, gross margins of 65% to 70% and adjusted EBITDA margins greater than 20%. Moving forward, we believe that our comprehensive cloud software solution for contact centers provide us with a clear advantage to capture increased market share in a dynamic multi-billion dollar market while also benefiting from increasing sales into our existing customer base. Lastly, before we turn to your questions, I'd like to mention our upcoming conference participation. We are presenting at the JPMorgan 2014 Technology, Media and Telecom Conference in Boston on Tuesday, May 20; and the Bank of America Merrill Lynch 2014 Global Technology Conference in San Francisco on Wednesday, June 4. A press release will be issued with further details on these events. And now we'd like to open the call for your questions. Operator, please go ahead.

[Operator Instructions] And our first question comes from the line of Sterling Auty with JPMorgan.

So let me ask 2 questions, and then I'll jump back in the queue. The first one is, can you give us a sense in terms of sales cycles, I think you've talked about -- through your roadshow, you have relatively short sales cycles across the customers that you target. What did you see through the quarter in terms of the sales cycles? Any change in either direction?

Good question, Sterling. No, we see continued sales cycles in roughly 45 days for our SMB customers and somewhere in the neighborhood of 120 days sales cycles for enterprise customers. So business as usual.

And then as a follow-up, in terms of the wins that you had in the quarter, especially some of the more notable larger wins, any trends that you're seeing in terms of the type of implementation that they currently had, that they were looking to migrate to the clouds? In other words, any trends in terms of what you're displacing? And did that differ versus what you've seen in the past?

Very consistent with what we've seen in the past, Sterling. Our premise replacements continue to be mostly with Avaya customers. But we've also replaced other premise solutions this quarter. And again, we had continued very strong momentum in enterprise customer wins and customer expansions.

And maybe just one really quick little follow-on in terms of those larger deals, the -- you mentioned the retail customer that might scale to over 700 seats in the holidays. Could you give us a sense, so that investors can understand how far you can scale? Or at this point, what is the largest implementation or largest customer in terms of seat count?

Yes, our largest customer is over 1,000 seats. And again, as we've climbed upstream, just to give you a sense, over the last 3 years, we looked at enterprise customers as those above 50 seats. Yes, that's 50. That's over 1,000 seats today in terms of the seat range. That enterprise group makes up approximately 60% of our recurring revenue today. And if you look back 3 years ago, it was approximately 30% of our recurring revenues. So we continue to do more and more larger deals, and that enterprise market opportunity continues to be a big part of our growth strategy.

And our next question comes from the line of Raimo Lenschow with Barclays.

From me, a quick one. Let's stay on -- if I could stay on Sterling's point for a little bit, if you think about the large retail deals, for example, that you kind of won there, can you talk a little bit about the competitive dynamic there? Obviously, there are some guys that kind of used to be on premise or used to be other players and who are now claiming to be in your space. Can you just kind of talk us through like how that -- how you spear [ph] up and sales pick up [indiscernible] with those guys?

Yes, sure. Glad to do it, Raimo. And again, we compete most often with the premise players that we are replacing. There are some hybrid companies, as I call them, out there that have either come from premise and have a very small percentage of their business coming from cloud now. Very tough to do that. A difficult challenge, I think, to be both the premise vendor, as well as a cloud vendor, but there are companies trying to do that. And again, we compete very effectively against those players, in that we are a pure cloud player, a multi-tenant cloud player that requires no hardware at all on premise. I can't say the same for some of our competitors in the hybrid category. So it -- competitively, for the quarter, we did very, very well against those hybrid companies.

Yes. And then on the push into enterprise, I mean, could you talk a little bit -- I mean, you talked to Salesforce, though, which is obviously having very good momentum with their Services Cloud. And how do you -- how do we have to think about the enterprise market and the opportunity there? I mean, how will legacy, is it -- try to help us understand like where the world is in reality versus, obviously, what you kind of want us thinking here?

Yes, let me make sure to clarify something, Raimo, and that is CRM solutions, like Salesforce Service Cloud, for example, are very complementary to what Five9 delivers. We're tightly integrated with Salesforce and other CRM systems in almost every deployment, so really important for folks to understand that we are not a CRM player, and the CRM players are not contact center players. We're very, very complementary. As I said, we're often integrated, if not almost always integrated, with the CRM solution, depending on the type of opportunity. And Salesforce continues to be a wonderful partner for us. They bring us into opportunities for contact center as needed. Oracle has been a very good partner as well, and they're bringing us into more and more opportunities.

It was kind of this point I was trying to get to with. So the -- those guys are partners for you. And so as we look at now the big momentum that Salesforce is having, could it be, at least to a degree, an indicator for what's going on with your space as well then?

Yes, they -- yes, exactly. They have created a wonderful wake for us and, again, created a lot of pull in the marketplace. As enterprises migrate their CRM from a premise solution to a cloud solution, like Salesforce, that is a perfect opportunity, I should say, for those same enterprise customers to move their contact center solutions to the cloud with Five9.

Okay. One last question for Barry from my side. The gross margin expansion was very strong this quarter. Can you talk a little bit about the visibility you have around further expansion there and the different drivers for that?

Yes, Raimo. So the drivers for our future expansion are very clear. We are investing currently both on the expense side and the CapEx side on various usage initiatives that will take our usage margins up to -- starting towards the end of this year from the current mid-30s. And this is proven well-trodden technology that we know can deliver. The second is our professional services. This is currently a drag on our overall margin. Steps are being taken to improve this, and we'll see the results of that in 2015 and 2016. And finally and inevitably, as the revenue increases, we enjoy the economies of scale against those elements of our cost of revenues that are fixed or semi-fixed. So good visibility, and that's it.

And our next question comes from the line of Kash Rangan with Merrill Lynch.

Can you, Mike, talk about the enterprise market, if it's big, larger opportunity, more seats, presumably higher ASP, when do we potentially reach the inflection point of your business, where you could see the fruits of all the investments you've made in the enterprise market show up and even more revenue growth as in press release, 45%? As I'm sure that it would be -- enterprise market unfolds, you could see even more opportunities there. And secondly, maybe we could look at the SaaS universe, maybe we could use some thoughts about the lifetime value of the subscriber. How does your company think about the lifetime value of the subscriber as it relates to how you're closely monitoring acquisition costs, service costs, retention, up-sell, et cetera?

Yes, great questions, Kash. So I'll take the first one first. So we are definitely laying the groundwork currently for accelerating revenue in 2015 relative to enterprise customers, converting into revenue generation at the top line. So again, a lot of investments going into the sales and marketing and go-to-market strategy for -- in '14 for revenue growth in '15. So we expect some revenue acceleration in '15 at the top line. In terms of how we look at lifetime value of customers, again, remember we have a wonderful business model. We have a very proven, very scalable go-to-market strategy with deal flows that is pretty predictable. We've got 98% of our revenue that is recurring in nature, and we've got 100% dollar-based retention. You combine those things together, and it allows us to -- I think, to have a very, very powerful business model. But to answer your question about lifetime value and return, very simply, the CAC-LTV ratios that we do on an ad hoc basis are higher for enterprise customers than they are for SMB customers, hence, our disproportionate investment in enterprise go-to-market efforts.

And our next question comes from the line of Michael Huang with Needham & Company.

So just a few questions for you. First of all, in terms of a product roadmap, I wonder if you could share with us kind of how far along you are in kind of the integration with kind of social care and email and chat. And at end of the day, like when you look at the enterprise market, like what type of pent-up demand is there for some of these product areas?

Yes, great question, Michael. So we are quite far along. We will be delivering a summer release. We have not announced it yet, so I don't want to let the cat too far out of the bag, but I will tell you we're very excited about our summer release, and that -- one of the key themes in this release is the integration of our recent acquisition of SoCoCare, which brings to us, again, social and mobile customer care solutions, as well as core technology in the form of a natural language processing engine that allows us to enhance our email and chat in multichannel capabilities. So really, really excited about that integration. The efforts have been going very, very well. And again, later this summer, our customers will [indiscernible] to have the benefit of a fully integrated solution.

Got you. And do you want to comment on kind of whether or not there's pent-up demand for these product areas?

Yes, we're seeing more and more interest, especially in the areas of mobile and social. Email and chat have been around in the contact center for quite some time. And being able to deliver that natively and in a more robust fashion is something that is going to be, I think, very significant for us in terms of our market momentum. And then in terms of social and mobile, again, those are new trends that are front and center top of mind, if you will, for VPs of customer care. And again, it's something that I think most of our customers are looking at deploying at some point in the near future. But most importantly, they want to make sure they choose a vendor that future proofs their decision and has solutions for social and mobile that are definitely a growing part of customer interactions.

Got you. And on the nice retailer win in the quarter, and I know someone's kind of asked a couple of questions around that, so was that your biggest deal in the quarter? And I know that you don't have any customer concentration, but I just want to get a sense for kind of how many type deals that you have with -- which could see potential like that. And then maybe [indiscernible] this deal [indiscernible] what, ultimately, was the driver [ph] for the retailer to move to Five9 now?

Yes. In this case, they were moving off of a system that they just were not getting the performance metrics that they wanted. And they saw the value proposition of performance metrics in terms of agent productivity. Even in terms of customer sat metrics, I think we're going to help them deliver higher customer sat, higher agent productivity, along with the business agility that we deliver, so kind of standard action in terms of the value proposition that we brought that customer. I'll give you another customer example in the health care arena, a national administrator and managing agency that specializes in health and wellness products. We started out with a little over 100 seats deployment, with 3 more contact centers behind that individual contact center. So again, most of our enterprise opportunities have a lot of headroom or upside in them, and this is very much a land and expand type of go to market.

Got you. And last question from me. Just at the highest level, when you think about the opportunity within the enterprise segment, especially kind of as you are seeing those with 700 seats or kind of north of 1,000 seats, ultimately, what is the big gating factor to win kind of the 1,000 seaters? Is it more product footprint? Or is it sales and marketing and kind of some of the distribution strength that you may have?

Yes, sure. Well, the -- our ability to penetrate the very large enterprise customers is really conditioned upon the market itself in some respects. This is just a matter of time. If you look at the evolution of Five9 over the last 6 years since I've been running the company, we've gone from an SMB player. About 4.5 years ago, we started moving into the enterprise space. It's now 60% of our recurring revenue, as I said, and part of this is just the market is evolving. These larger enterprises are getting comfortable deploying mission-critical applications and solutions like ours in the cloud. If you look at the adoption of CRM in the cloud, it is paving the way for much, much larger deals for us. So this is really about the market opening up in a systematic or sequential fashion up above 1,000 seats for cloud solutions. The writings on the wall, it's happening. And again, we don't see a constraint in terms of our ability to continue to add sales capacity, nor from a product perspective is there a real constraint on our ability to continue to move upstream.

[Operator Instructions] And our next question comes from the line of Brendan Barnicle with Pacific Crest Securities.

Mike, one of the things I still hear from investors as far as some confusion around where you guys come in and where Service Cloud overlaps, and other vendors are out there like the Zendesk and some others. So following up on Raimo's question a little bit, could you give us like an example of where in a Salesforce partner deal where you guys could come in and what you would do and then what Salesforce would specifically do?

Sure. Happy to do it, Brendan. The best way to think about Five9 solution, think of us as the routing engine for customer interactions. So we're really the brains in better -- intelligently routing customer interactions. Whether they are phone calls, chat, e-mails, social posts, we're doing intelligent routing to the proper agent within the contact center or a call center based on everything from availability of agents, skills of agents, what we know about that customer based on our integration with the CRM system and other business rules. So again, think of us as the routing engine underneath. CRM, in this case, those CRM systems do not do the routing. What they're really responsible for is keeping customer information. So we see them as the system of record, if you will, for customer information, and we're the routing engine. That, really, is the difference between CRM and contact center at a high level.

And so would those applications be the front end, and maybe you are -- and you guys will be the back end. And so customers may not see you as much, but they'd certainly be seeing the benefits of your -- or the agent won't be seeing you as much but certainly would be seeing the benefits of your role?

Great question. I'm glad you asked that because our user interfaces are actually integrated. So when you look at from an agent's perspective, that's using Salesforce and Five9 integrated, you'll actually see the native Salesforce user interface with the Five9 soft phone, if you will, along the left-hand side of the screen real estate. So we're actually sharing a screen real estate in a contact center in terms of what the agent's experience is.

And our next question is from the line of Richard Davis with Canaccord Genuity.

On the up-sells part, are they part of the salesmen's quota? In other words, because you've called out some of those as nice successes there. So is that part of your quota? And is that part of your bonus? And then the second question is, where do you feel you are with regard to kind of being able to cover and know the deals are going down more or less anywhere in North America, if not the world, kind of where -- in other words, where are you kind of in your sales hiring flesh out strategy?

Yes, great questions, Richard. So we actually have both hunters and farmers, as I call them, in both our enterprise sales organization, as well as our SMB sales organization, so hunters being those responsible -- those salespeople responsible for bringing in new accounts and farmers being those sales people that are responsible for managing existing customers. And those farmers or account managers, as we call them, are carrying a quota for up-sells and seat adds. As you know, Richard, we have one full suite that we sell today, so our historical product up-sells have not been involving new products, but they've been involving seat adds. So those salespeople are responsible for continuing to grow or expand our footprint from a number of agent seats within those accounts, and yes, they are compensated on that. And secondly, to answer your question about deals -- deal visibility and where we are from a sales capacity standpoint, I assume is your question.

Correct.

We continue to expand our sales capacity much quicker in enterprise than in SMB. It's a much larger market opportunity, it's a faster-growing market opportunity for us, and that is where we are placing our bets in terms of sales capacity.

[Operator Instructions] And I'm showing no further questions at this time. I'd like to turn the call back over to management for closing remarks.

Well, thank you, everyone, for joining us today. We're very, very enthusiastic about our results in Q1 and the future. So look forward to seeing you in the near future at one of our conferences or whenever the occasion arises. Thank you so much for joining us.

Ladies and gentlemen, this concludes the Five9, Inc. First Quarter Fiscal Year 2014 Earnings Conference Call. This conference will be available for replay after 3:30 p.m. Pacific Time today through May 27, 2014, at midnight Pacific Time. You may access the replay system at any time by dialing (303) 590-3030 or 1 (800) 406-7325 and entering the access code of 4680481 followed by the # sign. Thank you for your participation. You may now disconnect.