This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Tony Righetti. Please go ahead.

Including these statements regarding our quarterly and full year 2021-2026 guidance, business and industry and others that could cause actual results to differ materially from the statements being made today. We encourage you to review our most recent reports, including the risk discussions under the caption, Risk Factors and Elsewhere in Five Minutes and Half Financial Measures during this call.

A discussion of why we use non-GAAP financial measures and reconciliation of our GAAP versus non-GAAP results and guidance is currently available in our press release issued earlier this afternoon, as well as in the appendix of our investor relations tag that can be found in the investor relations section of 509's website at investors.509.com. Also, please note that the information provided on this call speaks only to management's views as of today and may no longer be accurate at the time of replay. Lastly, a reminder, unless otherwise indicated, financial figures discussed are non-GAAP. And now, I'd like to turn the call over to Five9's CEO. Please go ahead, Amit. Thank you, Tony, and good afternoon, everyone.

Q3 was another solid quarter for Five9. Thank you for joining us.

Building a performance-driven culture, improving our operations, strengthening our core into two of them, our CCaaS platform and AI.

We believe Five9's role in customer experience is becoming increasingly important. It starts with our CCaaS platform and the technology that connects customers to the person who can help. The contact center is where customer experience is won or lost. and our deep understanding of customer workflows and routing capabilities determine how every customer interaction gets to the right outcome. That position gives us a clear advantage over companies that do not own the incoming voice pipes or have core routing and telco capabilities. Our view is that winners in customer experience will not be companies that automate the most, Thank you for watching.

Automate the work that AI can resolve and equip people to handle the situations and tools built for human agents remain absolutely essential. A customer needs to reach the right person and that person needs the information and tools to resolve the issue. We've spent years building and operating the foundation in these types of complex enterprise environments. And now we're using AI to make the foundation even more efficient. Our new products like Genius Clouding match the customer needs with the skills and proficiency of the available agent. Other 5.9 AI products help agents prepare for the conversation. The right balance between humans and AI depends on what the customer is trying to do. Someone checking an order or resetting a password may simply want the fastest answer. Simple requests like that are well suited for AI. Someone dealing with a denied insurance claim is more likely to want a person who can expose high-stakes situations. Our focus is, therefore, where we have the strongest fit. Financial services, healthcare, insurance, and other complex regulated environments where human judgment and accountability will remain essential. In these settings, AI handles routine requests, retrieves information, takes permitted actions. It can also use hold time to run checks and gather context. What makes this work well is the seamless handoff. Five9 connects the workflow and carries the customer's context forward. The handoff works when AI and the contact center are tightly connected, and it breaks when they are not. Our integrated platform will let a supervisor see every interaction and let the human step. In the moment an AI agent running on 5.9 verifies her identity, retrieves the claim's history and confirms the denial of reason within seconds. It recognizes the policy exception and routes her to the licensed claims specialist, selected by 509 Routing for skill and availability. During the wait, the AI summarizes the case, flags the relevant policy language, and services prior contacts. The specialist picks up already briefed, making the judgment call, and resolves the dispute on the first call. Of course, our customers want to keep the cost of service down. What time to explain the decision and help the policyholder understand her options. The insurer can handle the work more efficiently, and the customer gets personal attention when it matters the most. The efficiencies from this dramatic capability allow customers to expand their reach with their base and allow for more interactions which might not have been possible with the adoption of the iPhone products we introduced last quarter, which started contributing to that expansion. Taking a step back, the context-centric industry is in early stages of a disruptive change that we believe will drive a significant investment cycle. Companies have historically managed customer service around cost and capacity. With AI making more high-quality interactions economically possible, we believe companies will begin investing in machines becoming more serviceable for a positive experience. No way is that more visible than in recent introduction of personal agents such as Muse, Dots, and Instinct. These agents remove some elements of customer support friction and we expect they will drive incoming chat, email, voice interactions to the contact center. These services are early and our customers are just beginning to ask How they should address them. Although we are not counting on measurable financial contribution in the very near term, believe me, and indirectly. For agent-to-agent interactions, we're targeting a solution early next year. As personal agents make it easier to contact a business, we expect service requests to increase. Some will be resolved between AI agents. Others will require a person to handle an exception, make a decision, or resolve a dispute. Those escalations created another source of demand for human agents, even as it states that we are entering into a definitive agreement to acquire level AI for a total purchase price of $325 million. We're very excited about this opportunity to bring a world-class AI native team and an AI-focused platform to augment our agentic offering and organization to better unlock AI teams that are transforming our industry. Let me walk you through some of those details. Level AI brings AI-native applications with voice to the customer insights, agent assistance, and AQM, plus AI automation across voice and digital channels. Level AI's proven AI-native platform and applications will expand the ways we can win new customers while also accelerating our time to market. We've worked closely with Level AI since 2022, so we know the products and the team well. Its applications are already integrated with our CCaaS platform, giving us direct experience with the technology in customer environments. Another important reason for this acquisition is the opportunity to bring standalone AI capabilities to enterprises using other contact center platforms. That includes enterprises that want to use AI to improve customer service but aren't ready to move their contact centers to the cloud. Level AI lets us serve those customers without requiring them to first buy our CCaaS platform. Historically, we've led with CCaaS and brought AI into that relationship. And we'll continue to lead with CCaaS for customers ready to migrate. Level AI adds another starting point. Addressing the customers and those customers eventually adopt 5.9 CCaaS. It also gives us a relationship to build on. When an on-prem customer is ready for the cloud, we can compete for that business having already demonstrated the value of our AI. Five9 brings the sales force and customer relationships to take these products to a much larger market. We can introduce them to our existing customers and sell them independently to enterprises using other contact center platforms. For customers of Five9, our goal is to meet their human needs by connecting these capabilities more closely with our voice routing and orchestration platform. So teams can use conversation insights to guide coaching, identify opportunities, and grow approximately 50% year-over-year. For planning purposes, we're anticipating they'll grow ARR at a similar level again over the next 12 months, excluding any upside from synergies. Taken together, we believe the agreed purchase price represents and Attractive Value Level AI's standalone business with additional upside from bringing its products to market through our sales force. As we grow that business, we expect the acquisition economics to become even more attractive. That's how we approach cash business and expand the AI portfolio, positioning us to serve customers regardless of how contact center technology evolves. Importantly, we expect the evolution of level AI to accelerate our agenda product suite in totality. This combination strengthens our confidence in our ability to deliver double-digit revenue growth over the medium term. In closing, we are building 5.9 for a larger volume and wide range of customer interactions. Strengthening the connection between people and AI and expanding the customers we can reach. Our focus is on helping enterprises keep the cost of services down while growing the value of their customer relationships and delivering a clear ROI on their spend with 5.9. With that, I'll turn the call over to Bryan to review our quarter, our outlook, and the finances. Subscription revenue grew 16% year-over-year, driven by CCAS growing 8%, and AI revenue accelerating to 91% year-over-year growth. AI revenue was approximately $45 million, worth 17% of subscription revenue, up from 10% a year ago. Several customers deployed earlier and at a larger scale. The earlier deployments benefited the timing of revenue, while the larger deployments increased their scale. While we acknowledge that these strong ramps will create difficult year-over-year growth comparisons for 2027, we do feel good about the near-term trajectory. Consequently, we now expect full-year 2026 AI revenue growth of at least 75%, up from our prior outlook of at least 60%. Concurrent seed count grew relatively in line with seed cash revenue growth, and we expect data transfer and AI deployments from the backlog. We anticipate this key metric to remain flat to 1.0 in Q4, driven by the timing of our backlog converting to revenue. Now turning to profitability. Adjusted gross margin in Q3 was 62% compared to 63% in Q3 2025. The year-over-year decline reflects timing-related costs with one of our largest partners, and we anticipate this to start reversing Q4. In the fourth quarter, we expect this to lose $0.82 per diluted share, compared to $0.78 per diluted share in Q3 2025. In terms of cash flow, cash from operations was $58 million, or 18% of revenue, and free cash flow was $43 million, or 13% of revenue. We ended the quarter with approximately $698 million in cash, cash equivalents, and short-term investments. We remain on track for purchase of PPP and need to come in at approximately 3.1% of revenue for 2026. As a reminder, this is temporarily elevated by approximately 1 percentage point above last year's rate to support our global data center refresh in 2026. We completed a $90 million accelerated share purchase in September 2020. Thank you very much. Some comments on Level AI. The acquisition is for $325 million in cash from our balance sheet, subject to certain purchase price adjustments. We expect this transaction to close during the fourth quarter. Our Q4 and full year to 2026 guidance exclude Level AI's revenue and operating contribution. We will discuss the financial impact of the Level AI acquisition. As Amit mentioned, Level AI has a standalone annual recurring revenue of approximately $20 million, grew approximately 50% year-over-year, and we expect it to grow at a similar level again over the next 12 months, and several items could change. Our preliminary work indicates approximately one point of dilution to our adjusted EBITDA margin in 2027. However, we plan to bring levelized EBITDA dollars to break-even in approximately six months and EBITDA margin to accretion in 2028. We will share more details when we provide formal 2026 guidance in conjunction with our 2026 full year results in February. We're moving our investor data to 20 and excludes any impact from the acquisition. For total revenue in the fourth quarter, we're guiding to a midpoint of $331 million, with a range of $328 to $334 million. Within that, we expect a sequential step-up in subscription revenue, flat telecom revenue, and a sequential decline in professional services. For the full year of 2026, we're guiding total revenue to a midpoint of $1.272 billion, with a range of $1.269 to $1.275 billion. The midpoint of $6 million and above are our prior guidance, reflecting our Q3 outperformance and an increase in our implied Q4 outlook. Thank you for watching. Our guidance for 2026 non-GAB EPS is $3.19 per diluted share at the midpoint of the range of $3.17 to $3.21 per diluted share. Thank you very much. For the full year of 2026, we continue to expect our adjusted EBITDA margin to be at least 24%, and the annual cash flow to be approximately $175 million. I'd like to note that the revised timing of the plan for changes also affects Q4 adjusted EBITDA margin, although we still expect a sequential expansion. Please refer to the presentation posted on the Investor Relations website for additional estimates. We will now begin question and answer sessions.

If you would like to ask a question and have joined via a panelist link, please use the raised hand icon which can be found in the black bar at the bottom of the webinar application screen. If you have joined via telephone, please press star 9 on your keypad to raise your hand. When you hear your name called, you will be prompted to unmute your line and ask your question. If you have joined via phone, please dial star 6 to unmute your line. We will now take a moment to allow the queue to form. Our first question comes from Siti Panigrahi with Mizuho. Siti, please dial star 6 to unmute your line and ask your question.

Can you hear me? Yes.

Hello. Okay, that's great. Thank you. Thanks for the question and congratulations and good quarter. Look, Amit, you entered the second half with essentially no dependency on incremental new logo to go get, mainly to achieve your 2026 guidance. And you now have several large enterprise ramps, you know, continuing AI momentum. As you look beyond this strong backlog driven, how much visibility do you have today into sustaining this kind of double-digit revenue growth? And what are the biggest variables between roughly 10% growth versus something closer to mid-teens, mainly as you're looking into 2027?

Hey, this is Bryan and I'm happy to answer that question. So, you know, today we're not going to give formal guidance for 2027, especially given the acquisition that we just announced. But I can give you some high level commentary to help you with that. So there's obviously a lot of momentum in the business. And what we're thinking right now is that consensus, if you look at it on the revenue for organic basis, is at $1.39 billion. And we believe that's a reasonable starting point for next year. And to kind of look at the shape of the curve, as we always say, Q1 is relatively flat sequentially from the midpoint of Q4 guidance we've provided. And then it'll step up slightly in Q2 and more so in the second half. And then from a bottom line perspective, again, on an organic basis, we're guiding to at least 24% EBITDA margin this year in 26. So we'll continue to focus on gradually expanding that throughout 27. But one thing I do want to point out is that in Q1, the expenses are always significantly higher because of all the seasonal items that kick in like the FICA reset.

Okay, that's helpful. And if I could ask a follow-up. Amit, Level AI acquisition, why Level AI and does this replace your current IVA and QM roadmap that you have or is it alongside it and what kind of overlap you have in terms of customers that Level AI has?

Yeah, thank you for the question, Siddhi. So look, let me just start by framing a little bit and then I'll tell you how Level AI fits in. But, you know, if you recall, you know, I've always been talking about the CCaaS markets about 25 billion, you know, in size. The CXAI market is expected to be about 25 billion by 2030. A few years ago, we started building AI and said, hey, this market is now, we're going to attack both parts of it because we believe in the A lot of what we did, Siddhi, when we first started was to build AI that actually worked with our platform. And you've seen the success of that. The numbers we're putting up on the AI growth, a lot of it is coming from the base. And so our angle of attack was always CCaaS first and then AI. What has since happened is we've seen a lot of prospects coming to us, especially as we've said, look, a big chunk of the market is still, you know, 40, 50 percent is still on prem going to make the move to the cloud. A lot of them have come to us and said, look, I'd love to go test a full stack of AI on day one. and what Level.ai gives us now is a full suite of standalone AI products with day one referenceability. They have a lot of large customers already working with us. They were available through our app store, integrated with our CCaaS so we know what it would do. And so now this reverses it for us. where it gives us a second line of attack which is AI first and then CCAS second. And I think no one better to talk about a humantic conversation with a customer than one that's actually offering a full stack AI plus the CCAS and being able to talk about the interchangeability and the one plus one equals three there. And then the second part was, you know, they bring a robust team to augment all the stuff that we're already doing and accelerate our roadmap by, you know, about 12 months. So when I add all of that together, for me, the ROI on this pencils out from day one. And I think when you look at this, you know, two, three years from now, I think we will probably look back and say we bought this for a steal, just given what I think it can do for the business. and in terms of the overlap, yes, you know, there is a little bit, but that's the work that's, you know, going to be done in the next, you know, before close to kind of figure out like how we want to, you know, attack this. But I will just say end to end, it gives us, you know, more capabilities and it gives us a new line of attack into the market, which I am really excited about.

That's a great call and ties well with your 91% AI growth. Congratulations. Thank you, Sadiq.

Our next question comes from Arjun Bhatia with William Blair. Arjun, please unmute your line.

Thank you so much. Maybe we can talk about the AI growth acceleration. It seems like it was obviously very strong this quarter. I'm curious, as you think about that, what's changing? Does it seem like we're approaching a tipping point in terms of Adoption, because the numbers are clearly pointing to something there, or when you think about the broader customer base and we start to look into 2027, there's still roadblocks that you see customers trying to battle in terms of AI adoption going into next year and beyond.

Thank you for that question. So look, I'll just start by saying, and I'm sure Brian will add some more color on the customer size and what's happening there. But look, in general, we've been saying this, customers have moved past the POCs and now are in adoption. I think what you are seeing from us, a lot of this growth that you're seeing is coming from the base. And it's also coming from customers who've adopted one product and two and keep expanding, you know, building new use cases once it's been out. And so that is driving, you know, a big piece of it. Look, in terms of inflection, I mean, we're already at now 17% of our subscription revenue is AI. and it's up from 10%, you know, last year. So this is now becoming, you know, meaningful. I don't think this is a sideshow for anybody. This is really, you know, the way contact centers and service centers and others are starting to deploy. What is also happening is our messaging of Humantech is resonating because in this case, we also see a lot of customers, you know, When I came to this company, there was this whole fear that all humans are going away, it's going to be replaced by AI. And we were always the number one to say, interactions are going to go up, the economics of the contact center are going to get better with AI, and it's going to drive more interactions. And we're seeing that. And so a lot of our customers in regulated industries are maintaining, in some cases, adding heads, but also deploying AI more fully across their stack. And I'll just close with this. But the gap for us was always on the prospect side of things where someone was saying, hey, I am not ready as yet to make a switch to the cloud. And look, it's 2026. If you're still on-prem, you really want to be on-prem. But for us, those customers have come to us and said, give us a full stack AI solution. Let us go test it out. Let us see the full value in a second. And so this is where level AI fits in for us and really excited about what that opportunity brings. Brian, I'll turn it over to you.

Yeah, and Arjun, the only thing I'll add here is that we've been talking about the strength of our backlog converting to revenue. And it's really on both the CCaaS and AI side. to Amit's point about the importance of Humantic. So the step up as anticipated, you know, CCAS went from 7% growth to 8% in Q3 and AI went from 78% to 91%. So it's really a reflection of, you know, the business that we've won that we're now starting to convert into revenue.

Very helpful. Thank you, guys.

Our next question comes from Ramo with Barclays. Ramo, please unmute your line and ask your question.

Thank you. Congrats for me as well and great acquisition. Two quick questions for me. Can you speak what, you know, we obviously have some very large customers at the moment that are going live or in the process of going live. Can you talk a little bit about the progress there? and also what you're seeing in terms of early pipeline from other guys that have looked at what you're capable of doing now. And then Level.ai is really good, but you also partner with other players in the market. Does that kind of create some headwinds on some of those transaction or deals that you were working on? Just kind of double checking that we get all the numbers right. Thank you and comments again.

Thank you, Remo. Look, I'll answer the second part of the question, then I'll turn over to Bryan. So one thing for us, and we've always said this, is we are and will remain an open ecosystem because our belief is in this space, it's really hard to come in and dictate the full stack, and especially when you're working on an interaction layer, which I kind of now, with all the AI progress, I don't view ourselves as a standalone CCaaS company. I view ourselves as an interaction layer company. Thank you for joining us. and I am not going to go build everything for everybody and so for that viewpoint, partnering makes sense and serving up those sorts of solutions makes sense. With Level AI, from my view, what it does is it completes a big part of where I think the opportunity is. It gives us the opportunity to present a faster, more robust roadmap to our existing customers as well as prospects that want a full stack. And so that should just add more firepower to us. And there will always be gaps around that we will fill with partnerships.

Yeah, and I'll just add on to your first question. So there are a number of large customers, but also, you know, midsize customers that across new logos and install base that are in our backlog that's converting to revenue. So the ramps going right on track for the vast majority of those there's puts and ticks naturally. And then in terms of the pipeline that you talked about, especially around our partnerships with someone like Google, for instance, the pipeline remains robust. There are a lot of large enterprises, opportunities looking ahead. So we remain optimistic about kind of long-term growth opportunity ahead of us.

Lovely. Thank you.

Well done.

Elizabeth Porter with Morgan Stanley.

How does Five9 really capture the incremental revenue as more interactions are shifting to AI over time?

Elizabeth, I'll take that one. Thank you for the question. Really good one because it's on top of mind for us. Look, I will say, you know, when I joined this company, we were always, you know, very focused on, hey, interactions are going up. AI is going to drive more interactions for this business, not less. And we saw the first phase of that through, you know, better economics in the contact center, reaching more customers, you know, with the services provided. Personal Agents and this new wave is phenomenal because it has just expanded this interaction layer significantly. And you are right, it is early days. And so that is really exciting for us. In fact, I think it makes platforms like ours more relevant, not less. because of all the capabilities we bring. But look, there are two ways we will monetize this opportunity. One is direct, like we are working on a product and we can spend a little time talking about that. But eventually, we said we're bringing out our agent to agent and routing and all those capabilities for personal agents in the early part. So that's frame one that we'll actually navigate and monetize. And then the second one is breakage. Look, when you have millions and millions and millions of interactions, you're going to see breakage that happens. And that will lead to additional phone calls, additional chats from the human that originated it. And that's obviously something that we monetize today. And so that is where we feel the world is going. And why I think a platform is really important here is because what we do is we cobble together voice, AI, digital orchestration. An agent comes in, the customer has to be able to decide how you want to route it, how do you authenticate it, how do you check for permissions, and then what channel do you want to use. And so effectively, you know, you're going to go down the same process with an agent that you would when a customer receives an inbound call or a chat and decides how you want to handle it. So platforms like ours, I think, just have a more favorable position.

Great. And just as a follow-up, maybe one for Bryan, you noted more muted Q4 seasonality. Can you just unpack a little bit of what you're seeing today that would drive that more mutedness going into next quarter? Thanks.

Yeah, absolutely, Elizabeth. So we actually did a survey back in July with our top seasonal customers, as we do each year, and they cited muted seasonality just like last year. And it's really dependent on the uncertainty of the macro, the demand. Thank you.

Our next question comes from Scott Berg with Needham. Scott, please unmute your line and ask your question.

Hi, everyone. Thanks for taking my questions. Amit, your announced acquisition of Level AI was interesting to me because it's the second. Native AI company to be acquired by a CCAS vendor this week. Timing's everything, I guess. But how does, I guess, what is the acquisition or the consolidation of a vendor like this? You know, I guess what does it do in the market here today is... Is this a reflection of customers are struggling to integrate or to leverage these native platforms on their own and they're really best fit in this full stack scenario that you guys are all trying to help put together? Just help us understand, is this like a new trend and is this, I guess, the demand path that we should be seeing from customers going forward?

Yeah, look, I won't speak on behalf of what other companies are doing because I'm not clear all the way on that thesis, but I can tell you ours. For us, we've been saying this for a while, we've been talking about the human ecosystem. For us, it is really about how do you build, put together, and drive very clear back and forth for AI and humans. Digital, voice, AI orchestration. Those are the four components. And I think we've cited some examples of what happens when it actually all sits on the same platform where routing is controlled by us. Thank you very much for joining us. Thank you for joining us. and when you are ready, who better to talk to you than a company that actually does CCaaS and AI to show you what the power of one plus one equals three is, versus you assuming that. And so that's how that fits into us and where I think this market is going from. Yeah, they're very helpful.

And Bryan, the timing revision that you talked about and some of the forward change stuff, I guess we typically don't see this very often. Usually these things may be accelerated as much as anything. Help us give us maybe some background and why this is getting pushed out and will this all be completed in Q1 next year or will there be, I guess, further delays going into 27? Thanks.

Yeah, Scott, so absolutely. You know, we're going through a lot of different initiatives in terms of cost savings or design changes. And this is one that we originally planned for Q4, but it's purely a timing matter. We're going to continue to focus on executing on it in the earlier part of 2027. But the most important part here is that for 2026, we're still guiding to at least 24% EBITDA margin, which is what we've been guiding to throughout the year. Free cash flow, we're still expecting approximately $175 million for 2026. And for Q4 EBITDA margin, we're continuing to expect that to move higher in the fourth quarter as well.

Helpful. Nice quarter. Thanks, Ken.

And the next question comes from Catherine Trebnick with Rosenblatt. Catherine, please unmute your line and ask your question.

Yeah, thank you very much for taking the question. Just a couple of ideas on this acquisition. Are they going to say... as a separate sales force. They're going to integrate the sales force. And are they going to be, how are you going to do the quota for them? It will be AI-based or it will be CCAS-based. Thanks.

Hi, Catherine. Thank you for the question. Look, all good questions and things that we are in the works to get aligned. So as we have more on that, I will share with you. But look, for us, this is really about accelerating our AI capabilities into the market. And today, our sales team already carries for us with ZCAS and AI capabilities. and, you know, for me, it is really about how do they help us get better in terms of driving more AI into the acquisition base. So more to be sorted out there and we'll keep you posted, but, you know, I'll leave it at that.

Okay, just a quick follow-up. Is some of the customers coming from non-5.9 or on-premise contact center platforms like Genesys or Avaya? Thank you.

So a very small portion of Five9's customer, their revenue is with Five9, so a lot of it is additional customers. And they do have some sizable on-prem customers that are using them. For example, one is a Fortune 100 insurer. that is, you know, on a on-prem solution using Level AI's offering to augment and help all the humans in their centers. So, you know, for us, that was the referenceability. We know it works there at scale, you know, in enterprise settings, and we get a lot more phone calls for, you know, those sorts of questions. So I think it just worked.

All right. Congratulations. Thank you.

Thank you, Catherine.

Our next question comes from Samad Samana with Jeffrey. Samad, please unmute your line and ask your question.

Hello, this is Joey Pecora on for Samad Samana. Thank you for taking our questions. First, I wanted to revisit the capital allocation priorities after completing the accelerated buyback and, of course, the acquisition upcoming. How are you thinking about future capital allocation priorities between buybacks and M&A from here?

Yeah, Joey. So it's a good question. We have a very robust framework for evaluating all of our capital allocation alternatives. And as you said, in the last 12 months, we bought back about $150 million. But given the long-term Thank you so much for joining us. So, you know, we have a $200 million share buyback program in place. We'll continue to be opportunistic in terms of executing against that.

Understood. Thank you very much. And then second, I wanted to revisit the Level A acquisition. I appreciate how it can be another point of attack. But at a higher level, are there certain sectors or verticals that Level AI has been able to better penetrate that can help support the pipeline going forward, the 5.9 million? may have not had as much success

The thing for me that was important is do they have all the prerequisites to go and quickly let us go do that? Now that we've worked with them and partnered with them for a while, they have all the regulations, GDPR, HIPAA, PCI, etc., etc. And so it really lets us stay focused on our plan and work to get better outcomes from it. That was really what was important. And look, the other piece I would just say on Level AI is, you know, I've been here in C eight months and, you know, we didn't go out in rush to go pick up the first AI company that existed. We've been very thoughtful, waited for the right one that actually fit our strategy at the right price. And, you know, it checked a lot of boxes. And, you know, I've known the founder, Ashish, for a while, and we have a similar vision of a humanistic universe. And so, you know, just wanted to add that in, that this has been a very thoughtful kind of move at the time we've made it.

Awesome. I appreciate it, guys. Thanks again.

Our next question comes from Terry Tillman with Trist. Terry, please unmute your line and ask him.

Great. Good evening, Tim. Connor Pastor all on. Terry, appreciate you taking the question. As AI deployments scale, especially with some of the larger customers, could you maybe just talk a bit about the evolution of the services investments needed to get customers live and what you're seeing as the delivery models becoming more repeatable and less resource intensive? Thank you.

Yeah, so definitely, first of all, I'll talk about the AI portfolio. You know, the three biggest products that we have there that are contributing to that 91% year-over-year growth are our AI Agents and then Agent Assist and AI Insights. And if you look at the traction, you know, for this quarter, for instance, AI Agent was the biggest ramp that drove the acceleration. But we are, from a resource perspective, always have the right level to go as fast as the customer wants. And also we're constantly working on improving our technology to make that implementation faster and faster. So, you know, it's a long process to get there, but right now we're already showing good signs. And as you can see, a lot of these deployments for the last three quarters, when we talk about Rams, you know, they're coming in earlier than anticipated. That's, you know, partly also the efficiency that we're getting on the deployment side, as well as the customer being ready to go faster. So we're feeling good about that side of the business. Very helpful. Thank you.

Our next question comes from Jackson Adder, KeyBank. Jackson, please unmute your line and ask your question.

Hey guys, thanks for taking our question. On the acquisition, I'm just curious whether, I mean, I'm sure that you've talked about a lot of product roadmap, both on your side and on the Target side. So I'm curious where there is going to be maybe some damn expansive R&D opportunities and then maybe other opportunities where it's like, you know what, we're working on the same stuff, we can kind of consolidate those.

Thank you for that question, Jackson. So on the TAM expansion opportunities, level AI brings four to five very key products that are already built out. And so for us, the TAM expansion is it just gives us more firepower with those products that either were super nascent with us or not even built. And so that is one piece of it. and I think that's really the main piece. And then to the question around does it allow us to retire some part of our asset, etc., those are things that we have to go through. But at the end of it all, when I look at what they bring and the feature functionality and the additional product fully built out, it's just... The roadmap is accelerated. And net-net, that's the real impact.

And I think the only thing I'll add there, Jackson, is that if you look at their ARR as of October 31, we mentioned it's $20 million. And it's growing very quickly at 50% on a standalone basis. And we expect that level to kind of continue next year, excluding any synergies on that front. But one thing I did want to clarify is that we are talking about ARR. So of course, naturally, when you're modeling, there's going to be a lag to revenue there.

that makes sense and then just real quick on backlog remaining performance obligation I know stuff can swing around it depends on you know a bunch of different things but RPO up a bunch again in the quarter and so I'm just curious as we kind of head into the fourth quarter and into 27 anything you can share with us on kind of like pipeline or coverage ratio relative to fourth quarters in the past thank you

Jason, in terms of RPO, as I've always said, it's not a good indicator of future revenue because any customer contract that's 12 months or less are excluded. Now, having said that, you're right. RPO is not at $1.6 billion. It went up 11% quarter to quarter. and that was primarily driven by one of our largest customers who actually committed to a much longer term with us and therefore it was now counted in our PSO. But, you know, it is not a tool that we use internally for forecasting. So I just wanted to emphasize that point. And from a pipeline perspective, you know, we feel really good about it. It stayed very strong. A lot of the partner momentum that I talked about with Google, that's a real solid, robust pipeline for us. So we're feeling good on that front. Thank you both.

As a reminder, if you would like to ask a question and you've joined via the panelist link, please use the raise hand icon, which can be found in the black bar at the bottom of the webinar application screen. I will pause for a moment to ensure there are no further questions. This concludes our Q&A session. I will now turn the call back to Amit Mathradas for closing remarks.

Thank you all for joining us today. The leadership team is working well together. Our AI offerings are performing. And the way customers think about their contact center lines up with our humantic CX vision. We believe this is not an AI or human choice. The next horizon needs a platform that connects AI and people across every interaction. Customers asked us for a standalone AI and demanded that we build and offer a solution and Level AI is that answer. The market is moving fast and represents a multi-billion dollar opportunity, so we will stay focused on the opportunities in front of us. Thank you for joining us today.

The call has concluded. Thank you for joining. You may now disconnect.