Five9's (FIVN - Get Report) shares have risen more than tenfold over the last four years, as Wall Street rewarded the company's steady market share gains and the bottom-line improvement that accompanied them.

Five9, along with Nice Ltd.'s (NICE - Get Report) inContact unit, is a top provider of cloud-based software for contact center agents. Its platform allows agents to do their jobs both within traditional contact centers and remotely, and through a variety of communications mediums (voice, text messages, e-mail, video, etc.).

The company's shares jumped last week after it comfortably beat Q2 estimates on the back of 27% revenue growth and hiked its full-year revenue and EPS guidance. On average, analysts polled by FactSet expect Five9's revenue to rise 22% this year to $314 million, and its billings to rise 24% to $323 million. Free cash flow (FCF), which for now remains held back by large sales and R&D investments, is expected to total $24 million this year and $37 million next year.

Following Five9's Q2 report, I talked with Rowan Trollope, who was named the company's CEO in mid-2018 after having previously served as the SVP of Cisco Systems' ( CSCO - Get Report) Internet of Things and Applications division. Here's a recap of notable things discussed.

Five9's Addressable Market

Trollope says Five9 estimates its total addressable market (TAM) to be equal to $24 billion in annual recurring revenue (ARR). He noted there are an estimated 16.9 million contact center agents globally, and that 88% of them are still believed to be using traditional, on-premise, contact center software rather than cloud-based platforms.

As a result, Trollope declares cloud contact center software adoption to still be in its "early innings." However, he feels the technology's "evangelism" period is now over, as potential buyers have become wellaware of cloud offerings and their various advantages. As evidence, he pointed out that research firm Gartner has stopped providing its trademark Magic Quadrant research reports for on-premise contact center software, and instead only publishes a report for cloud offerings.


Five9's view of its addressable market. Source: Five9.

Competition

In Gartner's latest Magic Quadrant report for cloud contact center software in North America, Five9 was given the second-most prestigious ranking out of the 10 companies discussed, trailing only Nice/inContact. Trollope asserts that when it comes to enterprise-class deals, the cloud contact center market is now "mostly a duopoly" featuring Five9 and inContact, while adding that his company has a win rate above 75% in deals that it competes for.

He added that Five9 has been seeing less of Genesys, which had the third-most prestigious ranking in Gartner's report, and also said that the company doesn't often see the cloud contact center offerings provided by Cisco's BroadSoft unit.

Partnerships with CRM Software Firms

When asked about Five9's partnerships with customer relationship management (CRM) software firms -- its platform integrates with many third-party sales and customer service apps -- Trollope noted most Five9 deployments involve CRM integration, and that Salesforce.com ( CRM - Get Report) and Oracle ( ORCL - Get Report) are (in that order) its most common partners. At the same time, he indicated Five9 has begun seeing more deployments that involve Microsoft's ( MSFT - Get Report) Dynamics CRM apps (believed to be seeing strong growth), and noted Five9's partnership with Microsoft was recently expanded to cover the software giant's Teams collaboration platform.

At the same time, he indicated Five9 has begun seeing more deployments that involve Microsoft's (MSFT - Get Report) Dynamics CRM apps (believed to be seeing strong growth), and noted Five9's partnership with Microsoft was recently expanded to cover the software giant's Teams collaboration platform.

Cisco Systems, Salesforce.com and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CSCO, CRM or MSFT? Learn more now.

An Intelligent Agent Assistant Solution

Like many enterprise software peers, Five9 has a strong interest in using AI/machine learning to enable new software features. Specifically, the company is prepping an agent assistant solution that -- by leveraging Alphabet/Google's ( GOOGL - Get Report) cloud contact center AI capabilities -- uses machine learning to make intelligent predictions and recommendations to a contact center agent.

One example that Trollope gave of how the solution could work: When a cable customer calls because his or her cable box isn't working, Five9 could automatically convert the customer's remarks into text, use that text to search a knowledge base for up-to-date information about the problem and then use that information to predict what the most likely cause of the problem is, while taking into account customer-specific information such as the zip code where the issue is occurring.

Trollope said "four of [Five9's] largest customers" have already signed up for the assistant solution, which is currently in alpha trials ahead of a full commercial launch next year.

Cisco Systems, Salesforce.com, Microsoft and Alphabet are holdings in Jim Cramer's Action Alerts PLUS member club . Want to be alerted before Jim Cramer buys or sells CSCO, CRM, MSFT or GOOGL? Learn more now.

R&D Priorities

In addition to AI/machine learning features, Trollope said that investments in software integration are a key R&D priority for Five9. "We want to be deeply integrated into the CRM companies, and they're not standing [still]," he said.

Trollope suggested that Five9, which recently hired former Cisco exec Jonathan Rosenberg to be its CTO and head of AI, is also more broadly investing in developing features that will appeal to large enterprise clients, a segment for which its deal momentum is particularly strong. And though stating that he prefers to develop products internally, Trollope left the door open to making acquisitions to strengthen Five9's platform.

"[There are] certainly lots of good companies out there that are doing interesting things," he said. "Our preference is to build, but if there's something great out there to buy, we're certainly open to it."

Growing International Sales

Unlike Nice, Five9 for now only gets a small portion of its revenue from outside of the U.S. When asked about Five9's international sales, Trollope said they currently account for only a "mid-single digit" percentage of revenue. At the same time, he noted Five9 recently hired the first general manager for its international operations (a former Cisco exec who is based out of London), and is more broadly working to grow its international sales footprint.