According to a recent market report, the global cloud-based contact center market is projected to grow 25% annually from $6.80 billion in 2017 to $20.93 billion by 2022. Billion Dollar Unicorn Five9 (Nasdaq: FIVN) is a pioneer and leading provider of cloud software for contact centers.

Five9’s Offerings

Five9 was founded in 2001 by Gus Laredo, James Southworth, John Kim, and Ray Soto. It was set up to provide cloud-based solutions that could replace legacy on-premise contact center systems. Five9 offers a scalable and secure Virtual Contact Center cloud platform that provides easy-to-use applications for all of contact center-related customer service, sales, and marketing functions.

As explained by its former CEO and current Executive Chairman Mark Burklaud, it is a routing engine for customer interactions that intelligently distributes multi-channel interactions between the consumer and the agent in the contact center. Additionally, being a cloud-based solution, the platform also allows companies to migrate to its platform with minimal upfront investment.

Five9’s Financials

Five9 operates on a Software-as-a-Service business model, earning revenues through recurring subscriptions charged to its customers primarily on the number of agent seats and minutes of usage of its cloud platform. It recently reported its first quarter earnings where revenues grew 25% over the year to $58.9 million, against the Street’s forecast of $55.1 million. EPS of $0.08 was also better than the market’s estimated $0.03 per share.

For the current quarter, Five9 expects revenues of $55.8-$56.8 million with an EPS of $0.03-$0.04. It expects to end the current year with revenues of $235.8-$238.8 million and an EPS of $0.25-$0.30. The market was looking for revenues of $56.4 for the quarter with an EPS of $0.04 and revenues of $237.6 million and an EPS of $0.43 for the year.

Five9’s Competition

There is a lot of consolidation in Five9’s market segment. Two years ago, giants Nice Systems and Genesys Telecommunications both made big acquisitions in the space. Nice acquired InContact for $873 million and Genesys bought Interactive Intelligence for $1.4 billion. Then there is always the worry about Amazon entering the space. According to Five9’s CEO, Rowan Trollope, Amazon is already testing the waters with its Unified Communications space offering called Chime. It may still a far cry from the solution offered by the likes of Five9, but Amazon’s growth capabilities cannot be ignored.

Questions for Five9’s Board

This brings me to the question of what does Five9 see in its future? Does it believe that it too will be acquired? Or, does it think that it has what it takes to remain independent. According to former CEO, Mark Burkland, the company’s offerings would be a good complement to the CRM software sold by vendors such as Salesforce.com, and Oracle, Zendesk, and Microsoft. He believes that once Five9 attains revenues of $400-$500 million, it would make sense for the CRM players to merge with it. It would be interesting to see if and when that happens.

Five9 went public in 2014 when it raised $70 million by selling shares at $7 apiece. Prior to that, it had raised $71 million in venture funds from investors including SAP Ventures, Partech Ventures, Adams Street Partners, Hummer Winblad Venture Partners, and Mosaic Venture Partners. The stock has done well since it listed. It is currently trading at $34.22 with a market capitalization of $1.97 billion. It touched a 52-week high of $39.55 in June this year. It has been climbing steadily from the 52-week low of $19.53 in August last year.