Yanni Samoilis

Yanni Samoilis, on behalf of Will Power from Baird, asked about trends across Five9's different verticals, specifically if any are strengthening more than others or are expected to drive second-half acceleration, with a focus on healthcare and consumer verticals.

Answer

CFO Bryan Lee explained that Q4's seasonal uptick in consumer and healthcare was more favorable than anticipated but still weaker than the previous year, particularly for telecom usage. He noted that the Q1 seasonal downtick would be more muted than a year ago, and the 2026 guide assumes similar macro conditions to Q4. President Andy Dignan added that financial services, healthcare, and retail are seeing strong adoption due to Five9's platform advantages, especially for complex CCaaS deployments and AI adoption.

Yanni Samoilis inquired about trends across Five9's different verticals, specifically if any are strengthening more than others or are expected to drive the second-half acceleration, with a focus on updates for the healthcare and consumer verticals and their impact on the 2026 guidance.

Answer

CFO Bryan Lee noted that Q4 consumer and healthcare vertical upticks were better than anticipated but weaker than Q4 2024, particularly for telecom usage, leading to a more muted Q1 seasonal downtick. He assumed similar macro conditions for 2026. President Andy Dignan highlighted strong adoption in financial services, healthcare, and retail, attributing it to Five9's platform advantages in regulatory compliance, security, and complex integrations for scalable enterprise AI solutions.

Yanni Samoilis inquired about the progress of Dedrone and DFR (Drone as First Responder) conversations at the state and local level, particularly customer reception post-IACP, and the growing traction of Axon's broader drone portfolio in military or defense applications. He also asked about the gross margin outlook and the specific impact of tariffs on connected devices gross margins.

Answer

CEO Rick Smith highlighted acute customer awareness of drone threats and building momentum in Congress for state and local drone mitigation, positioning Dedrone well. He noted Skydio as Axon's DFR partner, with robotic docks scaling rapidly and generating significant interest. President Josh Isner emphasized the synergy between DFR and 911 investments, accelerating DFR adoption. CPO and CTO Jeff Kunins added that every conversation involves the triangle of 911, DFR, and real-time crime centers with Fusus. CFO Brittany Bagley explained that tariffs primarily impacted connected devices gross margins in Q3, marking the first full quarter of impact. She views this as a one-time adjustment, expecting future gross margin tailwinds from software growth and scaling new businesses.

Yanni Samoilis, on behalf of William Power at Baird, questioned the impact of the recent price increase for the monthly Pro SKU, asking if revenue expectations have changed and what customer feedback or behavioral changes, like churn, have been observed.

Answer

CFO Michelle Chang confirmed that the initial forecast of a $10 to $15 million incremental revenue impact remains on track. She noted that online business churn remains at continued lows of 2.9% and that there was minimal customer pushback, attributing this to the strong value proposition, which includes added AI features and increased storage limits.