Five9, Inc. (FIVN) Earnings Call Transcript & Summary

Hi, everyone. Good afternoon or good morning, depending what timezone everyone is in. Thanks for joining us on day 3 of our annual Tech & Media Conference. My name is Scott Berg. I lead our enterprise software and SaaS research efforts here at Needham, for those who are not familiar with myself. Today with us, we have one of my favorite companies to talk about, Five9. We have the company's CEO, Rowan Trollope; and the company's CFO, Barry Zwarenstein. Before we get started, I think Barry wants to make a couple Of comments.

Yes. So just before we start, I want to remind everyone, discussion today will include forward-looking statements concerning events and trend that may affect the industry or the company and projections concerning our future operations. Actual results may be materially different from what we discuss here. Please refer to our recent 10-K and 10-Q for detailed information about factors that could cause our results to differ.

Excellent. From a bit of housekeeping, we will take audience Q&A at the end of our fireside chat here. [Operator Instructions] I don't think I see anyone on here that really doesn't know who Five9 is, but how about give them the real quick brief overview in case someone is not familiar.

Sure. We make software for -- thanks, Scott. Thanks for having us again, of course. We -- Five9 is a contact center software company. We make contact center software, and we deliver it as a service, born in the cloud software company. What is a contact center software? Well, it's everything that a business needs to engage with their customers, whether that's by phone or by e-mail or by messaging, SMS, web-based chat and so on. And we focus a lot on automation on our software platform. So not only do we handle the basics of communications with your customers and managing the agents or people that you have involved, but also we focus a lot on automation these days, which is having less people and having more automation to deliver the engagements with your customers at scale. So that's who we are. We're about a $500 million revenue company and growing quickly and have been around for about 20 years but public for just over 5 years or so.

All right. Let's start with that growing quickly part. Lots of conversations that I've had in the last 2 weeks about your quarter results. Best revenue growth rate, at least since you've been public. Besides just standard strong operations, what can you point to particularly in the business? It's not just this quarter, it's really a multiyear run that's driven revenue growth. I mean I remember when you guys -- when the company went public, we were part of that. And since, I've been covering it, it was a mid-20s growth profile, plus or minus, moving into the 30s. And you had 45% this last quarter. What are kind of the drivers there that's driving that? And is this kind of a new level we can expect for a while?

Well, I'll let Barry comment on the expectations for the future, which we've shared in our guidance. However, I would say, see, he's trained me well, Scott.

I see that. That's obvious.

The factors driving it are really 2 things. Number one is the market. And I think that customer experience has been on this long-term uptrend in terms of importance for large businesses and -- well, businesses large and small, really, who are just recognizing that, especially with the new -- the sort of generational shift towards millennial -- from a consumer perspective towards millennials and Gen Z now, there's a strong preference to have a different kind of an experience when you engage with a company that you're doing business with from a customer service perspective. And that's not only sort of preferring things like digital channels, but it's also just a raised expectations in terms of the kind of service that the new consumer expects. And so businesses really all around the world have said, "okay, we got to up our game on customer experience." And so it's been rising in priority on the corporate sort of priority stack for many businesses. And so that's number one. And sometimes that shows up as sort of digital transformation. Sometimes it shows up as customer experience transformation. But whatever it is, it's ultimately business is just saying, "we've got to do a way better job at engaging with our customers." So that's the biggest trend driving this market. The second trend that's driving it is the shift from premises to cloud. So all of these legacy on-premises systems for now 2 decades, all of the software and systems that power businesses have been transitioning to the cloud. And the communications part of that software stack, things like meetings and telephony and contact center, are really just hitting their stride now in a sense. So we had the -- what I think about as wave 1, which was the non-realtime systems like the sales forces and HR systems and payroll and financial back-ends and so on, all move to the cloud. And now you're in this wave where customers are upgrading their communications platforms. So you have those 2 trends, CX being more important and premises moving to cloud. For us, the second big thing driving our growth is execution. The team has been executing really well across not only product innovation but also sales and go-to-market. And so you have essentially a confluence of factors coming together to drive this accelerating growth story that you pointed out has been happening essentially since the company went public.

I guess we don't -- we know where the financial guidance is. I think the second part of the question was maybe not necessarily about the revenue numbers there. How about those drivers, the market. Are they making this sustainable?

I think that they are. And the first driver of CX being more important is only -- I mean is only, I think, continuing to increase. I don't see that slowing down anytime. So I don't think we're going to get to 2022 and go like, thank God all that stuff is behind us. Now we can get back to telephony support. That's just not going to happen. And I don't think companies are going to undigitize. So that's a -- that's just a monotonic increase in terms of importance. I think right now, it has a lot of focus. I think that focus is going to continue. It's the new -- if you look at all the reports, customer experience and, more broadly, just the total experience that a company delivers has become the #1 thing that businesses think about. And so I don't see that going backwards. I see that as -- and then I think the second thing is on the cloud transformation, that's certainly not slowing down. I think we've -- we're in the first inning still. If you look at cloud adoption in contact center, it's still less than 15%. So we're in that first inning of transformation towards the cloud. So I see a decade or so of transformation as we move to the cloud. And then the second driver that I think is not slowing down, in fact, is accelerating. So those first 2 are steady over the next decade. The next one is accelerating, and that's the demand for automation. Because what customers have realized is in order to do the first one to get a better customer experience, you can't just go spend a lot more money. You've got to look for areas of savings and efficiency in order to invest more because they're not going to say, "Well, we're going to break our whole P&L and go from 3% spend on customer service to 7% spend." They're saying, "How can you help me be more efficient so that I can make those investments?" And that's where our product has really come into its own in the last year because we are the -- one of the market leaders in making contact center automation. So this is really about taking the high-volume but low-value tasks that your contact center does with human beings today and automating a new software to do it instead. And that's been the biggest, I think, new part of the story in the last year. I mean you know, Scott, we've been talking about this for years. But in the last year, it's really started to get traction. So at our Financial Analyst Day, we shared our goals. And fast forward 1.5 years almost, I think it's been since our Financial Analyst Day, we've not only built out a technology platform organically and launched them and are selling it, but we also did an acquisition of Inference Technologies. That's now part of the portfolio. And that's the thing that's actually driving a lot of these big deals we've been sharing. So the $14 million ARR deal we shared in our last quarterly earnings call, we led with that automation portfolio. And it was one of the things that convinced that customer that was the way to go. In fact, for that customer who's -- with that contract going to pay us $14 million a year, they looked at the lifetime savings 5 years sort of horizon savings they would get from using Five9, and particularly our automation technologies and told us they thought they could save $59 million over the period -- over that 5-year period. So there's very significant savings, particularly for large companies. And that trend is accelerating right now.

Yes. I can still see the Minecraft chart from the Analyst Day that Barry put together. Good chart. But I think you bring up an important component there is -- I've read a lot on the CX space over the last couple of years. I cover several companies in there. And it's interesting how that theme, which has been around for 10, 15, 20 years in a different light, has really, I think, come into its own the last couple 3 years. And the big driver of that, I believe, is the newer, more modern functionality that's been brought to the market. And you mentioned you guys have been a leader in that, and you certainly have around the automation products. I see it in my work. We're obviously seeing it in the results. But if you were to think about that new automation, the market's obviously early, but the deals that you signed maybe over the last couple 3 quarters, how much of those deals really comprise this -- some of this newer automation? Just trying to understand maybe how much that's truly driving some of the increases we're seeing.

I'll give you a couple piece of information. The first one is essentially all of our large deals include our IVA. The customers have looked at that as a core driver for why they're moving onto our platform. And we've integrated it now such that it's tied deeply into the platform. So -- and we're continuing to do that through the balance of this year. But it's sort of -- that's the lead dog, if you will, when it comes to helping customers with this transformation. We put the IVA really right out at the front. So it's in essentially all of the large deals that I've looked at recently. And we're not yet through the deployment phase with those large deals. So we now have some of the larger customers that we were sort of closing in the mid part of last year that are now going live. Obviously, the company we acquired, Inference, already had some large referenceable customers. So we've got the sort of the proof in the pudding on that front. But we're now starting to deploy some of these larger customers that we closed in the middle part of last year are actually now going live on the technology. So we're starting to get more and more of those examples from that perspective. But that's just the large deals. Across the rest of the base, I can tell you that we put together some projections of this technology and what we thought it could do in the first year. And we are handily coming in ahead of those projections. So the demand has been stronger than we had anticipated when we created the acquisition case. And if you've done acquisitions before you know that, that's usually not the case. So you usually are too optimistic about these things upfront, and they tend to underperform. This is the opposite. We were actually too conservative, and the technology is overperforming to our expectations.

Got it. Last thing on the quarter that I think probably caught most by surprise, that have been following the story for a while, has been the commercial segment, and it made a really large comeback in the first quarter. Now you all made some changes there, I think, about 18 months or so ago, roughly a new leader. But the segment recorded over 20% revenue growth in the quarter, which is pretty amazing given there was a high single digits, 10% number, for a long time. But I guess when you think about growth there, is it purely just operational? Or is there something in your renewed partner strategy with maybe like an AT&T or CDW that's just helping drive increased deal flow there?

Definitely the -- well, the more broad investment in channel has been helping that team. So in terms of deal flow, lead flow, that's absolutely been a big part of the shift. The other part of the shift was really targeting a different kind of customer profile for who we're going to go after. So we did a very detailed analysis of the churn in the business, which was really one of the bigger factors, I think, affecting the growth from a net -- on a net basis and determined that there was a class of customers who we were signing up that were sort of regularly churning out of the base. And these were folks that were buying the product for a one-off use case, like, oh, I need to run a marketing campaign or an outbound sort of activity that was going to be time-based. And so we would land -- spend a bunch of money to land the customer, and then they would reliably turn out of the base if they fit that profile. So we actively moved away from seeking those customers out and moved to the ones with a longer and higher total lifetime value and a lower sort of anticipated churn. So that shift in terms of who we're targeting has really helped on the churn side, which is obviously having an effect on the net dollars that, that business is driving. So that's one of the factors. I think also the changes that we made from a management perspective, but that -- those changes were all really lined up kind of the strategy and trying to find those customers -- regardless of size, in the commercial sector, less than 50 seats, less than 25 seats, these customers that were really focused on the why -- the reason they're buying this product is because they wanted to drive up an improved customer experience sort of profile for their customers. And that's kind of the shift in strategy. And it's just done, again, there better than we had expected.

And I think from a more thematic standpoint, one thing that you didn't mention about in some of the recent business momentum has been kind of the slow trend but accelerating trend of a contact center moving into the front door of a business. Obviously, for decades, it's been very strong about supporting customers as they call in and have an issue. But I know you and I have discussed moving into the front office. Your EVP of Product Management, Anand, actually recently blogged how you are supporting this. And I found it a lot interesting because that commentary really suggests that there's, I think, even more demand there than what I had thought. How is that kind of driving for the business today? And assuming that's here to stay, does that become a larger and larger mix going forward?

The commentary that we shared around front door/backdoor, this idea of the contact center emerging as the new front door, what drove that -- what we saw in our customers was if you go sort of pre-pandemic -- and in many sort of, let's call them, legacy businesses, traditional businesses, you really don't want your customer to contact you because if they do, there's something wrong. And then it's just a cost, and it just hits your bottom line. So you want to make your product or service as good as you can and avoid ever really having to deal with customer service issues. So it was kind of something that wasn't always top of mind for business leaders. And if there was a rise in costs on that front, they'd sort of look to solve that problem in a different way, like can we solve this at the front end because that would be sort of typically more efficient. But in the pandemic, I think what became very obvious for a lot of those customers is, hey, if you can't serve your customer in person, the only way for you to engage with your customer is through your website, through your digital channels and through your contact center. So the contact center moved front and center. So for our customers, we just saw this firsthand. They were previous -- retailers and health care were 2 great examples where all of a sudden, foot traffic went down to 0, and every engagement had to move to a digital experience. And that pushed a lot of traffic in through the contact center and became the primary front door for those companies. And that's the part that we don't really see reverting. I think a lot of company's eyes have been open. So just as a simple example here, I've been to the doctor 4 or 5 times in the last year. There's nothing wrong, but I have been to the doctor a few times. And they're now giving me the option: hey, would you like your next appointment to be digital, to be a Zoom meeting or a video meeting? The answer on my part, of course, I do, right? And so any time I can now use my telemedicine -- I can use telemedicine as opposed to going in person, I'm going to do that. So there's this I think one time -- there's this like -- the pandemic drove many businesses to be forced to adapt to leveraging digital channels and the contact center as their front door of engagement way more than they ever would have before. And they basically said, "Wow. This is awesome. We're not going back. We really want to drive more traffic this way." It's more efficient. It's better for customers. They like it better. So across a bunch of industries, that's what we've seen happen. And no looking back at this point.

Has the pandemic effectively shut the door on any new on-premise contact center implementations?

I've been saying for a while that, in fact, the last -- I was thinking about this the other day, Scott. For the last 15 years, since cloud software became a thing, I have -- like a big part of my job has been convincing enterprise buyers that the cloud is the way to go. And in the beginning of that 15-year part of my life -- it has now come to an end. But in the beginning, salespeople would tell me like, don't -- Rowan, like I know you're passionate about this cloud stuff, but this customer of mine, just please don't mention the C word, cloud. And they don't want to hear it. They're really tied to their on-premises stuff. And that -- initially, that was like most conversations. It was like just get them to renew their existing on-prem stuff. They don't want to go to the cloud. They don't believe in it. 15 years later, and finally, I think the pandemic was the straw that broke the camel's back on this front. So the answer -- short answer to your question is yes. I think it's -- just to put an end to this. I'm not having those conversations at all. I mean -- and as recently as when I joined Five9 3 years ago, I was still having those is cloud-ready for your business in some of the larger companies, financial services and so on? And at this point, I think we're past that. The evangelism phase is over. I think there's going to be a long tail of customers who will still sort of hug those boxes for as long as they can. And you've got the existing incumbents who sell on-premises software who recognize that the cloud is the future, but they're helping their customers move at their pace, a slower pace and saying, "Look, when you're ready, we'll have the cloud for you. But just keep renewing that on-prem stuff for a little while long -- for as long as you want, really, and then we'll get you to the cloud." Many companies have said, we're just going to stop -- we're going to start -- like take Atlassian as a one, for example, like they're no longer delivering new capabilities as far as I understand, to their on-premises customers. All the investment is going to cloud. Genesys has -- I don't know that they've been that extreme, but they have said something similar, like most of the investment is going on cloud. So customers see that and they're like, "Okay. We get it. The writing's on the wall. Cloud is the future." So I think we are past that, and I think the pandemic did its part to help accelerate the death of prem.

Yes. I found it interesting a year ago when I was just working the space. And in the month of April, obviously, just 30 days after all this hit, the pipeline seemed to drive like that for the perpetual. Everything [ you spoke about ] was cloud.

In our space, it was particularly acute because premises-based contact centers are really not easy to operate in a remote work environment, whereas cloud was just perfectly built for this. I mean you think about Five9's user experience. Your agents just log into a web browser. So for our customers, it was very -- it was kind of a nonevent. They just said, "well, your agents are going to go home. What do they need?" They need their computer and an Internet connection and maybe a USB headset. So 3 things. Many -- like that's something that most people have at home these days. So what, they took their headset home and maybe they took a laptop. That was much, much easier than the on-prem world, where it was like -- think about a legacy contact center with literally phones on desks. Moving that to a work-from-home environment is a real heavy lift, if it's even possible at all in many scenarios. So I think that was -- it was so acute -- that part of it was very acute. And I think people saw it and said, "Wow. Like let's not even mess with this prem stuff anymore."

Well, you can solve that problem by installing a PBX in every individual's home.

Great idea.

Exactly. At your customer conference, Rowan, you had highlighted a chart on contact center minutes per agent had effectively doubled for like the first 5 or 6 months coming out of it. And the chart really struck me as interesting for a variety of reasons. And I know I asked this question in January, but I was asking it in a different way. Is -- what are you seeing today as the economy is starting to reopen a little bit around that usage? And I don't expect that doubling in minutes to be sustainable, but has it taken a step-up function that's probably sustainable at some level?

That is how it feels to us. The actual -- it wasn't agent minutes that stepped up. It was just minutes overall into the contact center. Just think total volume. What happened in the beginning was not just equated the longer hold times. I mean you might have -- I certainly experienced this, which was I needed to cancel some flights or something. And it was like, okay, our hold times are insane right now because businesses couldn't staff up just fast enough to keep up with the increased traffic and demand. We haven't seen a return to the previous levels. I think businesses have accepted this new higher level of traffic into their contact center. But there was an initial spike, I think, just related specifically to cancellations and hotel changes and this, that and other thing. But I think we're now at a place where we've seen that kind of move through the system, and the business is continuing to accelerate at the new higher level really.

Okay. I think it's interesting. So -- and I know you and I have been talking the kind of the omnichannel experience for customers for quite some time now. And it's not a new concept for Five9 because you've had the multichannel approach built into the platform for a while. But you've had a well-known, I will call, messaging software company recently talked about getting into voice for the -- needing to get into voice, I should say, because of this demand. Does this help validate kind of what you're seeing for the last several years, voice is certainly not dead?

What we see with customers is a desire to go digital first wherever possible but also a recognition that anyone who is telling that company before that you could just go digital-only has basically been totally discredited at this point. And so the fact that said well-known messaging company is now admitting after years of saying voice is not important but they're going to get into voice, I think is a pretty clear admission that they were wrong and that you need really to have all of the channels. And what we've differentiated on, I think, very clearly in the minds of customers is let your customer -- like in the minds of our customers, right, let the end user decide what channel they want to use. So if they want to come to our website and message an agent or, in many cases, a bot, right, to get sort of try to triage that question or that issue right upfront, that's great. But you've probably experienced this. I know I have. Like often the bots or even the humans on the chat, it ends up being slower and you might want to escalate to a voice conversation. So what our value is, is sort of natively bringing a seamless sort of palette of connectivity modes that allow for an end user to choose and to seamlessly move from one to the other or even to have them going at the same time. So for example, I might be very, very frustrated about my Mother's Day flowers didn't -- not showing up, true story. I'm not going to wait on -- send a message and maybe not get a response or back and forth. I'm on the horn right away. Like I know I'm going to get in trouble with mom, which I did. And so I'm on the horn with them, but I also was texting at the same time. Okay. Send me the link to the delivery man, where he is on the map, and they're able to do that seamlessly. So Five9 is a great platform for that. We have one of the largest flower companies, in fact, using our national flower company delivery companies on our platform. And this is part of the value that they add is you get all the channels all at the same time. So yes, I think in hindsight, for some of these folks that have been thinking about it as a one-size-fits-all for one channel, that's not the case. You need to have all the channels but, most importantly, they need to be seamlessly -- provide all those channels seamlessly to your end customers because that's ultimately what they want at this point.

All right. And as a reminder, we have about 3 or 4 minutes left here in my prescripted questions, which I think I have about 12 left. So we'll just do one of them. [Operator Instructions] And if not, I'll just keep rolling. But I guess for my last one, unless a couple come in, Rowan, is around the automation component. I know we've talked a lot about the automation component, and you guys have certainly highlighted a lot during your conference -- your quarterly conference calls. But where are we in terms of a customer's ability to drive time to value on those? And there's multiple modules, so the answer is probably different. But I think of AI and I think of some of the technologies that are out there, they're learning technologies and may or may not be as effective on day 1 as they are in day 180. But if you have some of that new coming today to you versus maybe 6 years ago, how long does it take for them to actually be using those and driving some ROI in their environments?

Yes. So I'll start off by saying automation for us is a whole portfolio and a bunch of different technologies. And the one that, I guess, has gotten a lot of focus lately is the IVA, Intelligent Virtual Agent. And on that front, the real revolution here is that what used to take 2 years to deliver using legacy technologies like Nuance and statistical and grammatical speech legacy methods has now been really supplanted by machine learning, and it's very fast. So -- and then the second thing is that the company -- there's a -- machine learning is actually moving much faster. A lot of it is pretrained. So speech recognition doesn't have to be trained. It's good. It's not just good enough out of the box anymore. It's great out of the box. And so we're already -- we're able to leverage that and couple that with the work that the Inference team has done, which is a task library. So what they've done is taken a bunch of industry verticals, retail, financial services, insurance, health care, and they've created a pre-canned set of tasks that are relevant for the -- for each industry. So in retail, it'd be like order status, change of address, cancel order, blah, blah, blah. And all those tasks have been encoded based on a lot of interactions with customers in the retail segment. So customers get a jump start when they get on our platform. And the whole value proposition -- forgot about machine learning for a minute. The value proposition here is time to value. It's taking something that used to take 2 years and millions of dollars and allowing you to get there with -- in 2 months and hundreds of thousands of dollars. And so that's the shift, it's this order of magnitude shift in terms of time and money to get the value of the automation and the Intelligent Virtual Agents. So that's where we are. And so we're getting customers up to speed really fast, much faster than it was possible in the past. And that's why we're seeing the adoption that we're seeing.

Yes. That time to value is the more you can reduce that time, obviously, it's going to be easier to sell it. So that's why I asked the question. I have gotten a couple of questions from the audience. And I like this first one to ask is -- because it's a question I've had for years but worded differently. The question is as UC and CC bundled deals are gaining popularity, I guess, I would argue what end of the market spectrum on that. But the way the question is phrased gaining popularity, with Ring seeing a lot of success and 8 as well, 8x8, is there a scenario where it makes sense for you, Five9, to develop your own UCaaS solution?

Yes. Well, I think I would argue the premise of the question, which is that UC and CC deals are gaining popularity. I think it's actually the other way around. So for a long time -- historically, pre-cloud UC and CC were hard bundled. I mean, essentially, when you bought your phone system, your UC, it came with a contact center. The revolution that cloud introduced and has become more prevalent lately is you no longer need to have your phone company provide your contact center software. And so it's not -- by the way, it's not clear to me that -- that's not to say that the UC/CC bundle is not attractive. It is attractive and partially for the reason that many customers, that was their buying motion. The customer was just used to buying the phone and the contact center together. As the UC vendors moved to the cloud, many of them didn't have a great contact center offer. In fact, even today, we're in that state. I mean RingCentral doesn't own their own. They bundle. InContact -- 8x8 is the one example of the customer -- of a business that has both that are both organically developed, but they're actually not doing very -- I mean as far as I can tell, on the surface, anyways, it's not doing that well vis-a-vis Ring. And you also see this in Zoom now who doesn't have a contact center offer but bundles -- it doesn't bundle but partners with Five9 and others. Microsoft is in the same state. So I actually see less of that motion and more of the contact center line of business buyer, the contact center operations folks actually saying, "We want the best product for us. And if we no longer have to have that tied to our telephone system, that's a good thing." And you also have the fact that telephone systems are increasingly not that necessary for running your business. With all of your employees having mobile phones and all kinds of other modes of communication, like meetings like what we're doing right now, you're seeing telephony, in general, become less important to -- as a tool to run your business. And so the contact center, however, is quite the opposite. The contact center is becoming more important as a tool to operate your business for all the reasons we said earlier. Now all that being said, we're extremely agile when it comes to leveraging opportunities that are put in front of us. So we've been partnering with Zoom. We've been partnering with Microsoft. Anywhere there is a sale to be made, we want to be there. And even with RingCentral through the AT&T partnership, where AT&T has essentially bundled Five9 with RingCentral. And they're saying, "Look, you can get both of those from AT&T." And they're able to make that choice. So it's a valid and an important channel to go sell software to customers because of the existing sort of buying behaviors, but increasingly actually see the opposite happening where it's the unbundling that's driving the value in this market.

Right. We have time for one more for sure. We'll see about 2. But I like this question. I'll throw it in, the comments on these. The question is what ultimately should be the percentage of revenues coming from international? And how should we view it as growth rate? My comment on that is because you just want to get back on the Magic Quadrant, Gartner's Magic Quadrant, correct?

The driver here -- what should it ultimately be? 50-50, 60-40, international versus U.S. What are we at now? Single digits. So what does that spell? Opportunity -- big opportunity for Five9. And you can see that beginning to get traction with our -- EMEA bookings were up 300% year-over-year. Latin America bookings were up 250% year-over-year. So we're getting traction, and we're going to keep doubling down in that space. I just had one of my leaders, Scott Welch, who you know, actually is relocated to London and is establishing our service delivery capability there. So we're really all in on the European expansion right now and a lot of room to grow there, a lot of room.

And I think the natural follow-up to that is part of your go-to-market strategy that's maybe not as long as there is a lot of Europe, at least, and [ my team ] is this way too is my understanding is partner driven at the end of the day. And you've invested heavily in your partnership over the last 2 years, specifically to set the infrastructure to drive that. I think it takes some time to actually put the infrastructure together, but you're bearing the fruits, at least from what I hear over the last year, of finally laying that out in the team.

There's some unique complexity, particularly in Europe and -- but other countries, too. But in the European countries, sorry, which is the telco landscape is quite varied. In the U.S., you have a very large homogenous market, where telco deregulation has been done. That is not the case in many countries in Europe and elsewhere in the world. And so that requires a different approach from a partnering perspective. And so yes, we're looking at it and being responsive to each country and how we can be most successful. There's also the factors of local data residency issues and -- with regards to cloud. So the U.S. is somewhat of an outlier in the makeup of the market, the deregulation and the fact that it's one single homogenous large market. Therefore, partners help -- so I think partners are going to be in a more important part of that picture in the rest of the world, and we really have invested on that front. But we also have invested to generate the demand for those partners. So there's -- while there's an existing book of business and there's existing partners servicing all these countries, we also have to drive the demand in those regions. And so we actually do need to have direct sales forces and so on. So that's one of the things we've been staffing up, and it's one of the things that's been paying dividends in the most recent bookings numbers.

Well, with that, we are up against the clock. So we're going to have to end it. Rowan, Barry, I wanted to thank you so much for your time today, and thanks for helping us make the conference a success. And I certainly look forward to speaking with everyone on the call and both of you very soon.

It's an honor for us to be here. Thanks for having us, Scott.

Thanks a lot, Scott.