Please standby. We are about to begin. Good day. And welcome to the Five9, Inc. First Quarter 2018 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Lisa Laukkanen. Please go ahead.

Thank you, Operator, and good afternoon, everyone. And thank you for joining us on today’s conference call to discuss Five9’s first quarter 2018 results. Today’s call is being hosted by Barry Zwarenstein, Interim CEO and CFO; and Dan Burkland, President. Mike Burkland, Five9’s Executive Chairman will also be on the call today. During the course of this conference call, Five9’s management team will be making projections and other forward-looking statements regarding the future financial performance of the company, industry trends, company initiatives and other future events or recently announced management transitions. You are cautioned that such statements are simply predictions and should not be unduly relied upon by investors, and actual events or results may differ materially, and the company undertakes no obligation to update the information in such statements. These statements are subject to substantial risks and uncertainties that could adversely affect Five9’s future results and cause these forward-looking statements to be inaccurate. A more detailed discussion of certain of the risk factors that could cause these forward-looking statements to be inaccurate that you should consider in evaluating Five9 and its prospects is included under the caption Risk Factors and elsewhere in Five9’s filings with the Securities and Exchange Commission. In addition, management will make reference to non-GAAP financial measures during this 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 financial information internally to evaluate and manage the company’s operations. This non-GAAP financial information should be considered along with and not as a replacement for financial information reported under GAAP and could be different than the non-GAAP financial information provided by other companies in our industry. The full reconciliation of the GAAP to non-GAAP financial data can be found in the company’s press release issued earlier this afternoon and it is also available on the Investor Relations section of Five9’s website. Now, I’d like to turn the call over to Five9’s Executive Chairman, Mike Burkland.

Thank you, Lisa, and welcome everyone. I have very exciting news to report on two fronts. First, we delivered an exceptional quarter, exceeding our expectations on both top and bottomlines, with revenue growth of 25%, including 38% growth in LTM enterprise subscription revenue and adjusted EBITDA margins of 12.7%. And second, I am thrilled to announce that industry veteran Rowan Trollope will be the next CEO of Five9. Rowan comes to us from Cisco, where he led their Applications Group, a $5 billion business, including collaboration and contact center. Prior to joining Cisco, Rowan spent many years in the Internet Security industry and led Symantec’s sales, marketing and product development teams as Group President, focusing on their cloud strategy. Rowan also holds a variety of patents in computer security and operating systems. Over the past few months, the Board and I took an extensive look at many qualified candidates. It was critically important for us to find an individual who could not only take Five9 to the next level, but also sustain our unique and thriving culture. Rowan is a proven superstar and one of Silicon Valley’s most sought after executives. He is a seasoned veteran with an extensive track record of creating value, driving innovation and scaling large technology organizations. Rowan’s valuable domain experience in cloud technologies and the context center market will be a huge benefit to Five9 and we’re really fortunate to gain a leader with his experience, talent and vision. In addition, we believe Rowan has the right character and personality traits to carry on our special culture. Rowan will be joining as the CEO on Thursday, May 3rd when he returns from a personal overseas trip. As you know back in December, I transitioned from CEO to Executive Chairman due to health reasons. I will continue as Executive Chairman and look forward to working with what I consider to be the dream team of Rowan, Barry and Dan. Now, I’d like to turn it over to Barry and Dan to take you through the Q1 highlights.

Thank you, Mike. Welcome everybody to our first quarter 2018 earnings call. I am very pleased to report that our first quarter result significantly exceeded our expectations on both the top and bottomline. Revenue on the ASC 606 was a record $58.9 million up 25% year-on-year. Revenue under the prior ASC 605 standard would have been $58.2 million, an increase of 24% year-on-year continuing our consistent pattern of revenue growing every quarter in the low to mid 20s. This revenue growth continues to be driven by our enterprise business, which now makes up three quarters of our overall revenue mix. We believe the key enterprise revenue metric to focus on is the growth in LTM Enterprise Subscription revenue. I am pleased to report that the LTM Enterprise Subscription revenue growth was 38% in the first quarter, as we continue to successfully address this massive underpenetrated market opportunity. We continue to enjoy considerable leverage in our business model. For the first quarter 2018 adjusted EBITDA was $7.5 million, representing a 12.7% margin. This was an increase of 7.2 percentage points year-over-year, of which 3.6 percentage points was due to the ASC 605, ASC 606 transition. The adjusted EBITDA improvement continues to be driven by the strong growth in our Enterprise business, which enjoys excellent unit economics, and as just mentioned, it’s consistently increasing as a proportion of total revenue and by the operating leverage we have consistently achieved. I will now turn the call over to Dan to highlight the success we are having in the Enterprise market.

Thank you, Barry. I am pleased to report that we started 2018 with another first quarter record for Enterprise bookings. In addition our pipeline reached another all-time high. As a reminder, our strong bookings continue to be driven by the push towards digital transformation including the modernization of contact center and customer service technologies, the favorable market landscape, the growth in our direct sales force and the increased leverage from our expanding ecosystem of partners. This ecosystem of partners, which includes master agents, referral partners, resellers and other integration partners influenced more than 55% of our enterprise deal flow in the first quarter of 2018. As you know, Five9 has deep partnerships with the industry leaders in areas such as CRM with the likes of Salesforce, Oracle, Zendesk, Microsoft and ServiceNow, and WFO with the likes of Calabrio, Verint and CSI, and in unified communications with Microsoft teams formally Skype for Business, Fuse, as well as Cisco and several others. This ongoing success in our enterprise business continues to be driven by six key factors. First, a massive market opportunity estimated at $24 billion in annual recurring revenue where cloud penetration is still only 10% to 15%. Not only is the market opportunity massive, but it has a number of appealing aspects, namely it is not a land grab, but a steady replacement cycle lasting over a decade or more. The evangelical phase of this replatforming is clearly over. Nowadays, most RFPs include a cloud option as a matter of course. Second, our end-to-end solution providing the industry’s most robust omni-channel solution. Third, our investments in growing our enterprise quota-bearing sales headcount plus strong traction in our channel expansion initiatives. Fourth, our high-touch on-site implementation process performed by our professional services team, as well as ongoing personalized premium support service…

Thank you, Dan. During today’s call, we will review our first quarter 2018 financial results according to the new revenue recognition standard ASC 606. With the certain income statement items, we will also provide the first quarter 2018 results as they would have been under the old standard ASC 605. This is in order to maintain consistency for year-over-year comparisons for the first quarter 2017 results, which are only available under ASC 605, given a modified retrospective approach to the adoption of ASC 606. We will conclude by discussing our financial guidance for the second quarter and the full year 2018 according to the new standard ASC 606. Reconciliations on GAAP to non-GAAP results and from ASC 606 to ASC 605 are included in the appendix to our investor presentation in the Investor Relations section of our website. Revenue was a record $58.9 million up 25% year-on-year. Revenue under 605 standard would have been $58.2 million, an increase of 24% year-over-year. This reflects a continued strong growth in our enterprise business and now makes up 75% of our LTM revenue. Our commercial business, which represents the other 25% of LTM revenue, is growing in the single digits as we focus on investments on the higher ROI enterprise business. Recurring revenue accounted for 92% of our revenue in the first quarter of 2018 or 94% under the 605 standard. Recurring revenue is made up of monthly software subscriptions, which are based on the number of agencies, plus usage which is based upon minutes. We enjoy a high retention rate on these recurring revenues. Our annual dollar base retention rate in the first quarter of 2018 was 98%, the same as in the prior three quarters. Note that DBRR is based on the net invoicing and is not affected by the switch…

[Operator Instructions] We’ll take your first question from Sterling Auty from JPMorgan.

Just based on some of the case studies you gave, sounds like some of the initial deals are getting larger. Can you give us a sense of what you’re seeing in the trends of initial sized deals?

This is Dan Burkland. We’re seeing a tremendous amount of continued interest from enterprises of all sizes and as companies of larger and larger sizes get more and more comfortable with cloud and the reliability and security and scalability, as well as the innovations that we can deliver to them they continue to open up and bring the market to us. And that’s what we’re seeing as, as the trend continues to get us further and further up market.

And how about in terms of the expansion deals, whether it’s more data centers, more geographies, more divisions, what are you seeing in terms of what people are looking to expand with I guess in the deals that you saw in the quarter?

Well, you just mentioned three and there - those are all very clear ones, whether it really depends and it runs the gamut across the market. Some do it by geographies and add geographies. Some do it by departments and add departments. Some do it by applications where they continue to add more and more SKUs as we continue to innovate and offer more to the market.

We will move next to David Hynes from Canaccord.

Congrats on lending. Rowan it sounds like a good win for the team. Maybe this question is best for Dan. I wanted to ask just a couple of competitive questions, maybe two competitors at opposite ends of the spectrum right. Avaya was talking a bit more about their cloud efforts. I know they made an acquisition earlier this year in the space. Obviously they’ve successfully relisted and then Twilio with that Enterprise Connect introducing their contact center platform. So obviously it doesn’t seem to be impacting win rates. But I’m curious in the field are you seeing any pace in the - any change in the pace of decision making, if buyers I guess have to consider new or more alternatives?

Great question, and I think you hit it right on which is opposite ends of the spectrum. If you look it, I’ll take a Via first, if you take the acquisition I’ve spoken that they made recently and put a lot of messaging around cloud and multi-tenancy, what we understand is it’s primarily a BPO focused solution to allow them to take a switch that they serve multiple clients with and partition that are divided up so that they can serve those clients with the assurance that one client can’t interfere or see data from another client. And that’s really - and some AI innovations on top of that that they’re playing with or doing proof of concepts with, but for the most part that really hasn’t changed the competitive landscape. They’re still a via - they always will be, we see them, try to hold on to their base and they have quite a base as we all know, and it’s a matter of customers who want to wait for them to truly get a cloud solution or innovate on the solution that they have. And many customers just don’t want to wait that out or don’t have faith that they’ll get there because they continue to be hamstrung a bit from a wherewithal standpoint. As far as Twilio, like you said opposite end of the spectrum, there’s really a developer based tool even when we heard the hype that they were coming out of the enterprise connect with something new and exciting it was something new and exciting for developers, and it was positioned just that way that if you have an IT shop that wants to be in R&D shop for contact center applications and solutions, you can kind of build around so to speak, very few enterprises have the staff for the wherewithal to go build their own and then test these applications and work through bug cycles and so forth. It’s hard enough for companies like us that do nothing but that. I can’t imagine somebody trying to do this in their quote spare time with the small staff.

And then you know, obviously lots of buzz about intelligence in the context center and you alluded to some of your efforts in the prepared remarks. Curious how you’re thinking about rolling out AI to your customers, I know at Enterprise Connect you talked about this idea of practical AI, I mean where are our customers in terms of readiness to adopt these types of technologies?

Great question, because AI is coming at companies from all directions. And there are so many different ways that they’re being asked to implement AI and it’s not just in the contact center of course. The question is, how do we best apply it within the contact center that can result in real tangible ROI and real you know, obvious improvements in the customer experience. And that’s where it’s very important to be practical about it, right. Certainly there’s companies experimenting that want to hire one of the big SIs to come in and spend millions of dollars customizing a solution and building it from the ground up. But we’re trying to look for solutions that are repeatable and that can be applied to many enterprises across the board. And so, we’ve worked with the Salesforce, with IBM, with Deloitte and really look to where are areas that we can build a repeatable, strong return, and we demonstrated some of those examples in - at Enterprise Connect, as well as the Oracle User Group that they had modern CX. And really it comes down to being able to leverage the intelligence of a natural language processing engine typically a transcription engine, so I transcribe a conversation in real-time, I use NLP to search those words that are now converted into text, and then be able to interrogate a knowledge database to give - to fetch valuable information that can then be displayed to an agent, and I’m getting down in the weeds there for a moment. But what that does is it allows the agent then to have assistance, okay not rely on every agent to go do their own searching and hunting for information, but let the system go find it and deliver it back to the agent, and we call that Agent Assistance, probably one of the very first ways in which companies will adopt AI in the contact center because it helps those agents become more efficient and actually more consistent in the experience that they deliver to the end consumer.

We’ll hear next from Raimo Lenschow from Barclays.

I have two. If I stay on that subject, Dan, can you talk how you see that AI was playing out because there is obviously the front office - yes, like the front office guy like front office is the wrong word, but the front end guys like the Salesforce, Zendesk, et cetera, and then you guys on the back end, who is going to provide that AI functionalities, does it need to be you or a combination of the two of you, how does that going to play out in your mind?

Well, it’s a great question and it’s a combination of several different entities right. If you stop and think about it, there’s going to be certain components that are best served by a CRM. They can do things like transcription servicing and so forth and transcribing conversations. There’s engines like NLP, and machine learning that we can do that we use for leveraging either fetching information from a database or using the information we’ve collected to do more intelligent routing because we’re the routing engine and then there’s going to be third parties platforms like ours have to have the open APIs so that we can leverage what third parties come up with. There’s a lot of AI companies out there of all sizes that are trying to come to market with an application and the question is, how well we can leverage those applications and bring them in for our customers. So it’ll be a combination of all the above.

But it that helps. They are totally interesting. The question for Barry, like, can you talk a little bit about your Q1 cash flow, because it was very, very strong. Where there any specific items in there that you want to point out?

Raimo, thank you very much for asking that question. A great question. So we had another very good quarter for operating cash flow, $8 million, $19 million over the last 12 months and the $8 million in this quarter basically all came from the income statement, $7 million of it. So nothing unusual at all. Remind you Raimo that, we’ve been consistently positive on the operating cash flow and now for years. Q3 was another one, $8 million and the thing I would really point to is two things I would really point to. The inherent profitability of the business, this is mission critical stuff that people are willing to pay for, if they get a good solution that’s maintained and secure that is enhanced. And the second thing is working capital intensity with DSO of 27 days, will go up over time, but not dramatically and not quickly. And so as the business grows, we’ll be able to bring a lot of the improvements in operating cash flow without draining in into operating asset.

We’ll move next to Scott Berg from Needham.

Congrats on a great quarter. I have two questions. Let’s start with the new CEO, Rowan. Mike can you help us maybe fill us in with, what specifically in his background or his experiences did you think would transcend best within the Five9 built product and end markets?

So we’re just thrilled to have Rowan at the helm to take Five9 to the next level. Obviously he brings an incredible and rare combination quite frankly of experience, talent, and I would say character that gives us really the entire team here, the board, the C Staff and the very high confidence that he’s the right leader to take us to that next level and beyond. But also to carry on the Five9 culture which is very unique, it’s a very, very important strategic and competitive advantage for us. And I got to know Rowan very well through this process and he is going to be an absolute superstar. He is one of the most sought after executives in Silicon Valley. Our timing was perfect to be able to take him out of a, a C level job at Cisco where he was running 5,000-plus person organization and reporting to the CEO. He’s one of the superstars in our industry and I personally, I am just thrilled that he’s going to be our next CEO.

And my follow-up is probably for Dan. Dan, I think it was in your remarks you mentioned one of your big wins was a customer that moved on-premise to cloud based on their migration to the salesforce lightning platform. I always thought that could be an interesting catalyst over the next two years for you guys of that exact example. But are you seeing that a little bit more out there as customers are having to make that platform, this is becoming a catalyst to kind of look like - at all these different applications that interact with the CRM system.

Sure Scott, and that’s - you hit right on, which is customers are being encouraged certainly by sales force to make that transition from classic to lightning. And it’s important for us to make sure that when we innovate, that we’re writing through to lightning and making sure integration is there. We’ve because of our tight partnership with sales force, we get early access to software that not all of our competitors do. And we’re able to innovate and write to lightning, I think sooner than our competition so that gives us certainly an advantage and it gives comfort to customers that we’ve got that early visibility into their software.

Terry Tillman from SunTrust Robinson Humphrey. Your line is open.

First question just relates to maybe Dan for you in terms of the enterprise strength in the quarter. One thing I’m just kind of curious about, obviously you have secular drivers like a digital transformation and just modernizing contact center infrastructure but it may be some of the more economically sensitive industries you serve. Did you see anything that was maybe kind of a incremental activity or maybe more agents, transaction volumes or just a greater amount of business than you would have expected in some of the more economically sensitive industries?

Business as usual when it comes to that. Let me remind you that we do have some seasonality at the end of the year that comes in typically late Q3 or early Q4 in certain segments, healthcare, retail as they ramp up, healthcare because of open enrollment and some ACA enrollments. And then just overall in consumer products, a little bit from education in Q3. But then I think we’ve just seen a thriving economy and continued business that takes place and more calls and more transactions are taking place across the board.

Well, you’ve created quite the track record, we’ll expect a record quarter every quarter on the enterprise booking. But yes, one thing in terms of AI and machine learning, what I’m curious about is there’s plenty of talk and there’s been plenty of talk about RPA. What is your all stance on RPA, whether it’s assisted or unassisted going forward in the contact center. So beyond analytics, but actually maybe certain tasks just completely being taken over with an RPA type model?

I mean you see the visionaries point out that in 10 years, it’s completely robotic, completely automated and we’re not going to have agents at all. And I think we see that tendency come about every 10 years back around the 2000s with the advent of the Internet, it was like, nobody is going to get service from a contact center or call center. They’re just going to get it online. And then you had speech enabled IVR where people could talk to the machine and they would find the answer and give it back to them and we’d all self-serve. So I think that comes about and there are going to be places where AI fits. I don’t think it’s a replacement. I think it’s an enhancement. And that’s what I think when you look long-term we’ll use it for things like age and assistance to make them more effective. Some of the self-service things that are very mundane, repeatable, check by balance, the people do that already online and through other means rather than call an agent. But that hasn’t really reduced the - that has not been at the expense of agent Talk Talk. Companies are now investing more and willing to spend extra time on the phone to enhance that customer experience, whereas you know five years ago it was about cost reduction, reduce the time on the call, get to the next one, do more with less, it was all about cost reduction and now it’s about investing the extra time and spend a few extra minutes on the phone to create customer delight.

Okay. And just the last question relates to you did mention, you guys did mention in the prepared remarks, and I think, maybe it’s a part question about add-on purchases and good expansion scenarios after you land the customers, is there anything different going on or are you doing anything to maybe turn a lever to go after that opportunity more aggressively or is just the natural kind of progression of when somebody is delighted with the software. They’re going to buy more, what are you doing on the go-to-market side, are you doing anything to maybe kind of turn that dial more? Thank you.

Yeah. Great question and we’re not doing anything new or unique. We’re always turn to that lever. We always have turned it. But it’s just like you said, you’ve turned up the customer. You get them excited about what they’re using it for and the applications that it’s serving and if they’re expanding their business, they’ll take more of it. If they’re expanding and innovating on their own then they’ll take more skews and more add-on products that we offer them.

All right. Thank you.

We will hear next from Brent Bracelin from KeyBanc Capital Markets.

Hello. This is [Clark] on for Brent. Mike, I was hoping I could get your perspective on evolution of the business, now that we’re at the doubling of revenue on a run rate basis since the IPO. We’ve seen a few competitors get acquired and now you have a Cisco executive at the helm. Is this an opportunity for a change in appetite maybe more aggressive move whether that would be M&A or acceleration in sales investments, basically any color on, is this is wide open as it’s ever been or is this going to be stay the course and continue to pursue the opportunity?

Yeah. Clark, I’m happy to take some time to talk about that. So, again, the beautiful thing about our business is, while we’re turning the page on a new chapter for the company with Rowan rowing at the helm. I’ve been here 10 years and it’s been an exciting journey for 10 years. But again we feel like we’re just getting started. This is a wide open market that is still 10% to 15% cloud, its $24 billion in annual recurring revenue in terms of the size of the worldwide opportunity. We’ve gone through a few chapters as an industry with some of that consolidation of some of the players recently by some legacy players which, again I think those were done for very specific reasons related to those companies that got acquired. We think we’ve got just an extended runway to keep running very, very fast and very consistently through time to continue to capture market share. I think with Rowan at the helm, he is just a extraordinary visionary leader. But at the same time he knows the great momentum we’ve got as a business and the market opportunity we’ve got right in front of us. So, he will be solving for continuation of momentum in this great, large open market space that we’ve got, but at the same time, he will be solving for extending our leadership position in the market.

Perfect. And just one clarifying question on the workflow engine, will this be functionality that was previously serviced by maybe at a WFO that was maybe involved as a partner or is this kind of net expansion opportunity monetizing in-house versus expansion of overall contacts center spend with this?

Yeah. Clark, sorry, could you repeat that, sorry, I was distracted.

I was wondering whether or not the workflow engine, will that be expansive to a customer’s contact center spend or will this be Five9 offering in WFO functionality that may have been previously serviced by a partnership?

Yeah. So, Clark this is Dan. Let me clarify the difference there. What we’re talking about is a workflow engine that will be doing the routing of a variety of different solutions. So, today, whether we’re routing voice, routing our chat, whether we’re routing our email or one of our CRM partners chat or email, what we want to do is make sure that we’re the routing engine and that we’re taking it to the next level by calling it workflow because we’re going to take objects. We’re going to route cases. We’re going to route whatever. There may be cost elements from the other providers and other solutions that they want to feed into our routing engine. But if you think about this the routing engine itself is going to be able to take our product guys like to say, hey, you want to route pizza, we can route pizza. You take the object that is presented to us because we control the agent state and the agent skill level and we have real time visibility into the presence of that agent. We can be the true routing engine to say whatever kind of interaction you want to get the best skilled available agent. We’re the ones that will direct that traffic to the right resource. And so think of the workflow engine as the routing portion because we see agents but also the engine that’s going to collect valuable data that allows us to then either again through kind of the AI engine be able to enhance routing, right. I talked about a very simplistic example there which was I’m going to get information. I’m going to find the right resource. The question there is how do I find the right resource that may be looking up a phone number, it may be collecting data like we do today from an IVR, but it may also be based on a lot of other information that I get either from a database about their history, it maybe from their buying behavior, it may be a lot of different personality matching. There is lots of different variables that can go into that equation and that’s what we want to be as the routing engine. Fairly different, as opposed to it’s not workforce, not WFO piece. That’s more on the, a little bit more on the back end of recording speech analytics, although they do some real time speech analytics and again in that case we could leverage what they’re doing rather than reinvent it. So, again, it’s going to be all through partnerships and we’ll supply the actual engine and where we need to leverage whether it’s a transcription engine or whether it’s a real time speech engine, we can certainly take advantage of our partners and one more reason why we partner with the leading WFO players.

Right. Perfect. Thank you for clarifying.

Jeff Van Rhee from Craig-Hallum. Your line is open.

Great. Just a couple left for me. From a capital intensity, your sort of CapEx outlook how do you envision, look out next year, two years, three years, any meaningful changes there and then along with that any thoughts about increasing potential reliance on cloud guys AWS, et cetera?

Yeah. So in terms of the capital spending the way we think about it is that typically we spend 5%, 6% or 7% of revenue, and mostly cuts around 6%. And that’s primarily to accommodate growth. There could be a case where in Europe, we might spend some additional money for CapEx, we’ve done it in the past, we have data centers there, but nothing dramatic. In terms of the public cloud with our announcement last summer of the global voice, it actually puts us in a very good position in the sense that we can go into a number of different countries at a much lower cost with a local point of present in as we do already in countries like Australia, Brazil, Ireland, Japan and so on.

Okay. All right. And then I guess just secondly from a sales process, I mean, you obviously just been a machine from a sales recruiting and ramping process historically, any changes at all that are notable with respect to the recruiting on-boarding processes and along those same lines, any changes in outlook or expectations about the sales capacity likely to be added this year?

No real changes of significance, we’re going to continue to scale our enterprise sales force domestically and opportunistically and carefully globally in the international markets, but we’re seeing a very, very good return when it comes to investing in those resources and we’ll continue to pace that commensurate with the expansion of the business. So I wouldn’t anticipate any changes there.

Got it. Okay. Yeah, great quarter and congrats on the addition of Rowan.

Thanks, Jeff.

We’ll move on to Nikolay Beliov from Bank of America.

Hi. This is actually Jacqueline Cheong on for Nikolay. I have a couple of questions. First of all, you’ve noted consistently in the past that enterprise sales hiring is trending at about 30% to 40% a year. At the same time, we noticed that enterprise sales is also growing going at 30%, 40%. So my question is why aren’t we kind of seeing leverage from the sales channel and pull-through of business from salesforce and Oracle and -- yeah.

Yeah. Great, great question Jacqueline. Thank you, and yeah, to just make that distinction, when we are getting leverage and access into accounts and leads through our ecosystem. So when Salesforce introduces us into an account that gives us leverage and we get an endorsement from them as well. When we get introduced through our other channels, whether it be the master agents, resellers, referral partners, VARs, et cetera, that gives us leverage, but we also assign our direct sales team to go in and work into the deal, make sure that it’s properly represented. This is complex integrations in a mission critical application. It’s really hard to have the channels have the depth, that we can have ourselves. We certainly get leverage from them. We always have and will continue to rely on that to not only help us have access but to help us through that process and help nurture the customer.

Got it. Makes sense. Thank you and my second question is how focused are you on the commercial segment at this point. Can we see the growth rate go kind of to the from the high-single digits to low-single digits?

We’re continuing to see a great demand from that commercial business and we’ll continue to invest there. It’s not the growth engine that enterprise is, but it’s still growing and part of that is because we define the commercial business in a sub-50 C market. It’s got a ceiling on it right. They go above that. They belong in our enterprise space. So we make that distinction and so that market because it’s restricted in its size, it’s growing at a little slower rate than the enterprise space.

And Jacqueline, this is Mike. I would just add that that’s a strategic decision we made years ago and we continue to kind of standby, which is the ROI that we get and the enterprise market is so significantly greater than what we get in the commercial market that that is where we’re placing our bets. That’s where we’re expanding our sales capacity. That’s where we’re investing our marginal dollars and that’ll continue, but we continue to see an opportunity to grow our commercial business. But, again, we’re not investing aggressively to do that and it really just comes down to that marginal ROI differential.

Got it. Got it. And lastly I know we touched upon this a little bit already, but can we talk about how Global Voice helps drive new incremental enterprise business?

Sure. So, yeah, Global Voice was an announcement we made last summer and what that does is it allows us to have voice pops or points of presence in local regions and markets around the world, so that they don’t have to bring the voice all the way home run back to our data centers where our application lives. They can park those calls in region and then have that voice pop, ping the ACD and IVR that’s here in our data centers domestically and we can see all agents understand their presence and skills, and then respond back to that voice pop about where to ultimately terminate that call. The great thing there is, we are able to often times terminate it right there locally in region which means it cuts down on cost, improves the call quality because there’s less latency. And it allows us to keep calls where they belong in region and we do that by these voice pops being built in public cloud facilities like AWS.

Got it. Thank you.

Mike Latimore from Northland Capital Markets. Your line is open.

Thanks. Congratulations on the higher-end quarter there.

Thanks Mike.

In two of the three deals you highlighted new customers, there was a cloud you see deployment as well, are you seeing kind of a combined contact center, you see -- you’re seeing that sort of dynamic increase as a percent of the pipeline here?

I wouldn’t say it increases. There’s always that subset of customers that do want to bundle it together and make a joint decision, a simultaneous decision if you will. But there’s still a great many of that realize these are two very different solutions and they want to have separate many times, it’s different departments, different decision makers and they make completely separate decisions.

Got it. And then, how important is the international market for your or how material is that for your plans for this year?

Yeah. So not dramatic -- no dramatic changes there, Michael. So we as you probably recall have some 10% of our revenue from international based upon bill to address like 6%, 7%. It’s something that we’re doing in a steady pace with no major increases in investments currently.

Yeah.

And the basic and the basic reason over there is that, we have a very, very good business here domestically with a very good returns and inevitably it takes away some of the return when you go internationally.

Yeah. It makes sense. Thanks.

Thanks, Mike.

At this time, there are no additional callers in the queue. I would like to turn the conference back over to Mike Burkland for any additional or closing comments.

All right. Thank you, Operator. Thanks everyone for joining us today. I just got to tell you I’m extremely enthusiastic about the next chapter for Five9 under Rowan’s leadership. I think we have a great position as a company. We’ve got a very strong momentum in a very large market that is still in the very early days of a massive shift to the cloud. So, I’m just pleased to have Rowan at the helm to take Five9 to greater and greater heights and thank you for joining us today.

And that does conclude today’s teleconference. We thank you all for your participation.