Five9 CEO Rowan Trollope tells Jim Cramer the cloud contact-center platform differs from Silicon Valley by pursuing disciplined growth: 28% quarterly revenue increase with a target of 20% EBITDA margin and cash-flow positivity. Lululemon can add hundreds of agents in an hour during Black Friday, while 90% of enterprises still run legacy systems as cloud adoption accelerates.
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After spending months lost in the wilderness, the cloud stocks have finally gotten their momentum back. But some of them held up the whole time, held up a lot better when the group was going down. Like Take Five Nine, the company that provides cloud-based software for contact centers, helping its clients improve customer engagement. The theme I've been focused on all week. Earlier this month, Five9, and that is F-I-V-E-9 like the number, reported a fantastic quarter and then followed it up with a bullish analyst day to the point where the stock is once again making new highs. Hey, could this thing have more room to run? Let's check in with Rowan Trollope. He is the CEO of Five9. Learn more about why his company's thriving in an environment where others are faltering. Mr. Trollope, welcome back to Mad Money. All right, Rowan, what is an intelligent What is a cloud contact center?
So it's software that's in the cloud. So it's a website where your age— businesses can have agents that talk to customers, and that's talking on the phone or say messaging on a website or SMS or whatever. So we're basically the pointy end of the spear when it comes to how a company connects with their customers.
So if I call someone at an organization that's yours, they can call up my record, know what I've done and where I've done it instead of being clueless and just putting me on hold.
Exactly. So as soon as you call in, they get the full 360 view of who you are and what you've bought and when you called last. And so they can treat you like a human being and not like a number.
All right. So we've got the holidays coming up, got Black Friday coming up. We've got a lot of places where there's a lot of calls. Yeah, typically we're ready to be on hold, but we'll go to another place now. How about if we pick up an outfit that uses Five9?
Yeah, exactly. So Black Friday, Cyber Monday. Huge spikes in retail. And cloud is perfectly suited to these kind of environments where you have massive call volume spikes. So Lululemon is one of our great customers. And you've talked about them on the show.
Sure, I love them.
They have got a really, really awesome configuration on their website where if you go on their website and you're trying to buy something, they can chat to you. Or if you call in, you have a return or a question about a product, it's all using our software. And they will scale up and down by hundreds of agents in one day. And we can do that literally within an hour. They can add hundreds of agents. Oracle provides the CRM side and Five9 provides the engagement and communication side.
Okay. When I go to your website, I learned that there are companies with a legacy expensive on-premises system. And I said to myself, how can any company still have that?
90% of companies still have.
But that's impossible.
Hardware sitting in closets. And it's super hard to up, it's super hard to maintain and keep working, which is why a lot of times you'll call in, you'll get disconnected.
Right.
You'll have bad experiences. That's what we fix. It's a website. You push all of that complexity into the cloud and we handle it and make it easy for you.
Now, one of the things I've noticed is that during this whole era of new companies, some companies have decided the more money they lose, the better. Other companies lose sight of the fact that cash flow matters, and still others seem to have no real path to profitability. Your stock hit an all-time high when many of these others were cratering. What distinguishes you and is it about caring about things like cash flow, caring about things like a path to profitability.
Yeah, my CFO Barry likes to say that, you know, we're a little bit old-fashioned and we like it that way. We, we look at things like cash flow as other companies think that they're quaint. We pay a lot of attention to it. Well, in Q4, we've committed to the Street, we'll be at 20% EBITDA margin and we are cash flow positive. So the company has grown responsibly. We're in this for the long haul, Jim, and That means that we need to have a responsible growth path for the company. We're still growing fast. It's still growing last quarter, 28%.
Right, right.
But it's not a growth at all cost strategy at all. So we're quite different than a lot of Silicon Valley companies in that it's this responsible and digestible growth story.
Now, are there— when I look at what you guys are doing in terms of cloud penetration, I have to tell you, I'm astonished that it is so little. A lot of people tell me, Jim, you interview all these cloud companies. It's got to be much further along. I'm trying to figure out how you can survive as a retailer and not use these things.
You know, you really can't. And we're increasingly— we're doing surveys and talking to customers. I mean, 84% of customers say that the experience you deliver is as important, if not more important, than the product or service that you're delivering. So that's big. And by the way, it's much more important for millennials than it is for boomers, who I think People who are older have a different expectation of like, I know I'm going to have a bad experience, but millennials are saying, you know what? And even Gen Z, hey, that experience is super important. And so companies are starting to come to that realization. They've got to upgrade this stuff. So even though cloud is only 10% penetrated, right, it's accelerating. And so I think we're going to now go through, you know, over the next decade, a transition of this technology from the on-premises to the cloud world.
Right now, one of the things that you talk about on your site is predictive dialing. So I think that's a great idea. But I also worry about spam. I worry about whether your robocalls and whether you're— if you're doing predictive dialing, if your customers are doing predictive dialing, they're going to start bothering me.
Absolutely. And we don't do that at all. We're the most conservative company out here. We focus almost exclusively on inbound and we do allow our customers to do outbound, but we don't allow for anything close to what you would call robocalling or, you know, where you basically tell a marketer—
How do you police that so that they don't?
Oh, we police it. We've configured our system. and actually worked with the FCC and others to basically say, look, here's the gold standard. We're considered the gold standard in this area of making sure that we don't allow anybody like that onto our system. And some customers of ours, like, a great example is Signify Health. They do do outbound calls. They're a very, very innovative healthcare company, and they are calling out and getting doctors and nurses to show up at customers' homes, but they're doing it one number at a time. So they're not banging a whole bunch of numbers to try and do telemarketing. This is very, very, very targeted outbound is what our customers—
and I like to use the voice escalation. You were at Salesforce with the Einstein bots.
Yeah, I know voice was a big deal at Dreamforce.
Yeah, voice was the— I think that was the theme.
Yeah.
And you guys were a major part of it. That's where Rowan Trollope is, the CEO of Five9. Guys, this stock actually hit a high when many of these stocks were cratering. And you heard why. Great growth and conservative use of their cash. MidBuddy's back after the break.
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