Five9 is buying contact center intelligence startup Level AI after it posted a narrow profit miss

Contact center company Five9 Inc. flexed its acquisition muscles today as it announced a $325 million deal to purchase an artificial intelligence-based competitor called Level AI during the release of its third-quarter financial results.

The transaction is expected to close in the fourth quarter, subject to customary closing conditions. Five9 is a leader in the cloud contact center software industry, selling tools and services that companies use to manage their customer service interactions. The web-based software includes traditional phone calls, video calls, email, messaging, social media and other channels.

Level AI is the developer of a contact center and customer experience intelligence platform that uses artificial intelligence to support human agents on calls and analyze, evaluate and improve their interactions with the callers they serve. The platform is designed to listen to customer service agent calls so that it can consistently provide real-time guidance and support workflow automation. The insights generated can also be used to support agent coaching.

Level AI is also developing autonomous AI agents that can automate some simpler customer requests and background operational tasks, allowing human agents to focus on more complex customer issues. “Level AI’s AI applications help companies improve agent performance, automate more customer interactions across voice and digital channels, and turn conversations into insights that the entire organization can use,” Five9 said in a blog post announcing the deal. “Its applications are now in production with enterprise customers and handle more than 1 billion customer interactions per year.”

Five9 said it intends to continue offering Level AI’s applications as standalone tools for companies that do not want to move their on-premises contact center operations to the cloud, and also for those that use other cloud contact center platforms. However, it also plans to integrate the startup’s tools into its Genius CX platform.

“As AI reshapes the customer experience landscape, we believe the addition of Level AI strengthens our competitive position, expands the customers we can serve, and deepens the AI ​​talent behind our continuous innovation,” said Amit Mathradas, CEO of Five9.

Ashish Nagar, founder and CEO of Level AI, said that by joining Five9, his company will be able to roll out its applications and native AI models for customer service in thousands of new contact centers around the world while continuing to support its existing customers.

Investors don’t appear to have shared the CEOs’ enthusiasm for the deal, however, with Five9 shares falling more than 23% in late trading after the deal was announced. This may be due to the acquisition costs. The $325 million in cash expenses represents nearly half of Five9’s current cash and marketable investments, which totaled $738 million at the end of the third quarter.

Five9’s results weren’t that bad. The company reported adjusted earnings of 82 cents per share on revenue of $323.3 million, beating Wall Street’s forecast of 80 cents per share in profit and $318.3 million in revenue. However, it’s worth noting that the company’s full-year guidance excludes any contributions from the upcoming deal and its value therefore depends on Five9’s ability to quickly integrate Level AI’s technology.

For the current quarter, Five9 expects earnings of between 88 and 92 cents per share on revenue of $328 million to $334 million. But that guidance was mixed. Wall Street is aiming for significantly higher earnings of 99 cents per share and revenue of $330.7 million.

For the full year, Five9 expects earnings of $3.17 to $3.21 per share on total revenue of $1.27 billion. Wall Street wants higher earnings of $3.26 per share on similar sales.

Image: Five9