Q4 2020 Five9 Inc Earnings Call
Our full Suite of products are now deployed in the public cloud in Canada and Europe with more relates coming through out the year next. We've increased the depth and breadth of our platform integration apis. I'll focus on zoom in Microsoft teams Integrations both launched in the fourth quarter and we saw over thirty feels right out of the gate. This isn't surprising given the traction that zoom and Microsoft teams have seen in the Enterprise space with zoon recently announcing over a million phone sold. Finally our thesis around demand for a high-powered Automation and the contact center is coming to fruition and serendipitous life comes at a time when the technology has meaningfully mature in a recent survey by Gartner. The number one priority for contact center leaders is to migrate away from Human only serves to self-service through automation to build a leadership position in this emerging category. We've launched a high-powered automation offers that Target each of the three phases of an engagement in a contact phone number.
Before during and after an interaction with a human agent starting with the first phase before human agent is even involved our market-leading inference. I V A uses conversational AI to answer questions and perform simple tasks automatically and here we focus on the high volume and low-value tasks that can be easily automated for example order status requests life changes and so on if the engagement cannot be handled by The Ivy a and a human agent needs to be involved, we pre populate key information from the conversation that the agent is going to need so customers don't have to repeat themselves Rai based agent assist then steps in and provides the human agent with real-time guidance based on the content of the conversation offering areas, like script adherence compliance up-sell opportunities and so on.
And finally when the agent is wrapping up after the interaction a Genesis automatically summarizes the call and inserts it into the CRM system dramatically cutting the time needed for wrap up while also meaningfully improving the quality of the summaries agent assist is also deeply integrated with our workflow automation platform formally known as when do together. They make it real simple for contact centers to implement proactive Outreach and notifications with their customers which normally requires considerable effort and development work in summary a high-powered automation is hitting its drive and the contact center is going to increasingly deploy this technology. We intend to remain at the Vanguard of this transition are Trifecta of ivas agent assist and workflow automation is delivering results today assisting Us in winning deals and generating initial Revenue.
So those are just a few of the highlights on the product Innovation side, but now let me shift to our go-to-market progress first. We've accelerated our progress with systems integrators in Q4 SI booking than double compared to last year and as anticipated 20/20 bookings more than tripled what they were in twenty nineteen s eyes are leaning into the cloud transition and automation opportunities particularly around five days where they can add significant value building Automation and helping customer deployments. We are now significantly more Diversified by Si partner and we expect another strong year in 2018.
XR AT&T partnership is making great progress. Just three quarters ago. We announced the AT&T Cloud contact center based on five nine. And since then we've consistently grown both wins and Pipeline and this will continue to be an investment for us in product development and Joint go-to-market efforts and we look forward to this contributing to our 2021 revenue and momentum. Finally. We're accelerating our Global expansion pack. We increased International headcount by More than 70% year-over-year although starting from a small base the rollout of our platform on the public Cloud will be a further enabler for accelerating International expansion. We saw strong bookings in Latin America growing more than 130% year-over-year in the fourth quarter. Our acquisition of influence with operations in Australia has a month to our Global footprint and will help us drive expansion with global Service Providers, but without a doubt the star of the fourth quarter was Mao where we won the largest deal in the history.
259 with a leading European Insurance Company. This five-year deal is expected to result in nearly twelve million dollars of annually recurring Revenue 259 more than two times the size of our previous record for a new logo in conclusion.
We've executed like clockwork over the last year and we believe we positioned 592 captured this massive Market opportunity and expand our leadership position with only 10% Cloud a tradition of the 24 billion dollar contact center software market and the potential to more than double our current tab with labor Arbitrage through a I powered automation Technologies. We believe we have a tremendous and long Runway ahead. We've invested in both organic product development and strategic Acquisitions to take an early leadership position in contact center Automation. And finally we're going to stay laser-focused on investing in four key areas strategic Enterprise go to market our technology platform International penetration and finally change with an Innovative product portfolio and a modern Cloud platform favorable industry Trends and a veteran management team. We believe we can maintain thirties level Enterprise subscription growth through Thursday.
821 and Beyond
with that and now let's turn it over to our President Dan Brooklyn to share some specific customer wins, Dan.
Thank you Robin. We continue to execute strongly on all fronts with our go-to-market machine. We have all time records for any quarter for both Enterprise net New Jersey Enterprise installed base and a Q4 record for commercial bookings. We also had record bookings for the year in 2020 with s eyes more than tripling year-over-year as Rowan mentioned month International bookings nearly doubling year-over-year and channel bookings growing over 80% year-over-year.
In addition or 65% of our deals were influenced by partners and our pipeline continues to grow at an all-time high.
And now I'd like to share a few key wins for the quarter. The first is our largest deal to date this leading European insurance company, which will enroll and referred to signed a five-year contract with $500 to modernize innovate and automate the customer experience. They deliver throughout Europe.
We competed with many solution providers from carrier hosted services to premise-based upgrade proposals to their Cisco system to several other Cloud providers find out who was chosen for our platform security and reliability are robust Innovation and automation Solutions throughout the customer journey and our Superior approach to supporting this customer throughout the European markets they serve
And social in addition to workflow automation performance dashboards video engagement off powered by verin and the integration to Microsoft teams as Roman mentioned we anticipate this initial order to result in nearly twelve million dollars in annual recurring Revenue to $5 off the second example, I'd like to share is a large Bank based in the South Eastern us after competing with the usual Cloud competitors. 5-9 was chosen for several automation capabilities wage Drive efficiency and reduce the number of human interactions required across their contact centers supporting their eleven divisions.
The first the most dramatic impact occurs from incorporating ivas from our inference acquisition to enable self-service. The second is they are using active outbound, ivr an SMS notifications for confirmations new services and account activity alerts and third our agent assist AI solution which transcribes summarizes and dispositions calls and uploads those into their sales force and service now crms these automation Innovations along with our w f o Suite package including qm WSM speech analytics and performance dashboards will help them transform the customer experience while improving agent efficiencies.
We anticipate this initial order will result in approximately two point seven million dollars in annual recurring Revenue 259.
The third example is a healthcare operational and financial systems provider to hospitals and Healthcare facilities throughout the world. They've been using a Cloud solution from one of our key competitors, but we're not achieving the reliability and support they were promised. They chose 594 our reliability high-touch support model as well. As our Innovative Technologies to allow them to fulfill their customer experience goals off visual ID our video engagement or workflow automation from when do and the full w f o Suite powered by Garrett. They were also looking to improve agent utilization by truly blending inbound and outbound campaigns something that was not achievable on their previous system. We anticipate this initial order will result in approximately two point four million dollars in annual recurring Revenue to five million.
And now as I usually do I'd like to share an example of an existing customer who continues to expand their use of five nine.
As a customer of ours since 2016 this well-known Media company with streaming service of Premium content and live TV was looking for contact center innovation in three subsidiaries not being serviced by $5 due to our proven track record of reliability and support ability to easily integrate with service now and zendesk and providing self-service options with their customers throughout throughout the experience through our inference ivas, they expanded their contract with five nine with these additional subsidiaries there ARR with faith is anticipated to go from 2.3 million dollars to over four point two million dollars.
So as you can see, we continue to capitalize on market demand for contact center Innovation. We're also seeing increased momentum as companies realize a strategic differentiation for them is to is the customer experience they deliver and the vast array of interaction choices. They offer their customers throughout their Journey, you know several years ago in a row and predicted that the contact center would change more in the next five years than it had in the previous twenty five and we are seeing that first-hand and we're helping our customers lead the way.
with that, I'll hand it over to Barry to share our financials very
Thank you. Dan. First reminded that unless otherwise indicated all Financial figures. I will disclose our non-gaap reconciliations to get more posted in the investor relations section on our time. We had another excellent quarter with both the top and bottom line results for exceeding my expectations. The record Revenue growth rates rolling mentioned were driven by Enterprise. Clearly. The market is healthy and our Enterprise offering is resonating and our Commercial Business continues to be resilient the speed of our total revenue agent recurring revenue and one-time Professional Services was 93% and 7% respectively LTM dollar based retention rate increase to 110% from 107% last quarter and from 105% a year ago.
I record installed base booking was the key driver of the continued Improvement in LTM database retention rate. I would like to expand on retention rates on a moment longer retention rate. We have been reporting president public have been calculated using invoicing rather than Revenue.
We now have eight quarters of trended LTM retention rates based upon 8606 Revenue. We have are for conforming to how the vast majority of other faiths as report. And we are now providing retention rate based upon Revenue going forward will stop providing invoicing based potentially.
the revenue base retention data is
Let's follow for the fourth quarter of 2020.
LTM database potential rate was 117%
I'm from 114% in the third quarter and I'm from 112% in the fourth quarter of 2019.
Each of these Revenue base retention Matrix is a seven percentage points higher than the invoicing base retention rate previously reported for the three.
May I help you? I'm not a basic tension data revenue and the invoicing methodologies for the eight quarters too cute for 20. I've been posted in the IR section of our website.
I would not address the two most frequently asked questions investors and analysts eyes namely how much are the improve Top Line that we have been reporting is your recovery and second what happens when hopefully in the not too distant future Corvette is contained as well and mentioned accelerated digitization has cannot get to a heightened interest amongst prospects and to the shop booking. Talked about the biggest impact has been in our sole base which has seen a significant up ticket booking and consequently in Revenue overall while difficult to estimate precisely especially given the seasonal impact that fluctuates meaningfully from here to your we believed that the code added approximately mid single-digit percentage points to a second have 2020 Revenue growth primarily from the increase install based booking.
What about Post cover? What companies digitize in a post covered do you liking although it is certainly possible that a portion of the bump cause I covered may receive post-pandemic take retailers one example retailers will reopen stores and customers will have other options beyond the contact center officer of those companies again, however, in most cases, we believe that the dynamic only accelerated the inevitable and we will see the new digital engagement options, generally permanent. Overall We Believe much of our business, we will likely not return to pre-crisis levels and we could potentially retain some of the midst increase we saw in the second half of last year during now to the rest of the financials postcode adjusted gross margin was 66.4% a record.
And up to a hundred basis points were over here fourth quarter adjusted ebitda margin was 22.8% also records and up a hundred sixty basis points over here is strong overall performance resulting in a generating 2.7 million in gaap operating income in the quarter.
Fourth quarter non-gaap net income was 23.7 million dollars an increase of 6.7 million year-over-year non-gaap EPS for the fourth quarter was Thirty cents per diluted share up $0.07 year-over-year before turning to our full your performance. I would like to report a average concurrent. C-can't for the first quarter of route to 180 4483 seats up a record 40% year-over-year and fifteen percentage points higher than the 25% off your vehicle in the fourth quarter of 2019 note that we estimate our concurrencies to be equivalent to approximately 277000 feet on an image feed basis unit of measure that some others in the industry side as a reminder. We provide the Seeker Matrix only on an annual basis and now for Chrome
Hello at the key full year twenty-twenty income statement metrics.
2020 Revenue was 434.9 Million up a record 33% year-over-year 20/20 gross margin was 65.5% off of 130 basis points year-over-year while on the subject of gross. Margin. I would like to underscore that in 2021 will likely be an interruption about seven year track record of annual gross margin expansion due to a meaningful increase in public spending to support International expansion and my life.
We expect this public spending to reduce 20 21 gross margins by approximately two percentage points.
2020 adjusted ebitda margin was 19.7% 120 basis points you earlier despite the meaningful investment. We have been making in R&D and go dead.
Finally before turning to guidance some balance sheet and cash flow highlights.
You said it was 29 days in Q4 a sequential Improvement of two days despite the strong Enterprise business fourth quarter operating cash flow was 19.5 and a record 67.3 million for the full year. We have now maintained our LTM operating cash flow margin in the team for eleven consecutive quarters, and we remain optimistic about our potential for continuing cash flow generation. Even our long-term model are essential oils. Andar Lo dear, so
I'd like to finish today's prepared remarks for the brief discussion of expectations for the full year and the first quarter of 2021.
For the year, we are guiding Revenue at the midpoint to grow 20% year-over-year to 520.
Those of you who have been following 559 for some time. Now, you will know that for the past six years. We have always started the new year with prudent Revenue guidance of 16% off your vehicle may need you to the uncertainties around the magnitude of the seasonal impact of our second half business.
Approximately 2 or the full percentage Point increase from 16% to 20% is driven by the revenue contribution from Temperance. And the other two percentage points. Is Jose the evidence strength of our Core Business.
For sharing the specifics on the 20 21 bottom-line guidance. Please keep two important factors in mind first as we pointed out on our last call. We will have meaningful tradition from the inference acquisition second. And I'd like to underscore this point. We are Awash with high-quality opportunities, which will require incremental expenses and given a healthy Market environment. It would be irresponsible for us not to continue investing in our business office that as a year unfolds. We will continue to a tried-and-true pragmatic approach of balanced growth. But with some slight temporary moderation on Thursday, we have placed on a strong bottom-line performance.
We are firmly of the opinion that making these investments will position of even better to achieve our long-term model, which as a reminder is to reach 27% plus adjusting in about four years from now.
As a result of these two factors, we are guiding 2021 non-gaap. Net income to a midpoint of 60.6 million which implies a year of a total of 6.8 million dollars.
As for the first quarter, we are guiding Revenue to a mid-point of 122.5 million dollars which represents a 4% sequential decline which closely follow the guy that we have established of a lot. So we're heading into q1. However, I would like to point out that the implied European growth at the midpoint is 29% off which is the highest growth rate. We have ever guided to in any culture with respect to the bottom line. We are guiding first quarter non-gaap. Net income to a mid-point of ten million dollars wage affects a thirteen point seven million quarter-over-quarter decrease, which is driven by the same two key items. I mentioned it more minutes named the solution from the influence of an increase. We are investments we're making as well as the customer cycle reset
Additionally would like to provide more color on the quarterly profile of both the top and bottom line for the remainder of twenty Twenty-One or Revenue off the guidance in past years. We do not expect to cancel sequential growth in the second quarter. However, following seasonal business patterns, we do expect Revenue wage increase sequentially in the third quarter and more strongly in the fourth quarter.
given the shape of this
Renuka and the renting of expenses we expect second quarter non-gaap. Net income to be lower than q1 at 9 a.m. Which should improve between the third quarter and more significantly in the fourth quarter.
Finding the customer estimates for modeling purposes for calculating earnings-per-share. We expect our diluted shares to be 76.5 million years 6 years to be sixty seven point five million for the first quarter of 2021 and 78.6 million and 69.5 million respectively for the full 20 21, please note that diluted shares of 78.6 million for the full year 2021 represents a year-over-year growth of 15% off. It's higher than normal increase is primarily driven by early adoption of a SE 2006 this standard reduces the complexity of accounting or convertible dead by eliminating a non-cash interest expense from the debt discount created a separate separating out the equity component, but also meaningfully increases the leadership job.
By requiring the use of the if converted method rather than traditional methods, we expect our taxes which would like mainly departments and series to be approximately turn off $90,000 for the first quarter of 2021 and one point two million dollars for the full year 2021 Capital expenditures for the first quarter of 2021. I expected to Total approximately 16.5 to fourteen point five million dollars for the full year 2021. We expect Capital expenditures to be between $42 and $45 million dollars at the midpoint this month approximately 8% of the full year Revenue guidance relatively in line with what we reported in 2020, but higher than historical trend is higher than Jake level of catalyst pan is primarily driven by International expansion and the bill.
about new headquarters
In summary, we are very pleased with our fourth-quarter and full-year performance achieving all-time records on multiple metrics. We continue to execute like clockwork off his massive Market opportunity and we believe ongoing an increase investment position of very well to continue to expand our leadership position of a game, please go ahead.
Our first call is for first question. Excuse me is from d j Heinz with an accord.
Hi, DJ. Hey guys. Are we doing here? We are good. You see everyone. I like the new format and congrats on the strong results one for you, but they kind of two related questions around i i v a so first just how often are your big deals now Landing with Ivy a as part of them and and then the second question would just be kind of as you think about the bass opportunity. Like can you use usage as a indicator of who would be you know, apt to get leverage out of ink n Ivy a sale in other words like I I would think that has to be you know, demand is correlated with increasing usage. Um, so maybe just talk about that motion of the back the base with you as well. Yeah, maybe Dan I'll I'll throw the big deals one to you on the big thing right now. Every one of our big deals has interest in dog.
During out how to automate and how to bring choices, too.
Their end customers on how to you know interact with them and there's several ways for us to automate right one is self-service using the the I va's other ways of automating choice to provide agent assistance and be able to bring more leverage and more more power to the agent and powering the agent to be more efficient more effective so that the customer can do more with fewer resources and then the Thursday through our work force automation, right? The window acquisition of wfae allows us to automate a lot of the functions that we're done manually within a contact center can now be done automatically triggering, you know off and notifications of upcoming appointments upcoming shipments from whatever they might be you can trigger trigger activities based on conditions. So great question growing. Yeah, as far as the base wage, I think the make sure I understand the question you're asking if it gets around like how do we decide where to take this offer within the existing base of five? Nine customers? Is that question? Yeah, that's yeah, that's right in like can you use usage of the Leading Edge?
Gator of kind of who were government there are a few signals and the and the and the inference team are really good at identifying where to get the most traction the bass. We've actually stopped up and put one of our top leaders on to a new team in the sales organization. That's helping both on the sort of the net new positioning but also the go after the base side and so him and his team are sort of travelling that strategy but we're starting from a good place because we already know name for it's already had, you know, fairly strong Revenue run rate on their own outside of odd ends with the growth of that revenue. And so we're able to go after and sort of use their sales strategy in terms of which industry verticals and what other signals we can use to figure out where there's going to be take it wouldn't just be usage. It would be other things as well like in a vertical and then also like we have Tamsin many cases and customer success managers covering these accounts so we can do a a very sort of surgical job of identifying wage.
Going to be the highest return on our on our time speaking to the base.
Yeah makes sense. Awesome. Thanks for calling guys and congrats.
The next question is from me to Marshall with Morgan Stanley.
Great. Thanks. Just a question on you know, kind of building on DJ's question. You know, just what are you seeing as far as initial deal composition? Is it out there looking at you see contact center way. I kind of all at the same time or just how is that evolving of what you're seeing kind of in what customers are trying to do in the initial deal cycle, and then maybe as just a second question just any update on on the AT&T relationship. Thanks.
Sure, let down take the first part. Okay regarding the the deals themselves. It really runs the gamut when you look at companies that are trying to deliver a better optimal customer since that can mean different things to different companies some have mastered certain certain portions of the the mix if you will, but what we look for is going in and consultative Lee working with that come back to say what is it that you're trying to deliver and how can we help and often times that comes down to they have lacked Automation in the past and they're looking for ways to give their customer more choices and I mean even things as basic as adding chat or email the omni-channel solutions to the full automation that I described earlier, so it does run the gamut and it really depends on the particular customer, but that's the key for us as being able to deliver a full end-to-end portfolio that can allow us to to tailor a solution try to give a customer regarding the ATM.
A relationship we're seeing tremendous traction there. We're building up a tremendous pipe.
Wine and executing and selling more and more deals. The larger deals are starting to come through with AT&T not because there was an interest in the larger deals. The larger deals have a longer sales cycle a larger engagement cycle. So those are starting to come to fruition and as we had mentioned last year 2021 is the year to really capitalize and see a revenue Louver from that activity.
Thanks Smita. The next question is from Terry Tillman with truest.
Hey congratulations on the results great job my two-part question and you are a very proactive and and and helpful on a i before during and after an interaction. I'm curious of those three kind of areas or phases increasing the most activity. And again, I know it's early days but it does seem strategically important for the business particularly, like driving revenues the middle and during the animation, but how the pricing of the packaging and working out. Thank you. Sure. The the interest is strongest on the before because if you can handle the the interaction before she gets an agent you get the most savings and then and then these the second is really I would call it after is we're we're getting traction and that is doing after call work and call log in automatically for customers. So those are the two areas and the during is something I would say. We're still we're still working on on delivering the capabilities and but yeah really before and after and before being very very dead.
Much the place that I think people are most interested in looking right now.
Could you maybe just talk real quick about the packaging or the how's it working out in terms of the the pricing and monetization? Yeah. Yeah. So we we already have established market pricing from influence before the acquisition before the acquisition. And so, you know, we've kind of used that as our base line so our and we've introduced a default offer that comes with $500 and then sort of three tiers above that way. You can sort of by the silver, you know, the bronze silver and the Gold version of inference, uh with The Sweet Spot probably being in the $450 per digital agent about pricing price range.
Thank you. Thank you.
My next question is from Sterling on t with JPMorgan.
Hey guys, this is Juwan for Sterling. I was wondering if you could provide a little more color on the incremental investment in 2021 and kind of which operating Life Sciences you plan to ramp up specifically. Thanks very yeah. So this is in basically an order of importance. We investing increasingly. I'm allergic slightly in sales and marketing expenses. So number one number two is R&D again. We expect another year in which the exact percentage will inch up now separately. We've also going to be spending a fair amount on but relatedly on on inference off they you know, they uh in spite of our agreement to buy them. There was an earn-out we ring-fenced the sales marketing R&D and that's a quite a big change in a year two years.
to get his sales and marketing and our
And then finally as we alluded to in the prepared remarks, we are spending a fair amount this year, especially in second-quarter on words on public Cloud as we wrote that out across different regions that however will not show up and expenses primarily. It'll show up most of the cost of Revenue.
Got it. Thank you for next question is from willpower was bared.
Right great. Thanks for taking the question. Congratulations on the the strong results. You know, I wanted to ask on the international results and they'd indicated bookings double year-over-year and it seems like you're really seeing strong. And of course alluded to I guess what your what Your what your what's your biggest deal ever? So maybe if you could just talk about what the key drivers have been as you look over this past year of the trash generated internationally and what are the next key drivers, right? If you look at the next three years what helps you maintain that kind of Attraction? Yeah. Well we started thanks. Thank God. We started the Investments there as you know, you know, we started talking about that a couple of years ago. Uh, you know, we hired a new leader in Amaya and so we we really began Staffing out in investing there as well as my life investment in supporting our infrastructure to public Cloud which has allowed us now to very quickly stand up new instances. So some of the bigger deals that we're now starting to win are directly on the back of a game.
Investment because we wouldn't have been in these very very large accounts had we not been able to satisfy local European data residency requirements and so on. So it's a combination of factors know one factor. I think the last back where I would throw off Market Readiness, you know, this is this is another one where it may be probably even COVID-19 with sort of okay. We got to finally look at the cloud kind of kind of recognition of that being a new reality. So I think just a combination of factors not any one individual thing and just all hitting at the kind of all coming into play at the in 2024 us.
Thank you. Yeah, thanks a lot.
My next question is from Michael touring with Wells Fargo.
Hey there. Thanks. Good afternoon. I appreciate you taking the questions. So clearly great close to the year here heading into twenty Twenty-One. Just wondering if there's anything you can have in terms of how your life about progression throughout the course of the coming year versus what you're seeing today. There's certainly potential for Rebound from some of the impact that Industries but then also chance for normalization of some of the exchange in Trends towards remote you've seen and so I know you reference many times. This is a patient Market just a secular from your perspective just outweigh some of those puts and takes in terms of the various Industries or anything. You could just around how you're classifying the coming year I think is helpful as we're just passing through what we're seeing right now buried you want to comment on that, please so a couple of things first of all about 80% of our Revenue comes from 8 Industries.
ranging from
Education to technology to health care and so on and only and our money considering that 80% cuz we didn't do much of an analysis on Thursday. And in that 80% is very little that sort of squarely hit by covert in a negative way of thinking of things like discretionary time travel and vacations and vision and so on. So basically our business is is is is fine pre or post during college. What is what is now changed is the fact that people are relying more and more on the context attitude to work with companies and
In that environment. I referenced back Michael to to our prepared remarks. We're basically saying that we saw a very strong growth in. Our install base bookings may be added mid single-digits in terms of overall growth, and we expect much of that to remain postcode. Excellent great great finish the year. Thanks guys. Thank you, Michael.
My next question is from George could follow with KeyBank.
Hi guys. Thanks for taking my question dialing in for Alex hear. My question is about the competitive landscape you referenced in very impressive deals in the quarter. I believe in all of the ones that you highlighted. You mentioned. You either competed against Cloud offerings or in one case actually beat out competitors Cloud offering just from a high-level would you say five nine is still a story of displacing incumbent Solutions or is there more element of beating out competitive Cloud offerings? Thank you. Well, we always run into competitors on on these deals, you know, if the competitive market and it's by and large still a replacement of on-prem, you know drives most of our business. However, you know, sometimes we see in third, you know, if number one and number of the two incumbents in in on-premise systems, they are the ones that we replaced the most but number three is actually another Cloud vendor that we compete with so we're actually sometimes
Placing other Cloud vendors that you know, the company has tried and wasn't right for them. So we are we are seeing that but by far the biggest driver is continuing to replace on-premise and and on that front, you know, we continue to see the exact same competitors not, you know strong competitors in nice and contact and Genesis are the two big ones that we see uh, and you know, they're they're in most of the deals. I would say, I'm great. Thank you very much and congrats camcorder. Thanks George.
Next question is Scott Berg with Needham.
Hey Rowan, buried and congrats on a really good quarter. And thanks for taking my question here. I guess my questions around the big deal environment. It looks like it's going pretty well for you guys. Including you. Do you still ever and um, I guess as you look at the beginning environment, I know it's early on the automation side row and but is our those Solutions during the impact selling those deals or what the bookings in those looks like or should we imagine or or view? The automation Solutions is really being more of a Twenty-One bookings event versus maybe what you've done last quarter or two, but then I'll let them thanks God for the questions good one. Sure. Yeah Scott great question. And you know, we're we're coming to every opportunity with the automation story off the ability for these companies to take on and automate more of the functions that they used to do manually and the key there is ugh main companies will go ahead and Implement automation day one, but yep.
The revenue needle as much so far to your point.
Earlier the bookings that we've done. Thus far haven't really moved the needle in the revenue front and part of that is because they see our story they test those Solutions and they say great in many cases get me to the cloud with five nine. Am I know you guys are my long-term solution and the automation will occur over several years. Yeah. We'll definitely get impact in twenty Twenty-One. But when you start to say, oh, okay, let's put in ivas to sell serve or the consumers all going to self serve and get all of their transactions handle that way. No, but there's a small percentage that will that I think over time as our society gets more and more comfortable talking to machines. We all do it at home with, you know, Siri and Alexa and other devices from the spoken commands into a system and expecting to get the the right response is going to only get better and better adoption over time. And you know, you think about it where we are today versus where we were three four years ago. It's come a long way and now it's starting to creep into the contact center in, Georgia.
Is that we haven't seen before so to answer your question. I think it's going to be a it's going to be a several years of you know, labor Arbitrage that we're going to be able to benefit from but it's not going to happen. It's going to be an adoption that'll probably take over the next decade and it'll just keep increasing each and every year and part of that is societal or if it's the technology but a big part of that is just our societal acceptance and comfort level with with getting self-service that way.
It's a great quarter again. Yep. Thanks Scott.
My next question is from Poland show from Berkeley Corvettes for me as well. And the price is doing really well. So like, you know when we talked a lot of thoughts about it last about the the SMB part of the business, but that has been also like a mini success story for you guys. So I just wanted to talk a little bit about that long, you know, you talked about teens Grove and that's much better than the the high single-digit we had before how much of that is just the new leadership and instead of one year fact versus actually you having having been done like full of mental changes to that mm make that sustainable Trend. Thank you Dan. Yeah, so part of it is that leadership change that team coming in and focusing on Solutions selling more of an Enterprise like sales motion off than what we had had prior to that, uh several years ago. The other is channels, you know, we talked a lot about these Channel organizations that we signed on and they many of them do business across the the Spectrum dead.
From small customers to larger customers and so we get handed and brought into a lot of transactions that we wouldn't otherwise have seen. They wouldn't have reached out and found five nine on their own but the channel. Business and so that's been another driver for why we've been able to see a Resurgence in that growth model within what you call us and B, which is really what we call commercial that same the same. Okay. The next question is Ryan McWilliams with Stephen.
Nice taking the question.
So when I used to work at a contact center back in college, we always talked about two things that never happened remote agents and and virtual agents. So we have seemingly open Pandora's Box contact center. Now, you know a lot of double click on your expanding net retention rates. Are you seeing an expanding Enterprise opportunity with existing customers? So are you seeing organizations that use contact center for individual business Silo expanded implementation throughout the organization over the last year. We have seen that yeah that comment as well but we definitely have seen a expansion within our existing customers as they look at totally new use cases. I'll give you one example customer that I'm the exact sponsor for in the healthcare space off and you know big hospital Network and they figured out that they're they're receptionist's in their offices in their doctors offices that they have many many many of our sort of dog.
The job of a contact center agent and especially now that they're remote and they sort of said well, how can we repurpose these folks so that when they're not dealing with customers who are in front of them, you know, if they have extra time they can actually start dealing with other, you know virtual request that are coming and not even to that office necessarily but in any office, so that's one example sort of an adjacent use of contact center getting more broadly embedded into the back of an organization and dance probably got a lot of other examples like that. Well, the one that first comes to mind Ryan is if you look at the million dollar customer base that we have and we talked about that every year that that group of customers is growing tremendously. But if you look at that group of customers over the last several years, they've grown it at 67% kegger and if you think about that for a moment, that's all what you just described. That's a land and expand model when you go into a large Enterprise, they're not going to flash cut and say get rid of all my premises equipment and bring it take me to the cloud. The beauty of the cloud is you can pick off.
My group or Department by department where they need us most right they need to innovate they need to automate and so they they look at those groups first. And then once you get that that momentum going it's easy to internally use the other groups as references and and that makes it real easy to then go after the rest of the Enterprise and so that's why we see that caterer so high within those large installed base customers.
Thanks. Yeah. I'm excited to see how lasting remote agents change things next, but appreciate it. Thanks guys.
The next question is from Andrew Kingwood Colliers.
Yes. Hi, Andrew. Go ahead. I'm I'm unfortunately Andrew I'm not able to hear you. I don't think we're able to use it. Sounds like you know, not really.
Can you guys hear me now? Yeah, that's better. Thank you. Okay, great. So obviously you guys had a really strong quarter with zoom phones and it seems like a lot of that adoption is coming from the phone solution. Can you talk a little bit about any new use cases? You're seeing pairing see cats with video Solutions.
And you wanted to take that one. Yeah, you know we seen several adopted video engagement particularly. We have a couple key customers and Healthcare that doing room off. Being one of our big customers being able to do those remote, um interactions and being able to service a patient, um, you know via the zoom or a video another video type of solution and there's some very specific products that allow that to happen. Um, it's not as simple as hey just turn on video for every interaction you're going to have within a contact center, but there's some specific solution to do cater directly to health care and some other key verticals, you know, it's still Niche play when it comes to, you know video in the contact center. Some organizations are you know, it's not a right the right fit and they don't necessarily want their their agents being viewed by in every interaction, but it's it is a growing Trend and it does have its place especially with today's remote Workforce wage.
If I touch on that for a moment, the previous question was being asked about remote Workforce. And will that be kind of a a permanent thing? We're finding a lots of our customers for a couple of reasons. I bought several reasons are are looking at having a remote Workforce. Well after the pandemic ends and the reason is because they can cast They Now find with the technology they can observe monitor Track Performance and they're getting the productivity that they never imagined that they would out of a remote Workforce. You know, Brian's Point earlier was oh I never thought I'd see remote agents. Well, we've now proven it and customer finding the data is reflecting that they can get that productivity. And when you look at the remote Workforce, I can now cast a wider net. I don't need to hire within 30 miles 30 mile radius of my contact center. I can also get a higher educated Workforce because I'm able to hire people that may have had to stay at home previously for other personal reasons, but they now can be part of that Workforce. And so there's and I have the tools like I mentioned to be able to age.
And monitor them so lots of customers are finding when they go back to the way it was before very few. Their study is coming out right now with Statistics that you know, very few will go back to the way. It was feel completely. Stay remote. Most of them will have a have a combination or hybrid model. So we're looking forward to that as well. Great. Thank you. Thank you.
My next question is from Jeff with craig-hallum. Great. Thanks guys. Hey congrats, how many great quarter lots of love? I like the format very, I love the Captain Crunch in the background. That's good stuff. So just a couple for me. I guess guys one for you Dan the it's in the what-have-you-done-for-me-lately category. How long is it going to take to beat this deal size. Do you think this record deal size stands for the year? Obvious question. How many more hour are these in the body? Who are you put me on the spot? Without one? We we keep the last several quarters. We've we've pushed on the on the wall. You know, it's what is it February 22nd? I'm not going to I'm not going to make that prediction at this point in the quarter. But but you know, we've we've seen a pipeline that grows. I'll make a generic statement and that is when you go in and you sell significantly meaningful Global Enterprise that considers themselves having some of the most complex.
requirements and needs
Once you execute successfully within that Enterprise, there's going to be many more that are going to come to the table and say wow, if you can support them. I have confidence you can support me and that reference settling when you get up Market is so important and we've seen that with help of RSI Partners as well as the customers themselves being able to say. Yep. 5-9 executes that get it there helping me. I'm I'm extracting expected. So will there be continued momentum further further upmarket? Absolutely. I don't want to try to put a timing on the on beating the record though. Can you get us in the ballpark on on how many seats a deal like that might be dead within a range. I don't know. If you can kind of back into it with our typical, you know model of around $200 to see and then you add a few of the extra skew of Technologies and off, you know, for some of the larger organizations that do buy more and you can figure out where that falls it's it's actually hard for customers to estimate their concurrent usage when they purchase because their birth
They're looking at it with G. I never really had to worry about concurrency that you know, they worrying about overall licenses for every end-user. So it's it's some of that is is estimating at the front and then and then turning up as you go. Yeah makes sense different day last but if I could sneak it in Roland, you know, you got a question earlier on on competitive landscape, but I wanted to revisit it. Obviously the space is on file, customer engagement digital engagement digital transformation is a super strong space, you know of I is out talking about their move to the cloud and you talked about the Legacy guys that you're in there frequently displacing. I'm more interested in in both of you guys that are they're trying to sell contact center into the base. And then also Amazon twilio, you know, truly great numbers the other day Amazon throwing out some big numbers. I mean, there's a lot of room to play with these numbers, but I'm just kind of curious in the positioning like where you're seeing them, you know, just how everybody's carving out their relatives spaces for future dominance. Well, this is probably this is definitely an over-simplification but dead.
You cast members to be tend to be in the smaller end of the customer base, uh, you know RingCentral an eight by eight for example, and then you know Amazon tends to at least, you know, they're either they're both sort of the very very small, you know, less than five or ten agents and then very very large. So we're not running into Amazon that much and we don't run into the UK's vendors that much that's why when we talk about our competitors who we Face head off as those Pure Play Cloud contact center as a service companies and to remind you, you know, the the distribution of contact centers. It really follows a bell curve where you know, the fifty percent of the Dead Center seats are in these sort of mid-sized contact centers between fifty to Five Hundred seats. And you know, we we play, you know, from sort of call it 225 seats at the low end all the way up into the you know into that fifty to Five Hundred space and Beyond now, obviously you're seeing that traction as we're getting up into the top end of the market but instead of it is there is plenty of Market to go after them.
In in in the segment without actually bumping into some of the competitors that you mentioned. Yeah. Well fair enough congrats guys. This is very
Thank you. Thank you.
Calling for just one more question. So our last question is going to come from Matt van Fleet. Btig.
Hi guys, congrats on the quarter you mentioned in the prepared remarks a growing ecosystem of of Si Partners, but wanted to dig in a little bit there and and kind of Thursday. What what do you feel like some of the biggest Catalyst of them increasingly joining, uh and joining The Fray and and then also as you look at kind of an omni-channel and and especially the digital change inclusion, you know, is that something that that customers are driving. Are you educating them about that and are those that kind of deals where the SI partners are really getting involved in, you know bringing in Communications from a multitude of different areas of that the organization. So awesome question and I'll tell you right now when you look at the S eyes they'd been in this business for decades. So they've been slumping companies with their with their contact center purchases and applying technology and Consulting with how to apply technology to solve the customer experience. They just done it historically with birth.
The space Legacy vendors and you know, they had built their practice around that we kind of cracked the code for the first time with deployed several years ago and said hey time to start off with Cloud. When did they run out and lead with Cloud on every deal know but we were kind of first first mover with them to build a practice around that and as we saw momentum come it really comes from customers. It's the customers saying no, I want to consider Cloud you bring me a cloud bring the portfolio of cloud options. And so for the S eyes they had to respond to their clients and really come to us and say okay it's time. So when you look at Accenture and IBM and slalom and and and do another's they they really had to build their practice around it. Not not because they just woke up one day and made a decision it was because of customers were driving and that's actually the same. It's very analogous to the to the channels right when you look at the channels that distributed Avaya and Cisco Genesis for years. Okay. They have the same.
Thing happen there, which is hey, we're going to sell this as long as we can as long as our customers will accept it and then customers started saying no. No, I need to innovate. I need to be in the cloud. And so they had to bring a cloud offer. So that's why we're seeing increased momentum in both of those areas. So great question. I thank you. Yep.
All right, and that does it for all of the questions you have time for today? I'm going to give the conference back over to Ron for some closing remarks. All right. Thank you so much. Well, thanks everybody for joining us a call today and for all the great questions, you know off the Record Financial results for Q4 and twenty20 should really be viewed simply as the outcome and a reflection of the fact that we're doing a terrific job of making customers happy and that we're making progress on our mission to help them re-imagined customer service and the integration of influence as well has given us a leadership position in this expanding Tam opportunity for Automation and instead of the prepared remarks, but I'll say it again. This progress is a direct reflection of the hard work and the efforts of our incredible employees who deserve all the credit for the performer like you have seen 459, so thanks to our employees and thanks to all of you for joining today. We'll see you next quarter. Thank you.