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Rowan Trollope, Five9 CEO, joins Yahoo Finance's Alexis Christoforous and Zack Guzman to discuss the software company's solid third-quarter earnings report and its growth during the COVID-19 pandemic.
ZACK GUZMAN: Third quarter earnings season is rolling on. I want to highlight a mover we got here in Five9 after they reported earnings there that were quite impressive. Revenue for the third quarter of 2020 increasing 34% to a record $112.1 million, that compared to just above $83 million in the third quarter of 2019.
The company is a provider of cloud contact centered software and has enjoyed the shifts here in 2020 to more remote working and remote contact for a lot of these companies interacting with customers. And here to talk about that with us is the CEO of Five9. Rowan Trollope joins us now, along with Yahoo Finance's Alexis Christoforous.
And Rowan, appreciate you coming on to chat about the quarter. Talk to me about what you saw in terms of trends in that acceleration for your guys' cloud contact software here in 2020. Are you seeing that continue to accelerate?
ROWAN TROLLOPE: Yes, well, clearly, we've accelerated our growth rate. And that's off of the back of work that our employees have been doing for the last year candidly as we continue to sell upmarket to larger and larger enterprises, as well as the international expansion that we've been laying the groundwork for, for quite some time.
So we've been primarily a US company, but have been expanding internationally. So that's contributing to growth. We also have to credit our partners. We signed a historic deal, for us anyways, with AT&T, powering their AT&T cloud contact center. And then we've had some really, really solid relationships with systems integrators, namely companies like Deloitte, for example, who've been great for us.
So yeah, it's been good, and I'd say the pandemic was an unexpected boost to a couple of trends that were driving our market, cloud transformation as well as digital transformation. And the pandemic has really just been an accelerator there as customers look for more modern technology to improve their customer experience that they can deliver to their end users.
ALEXIS CHRISTOFOROUS: Rowan, you touched on those partnerships. You mentioned Deloitte. I know you have a partnership with AT&T. I want to get to that in a minute. But your company is going on a bit of a buying spree. You just made your third acquisition in a year. You bought Inference Solutions. It's a 15-year-old startup based in San Francisco, for a little under $115 million.
And they work with AI, a virtual assistant technology for these web-based cloud centers. Tell me how that fits into the overall strategy. What kind of innovation might we see in these call centers?
ROWAN TROLLOPE: Yes, the Inference acquisition is strategic for us. We have had a partnership within Inference. And what we have been seeing, Alexis, was really strong interest from our customers around automation.
So, frankly, beginning in the pandemic, what we started to see was a rise in the volume of contacts into contact centers as, you know, sort of naturally, as customers were unable to-- as our customers were unable to engage in environments like retail as their retail shops closed. So they had to drive more towards e-commerce and more online. And that makes the contact center really the front door, the virtual front door, for your business. So it dramatically has increased the amount of volume and expectations of that contact center.
And but at the same time, they weren't able to hire people fast enough. So there is an interest these days from customers on, how can I automate the work that I used to sort of require humans to do? Can I start to automate some of those routine tasks? And, frankly, can I help my end customers get a better self-service experience?
And the technology has really risen to meet this occasion. And Inference is the best example. They're the market leader in interactive virtual assistants. And that's the next generation of what has been in this space of technology called IVR, which is that old touchtone thing where you had to push 1 and push 2 for this and that. Now you can speak naturally to a virtual agent. And you can get self-service and get the answers that you want.
And so it's a much more pleasant experience. And it has the opportunity to drive significant cost savings to businesses. So both helping deliver a better experience for the end user and also making that more affordable for businesses to deliver.
And that's what Inference is all about. Really, really exciting acquisition, and they're the market leader, as I said. And we see a big transformation of this industry sort of powered on the back of AI and technology, like what's delivered from Inference.
ALEXIS CHRISTOFOROUS: You know, I think people hear this, and they go, uh-oh, that means jobs. Everything is going automated. Is that what this means? Will we have fewer people in these call centers because of technology like this? And also, if I may, a two-parter, when might this acquisition have a material impact on results at Five9?
ROWAN TROLLOPE: Sure, I'll take the second part first. You know, we provided our normal-- well, not guidance but steering for 2021. And so we've shared a little bit of that. So there will be an overall impact on the business in 2021 upside to revenue. So that's-- we've shared that detail. It's two percentage points, is what we shared.
And as for the first question about jobs, I actually see there's two factors going on here as it relates to jobs. And my first job when I was 18 years old, Alexis, was working in a call center. And I can tell you that when you take, you know, let's say, 100 calls a week, which is what I took at the time, and 90 of those calls are the same calls you've taken over and over and over and over again, it's mind numbing.
And the biggest cost for contact centers today is turnover. You can imagine, if you do one of these jobs, it doesn't take long before you burn out, dealing with the repetitive questions. So the advantage of AI and these conversational experiences is that you can actually take the load off of the human beings doing work that, frankly, is very difficult and mind numbing.
And so we actually think that that can reduce agent turnover and make the contact center a better place to be. Now, you know, AI can't do everything that a human can do. Humans are incredible at dealing with complexity and empathy and all kinds of stuff.
But if you're an end customer and you really just want the answer to a simple question or you just want to do something relatively straightforward, self-service powered by a conversational AI is really the way to go. And it improves both sides of the equation. So that's why we're so excited about this transformation.
ZACK GUZMAN: Yeah, I mean, in 2020, it's hard to find a job here that's not one of those ones that burns you out every day that you show up, but interesting to see it all play out. Rowan Trollope, I appreciate you joining us, the CEO of Five9, along with Yahoo Finance's Alexis Christoforous. Thanks again.