We’ve got 250 projects that we’re working on for a couple of reasons. One, we talked about pivoting and selling more software when the seat tabs were slowing that the growth was slowing and we’ve done that very effectively. Secondly, as we get in and we find there’s many more use cases than we first started out when — a salesperson isn’t going to delay their sale to keep adding more and more use cases. They’re going to go close the deal, if the customer is ready. And so we get a lot of that out. And then thirdly, if you look at the actual applications themselves they’ve matured. We talked about Agent Assist. We talked about Agent Assist two or three years ago. Well today, it includes something called summaries. I can take the transcription, I can summarize it in about three seconds.
I can deliver that summary back. I can pump it straight into the CRM. The agent tomorrow can look at that summary of what happened in today’s call and make better judgment and get right to the point very much quicker. So and it cuts back on that wrap-up time for the agent. So we’re incorporating this AI again an unprecedented level of momentum and interest in the whole suite. And it’s both for net new where we’re getting a great attach rate, but it’s really the installed base that’s starting to really see an appetite for doing more than just dipping their toe in the water as we’ve talked about before.
Operator: Moving on to Michael Turrin with Wells Fargo.
Michael Turrin: Hey, great. I appreciate you taking the question. Nice to see everyone. Barry, you had some commentary on the retention rate. I know, we’ve talked about it in the past. It’s 110%. And it sounded like you have some confidence that can maybe bounce back at some point in 2024. So just want to understand the trajectory a bit better, if there are certain milestones you’re looking for how much of this is lingering impact from prior periods and just also gauge confidence and the potential for that metric to get back up into the 120s over time and the drivers there?
Barry Zwarenstein: So Mike, I don’t want to take issue with the phraseology, but you said bounce back. They’re not bouncing yet. This is an LTM number moves slowly.
Michael Turrin: Slowly gradually. And higher.
Barry Zwarenstein: Yes, thank you. So — and really in the near term comes down to two things. It comes down to a the macro just staying middling neither going much better or much worse a little bit better a little worse. That’s all we’re asking for because then we get the easier compare. And the other thing that’s important is that some of the longer term — the health care company for example is a good example. They start granting and that gives us a very nice tailwind. Because they’re big and they start from a tiny base. So it’s a disproportionate impact. You with me?
Michael Turrin: Yes.
Barry Zwarenstein: Okay. Then on long term the basic fundamental reason that we have confidence around reaching the high 120s is the fact that these $1 million-plus customers which are growing every quarter that we don’t give you the numbers in every year which is already more than 50% of recurring revenue as Mike mentioned in his remarks. Those have an appreciably higher dollar-based retention rate. Which makes sense doesn’t it? I mean, it’s a big company certainly grow organically but there were so many acquisitions they buy new stuff et cetera. And that mix impact from that fast-growing $1 million-plus which is much faster than the rest of the business in dollars and — yes in dollars is what gives us that confidence.
Michael Turrin: Thank you.
Barry Zwarenstein: Sure. Thanks, Michael.
Operator: We have time for one additional question which will come from Will Power with Baird.
Q – Will Power: Great. Good afternoon. Thanks for the comments on our survey. We spend a lot of time on that.
Barry Zwarenstein: Happy to help.
Q – Will Power: Yes. Well the AI commentary did look good. You’re, right. Let me ask you about the strategic deal pipeline comments doubling year-over-year. I mean, it sounds like you continue to see very good momentum there. And I know you’ve kind of touched on that but perhaps, dig into kind of the key drivers of that? And how do we think about kind of the confidence level and converting that? How do we think about conversion rates going forward versus what you’ve seen? I mean anything to kind of keep in mind on that front?
Dan Burkland: Yes. If I go back two to three years in time, there were some large enterprises that would take meetings. They were just checking what was out there and they had really no interest and no immediate need to move to the cloud. Two factors are happening two main drivers. One is the legacy platforms, that they’re using today — and many of these large companies have all of them right? They have all three of the major platforms the Avaya, Cisco, Genesis. And all of them are either end of lifing or being told they’re not going to further develop on those. So, the sign is there that they’ve got to get off those platforms. That’s, one. I’ll give three factors. Second, we had to demonstrate in the CCaaS world and particularly Five9 has demonstrated that we can scale and deliver the reliability that they absolutely require table sticks, before they’ll even consider moving.
And we’ve done that and proven it because of those two I’ll say, two early adopters. They were like two that made decisions far before anyone else. And I mentioned, this in the last meeting. The others have now taken notice. If it’s good enough for them, it must be good enough for us. And we’re being pushed our legacy providers saying they’re end of lifing, we’re being pulled by this AI and automation innovation that’s coming about. And they realize the only way to take advantage of that is to move to the cloud. And so that’s why the RFP volume is up. That’s why even the ones that haven’t issued RFPs yet are taking meetings to say “Help, how do we start this process?” They’re turning to the Sis, they’re turning to us because they recognize “Oh no, this process may take us a year or two to get through.” And they’re almost feeling like there’s pressure there to do it quickly, because they want to take advantage of AI and automation and it may take them a year or two just to get through a decision process and start to implement.
So, that’s why we’re seeing such great momentum.
Mike Burkland: And Will I know Dan, won’t brag so I would brag for him. We’ve got the best go-to-market team in this industry by far. And so when you think about pipeline doubling and our ability to go convert that and win business, I have so much confidence in this team and it’s a team that has actually grown so significantly over the years, from our competitors. There are so many people that want to be on the Five9 team, quite frankly. So we’re able to track the best and brightest, on this team and they are just superstar. So I have no doubt that they’re going to convert, way more than our fair share of that pipeline into wins for Five9. And you can see it in, our win rates. So I’ll leave it at that.
Q – Will Power: Great. Thank you.
Mike Burkland: Thanks, Will.
Operator: And again this does conclude today’s Q&A session. Mike I’ll turn it back to you for closing comments.
Mike Burkland: Yes. Thank you very much for joining us today. I’ll just say this. I can — so excited about the future for Five9. We have seen this dramatic inflection quite frankly, we’ve been jog talking about in terms of large enterprises, adopting cloud shifting off of these legacy on-premise solutions. And I think the most exciting metric that I talked about today, is the leading indicator the leading indicator and that is the RFP flow. So, 66% growth in RFPs for strategic and enterprise 21% growth sequentially. So that is a very good leading indicator for the inflection in our business opportunity. Thanks for joining.
