Contact center company Five9 Inc. flexed its acquisitive muscles today as it announced a $325 million all-cash deal to buy an artificial intelligence-native rival called Level AI as it posted its third-quarter financial results. The deal is expected to close in the fourth quarter, subject to customary closing conditions, Five9 said.

Five9 is a leading player in the cloud contact center software industry, selling tools and services that enterprises use to manage their customer service interactions. Its web-based software spans traditional phone calls, video calls, emails, messaging, social media and other channels.

As for Level AI, it’s the developer of a contact center and customer experience intelligence platform that uses artificial intelligence to support human agents on calls and analyze, score and augment their interactions with the callers they serve. Its platform is designed to listen into customer service agent’s calls, so it can provide real-time guidance throughout and support workflow automation. The insights it generates can also be used to assist in agent coaching.

Level AI also develops autonomous AI agents that can automate some simpler customer inquiries and background operational tasks, freeing up human agents to focus on more complex customer issues. “Level AI’s AI applications help organizations improve agent performance, automate more customer interactions across voice and digital channels, and turn conversations into insights the whole organization can use,” Five9 said in a blog post announcing the deal. “Its applications are in production with enterprise customers today and handle more than one billion customer interactions a year.”

Five9 said it intends to continue offering Level AI’s applications as standalone tools for organizations that don’t want to shift their on-premises contact center operations to the cloud, also those who are using other cloud contact center platforms. However, it also plans to integrate the startup’s tools with its Genius CX Platform. “As AI reshapes the customer experience landscape, we believe adding Level AI strengthens our competitive position, expands the customers we can serve, and deepens the AI talent behind our continuous innovation,” said Five9 chief executive officer Amit Mathradas.

Level AI founder and CEO Ashish Nagar said that by joining Five9, his company will be able to bring its applications and customer service-native AI models to thousands of new contact centers around the world, while allowing it to continue supporting its existing customers.

Investors don’t seem to have shared the CEOs’ enthusiasm for the deal, however, for Five9’s stock fell more than 23% in late trading after the deal was announced. That may be because of the cost of the acquisition. The $325 million cash outlay amounts to almost half of Five9’s current cash and marketable investments, which stood at $738 million at the end of the third quarter.

Five9’s results weren’t too bad. The company reported adjusted earnings of 82 cents per share on revenue of $323.3 million, surpassing Wall Street’s guidance of 80 cents per share in earnings and $318.3 million in sales. But it’s notable that the company’s full-year guidance excludes any contributions from the pending deal, and so its value hinges on Five9’s ability to rapidly integrate Level AI’s technology.

For the current quarter, Five9 said it’s expecting earnings of between 88 cents and 92 cents per share on sales of $328 million to $334 million. But that guidance was mixed. Wall Street is looking for significantly higher earnings of 99 cents per share and $330.7 million in revenue.

For the full year, Five9 said it’s looking for earnings of $3.17 to $3.21 per share on total sales of $1.27 billion. Wall Street wants to see higher earnings of $3.26 per share on similar revenue.

Image: Five9