Five9 sells the software that runs corporate call centers — routing voice, chat and email to human agents — and it bills for it by the seat. In the June quarter it sold considerably more artificial intelligence. Revenue from AI products rose 78% to roughly $39m, an annual run rate above $150m, and now accounts for about 15% of subscription revenue against 9% a year earlier, according to the company's second-quarter disclosures. Management raised its full-year AI growth target to at least 60% and lifted revenue guidance to $1.266bn-$1.272bn.

It also earned less on each dollar. Gross margin fell to 53.4% from 54.9% a year earlier and 55.9% in the prior quarter, so gross profit grew 7.3% while revenue grew 10.3%. The adjusted figure tells the same story, slipping to 61.4% from 63.0%. Inference is a cost of goods sold. Selling an AI agent is not the same business as licensing a seat, and the reported margin now says so.

The seats are not disappearing

The widely held fear is that each automated conversation deletes a billable human. That is not yet visible. Five9's last-twelve-month subscription dollar-based retention was 107%, and management said concurrent agent seat counts are growing in line with contact-center revenue. Total revenue growth has accelerated three quarters running, to 10.3%. A Fortune 100 financial-services win worth about $100m in contract value will ramp to $25m of annual recurring revenue.

RingCentral, which sells cloud business telephony and is ranked first in unified-communications cloud PBX seats by Synergy Research, is monetizing the same idea from the other end. Customers using at least one paid native AI product now represent about 13% of its $2.8bn of annual recurring revenue, double a year ago, and its AI Receptionist product passed 16,000 paying customers, up 400%. Unlike Five9, its gross profit grew faster than revenue — 7.0% against 5.9% — at a 71.9% margin. Operating income rose 36% to $50.3m and net income tripled to $39.1m. It also raised the dividend 67% and cut leverage to 1.5x net debt to EBITDA, with gross debt heading toward $1.00bn from $1.64bn at the end of 2022.

Zoom is the control, because it has disclosed nothing. Its last report, on 21 May, showed revenue of $1.239bn up 5.5%, a 77.9% gross margin and operating income up 28.5%; enterprise revenue grew 7.2% while online monthly churn worsened to 3.0% from 2.8% and paid AI Companion users grew 184%. Its next print lands on 25 August.

What the price is now paying

Because gross margins across these businesses differ by more than 20 points, the comparable lens is what a buyer pays for a dollar of trailing gross profit. Five9 costs 3.81x, against 2.58x in May and 2.36x in February — a 61% re-rating over six months in which trailing gross profit grew 4.9%, from $628.0m to $658.6m. RingCentral has gone from 1.90x to 3.11x, up 64% on 3.6% gross-profit growth, though it remains the cheapest name here at 13.3x forward earnings with an 11.6% free-cash-flow yield. Zoom has moved only from 7.16x to 8.25x, and carries the lowest enterprise value to EBITDA of the group at 11.0x — but its forward price/earnings of 17.8x sits above its 15.5x trailing multiple, meaning reported earnings are flattered by non-operating gains and consensus expects earnings per share to fall. Consensus sees no acceleration anywhere: Five9 near 10%, RingCentral 5.1% then 4.6%, Zoom 4.8% then 4.0%.

The month's gains were not earned the same way. Strip Five9's two best sessions — the 19.8% jump the day after its 6 August print and an 18.2% late-July gap — and the remaining sessions compound to 0.8%. RingCentral keeps 28% after removing its earnings day and the session that followed; Zoom keeps 11.2% while disclosing nothing. Macro helped: July producer prices came in flat on 13 August and the S&P 500 hit a record, and on 18 August money rotated from semiconductors into software after Anthropic's $65bn run-rate disclosure landed below expectations. But NICE, the largest contact-center vendor at 22.2% revenue share, is down 27% over twelve months in which these three rose between 28% and 130%. This is not a sector bounce.

It is also not a settled market. Five9 is third at 13.1% share behind NICE and Genesys at 19.7%; NICE bought conversational-AI vendor Cognigy for $955m, Salesforce and ServiceNow put $1.5bn into Genesys, and Salesforce's own Agentforce Contact Center went generally available in February with native access to customer data Five9 must integrate to reach.

The setup

Where it stands — AI is selling into these customer bases faster than it is deleting seats, but at Five9 it is arriving below corporate gross margin.

Would confirm — Five9 gross margin stabilizing at or above 53.4% next quarter while AI revenue growth holds near 60%.

Would invalidate — Dollar-based retention falling below 100% at Five9, or paid-AI ARR share stalling near 13% at RingCentral.

Watch next — Zoom reports its July quarter on 25 August, its first disclosure since 21 May.

Valuation — Five9 at 3.81x trailing and 3.65x forward gross profit against 2.36x in February; RingCentral 3.11x against 1.90x.