Shares of customer communications software providers RingCentral and Five9 surged after quarterly results eased investor fears that artificial intelligence tools could undermine the software-as-a-service industry’s traditional Business models.
RingCentral climbed roughly 34% while Five9 gained about 12% after both companies beat Wall Street estimates and delivered optimistic forward guidance.
Management teams said rising adoption of AI actually increased demand for their platforms rather than replacing them, reversing recent pessimism across the sector.
The broader software market had been hit by heavy selling amid concerns that new tools capable of building applications rapidly would reduce the need for subscription software products.
An industry-tracking ETF has dropped around 23% this year, with Atlassian, Unity Software and Rapid7 losing more than half their value during the decline.
Major technology companies Salesforce and Microsoft also suffered significant share price drops during the selloff.
Ai Drives New Revenue
RingCentral reported that annual recurring revenue from customers using its AI capabilities doubled year-over-year to nearly ten percent of total revenue.
The company recently integrated ChatGPT-based models into its voice artificial intelligence platform to expand automated communication features for enterprise customers.
Five9 said enterprise AI bookings more than doubled from the previous year, increasing backlog visibility and pushing its AI portfolio to $100 million in recurring revenue.
Chairman Michael Burkland told analysts the technology enhances rather than replaces their services.
“We’re going to continue to have advancements by LLMs, but I’ve said this even two years ago, you cannot run a customer service organization on an LLM,” he said.
Sector Recovery Potential
Despite the rally, Five9 shares remain slightly lower this year after a steep 51% selloff during 2025 as investors questioned long-term competitiveness against emerging AI platforms.
The latest results suggest companies integrating artificial intelligence directly into their products may stabilize valuations across the enterprise software sector in coming quarters.