Financial Data and Key Metrics Changes - Subscription revenue grew 14% year over year, now comprising 80% of total revenue [4][28] - Adjusted EBITDA margin reached 19% for Q1, with operating cash flow at a record $48 million, representing 17% of revenue [4][30] - Free cash flow also hit an all-time high of $35 million, or 12% of revenue [4][30] - Q1 revenue growth was reported at 13% year over year, primarily driven by subscription revenue [28] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 20% year over year, contributing significantly to overall subscription revenue growth [4] - Enterprise AI revenue grew 32% year over year, making it the fastest-growing category in the product portfolio [28][15] - The commercial business, representing 10% of total revenue, declined in the single digits on an LTM basis [28] Market Data and Key Metrics Changes - The total addressable market (TAM) for the core CCaaS market is estimated at $24 billion, with ongoing cloud migrations presenting significant opportunities [16] - The company is experiencing increased volume in new logo wins year over year, despite longer sales cycles for larger deals [22] Company Strategy and Development Direction - The company is focused on transformation initiatives to bolster long-term competitive positioning and aims to achieve the "Rule of 40" by 2027 [5] - Investment in AI and go-to-market initiatives is prioritized to drive revenue growth and capitalize on an expanding TAM [5][19] - The company is enhancing partnerships, such as with Salesforce, to deliver better AI-powered customer experiences [8][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic challenges, including inflation and uncertainty in consumer spending, which may impact future performance [2][22] - The company remains optimistic about long-term growth opportunities, particularly in the upper end of the market, which is the least penetrated [16] - Management has adopted a more prudent stance in guidance due to heightened macro uncertainty [34] Other Important Information - A 4% reduction in the global workforce was announced, expected to result in annualized compensation-related non-GAAP expense reductions of $20 to $25 million [32] - The company plans to retire $434 million in convertible notes in cash when they mature in June [31] Q&A Session Summary Question: Will Q1 be the trough for subscription revenue growth? - Management has not provided specific guidance on subscription growth but maintains annual total revenue guidance unchanged at $1.14 billion [38] Question: Can you elaborate on the longer sales cycles due to macro conditions? - Longer sales cycles are primarily observed in the large enterprise market, with some deals slipping into the next quarter [49][51] Question: How does Genius AI fit into the current environment? - The AI revolution is prompting companies to accelerate their AI initiatives, with significant momentum in decision-making observed [60][61] Question: What is the impact of the transformation on different divisions? - The reduction in force affected most departments, but sales capacity remains unaffected, with continued investment in go-to-market initiatives [63] Question: What is driving the growth in BYOT with Salesforce? - The growth is attributed to Salesforce's investment in AI and the simplification of the go-to-market strategy through Five9 Fusion [68] Question: How is the relationship with BT progressing after recent tariff announcements? - The relationship remains strong, with ongoing good activity and deal wins [96]

Q1 2025 Investor Presentation Five9 (NASDAQ: FIVN) Safe Harbor This presentation is proprietary and is intended solely for the information of the persons to whom it is presented. Disclosure of this presentation, its contents, extracts or abstracts to third parties is not authorized without the express written permission of Five9, Inc. (the "Company"), and it may not be retained, reproduced or distributed, in whole or in part, by any means (including electronic) without the prior written consent of Five9, In ...

Financial Data and Key Metrics Changes - Subscription revenue grew 14% year over year, now comprising 80% of total revenue [3][27] - Adjusted EBITDA margin reached 19% for Q1, with operating cash flow at a record $48 million, representing 17% of revenue [3][30] - Free cash flow also hit an all-time high of $35 million, or 12% of revenue [3][30] - Non-GAAP EPS was $0.62 per diluted share, up 29% year over year [29] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 20% year over year, contributing significantly to overall subscription revenue growth [3][27] - Enterprise AI revenue increased by 32% year over year, making it the fastest-growing category in the product portfolio [14][27] Market Data and Key Metrics Changes - The total addressable market (TAM) for the core CCaaS market is estimated at $24 billion, with ongoing cloud migrations expected to drive growth [15] - International business represents about 12% of total revenue, with some resistance noted in international regions towards US vendors [20][83] Company Strategy and Development Direction - The company aims to reestablish itself as a "Rule of 40" company by targeting adjusted EBITDA above 40 and approaching the same for free cash flow by 2027 [4][43] - Focus on AI and go-to-market initiatives to drive revenue growth and capitalize on an expanding TAM [4][15] - A recent operational review led to a 4% reduction in the global workforce, aimed at improving profitability and reallocating resources towards strategic areas [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite macroeconomic challenges, including inflation and consumer spending uncertainty [3][20] - The company is maintaining its full-year revenue guidance at $1.14 billion, with a cautious outlook due to macro uncertainties [34][80] Other Important Information - The company has deepened its partnership with Salesforce through the launch of Five9 Fusion, enhancing AI-powered customer experiences [7][66] - The AI blueprint program has shown promising results, with 50% of customers participating purchasing AI products [15][60] Q&A Session Summary Question: Will Q1 be the trough for subscription revenue growth this year? - Management has not provided specific guidance on subscription growth but maintains the annual revenue guidance unchanged at $1.14 billion, reflecting stable macro conditions [38][39] Question: Can you elaborate on the longer sales cycles in the enterprise market? - Longer sales cycles are primarily observed in larger enterprise deals, with some deals slipping into the next quarter due to macro conditions [48][51] Question: How does the Genius AI play into the current environment? - The AI revolution is prompting companies to accelerate their AI initiatives, with significant momentum in decision-making and ROI delivery from AI solutions [55][60] Question: What is driving the growth in BYOT (Bring Your Own Telephony)? - The growth in BYOT is driven by Salesforce's investment in AI and the simplification of the go-to-market strategy through Five9 Fusion [66] Question: How has the international business been affected by recent geopolitical events? - International business represents a small portion of total revenue, and while there is some resistance, confidence remains strong among existing customers [83][85]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, highlighting a shift to net income and growth in total assets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $370,344 | $362,546 | | Total current assets | $1,287,451 | $1,248,568 | | Total assets | $2,089,924 | $2,051,214 | | Total current liabilities | $638,892 | $641,691 | | Total liabilities | $1,425,638 | $1,429,022 | | Total stockholders' equity | $664,286 | $622,192 | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $279,705 | $247,010 | | Gross profit | $153,732 | $132,480 | | Loss from operations | ($5,428) | ($20,695) | | Net income (loss) | $576 | ($7,077) | | Diluted net income (loss) per share | $0.01 | ($0.10) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,384 | $32,353 | | Net cash used in investing activities | ($38,103) | ($266,823) | | Net cash (used in) provided by financing activities | ($2,163) | $331,396 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes provide detailed explanations of accounting policies, revenue recognition, debt instruments, and significant corporate events impacting the financial statements - As of March 31, 2025, the company's remaining performance obligations (RPO) totaled **$1,066.7 million**. It expects to recognize approximately three-fourths of this amount as revenue over the next 24 months[41](index=41&type=chunk) - In March 2024, the company issued **$747.5 million** of 1.00% convertible senior notes due 2029. A portion of the proceeds was used to repurchase approximately **$313.1 million** of its 0.50% convertible senior notes due 2025[61](index=61&type=chunk)[65](index=65&type=chunk) - On August 27, 2024, the company acquired Acqueon for approximately **$173.8 million**, resulting in **$139.4 million** of goodwill. This acquisition is intended to expand the company's outbound and proactive customer engagement capabilities[121](index=121&type=chunk)[123](index=123&type=chunk) - A reduction in force plan (the "2025 Plan") was approved on March 31, 2025, to reduce global full-time employees by **4%**. Estimated cash expenditures are **$7 million to $9 million**. This follows a 2024 plan that reduced headcount by **6%**[128](index=128&type=chunk)[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results for Q1 2025, highlighting revenue growth, a shift to net income, and improved Adjusted EBITDA [Overview](index=33&type=section&id=Overview) This overview describes the company as a leading cloud contact center solution provider, emphasizing its SaaS model, strategic shift to larger customers and AI integration, and recent restructuring efforts - The company is a leading provider of intelligent cloud contact centers with **over 3,000 customers**, generating revenue through a **SaaS business model**[130](index=130&type=chunk)[136](index=136&type=chunk) - Subscription and related usage fees accounted for **93% of revenue** for the three months ended March 31, 2025 and 2024[132](index=132&type=chunk) - The company executed a reduction in force plan in August 2024, reducing employees by **~6%**, and approved another plan in March 2025 to reduce employees by **~4%** to prioritize investments in areas like AI[134](index=134&type=chunk)[135](index=135&type=chunk) [Key Operating and Non-GAAP Financial Performance Metrics](index=34&type=section&id=Key%20Operating%20and%20Non-GAAP%20Financial%20Performance%20Metrics) This section reviews key operating and non-GAAP financial metrics, including the Annual Dollar-Based Retention Rate and Adjusted EBITDA, reflecting operational performance Annual Dollar-Based Retention Rate | Period | Rate | | :--- | :--- | | Twelve Months Ended March 31, 2025 | 107% | | Twelve Months Ended March 31, 2024 | 109% | Reconciliation of Net Income (Loss) to Adjusted EBITDA | Metric | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net income (loss) | $576 | ($7,077) | | Adjusted EBITDA | $52,703 | $37,586 | [Key Components of Our Results of Operations](index=36&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) This section outlines the primary components of the company's financial results, detailing revenue sources, cost of revenue, and operating expense categories - Revenue consists of recurring subscription and related usage fees, and professional services revenue[146](index=146&type=chunk) - Cost of Revenue primarily consists of personnel costs, telecommunications provider fees, data center expenses, and amortization of acquired technology and internal-use software[149](index=149&type=chunk) - Operating expenses are broken down into Research and Development, Sales and Marketing, and General and Administrative categories[150](index=150&type=chunk) [Results of Operations for the Three Months Ended March 31, 2025 and 2024](index=37&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) This section details the results of operations for Q1 2025 and 2024, showing a **13% revenue increase**, improved gross margin, reduced operating loss, and a shift to **net income** Revenue Performance | Period | Revenue (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | | Q1 2025 | $279,705 | $32,695 | 13% | | Q1 2024 | $247,010 | | | Operating Expenses Analysis | Expense Category | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (in millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $41.1 | $41.5 | ($0.4) | (1)% | | Sales and marketing | $82.9 | $81.1 | $1.7 | 2% | | General and administrative | $35.2 | $30.5 | $4.7 | 15% | - The increase in General and Administrative expenses was primarily due to a **$1.6 million** increase in professional costs for strategic consulting services and a **$1.2 million** increase in personnel-related costs[161](index=161&type=chunk) - In Q1 2024, the company recognized a **$6.6 million** gain on the early extinguishment of debt related to the repurchase of its 2025 convertible senior notes[162](index=162&type=chunk)[163](index=163&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section details the company's strong liquidity position as of March 31, 2025, with substantial cash and marketable investments, and discusses its financing activities and future capital sufficiency - As of March 31, 2025, the company had **$370.3 million** in cash and cash equivalents and **$671.4 million** in marketable investments[164](index=164&type=chunk)[165](index=165&type=chunk) - In March 2024, the company issued **$747.5 million** of 2029 convertible senior notes, with net proceeds of approximately **$728.8 million**[166](index=166&type=chunk) - The company plans to use cash to settle the 2025 convertible senior notes that mature on June 1, 2025[167](index=167&type=chunk) Cash Flow Summary | Cash Flow Activity | Three Months Ended Mar 31, 2025 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $48,384 | $32,353 | | Net cash used in investing activities | ($38,103) | ($266,823) | | Net cash (used in) provided by financing activities | ($2,163) | $331,396 | [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to the company's critical accounting policies and estimates since the December 31, 2024 Annual Report on Form 10-K - There have been no material changes to critical accounting policies and estimates since the 2024 Annual Report on Form 10-K[179](index=179&type=chunk) [Recent Accounting Pronouncements](index=42&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 of the condensed consolidated financial statements for information on recent accounting pronouncements - Information regarding recent accounting pronouncements is available in Note 1 of the financial statements[180](index=180&type=chunk) [Contractual and Other Obligations](index=42&type=section&id=Contractual%20and%20Other%20Obligations) This section outlines the company's material cash requirements, including obligations for convertible senior notes, leases, and various service agreements - As of March 31, 2025, the company has outstanding principal of **$434.4 million** for its 2025 convertible senior notes (due June 1, 2025) and **$747.5 million** for its 2029 convertible senior notes (due March 15, 2029)[182](index=182&type=chunk)[183](index=183&type=chunk) - Total lease obligations as of March 31, 2025, were **$50.7 million** for operating leases and **$22.9 million** for finance leases[185](index=185&type=chunk) - The company has commitments of **$29.5 million** for cloud services/software and **$13.5 million** for hosting/telecommunication services[186](index=186&type=chunk)[188](index=188&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section discusses the company's market risk exposures, primarily from interest rates and foreign currency exchange rates, noting no material changes since December 31, 2024 - The company's market risk exposure, primarily from interest rates and foreign currency, has not changed materially since December 31, 2024[192](index=192&type=chunk) - A hypothetical **100 basis point** change in interest rates would not materially impact the value of cash and marketable investments[193](index=193&type=chunk) - The convertible senior notes carry fixed interest rates and are therefore not subject to interest rate risk[195](index=195&type=chunk) - A hypothetical **10%** change in foreign currency exchange rates would have a maximum impact of **$2.8 million** on operating expenses[197](index=197&type=chunk) [Controls and Procedures](index=45&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - Management, including the CEO and CFO, concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[199](index=199&type=chunk) - There was no change in internal control over financial reporting during Q1 2025 that has materially affected, or is reasonably likely to materially affect, internal controls[201](index=201&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in a putative class action lawsuit and a related shareholder derivative action, both of which are being vigorously defended with uncertain outcomes - A putative class action complaint was filed against the company on December 4, 2024, alleging violations of the Securities Exchange Act of 1934[105](index=105&type=chunk)[190](index=190&type=chunk) - A related shareholder derivative action was filed on March 18, 2025, and has been stayed pending the resolution of the motion to dismiss in the securities class action[107](index=107&type=chunk)[191](index=191&type=chunk) - The company cannot predict the outcome or estimate potential losses from these lawsuits and intends to defend them vigorously[106](index=106&type=chunk) [Risk Factors](index=46&type=section&id=ITEM%201A.%20Risk%20Factors) This section confirms no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes from the Risk Factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[205](index=205&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not applicable[206](index=206&type=chunk) [Defaults Upon Senior Securities](index=46&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[207](index=207&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable - Not applicable[208](index=208&type=chunk) [Other Information](index=46&type=section&id=ITEM%205.%20Other%20Information) During the fiscal quarter ended March 31, 2025, no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements - During the fiscal quarter ended March 31, 2025, none of the Company's directors and officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement[209](index=209&type=chunk) [Exhibits](index=47&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including management contracts, compensatory plans, and required CEO/CFO certifications - The report lists various exhibits filed, including management contracts, CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[210](index=210&type=chunk)[211](index=211&type=chunk)

Investors might want to bet on Five9 (FIVN) , as it has been recently upgraded to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of a changing ea ...

Core Viewpoint - Five9 (FIVN) is expected to report first-quarter 2025 results on May 1, with anticipated revenues of $271.5-$272.5 million, reflecting a 10.35% increase year-over-year [1][2] Revenue and Earnings Expectations - The Zacks Consensus Estimate for revenues is $272.58 million for the quarter [1] - Non-GAAP earnings are projected to be between 47-49 cents per share, with the consensus estimate at 48 cents, unchanged from the previous year [2] Performance Drivers - Five9's performance is expected to benefit from strong enterprise AI revenue growth, which increased by 46% year-over-year in Q4 2024, contributing to 9% of enterprise subscription revenues [3] - The company achieved a record adjusted EBITDA margin of 23.1% and generated $79 million in free cash flow in Q4 2024, indicating strong operational efficiency [4] - Partnerships with major companies like Salesforce, ServiceNow, Microsoft, Verint, and Google are likely to enhance Five9's competitive position and customer acquisition [5] Macroeconomic Factors - The company may face challenges from macroeconomic factors such as persistent inflation, high interest rates, and currency fluctuations, which could impact performance [6] Earnings Prediction Model - According to the Zacks model, Five9 has an Earnings ESP of -11.27% and a Zacks Rank of 3, indicating lower odds of an earnings beat [7]

Investors with an interest in Internet - Software stocks have likely encountered both Five9 (FIVN) and F5 Networks (FFIV) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revisio ...

The market expects Five9 (FIVN) to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended March 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be releas ...

Innodata and Five9 could grow faster and overtake SoundHound AI in the near future. Innodata was once a tiny, slow-growth analytics software company that didn't attract much attention. But in 2018, it rolled out a suite of task-specific microservices aimed at preparing data for AI applications. When big tech companies develop a new AI project, they often spend 80% of their time preparing that data and the remaining 20% feeding it into the training algorithm. SoundHound AI (SOUN 0.86%), a developer of audio ...

Industry Overview - The Internet Software and Services sector is experiencing growth due to increased IT spending on hybrid operating environments and the high penetration of mobile devices, prompting businesses to invest in web-based infrastructure, applications, and security software [1][3] - The Internet Software industry is ranked in the top 37% of Zacks Industry Rank, indicating an expectation to outperform the market in the next three to six months [2] Growth Drivers - The industry is benefiting from the global digital transformation and the rapid adoption of Software as a Service (SaaS), which provides flexible and cost-effective application delivery [3] - There is a growing demand for web-based cybersecurity software due to the need to secure cloud platforms against cyber-attacks, leading to increased demand for performance management monitoring tools [5] Company Highlights Affirm Holdings Inc. (AFRM) - Affirm is projected to achieve revenues between $3.13 billion and $3.19 billion in fiscal 2025, driven by growing active merchant numbers and partnerships with companies like Apple Pay [11] - The expected revenue and earnings growth rates for Affirm are 36.9% and 96.4%, respectively, for the current year, with a short-term price target indicating a potential upside of 112.4% from the last closing price of $40.49 [12][13] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the adoption of AI tools, with a focus on personalized AI agents [14][16] - The expected revenue and earnings growth rates for Five9 are 9.8% and 5.7%, respectively, with a short-term price target suggesting a maximum upside of 190.4% from the last closing price of $23.07 [17] Unity Software Inc. (U) - Unity provides a platform for creating interactive, real-time 3D content across various devices, catering to developers and content creators [18][19] - The expected revenue and earnings growth rates for Unity are -2% and 31%, respectively, with a short-term price target indicating a potential upside of 82% from the last closing price of $19.23 [20][21] Olo Inc. (OLO) - Olo operates an open SaaS platform for restaurants, facilitating digital ordering and payment solutions, enhancing guest experiences [22][23] - The expected revenue and earnings growth rates for Olo are 17.5% and 40.9%, respectively, with a short-term price target suggesting a maximum upside of 62.1% from the last closing price of $6.17 [25] StoneCo Ltd. (STNE) - StoneCo provides financial technology solutions for electronic commerce in Brazil, distributing through proprietary Stone Hubs [26] - The expected revenue and earnings growth rates for StoneCo are 4.1% and -6.7%, respectively, with a short-term price target indicating a potential upside of 90.8% from the last closing price of $11.53 [27][28]