Five9's $325M Level AI deal opens door to new customers. The customer service software company plans to sell Level AI's applications to businesses using competing systems, giving it another way to win customers without requiring a major technology change. Five9, a major provider of cloud-based customer service software, has agreed to acquire Level AI for approximately $325 million in cash. The deal would allow Five9 to reach businesses using competing customer service systems, including those that aren't ready to replace their current technology. Five9 serves more than 4,000 organizations worldwide and reported $1.15 billion in revenue in 2025. Its business has traditionally centered on selling the software companies use to manage customer calls and other service interactions, then offering additional AI capabilities. With Level AI, Five9 can approach customers from a different direction. Level AI's software analyzes customer conversations, assists service employees and automates certain interactions while working with the systems companies already use. During the November 5 earnings call, Five9 CEO Amit Mathradas described the strategy as "AI first and then CCaaS second." CCaaS is the industry term for cloud-based contact-center software, Five9's core business. The acquisition also brings Five9 a growing recurring-revenue business. Level AI reported approximately $20 million in annual recurring revenue as of October 31, up about 50% from a year earlier. The transaction is expected to close in the fourth quarter of 2026, subject to customary closing conditions. Selling AI before replacing the platform. Replacing an enterprise customer service system can be a significant undertaking. Companies may have years invested in their technology, with established processes and employees trained to work with it. Adding an AI application is a much smaller decision than replacing the system that supports the entire operation. Level AI already works with other providers' systems, so Five9 could begin earning revenue from companies without first winning a larger contact-center contract. If those customers eventually decide to replace their underlying platforms, Five9 would have an established relationship and an opportunity to compete for the business. Level AI also brings relationships with companies Five9 doesn't currently serve. Mathradas said only a very small portion of Level AI's revenue comes from businesses already using Five9. He pointed to a Fortune 100 insurer using Level AI with an internally operated contact-center system as one example. Mathradas emphasized that Five9 sees value in selling the AI applications independently, even if those customers never move to its broader platform. How Ollie and Smartsheet use Level AI. Level AI serves companies across several industries. Neither company has disclosed what share of its customers operate subscription or membership businesses, but its work with Ollie Pets and Smartsheet offers two examples relevant to recurring-revenue operators. Ollie Pets, the direct-to-consumer dog-food subscription business, uses Level AI alongside Gladly, its customer service platform. According to a Level AI case study, Ollie's team uses the software to examine customer conversations and identify recurring concerns about products, pricing and the subscriber experience. Those findings can then be shared with colleagues across the business. Level AI reports that Ollie has also expanded its automated quality reviews to approximately 90% of customer interactions, while continuing to use human reviewers for conversations requiring closer evaluation. Smartsheet, a subscription software provider, uses Level AI to understand customer problems and share its findings with product and customer success teams. In one example documented by Level AI, Smartsheet discovered that customers were missing coaching sessions because of confusion over time zones. The booking page appeared to be working, but customer conversations revealed what was going wrong. Smartsheet identified the issue and corrected the display. A partnership dating back to 2022. Five9 and Level AI have worked together since 2022, and Level AI's applications are already available through Five9's marketplace of connected software products. The two companies have experience working together and connecting their technology. Level AI's products help companies review customer conversations, assist employees during interactions and identify recurring problems. It also offers AI agents that can handle certain customer requests automatically. Five9 says the technology processes more than one billion customer interactions annually. Following the acquisition, Five9 plans to introduce those applications to more of its existing customers while continuing to sell them to businesses using other systems. Mathradas told investors that acquiring Level AI could also accelerate Five9's AI development plans by approximately 12 months. Five9 already offers some similar AI capabilities, and Mathradas acknowledged that the companies' products overlap in places. Decisions about how those offerings will fit together have yet to be made. Five9 says it plans to continue offering Level AI independently, but detailed future pricing and packaging haven't been announced. Existing customers and companies considering the software will want to understand how integrations, product development and support arrangements evolve under Five9 ownership. Insider take. For subscription operators evaluating customer service technology, the acquisition raises a practical question: will Level AI remain as useful with other vendors' systems once it's part of Five9? Five9 says it plans to keep the applications available independently. That's important for businesses that want to improve their customer service operations without replacing their current platforms. But buyers should understand how the software connects with their systems, what access they'll retain to customer information and whether pricing or support will change. The value of tools such as those used by Ollie and Smartsheet depends in part on those connections continuing to work. There's a commercial lesson for subscription technology vendors, too. Five9 is pursuing growth by addressing a specific customer need first, building a relationship and potentially earning more of that customer's business over time. Related Member Resources Five9's planned acquisition puts Level AI under new ownership. For businesses using customer service technology, that raises questions about how the products may change and whether the connections their support teams depend on will continue working. These resources help operators examine both. * Why Vendor History Matters When Choosing Subscription Technology This guide helps operators examine how a technology provider's origins, acquisitions and product development can shape what it offers today. It provides questions to ask about Level AI's future under Five9, particularly where the companies already have overlapping products. * Subscription Support Technology Checklist: Systems and Connections to Review This operating checklist helps teams review how customer service tools connect to subscriber records, internal policies and support workflows. Operators can use it to identify which connections an AI application needs, what information it must access and what to test as vendor products or integrations change. Sources. Reported by: Subscription Insider Editorial Team News, market data, and regulatory updates to stay current on the companies, regulations, technology, and market shifts shaping subscription, memberships, and recurring revenue. Your Weekly Briefing Join over 10,000 subscription professionals who get the Subscription Signals newsletter each week. One clear market signal, the news behind it, and what to watch next. Explore a Subscription Insider Membership Make better subscription business decisions with operational guidance, tools, and resources.

Five9 reported third-quarter 2026 revenue of $323 million, up 13% from a year earlier. The contact center software company also agreed to buy Level AI for $325 million in cash, with the deal expected to close in the fourth quarter of 2026. The purchase marks a shift from building AI tools in-house to buying them, as Five9 seeks to compete in the agentic AI contact center market. It would use about 47% of the company's $698 million in cash and marketable investments. Five9 also carries $738 million in convertible senior notes. Subscription revenue rose to 83% of the total, up 2 percentage points. GAAP net income fell 19% to $15 million, while non-GAAP net income rose 5% to $64 million. Operating cash flow was flat at $58 million.

Five9 Q3 earnings call highlights. Five9 (NASDAQ:FIVN) reported third-quarter revenue above its guidance range as artificial intelligence deployments accelerated, and said it had agreed to acquire Level AI for $325 million in cash to expand its standalone AI offerings. The contact center software company raised its full-year revenue outlook but lowered its non-GAAP earnings forecast, citing the timing of planned organizational changes and a higher diluted share count. Revenue rose 13% year over year to $323 million in the third quarter of 2026. Subscription revenue increased 16%, with contact center as a service, or CCaaS, revenue up 8% and AI revenue up 91%. AI deployments drive growth. AI revenue reached approximately $45 million, representing 17% of subscription revenue, up from 10% a year earlier, Chief Financial Officer Bryan Lee said. Some customers deployed AI products earlier and at a larger scale than expected, benefiting revenue in the quarter. Five9 now expects AI revenue growth of at least 75% for 2026, up from its previous outlook of at least 60%. Lee cautioned that the strong deployment ramps would create difficult year-over-year comparisons in 2027. Chief Executive Officer Amit Mathradas said much of the AI growth came from existing customers adding products and use cases. He said some customers in regulated industries were maintaining or adding human agents while deploying AI more broadly. The company's last-12-month subscription dollar-based retention rate rose to 109% from 107% in the prior quarter, helped by seat additions and AI deployments from backlog. Five9 expects the measure to remain flat or rise by one percentage point in the fourth quarter. Third-quarter adjusted EBITDA margin was 25%, unchanged from a year earlier, while non-GAAP earnings rose to $0.82 per diluted share from $0.78. Free cash flow was $43 million, or 13% of revenue. Level AI deal broadens product reach. Five9 expects the Level AI transaction to close during the fourth quarter. Level AI offers applications including customer insights, agent assistance and automated quality management, as well as AI automation across voice and digital channels. Mathradas said the acquisition would give Five9 a way to sell standalone AI products to businesses using other contact center platforms, including those not yet ready to move from on-premises systems to the cloud. Five9 has worked with Level AI since 2022, and its applications are already integrated with Five9's platform. Level AI had approximately $20 million in standalone annual recurring revenue as of Oct. 31, up about 50% year over year. Five9 expects similar ARR growth over the next 12 months, excluding potential synergies. Lee noted that revenue recognition would lag ARR. Preliminary estimates indicate the acquisition could dilute Five9's adjusted EBITDA margin by approximately one percentage point in 2027. Lee said the company plans to bring Level AI's EBITDA dollars to break-even in approximately six months and expects the deal to be accretive to EBITDA margin in 2028. Mathradas said there is some product overlap, with decisions still to be made about how to address it. He also said Five9 would remain an open ecosystem and continue to use partnerships for some specialized needs. Revenue outlook rises as earnings forecast falls. For the fourth quarter, Five9 forecast revenue of $328 million to $334 million and non-GAAP earnings of $0.88 to $0.92 per diluted share. Its guidance excludes Level AI's revenue and operating contribution. For full-year 2026, the company expects revenue of $1.269 billion to $1.275 billion. The $1.272 billion midpoint is $6 million above its previous forecast, reflecting third-quarter outperformance and a higher implied fourth-quarter outlook. Five9 lowered the midpoint of its annual non-GAAP earnings forecast to $3.19 per share from $3.26, with a new range of $3.17 to $3.21. Lee attributed the reduction primarily to revised timing for planned organizational changes and a higher diluted share count resulting from a higher-than-expected share price. He said the company expects to execute the organizational initiative in the earlier part of 2027. The company maintained its expectation for a full-year adjusted EBITDA margin of at least 24% and approximately $175 million in annual free cash flow. Lee declined to provide formal 2027 guidance but said analyst consensus of $1.39 billion in organic revenue was a reasonable starting point. Five9 ended the quarter with approximately $698 million in cash, cash equivalents and short-term investments. It completed a $90 million accelerated share repurchase on Sept. 30 and has $200 million remaining under its authorization. About Five9 (NASDAQ:FIVN). Five9, Inc is a cloud-based software company that provides customer experience and contact center solutions. Its platform enables organizations to manage customer interactions across voice, chat, email, social media and other digital channels without relying on traditional on-premises contact center infrastructure. The company's Intelligent CX Platform includes tools for inbound and outbound communications, digital engagement, workforce optimization, workflow automation, analytics and reporting.