Company Overview - Five9, Inc. (NASDAQ:FIVN) is recognized as a promising small-cap stock with significant upside potential [1][2] - The company specializes in cloud software for contact centers, focusing on omnichannel routing, workforce organization, analytics, and reporting [4] Leadership Changes - Amit Mathradas has been appointed as the new Chief Executive Officer and director, effective February 2, 2026, succeeding Mike Burkland, who will remain on the Board [1] Financial Performance - For fiscal Q3 2025, Five9 reported an 8% increase in revenue, reaching a record $285.8 million compared to $264.2 million in the same quarter last year [3] - The company's Enterprise AI revenue grew by 41% year-over-year, and adjusted EBITDA margin reached a record 25% [3] Future Projections - For the full year 2025, Five9 anticipates revenue between $1.1435 billion and $1.1495 billion, with GAAP net income per share projected between $0.36 and $0.43, based on approximately 88.0 million diluted shares outstanding [4] Analyst Ratings - William Blair analyst Arjun Bhatia reaffirmed a Buy rating for Five9, while Wells Fargo analyst Ryan MacWilliams maintained a Hold rating with a price target of $22 [2]

Company Overview - Five9 provides a cloud-based contact center platform that offers voice, video, chat, email, social media, and API-driven customer engagement solutions [8] - The company serves enterprise clients across various industries, including banking, financial services, healthcare, technology, education, and business process outsourcing [8] - Five9 operates a subscription-based model, allowing clients access to its virtual contact center suite and related services [9] - The company leverages advanced technologies such as natural language processing and automatic speech recognition to enhance customer experience [9] Financial Performance - Five9 reported a record revenue of $285.8 million, representing an 8% year-over-year increase, with Enterprise AI revenue surging by 41% [11] - Profitability improved significantly, with adjusted EBITDA margins expanding to 25.1% from 19.8% a year earlier [11] - Operating cash flow reached a quarterly record of $59 million, indicating that growth is being achieved without sacrificing financial discipline [11] - Management authorized a $150 million share repurchase program, signaling confidence in the company's financial health [11] Investment Activity - S Squared Technology increased its holdings in Five9 by 165,000 shares in the third quarter, bringing total holdings to 350,000 shares valued at $8.5 million [2][3] - Five9 now represents 3.2% of S Squared's assets under management, although it is not among the fund's top five holdings [4][6] - The stock price of Five9 was $20.72, down 50% over the past year, contrasting with the S&P 500's 16% gain during the same period [4] Market Position and Outlook - Five9 is positioned as a key player in the cloud-based contact center market, with a focus on innovation and scalability [9] - The recent investment by S Squared Technology may indicate confidence in Five9's operating fundamentals despite its stock market performance [10] - The company is not priced for growth perfection, but improving margins, a rising AI revenue mix, and strengthening cash generation suggest a healthier business than indicated by its stock performance [12]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, focusing on companies believed to be undervalued based on fundamental analysis [2]. Company Analysis: Five9 (FIVN) - Five9 (FIVN) is currently rated with a Zacks Rank 2 (Buy) and an A for Value, indicating it is a high-quality value stock [3]. - FIVN has a PEG ratio of 0.65, significantly lower than the industry average of 1.31, suggesting it may be undervalued relative to its expected earnings growth [4]. - The company's P/B ratio stands at 2.85, compared to the industry average of 5.93, indicating a favorable valuation [5]. - FIVN's P/S ratio is 1.46, which is also lower than the industry average of 3.73, reinforcing the perception of undervaluation [6]. - The P/CF ratio for FIVN is 12.96, compared to the industry average of 17.95, further supporting the argument that the stock is undervalued based on its cash flow outlook [7]. - Overall, the combination of these metrics positions Five9 as one of the strongest value stocks in the market, particularly when considering its earnings outlook [8].

Core Insights - Five9 (FIVN) is focusing its growth strategy on a strategic partner ecosystem as enterprises transition to AI-driven customer experience platforms [1] - The company is enhancing its cloud contact center platform by integrating it with enterprise systems, allowing for modernization of customer service operations while maintaining existing workflows [1] Growth Strategy - The ecosystem-driven strategy is enhancing Five9's capability to secure larger and more complex enterprise deployments, with partner integrations becoming essential for customer service modernization [2] - The partnership with ServiceNow is a key component, enabling unified voice and digital interactions powered by AI, which is increasingly embedded in daily workflows [2] - Collaborations with Salesforce and Google Cloud are expected to broaden enterprise adoption and enhance customer engagement capabilities [3] Financial Performance - Five9 reported revenues of $286 million in Q3 2025, reflecting an 8% year-over-year growth, with subscription revenues increasing by 10% [3] - The Zacks Consensus Estimate for Five9's 2025 revenues is $1.15 billion, indicating a 10.04% year-over-year growth [3] - The estimated earnings for 2025 are projected at $2.93 per share, suggesting an 18.62% year-over-year growth [10] Competitive Landscape - Five9 faces competition from NICE and RingCentral in the cloud-based customer communications and contact center software market [4] - NICE focuses on analytics and workforce optimization, while RingCentral emphasizes unified communications [4] - Five9 differentiates itself through deeper workflow integration with enterprise systems rather than modular add-ons [4] Valuation Metrics - Five9 shares are currently trading at a forward 12-month price-to-earnings ratio of 17.03X, which is lower than the industry's 33.38X [8] - The company holds a Value Score of A, indicating favorable valuation metrics [8] - Five9 has experienced a share price decline of 25.2% over the past six months, underperforming the Zacks Internet - Software industry [5]

Industry Overview - The AI-driven bull run that began in 2023 and 2024 has continued into 2025, with strong momentum in the AI infrastructure segment [2] - The demand for AI infrastructure remains robust, supported by a bullish market scenario [2] Capital Expenditure Trends - Four of the "magnificent 7" stocks are set to invest $380 billion in 2025 for AI infrastructure development, representing a 54% year-over-year increase in capital spending [3] - Projections indicate that AI infrastructure capital expenditure will exceed $1 trillion by 2028, with estimates reaching a cumulative total of $5 trillion by 2030 [4] Investment Recommendations - Five small and mid-cap stocks are highlighted as potential beneficiaries of the AI boom in 2026: Calix Inc. (CALX), Qualys Inc. (QLYS), Innodata Inc. (INOD), Five9 Inc. (FIVN), and UiPath Inc. (PATH) [5][10] Company Profiles Calix Inc. (CALX) - CALX provides cloud and software platforms for communications service providers, integrating AI to enhance operations and subscriber engagement [8][9] - Expected revenue and earnings growth rates for CALX are 12.4% and 35.3%, respectively, for the next year [11] Qualys Inc. (QLYS) - QLYS specializes in cloud-based cybersecurity solutions, benefiting from increased demand amid rising cyber threats [12][15] - The company has a projected revenue growth rate of 7.7% and earnings growth of 6.5% for the next year [16] Innodata Inc. (INOD) - INOD plays a crucial role in the AI ecosystem by providing high-quality data for training language models, with expected revenue and earnings growth rates of 24.1% and 35.6%, respectively [18][21] - The company supports five of the seven major hyperscalers and is expanding its capabilities in AI services [19][20] Five9 Inc. (FIVN) - FIVN offers intelligent cloud software for contact centers, with a focus on AI-driven solutions that enhance customer interactions [22][25] - The expected revenue and earnings growth rates for FIVN are 9.5% and 8.3%, respectively, for the next year [26] UiPath Inc. (PATH) - PATH provides a robotic process automation platform that leverages AI to streamline operations, with new generative AI features enhancing its offerings [27][28] - The company anticipates revenue and earnings growth rates of 9.3% and 14.2%, respectively, for the next year [30]

Group 1 - Five9, Inc. is considered one of the best agentic AI stocks to buy, with a Moderate Buy consensus from analysts and a 12-month price target of $34–$35, indicating a potential upside of approximately 60%–65% from its recent share price in the low-20s [1] - The company introduced "Genius AI" upgrades at its CX Summit 2025, enhancing AI capabilities in routing, quality management, and analytics to improve customer experience programs [2] - The Genius AI release is positioned as an integration step, where routing and quality systems inform analytics, which in turn guides assistance and workflows, aiming to reduce fragmentation and enhance operational outcomes [3] Group 2 - Five9 provides cloud contact center software that automates customer interactions across voice and digital channels, offering a platform that includes core contact center capabilities, workforce optimization tools, and AI features [4]

Core Insights - The company is focused on a two-pronged growth strategy, emphasizing both product development and market approach [1] - There are two significant growth vectors identified for the company moving forward [1] Growth Vectors - The AI for Customer Experience (CX) segment is a major growth driver, with AI revenue growing 41% year-over-year and constituting 11% of enterprise subscription revenue [2] - AI bookings for the quarter increased by 80% year-over-year, indicating strong demand and rapid growth in this area [2] - The traditional Contact Center as a Service (CCaaS) market also presents a solid growth opportunity, with Gartner noting that 40% of contact center agents are currently in the cloud, leaving a substantial portion still on-premise [3]

Five9 (NasdaqGM:FIVN) FY Conference Summary Company Overview - **Company**: Five9 - **Industry**: Cloud-based Contact Center as a Service (CCaaS) Key Points Growth Strategy - Five9 is pursuing a two-pronged growth strategy focusing on product development and market approach [3][4] - The company identifies two major growth factors: AI for Customer Experience (CX) and traditional CCaaS market growth [3][4] - AI revenues are growing at 41% year-over-year, now constituting 11% of enterprise subscription revenue [3][4] - AI bookings increased by 80% year-over-year in the last quarter, indicating strong demand [4] Market Dynamics - Gartner projects that the percentage of contact center agents in the cloud will rise from 40% to 80% over the next several years, providing a significant growth opportunity for Five9 [4][5] - The migration to cloud solutions is expected to offset any potential cannibalization of human agents due to AI advancements [5][6] AI Adoption and Customer Engagement - The adoption of AI solutions is evolving, with many brands transitioning from proof of concepts to defined projects [12][14] - Customers are realizing the importance of integrated platforms for AI deployment, leading to increased demand for Five9's solutions [14][16] - Five9's AI offerings include self-service AI agents, Agent Assist products, and AI Insights for customer experience optimization [17][20] Partnerships and Market Position - Five9 has strengthened partnerships with major players like Salesforce, ServiceNow, and Google, with significant year-over-year growth in bookings [33][34][35] - The company is gaining market share as its growth rates outpace those of its partners, indicating a stronger position within their ecosystems [36] Financial Performance - Subscription revenue growth was 16% in Q2 and 10% in Q3, impacted by tough comparisons and a decline in the commercial business segment [42][44] - The company expects to see improved revenue trends as it laps tough comparisons and benefits from a strong backlog of new logo and install-based bookings [46][47] - Five9 is guiding for an annual revenue of $1.254 billion, with expectations of double-digit growth in the second half of the year [46] Profitability and Cost Management - Adjusted EBITDA margin improved from 19% in 2024 to a guidance of at least 24% for the current year, with a mid-term target of 25%-30% by 2027 [56] - The company is focused on cost management while reinvesting in strategic areas like AI and go-to-market initiatives [56] Capital Allocation - Five9 announced a $150 million share buyback program over two years, reflecting confidence in its valuation and cash flow generation [63] - The company is open to tech tuck-in acquisitions but remains cautious about overpaying for assets [66] Leadership and Culture - Five9 is seeking a new leader with a strong track record in product innovation and operational excellence to maintain its customer-centric culture [68][69] Additional Insights - The company emphasizes the importance of conversational data for AI effectiveness, positioning itself as a key player in the orchestration of AI and human interactions [27][28] - Five9's NPS scores are notably high, reflecting its commitment to customer success and satisfaction [69]

Core Insights - Five9 (FIVN) shares have declined 49.1% over the past 12 months, underperforming the Zacks Computer and Technology sector's return of 27.3% and the Zacks Internet Software industry's appreciation of 4.5% due to macroeconomic challenges and a transitional phase in its commercial business [1][5][9] Financial Performance and Projections - For 2025, FIVN expects revenues between $1.1435 billion and $1.1495 billion, with an adjusted EBITDA margin of approximately 23% [3] - The company anticipates exceeding a non-GAAP EPS of $3.14 for 2026, with an adjusted EBITDA margin expanding to 24% or higher and annual free cash flow reaching approximately $175 million [3] Competitive Positioning - FIVN differentiates itself with a platform that integrates AI agents and human agents, leveraging complete conversational history to enhance customer relationships [6][7] - The company has attracted over 3,000 customers globally and achieved its highest number of new $1 million-plus ARR logo wins in two years during Q3 2025 [7] AI and Market Trends - FIVN is benefiting from a surge in demand for AI-powered customer experience solutions, with enterprise AI revenue growing 41% year over year and AI bookings rising over 80% in Q3 2025 [8][9] - Strategic partnerships with ServiceNow, Salesforce, and Alphabet are enhancing FIVN's market position, with ServiceNow-related bookings quadrupling year to date [10][11] Valuation and Earnings Estimates - FIVN shares are attractively valued with a forward 12-month Price/Earnings ratio of 17.85X, significantly lower than the industry average of 34.04X and the sector average of 29.04X [12] - The Zacks Consensus Estimate for EPS in 2025 is $2.93, indicating an 18.62% year-over-year growth, reflecting increasing confidence in FIVN's subscription-led business model [15] Conclusion - Despite recent underperformance, FIVN is positioned favorably due to strengthening fundamentals, a data-driven platform advantage, and accelerating demand for AI solutions [16]

Group 1 - Five9 (FIVN) closed at $20.65, with a 4.1% gain over the past four weeks, and a mean price target of $33.95 suggests a 64.4% upside potential [1] - The mean estimate consists of 20 short-term price targets with a standard deviation of $8.77, indicating variability among analysts; the lowest estimate is $22.00 (6.5% increase), while the highest is $59.00 (185.7% increase) [2] - Analysts show strong agreement in revising earnings estimates higher, with the Zacks Consensus Estimate for the current year increasing by 25.4% over the last 30 days [11][12] Group 2 - FIVN holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - The consensus price target may not be a reliable indicator of the stock's potential gain, but it does imply a positive direction for price movement [14]