Five9 (FIVN) FY Conference Summary Company Overview - **Company**: Five9 (FIVN) - **Event**: FY Conference held on August 13, 2025 - **Key Speakers**: Mike (CEO), Brian (CFO) Key Points Industry and Market Dynamics - The CCaaS (Contact Center as a Service) market is still largely on-premise, with only 40% in the cloud, indicating significant growth potential for cloud migration [19][20] - The AI segment within Five9's offerings is growing rapidly, with AI revenue accelerating to 42% year-over-year, now constituting 10% of enterprise subscription revenue [5][6] Financial Performance - Five9 reported the highest quarterly ACV (Annual Contract Value) bookings in two years, with AI bookings tripling year-over-year [4][5] - Record profitability was achieved with 24% EBITDA margins [6][66] - The company anticipates revenue growth of 10-15% by 2027, driven by macroeconomic conditions and AI adoption [60] AI Strategy and Offerings - Five9's AI is embedded within its platform, providing access to contextual data, which is a competitive advantage [30][31] - The AI suite includes 10 SKUs, with self-service, agent assist, and workflow automation being the top three products driving growth [32][37] - The company emphasizes trust and governance in AI, addressing enterprise concerns [33] Executive Changes - Mike announced his transition from CEO to Executive Chairman due to health reasons, with Brian confirmed as the permanent CFO [10][14] - The leadership transition is aimed at setting the company up for long-term success [14][15] Partner Contributions - A significant portion of deals is influenced by partners, including ISVs and global systems integrators [23][24] - Partnerships with Salesforce and ServiceNow remain strong despite competitive investments in the space [28] Customer Trends and AI Impact - Customers are increasingly adopting AI, with expectations of self-service AI handling 5-15% of interaction volumes [50] - The company is seeing a net increase in ARR (Annual Recurring Revenue) as customers mature in their AI journey [47] Competitive Landscape - The acquisition of Cognigy by NICE highlights the competitive dynamics in the AI space, with Five9's AI business being a strong performer [54][55] - Five9's AI revenue is projected to grow significantly, with gross margins in the high seventies to low eighties [45][64] Future Outlook - Five9 is focused on maintaining sales capacity while improving productivity and targeting a diverse range of deals [62][63] - The company aims for gross margins to reach 66-68% in the intermediate term, driven by a shift towards higher-margin AI offerings [64][66] Investor Sentiment - The company believes it is positioned as a leader in AI within the CCaaS space, with strong revenue growth metrics that will shift investor perceptions [67][68] Additional Insights - The operational review earlier in the year has led to efficiency improvements, contributing to both top and bottom-line growth [7][66] - The company is optimistic about the future, with a strong pipeline and a focus on both large and mid-sized deals [63][68]

Core Insights - Five9 (FIVN) and Autodesk (ADSK) are both considered for investors looking for undervalued stocks in the Internet - Software sector [1] - Both companies currently hold a Zacks Rank of 2 (Buy), indicating a positive earnings outlook due to favorable analyst estimate revisions [3] Valuation Metrics - FIVN has a forward P/E ratio of 9.01, significantly lower than ADSK's forward P/E of 31.39, suggesting FIVN may be undervalued [5] - The PEG ratio for FIVN is 0.64, while ADSK's PEG ratio is 1.99, indicating FIVN's expected earnings growth is more favorable relative to its price [5] - FIVN's P/B ratio stands at 2.7, compared to ADSK's P/B of 24.74, further supporting the notion that FIVN is undervalued [6] Value Grades - Based on various valuation metrics, FIVN holds a Value grade of B, while ADSK has a Value grade of F, highlighting FIVN as the superior value option [6][7]

Core Insights - Five9 Inc. reported strong second-quarter 2025 results with adjusted earnings of $0.76 per share, exceeding estimates by 16.9% and showing a year-over-year increase of 46.2. Quarterly revenues reached a record $283.27 million, up 12.4% year over year, and beating estimates by 3% [1][10]. Financial Performance - Subscription revenues grew by 16% year over year, driven by a significant increase in Enterprise AI revenues, which rose by 42% year over year [2][10]. - Five9 achieved a 24% adjusted EBITDA margin and generated $21.6 million in free cash flow in the second quarter, indicating strong operational efficiency [7]. Product and Technology - The company offers a virtual contact center cloud platform that includes applications for customer service, sales, and marketing functions [3]. - Five9's platform features interactive virtual agents, agent assistance, workflow automation, and AI insights, optimizing customer interactions across various channels [4]. Strategic Partnerships - Strategic partnerships with major companies like Salesforce, Microsoft, ServiceNow, Verint Systems, and Alphabet have enhanced Five9's AI tool development and platform integration, contributing to client acquisition and retention [6]. Future Guidance - For Q3 2025, Five9 forecasts revenues between $283.0 million and $286.0 million, with adjusted EPS projected between $0.72 and $0.74, indicating year-over-year growth of 4.5% [8]. - For fiscal 2025, the revenue forecast is between $1.1435 billion and $1.1495 billion, reflecting a year-over-year growth of 9.8% [9]. Valuation Metrics - Five9 is currently trading at a forward P/E of 8.73X, significantly lower than the industry average of 27.50X and the S&P 500's 19.29X [10]. - The company has a price/sale ratio of 1.67X and a price/book ratio of 2.58X, both below industry averages, indicating an attractive valuation [10]. Market Outlook - Despite a year-to-date stock price decline of 40.3%, brokerage firms project a short-term price target increase of 51.2% from the last closing price of $24.28, suggesting a favorable risk-reward ratio [14][15].

Core Insights - Five9 reported strong Q2 2025 earnings, with GAAP revenue of $283.3 million, a 12% increase year-over-year, and non-GAAP EPS of $0.76, exceeding analyst expectations of $0.62 [1][2][6] Financial Performance - Revenue of $283.3 million surpassed analyst estimates by $8.1 million, reflecting a 12.4% year-over-year increase from $252.1 million in Q2 2024 [2][3] - Non-GAAP EPS increased by 46.2% year-over-year, from $0.52 in Q2 2024 to $0.76 in Q2 2025 [3] - Adjusted EBITDA margin reached a record 24.0%, up from 16.6% in the prior year [3][6] - Gross margin improved to 54.9%, a 1.9 percentage point increase from 53.0% in Q2 2024 [3] Business Overview and Strategy - Five9 operates in the software-as-a-service sector, providing cloud-based call center solutions that facilitate customer interactions across multiple channels [4] - The company focuses on driving cloud adoption, advancing AI capabilities, supporting digital transformation, and expanding its partner ecosystem to capture market share [5] Key Developments - Enterprise AI revenue surged by 42% year-over-year, now constituting 10% of enterprise subscription revenue, with bookings more than tripling [7] - Subscription revenue grew by 16% year-over-year, contributing to improved gross margins and profitability [8] - The company launched new AI products, including Agentic AI Agents and tools for Trust & Governance, enhancing operational efficiency [10] Partnerships and Market Position - Collaborations with major software providers like Salesforce and Microsoft have expanded Five9's market reach, particularly in sectors such as financial services and healthcare [9] - Management noted challenges with U.S. vendor acceptance in international markets, adopting a cautious outlook for international growth [9] Future Guidance - For Q3 2025, management projects revenue between $283.0 million and $286.0 million, with full-year 2025 revenue guidance of $1.1435 billion to $1.1495 billion [11] - Non-GAAP EPS guidance for Q3 2025 is set at $0.72 to $0.74, with full-year guidance of $2.86 to $2.90 [11]

Core Insights - Five9, Inc. (FIVN) reported second-quarter 2025 earnings of 76 cents per share, exceeding the Zacks Consensus Estimate by 16.9% and reflecting a 46.2% year-over-year increase from 52 cents [1][10] - Revenues for the second quarter increased by 12.4% year over year to $283.27 million, surpassing the Zacks Consensus Estimate by 2.98%, driven by a 16% growth in subscription revenues, particularly in Enterprise AI [2][10] Financial Performance - FIVN's adjusted non-GAAP gross profit for Q2 was $175.55 million, up from $152.4 million in the same quarter last year, with a gross margin of 63%, an increase of 250 basis points year over year [4] - Non-GAAP operating income rose to $54.45 million from $31 million year over year, resulting in a non-GAAP operating margin of 19.2% [4] - The company generated an operating cash flow of $83.45 million and reported a free cash flow of $21.57 million with a free cash flow margin of 8% [6] Revenue Breakdown - U.S. revenues accounted for $251.4 million, representing 88.7% of total revenues and a 12% increase year over year [3] - International revenues reached $31.88 million, making up 11.3% of total revenues, with a year-over-year growth of 15.7% [3] Balance Sheet and Cash Flow - As of June 30, 2025, FIVN had cash and cash equivalents of $635.88 million, down from $1.04 billion in the previous quarter, with total debt at $733.6 million [5] - Total capital expenditure for the second quarter was $17.22 million [6] Guidance - For 2025, Five9 expects revenues between $1.1435 billion and $1.1495 billion, indicating a year-over-year growth of 9.6% [7] - The company anticipates GAAP net income per share between 23 cents and 30 cents, and non-GAAP net income per share in the range of $2.86-$2.90 [8] - For Q3 2025, revenues are projected between $283.0 million and $286.0 million, with a year-over-year growth of 8.1% [9]

Financial Performance - Five9 reported quarterly earnings of $0.76 per share, exceeding the Zacks Consensus Estimate of $0.65 per share, and up from $0.52 per share a year ago, representing an earnings surprise of +16.92% [1] - The company posted revenues of $283.27 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.98%, compared to year-ago revenues of $252.09 million [2] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.70 on revenues of $285.51 million, and for the current fiscal year, it is $2.76 on revenues of $1.14 billion [7] - The estimate revisions trend for Five9 was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Five9 belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company reported a Q2 revenue growth of 12% year over year, primarily driven by subscription revenue growth accelerating to 16% year over year [29] - Adjusted EBITDA grew 63% year over year, reaching an all-time record margin of 24% in Q2 [7][33] - Non-GAAP EPS grew 45% year over year to $0.76 per diluted share [33] Business Line Data and Key Metrics Changes - Subscription revenue now makes up 81% of total revenue, with enterprise AI revenue growth accelerating to 42% year over year [6][30] - Enterprise AI bookings more than tripled year over year in Q2, contributing significantly to overall growth [7][20] - The highest quarterly total ACV bookings in two years were achieved, excluding a previous mega deal [20] Market Data and Key Metrics Changes - Strong momentum was observed in the healthcare sector, with two large healthcare customers extending contracts and significantly increasing their anticipated ARR [8][27] - The company saw significant traction with technology partners, including Salesforce and Google Cloud, leading to increased bookings and pipeline [15][16] Company Strategy and Development Direction - The company is focused on transforming its business to drive top-line growth and bottom-line profitability, with a strong emphasis on AI solutions [5][17] - The launch of new AI capabilities, such as AgenTik AI agents, is aimed at enhancing customer experience and operational efficiency [10][11] - The company is strategically deemphasizing telecom usage and professional services to focus on high-margin subscription revenue [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong pipeline and RFPs at elevated levels [22] - The company anticipates minimal seasonality for the remainder of the year, based on discussions with top seasonal customers [36] - There is a commitment to achieving the Rule of 40 plus by 2027, driven by double-digit revenue growth and continued margin expansion [37] Other Important Information - The CEO announced retirement plans, with a search for a successor underway [4][5] - Brian Lee was appointed as the new CFO, with additional changes in the leadership team to enhance operational efficiency [18] Q&A Session All Questions and Answers Question: Sustainability of AI business growth - Management highlighted that enterprise AI bookings for net new logos doubled year over year, and installed base bookings quadrupled, indicating strong momentum and sustainability [42] Question: Deal elongation and international market momentum - Management noted that there was no significant elongation in deals this quarter, and strong growth was observed through international partners [47] Question: AI readiness across customer base - Management indicated that while many customers are ready to scale AI, a common hurdle is ensuring their data is in order to maximize AI deployment [81] Question: AI capabilities and competition - The company aims to be the best in AI for customer experience, focusing on deepening its capabilities rather than broadening into unrelated areas [76] Question: Vertical performance and AI adoption - Financial services, healthcare, and retail are identified as top verticals for AI adoption, with these sectors having better data readiness [88]

Q2 2025 Performance Highlights - Total revenue grew by 12% year-over-year[6] - Subscription revenue increased by 16% year-over-year[6] - Subscription revenue accounted for 81% of total revenue[6] - Adjusted EBITDA margin reached an all-time high of 24%, with a 63% year-over-year dollar growth[6] - The company achieved a 108% LTM DBRR (Dollar Based Retention Rate)[6] AI Metrics and Innovation - Enterprise AI revenue experienced a 42% year-over-year growth[7] - AI contributed to 10% of Enterprise Subscription Revenue[7] - AI represented over 20% of Enterprise New Logo ACV Bookings[7] - Enterprise AI bookings grew by over 3x year-over-year[7] Customer Success with AI - One healthcare customer increased Five9 ARR by approximately 40%, exceeding $11 million after extending their contract to a 5-year term[8] - An airline customer more than doubled their Five9 ARR, reaching over $7 million by expanding their AI portfolio[8] Guidance - The company projects Q3 2025 revenue between $283 million and $286 million[37] - The company anticipates full-year 2025 revenue between $11435 billion and $11495 billion[37]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section outlines Five9, Inc.'s Form 10-Q filing details, including registrant identification, trading symbol, and filer status [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides key identification details for Five9, Inc.'s Form 10-Q filing for the quarterly period ended June 30, 2025, including its incorporation state, principal executive offices, trading symbol, and filer status - Five9, Inc. is incorporated in Delaware, headquartered in San Ramon, CA, and trades on The NASDAQ Global Market under the symbol **FIVN**[2](index=2&type=chunk)[3](index=3&type=chunk) Filer Status as of June 30, 2025 | Filer Status | Mark | | :-------------------- | :--- | | Large accelerated filer | ☒ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | - As of July 25, 2025, there were **77,262,690** shares of common stock outstanding[4](index=4&type=chunk) [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section clarifies forward-looking statements and outlines key risks that could materially impact future financial performance [Nature of Forward-Looking Statements](index=3&type=section&id=Nature%20of%20Forward-Looking%20Statements) This section clarifies that the report contains forward-looking statements reflecting management's current views on future events, strategies, and financial performance, which are subject to substantial risks and uncertainties - Forward-looking statements in this report cover business, expenses, strategies, growth plans, product and customer initiatives, market growth projections, and industry outlook[10](index=10&type=chunk) - Such statements are identified by words like 'expect,' 'intend,' 'plan,' 'believe,' 'project,' 'forecast,' 'estimate,' 'may,' 'should,' and 'anticipate'[10](index=10&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) The company highlights important factors that could cause actual results to differ materially from forward-looking statements, including adverse economic conditions, challenges in customer acquisition and retention, AI solution development risks, and competitive market pressures - Adverse economic conditions, including inflation, high interest rates, and geopolitical conflicts, may continue to harm the business[11](index=11&type=chunk) - Failure to attract new customers, sell additional services, or retain existing subscriptions could harm revenue and gross margins[11](index=11&type=chunk) - Risks associated with AI solutions include potential decreases in subscription revenue if AI solutions do not replace licenses, unsuccessful development, reputational harm, and legal/business risks from evolving AI technologies[11](index=11&type=chunk) - Other risks include managing technical operations, reliance on third-party distributors and service providers, volatility in quarterly results, inability to attract and retain skilled employees, and challenges in international expansion[11](index=11&type=chunk)[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Five9, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Five9, Inc., including the balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining significant accounting policies and financial components [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the unaudited condensed consolidated balance sheets, detailing changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (In thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $205,479 | $362,546 | | Marketable investments | $430,397 | $643,410 | | Accounts receivable, net | $127,835 | $115,172 | | Total current assets | $894,194 | $1,248,568 | | Total assets | $1,704,860 | $2,051,214 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Convertible senior notes (current) | $— | $433,490 | | Total current liabilities | $201,589 | $641,691 | | Convertible senior notes (non-current) | $733,620 | $731,855 | | Total liabilities | $987,483 | $1,429,022 | | Total stockholders' equity | $717,377 | $622,192 | | Total liabilities and stockholders' equity | $1,704,860 | $2,051,214 | - Total assets decreased by approximately **$346.3 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in cash, cash equivalents, and marketable investments[16](index=16&type=chunk) - Current convertible senior notes were fully repaid by June 30, 2025, leading to a significant decrease in total current liabilities[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20(Unaudited)) This section presents the unaudited condensed consolidated statements of operations, highlighting revenue, gross profit, and net income (loss) Condensed Consolidated Statements of Operations (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $283,269 | $252,086 | $562,974 | $499,096 | | Gross profit | $155,404 | $133,672 | $309,136 | $266,152 | | Loss from operations | $(1,561) | $(19,365) | $(6,989) | $(40,060) | | Net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Basic net income (loss) per share | $0.02 | $(0.17) | $0.02 | $(0.27) | | Diluted net income (loss) per share | $0.01 | $(0.17) | $0.02 | $(0.27) | - The company reported net income for the three and six months ended June 30, 2025, reversing net losses from the prior year periods[19](index=19&type=chunk) - Revenue increased by **12%** for the three months and **13%** for the six months ended June 30, 2025, compared to the same periods in 2024[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) This section presents the unaudited condensed consolidated statements of stockholders' equity, detailing changes in capital structure Changes in Stockholders' Equity (In thousands) | Metric | Balance as of Dec 31, 2024 | Six Months Ended June 30, 2025 | | :----------------------------------- | :------------------------- | :----------------------------- | | Common Stock (Shares) | 75,808 | 77,263 | | Common Stock (Amount) | $76 | $77 | | Additional Paid-In Capital | $1,039,125 | $1,133,107 | | Accumulated Other Comprehensive Income | $636 | $108 | | Accumulated Deficit | $(417,645) | $(415,915) | | Total Stockholders' Equity | $622,192 | $717,377 | - Total stockholders' equity increased by **$95.2 million** from December 31, 2024, to June 30, 2025, driven by net income and stock-based compensation[27](index=27&type=chunk) - Stock-based compensation contributed **$86.0 million** to additional paid-in capital during the six months ended June 30, 2025[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents the unaudited condensed consolidated statements of cash flows, detailing operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $83,445 | $52,231 | | Net cash provided by (used in) investing activities | $191,063 | $(360,103) | | Net cash (used in) provided by financing activities | $(431,125) | $340,412 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(156,617) | $32,540 | | Cash, cash equivalents and restricted cash, End of period | $207,568 | $177,382 | - Operating cash flow increased significantly to **$83.4 million** for the six months ended June 30, 2025, from **$52.2 million** in the prior year[29](index=29&type=chunk) - Investing activities shifted from a net cash outflow of **$360.1 million** in 2024 to a net cash inflow of **$191.1 million** in 2025, primarily due to changes in marketable investment purchases and maturities[29](index=29&type=chunk) - Financing activities resulted in a net cash outflow of **$431.1 million** in 2025, mainly due to the repayment of 2025 convertible senior notes at maturity[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes to the financial statements, explaining accounting policies and key financial components [Note 1. Description of Business and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) Five9, Inc. is a cloud software provider for contact centers, incorporated in Delaware in 2001. The financial statements are prepared under GAAP, with no material changes to significant accounting policies from the prior annual report. The company is evaluating the impact of several new FASB ASUs on income tax disclosures and expense disaggregation - Five9, Inc. provides cloud software for contact centers and operates globally with offices in Europe, Asia, and Australia[32](index=32&type=chunk) - The company is assessing the impact of ASU **2023-09** (Income Taxes), ASU **2024-03**/**2025-01** (Expense Disaggregation Disclosures), and ASU **2024-04** (Debt with Conversion and Other Options) on its financial statements[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 2. Revenue](index=12&type=section&id=Note%202.%20Revenue) This note details the company's contract balances, including accounts receivable, deferred contract acquisition costs, and contract liabilities. It also outlines remaining performance obligations, with approximately three-fourths expected to be recognized over the next 24 months Contract Balances (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Accounts receivable, net | $127,835 | $115,172 | | Total deferred contract acquisition costs, net | $246,410 | $231,757 | | Net contract liabilities | $(65,462) | $(72,832) | - The company expects to recognize revenue on approximately three-fourths of its **$1,150.1 million** remaining performance obligations over the next **24** months[43](index=43&type=chunk) - Revenue recognized from contract liabilities at December 31, 2024, was **$11.4 million** for the three months and **$60.9 million** for the six months ended June 30, 2025[42](index=42&type=chunk) [Note 3. Investments and Fair Value Measurements](index=12&type=section&id=Note%203.%20Investments%20and%20Fair%20Value%20Measurements) This note details the company's marketable investments, classified as available-for-sale, and their fair value measurements using a three-level hierarchy. It also discusses an equity investment in a privately-held company and the fair value of convertible senior notes Short-Term Marketable Investments (Fair Value, in thousands) | Investment Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Certificates of deposit | $816 | $802 | | U.S. treasury securities | $217,137 | $442,572 | | U.S. agency and government-sponsored securities | $184,731 | $146,760 | | Commercial paper | $5,703 | $9,608 | | Municipal bonds | $900 | $— | | Corporate bonds | $21,110 | $43,668 | | Total | $430,397 | $643,410 | - The fair value of **2029** convertible senior notes was **$653.7 million** as of June 30, 2025, classified as Level **2** in the fair value hierarchy[52](index=52&type=chunk) - An equity investment in a privately-held company, accounted for at cost minus impairment, is classified within Level **3**, with a **$1.3 million** impairment charge recorded in **2024**[53](index=53&type=chunk) [Note 4. Financial Statement Components](index=16&type=section&id=Note%204.%20Financial%20Statement%20Components) This note provides a detailed breakdown of various financial statement components, including cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, property and equipment, other assets, and accrued and other current liabilities Cash and Cash Equivalents (In thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Cash | $167,900 | $162,902 | | Money market funds | $37,579 | $114,370 | | Certificates of deposit | $— | $496 | | U.S. treasury securities | $— | $42,946 | | U.S. agency and government sponsored securities | $— | $41,832 | | Total cash and cash equivalents | $205,479 | $362,546 | Property and Equipment, Net (In thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Computer and network equipment | $177,866 | $173,671 | | Computer software | $65,765 | $66,455 | | Internal-use software development costs | $72,900 | $49,340 | | Furniture and fixtures | $4,559 | $5,127 | | Leasehold improvements | $6,746 | $6,736 | | Property and equipment (gross) | $327,836 | $301,329 | | Accumulated depreciation and amortization | $(173,337) | $(156,441) | | Property and equipment, net | $154,499 | $144,888 | - Depreciation and amortization expense for property and equipment was **$21.6 million** for the six months ended June 30, 2025, up from **$19.8 million** in the prior year[58](index=58&type=chunk) [Note 5. Goodwill and Intangible Assets](index=18&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) This note outlines the changes in goodwill and intangible asset balances, including a measurement period adjustment for the Acqueon acquisition and amortization expenses. Developed technology represents the largest component of intangible assets Goodwill and Intangible Asset Activity (In thousands) | Metric | Goodwill | Intangible Assets | | :----------------------------------- | :------------ | :---------------- | | Beginning of period, Dec 31, 2024 | $365,436 | $65,632 | | Measurement period adjustment (Acqueon) | $1,262 | $— | | Amortization | $— | $(7,564) | | End of period, June 30, 2025 | $366,698 | $58,068 | Components of Intangible Assets (June 30, 2025, in thousands) | Component | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Amortization Period (Years) | | :------------------ | :-------------------- | :----------------------- | :------------------ | :----------------------------------------------------- | | Developed technology | $105,714 | $(57,317) | $48,397 | 5.9 | | Customer relationships | $12,850 | $(3,942) | $8,908 | 3.9 | | Trademarks | $1,300 | $(537) | $763 | 1.9 | | Total | $120,334 | $(62,266) | $58,068 | 5.5 | - Amortization expense for intangible assets was **$7.6 million** for the six months ended June 30, 2025, an increase from **$5.3 million** in the prior year[60](index=60&type=chunk) [Note 6. Debt](index=18&type=section&id=Note%206.%20Debt) This note details the company's convertible senior notes, including the issuance of 2029 notes, the repurchase and maturity of 2025 notes, and related capped call transactions. It also covers the interest expense associated with these debt instruments - In March **2024**, the company issued **$747.5 million** aggregate principal amount of **1.00%** convertible senior notes due **2029**[66](index=66&type=chunk) - The company repurchased **$313.1 million** of its **2025** convertible senior notes for **$304.9 million**, resulting in a **$6.6 million** extinguishment gain[62](index=62&type=chunk)[63](index=63&type=chunk) - The **2025** convertible senior notes matured on June **1**, **2025**, and obligations were settled in cash; no **2025** notes were outstanding as of June **30**, **2025**[76](index=76&type=chunk)[97](index=97&type=chunk) Interest Expense on Convertible Senior Notes (In thousands) | Note Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :----------------------------- | :----------------------------- | | 2029 Convertible Senior Notes | $5,503 | $3,662 | | 2025 Convertible Senior Notes | $1,820 | $2,686 | | Total | $7,323 | $6,348 | [Note 7. Stockholders' Equity](index=21&type=section&id=Note%207.%20Stockholders'%20Equity) This note details the company's capital structure, including common and preferred stock, shares reserved for future issuance, and activity related to stock options and restricted stock units (RSUs), including performance-based RSUs (PRSUs). It also provides a breakdown of stock-based compensation expense - As of June **30**, **2025**, **77,262,690** shares of common stock were issued and outstanding[78](index=78&type=chunk) Common Stock Reserved for Future Issuance (June 30, 2025, in thousands) | Category | Shares | | :------------------------------------- | :----- | | Stock options outstanding | 848 | | RSUs (including PRSUs) outstanding | 7,198 | | Shares available for future grant under 2014 Plan | 13,029 | | Shares available for future issuance under ESPP | 3,961 | | Total shares of common stock reserved | 25,036 | Total Stock-Based Compensation Expense (In thousands) | Expense Category | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------ | :------------------------------- | :----------------------------- | | Cost of revenue | $7,296 | $14,480 | | Research and development | $8,829 | $17,519 | | Sales and marketing | $13,355 | $24,929 | | General and administrative | $12,379 | $24,176 | | Total | $41,859 | $81,104 | - During the six months ended June **30**, **2025**, the company granted **267,711** market-based PRSUs with a grant date fair value of **$13.9 million**[83](index=83&type=chunk) [Note 8. Net Income (Loss) Per Share](index=24&type=section&id=Note%208.%20Net%20Income%20(Loss)%20Per%20Share) This note details the calculation of basic and diluted net income (loss) per share, including the weighted-average shares outstanding and the securities excluded from diluted EPS calculation due to their anti-dilutive effect Net Income (Loss) Per Share (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Basic shares | 76,654 | 74,203 | 76,303 | 73,845 | | Diluted shares | 88,523 | 74,203 | 88,964 | 73,845 | | Basic net income (loss) per share | $0.02 | $(0.17) | $0.02 | $(0.27) | | Diluted net income (loss) per share | $0.01 | $(0.17) | $0.02 | $(0.27) | - For periods of net loss (e.g., June **30**, **2024**), stock options, RSUs, and convertible senior notes were excluded from diluted EPS calculation as their effect would have been anti-dilutive[89](index=89&type=chunk) [Note 9. Income Taxes](index=24&type=section&id=Note%209.%20Income%20Taxes) This note details the provision for income taxes, which primarily consists of U.S. federal and state tax expenses due to IRC Section 174 requirements and tax attribute utilization limitations, as well as foreign current income tax expense. The company maintains a full valuation allowance against its U.S. net deferred tax assets Provision for Income Taxes (In thousands) | Period | June 30, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------ | | Three Months Ended | $1,382 | $3,345 | | Six Months Ended | $1,566 | $4,334 | - The provision for income taxes is primarily driven by U.S. federal and state tax expenses due to IRC Section **174** capitalization requirements and foreign current income tax[91](index=91&type=chunk) - A full valuation allowance is maintained against U.S. net deferred tax assets, as the company does not believe their realization is more likely than not[93](index=93&type=chunk) [Note 10. Commitments and Contingencies](index=25&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note outlines the company's principal commitments, including those under co-location hosting, telecommunication usage, cloud services, software and maintenance agreements, and convertible senior notes. It also addresses legal matters, specifically a securities class action and a related shareholder derivative action - As of June **30**, **2025**, commitments include **$12.0 million** for co-location hosting and telecommunication services, and **$25.5 million** for cloud services and software/maintenance agreements[95](index=95&type=chunk)[96](index=96&type=chunk) - The **2025** convertible senior notes matured on June **1**, **2025**, and **$747.5 million** of **2029** convertible senior notes remain outstanding[97](index=97&type=chunk) - The company is a defendant in a securities class action lawsuit filed in December **2024**, alleging violations of the Securities Exchange Act, and a related shareholder derivative action filed in March **2025**[98](index=98&type=chunk)[100](index=100&type=chunk) - The company intends to vigorously defend the lawsuits and cannot estimate the reasonably possible loss at this time[99](index=99&type=chunk) [Note 11. Segment and Geographical Information](index=26&type=section&id=Note%2011.%20Segment%20and%20Geographical%20Information) Five9 operates as a single operating and reportable segment, providing cloud contact center solutions through a SaaS business model. Revenue is generated from subscriptions, usage-based telephony, and professional services. The note also provides a breakdown of revenue and long-lived assets by geographic region - The company's Intelligent CX Platform, powered by Five9 Genius AI, offers a comprehensive suite of applications for customer service, sales, and marketing functions[102](index=102&type=chunk) Revenue by Geographic Region (In thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $251,390 | $224,532 | $498,446 | $443,792 | | International | $31,879 | $27,554 | $64,528 | $55,304 | | Total revenue | $283,269 | $252,086 | $562,974 | $499,096 | Long-Lived Assets, Net by Geographic Region (In thousands) | Region | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | United States | $142,702 | $136,382 | | International | $11,797 | $8,506 | | Total | $154,499 | $144,888 | [Note 12. Leases](index=28&type=section&id=Note%2012.%20Leases) This note provides details on the company's operating and finance leases for offices, data centers, and equipment, including lease expenses, cash flow impacts, balance sheet information, and maturity schedules. New equipment finance lease agreements were recognized during the period Lease Expenses (In thousands) | Lease Type | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------ | :------------------------------- | :----------------------------- | | Operating lease cost | $3,123 | $6,295 | | Total finance lease cost | $2,600 | $4,867 | - The company entered into additional three-year equipment finance lease agreements, recognizing **$3.9 million** in right-of-use assets and corresponding liabilities during the six months ended June **30**, **2025**[112](index=112&type=chunk) Total Lease Liabilities (In thousands) | Lease Type | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Total operating lease liabilities | $46,698 | $48,329 | | Total finance lease liabilities | $19,186 | $19,456 | - Weighted average remaining lease terms are **4.7** years for operating leases and **2.2** years for finance leases as of June **30**, **2025**[114](index=114&type=chunk) [Note 13. Acquisition](index=30&type=section&id=Note%2013.%20Acquisition) This note details the acquisition of Acqueon on August 27, 2024, for approximately $173.8 million. The acquisition aims to enhance Five9's AI-powered CX platform with omnichannel proactive customer engagement. The purchase price allocation includes significant goodwill and intangible assets - Five9 acquired Acqueon for approximately **$173.8 million** to expand its AI-powered CX platform and outbound capabilities[115](index=115&type=chunk) Preliminary Purchase Price Allocation (Acqueon Acquisition, in thousands) | Asset Acquired | Amount | | :------------------ | :----- | | Cash | $6,661 | | Tangible assets acquired | $3,559 | | Other assets acquired | $7,333 | | Acquired technology | $30,400 | | Customer relationships | $8,700 | | Trademarks | $800 | | Goodwill | $139,429 | | Total assets acquired | $196,882 | | Deferred tax liability | $(5,058) | | Liabilities assumed | $(17,997) | | Total | $173,827 | - Goodwill of **$139.4 million** was recorded, which is not deductible for tax purposes[116](index=116&type=chunk)[117](index=117&type=chunk) [Note 14. Restructurings](index=31&type=section&id=Note%2014.%20Restructurings) This note describes two reduction in force plans, the 2024 Plan and the 2025 Plan, implemented to drive profitable growth and prioritize AI investments. Both plans involved employee reductions and incurred restructuring costs, primarily for severance and benefits - The **2024** Plan, announced in August **2024**, reduced global full-time employees by approximately **6%**, incurring **$9.6 million** in restructuring costs[121](index=121&type=chunk) - The **2025** Plan, approved in March **2025**, reduced global full-time employees by approximately **4%**, incurring **$7.8 million** in restructuring costs and an additional **$2.1 million** in stock-based compensation costs during the three and six months ended June **30**, **2025**[122](index=122&type=chunk) - Both plans aimed to drive balanced, profitable growth and prioritize investments in key strategic areas, including artificial intelligence[121](index=121&type=chunk)[122](index=122&type=chunk) [Note 15. Subsequent Event](index=31&type=section&id=Note%2015.%20Subsequent%20Event) This note discloses a subsequent event: the signing of H.R.1, the One Big Beautiful Bill Act (OBBBA), on July 4, 2025. This new tax law introduces significant changes to the U.S. tax code, including bonus depreciation and R&D expensing, which are expected to impact the company's effective tax rate and financial position starting in Q3 2025 - **H.R.1**, the One Big Beautiful Bill Act (**OBBBA**), signed on July **4**, **2025**, will reinstate **100%** bonus depreciation and allow immediate expensing of domestic R&D expenditures[123](index=123&type=chunk) - The **OBBBA's** effects are not reflected in the Q**2** financial statements but are expected to impact the company's effective tax rate, cash flows, and capital allocation strategy starting in the third quarter of **2025**[123](index=123&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Five9, Inc.'s financial condition and results of operations for the three and six months ended June 30, 2025 and 2024. It covers the company's business overview, key performance metrics, detailed analysis of revenue and expenses, liquidity, capital resources, and critical accounting policies [Overview](index=32&type=section&id=Overview) Five9 is a leading provider of intelligent cloud contact centers, focusing on transitioning organizations from legacy systems to its AI-powered Intelligent CX Platform. The company has expanded its market to larger contact centers and embedded AI throughout its platform, driving revenue growth despite macroeconomic challenges and recent workforce reductions - Five9 is a leading provider of intelligent cloud contact centers with over **3,000** customers, offering a SaaS solution for managing customer interactions across multiple channels[125](index=125&type=chunk)[132](index=132&type=chunk) - The company's Intelligent CX Platform, powered by Five9 Genius AI, optimizes customer experience and agent productivity[125](index=125&type=chunk) - Subscription and related usage fees accounted for **93%** of revenue for the three and six months ended June **30**, **2025**[127](index=127&type=chunk) - The company implemented reduction in force plans in **2024** and **2025**, reducing global full-time employees by approximately **6%** and **4%** respectively, to drive profitable growth and prioritize AI investments[129](index=129&type=chunk)[131](index=131&type=chunk) [Key Operating and Non-GAAP Financial Performance Metrics](index=33&type=section&id=Key%20Operating%20and%20Non-GAAP%20Financial%20Performance%20Metrics) This section highlights key metrics used to evaluate business performance, including Annual Dollar-Based Retention Rate and Adjusted EBITDA. The retention rate remained stable, while Adjusted EBITDA saw significant growth, reflecting improved operational performance Annual Dollar-Based Retention Rate | Period | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | Retention Rate | 108% | 108% | - The Annual Dollar-Based Retention Rate remained stable at **108%** year-over-year, influenced by macroeconomic headwinds, seasonal decreases in certain markets, and growth from AI and existing customer expansions[136](index=136&type=chunk) Adjusted EBITDA (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Adjusted EBITDA | $67,950 | $41,781 | $120,652 | $79,366 | - Adjusted EBITDA increased by **62.6%** for the three months and **52.0%** for the six months ended June **30**, **2025**, compared to the same periods in **2024**, indicating improved operational performance[139](index=139&type=chunk) [Key Components of Our Results of Operations](index=35&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) This section details the primary components of the company's financial results: revenue, cost of revenue, and operating expenses. Revenue is primarily from recurring subscriptions and usage, supplemented by professional services. Cost of revenue is influenced by telecommunications fees and infrastructure investments, while operating expenses are categorized into research and development, sales and marketing, and general and administrative, all expected to increase in absolute dollars to support growth - Revenue consists of subscription and related usage fees (recurring) and professional services, with subscription fees recognized straight-line and usage fees based on actual usage[141](index=141&type=chunk) - Cost of revenue includes personnel, telecommunications fees, USF contributions, depreciation, data center costs, and amortization of acquired technology and internal-use software[145](index=145&type=chunk) - Research and development expenses are primarily personnel costs for new product development and improvements, expected to increase in absolute dollars[147](index=147&type=chunk) - Sales and marketing expenses include personnel, amortization of deferred contract acquisition costs, and advertising, also expected to increase in absolute dollars to drive revenue growth[148](index=148&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024](index=36&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section provides a detailed comparative analysis of the company's operating results, highlighting revenue growth driven by larger customers, increased gross profit, and changes in operating expenses. Net income was achieved in 2025, a significant improvement from net losses in 2024, despite increased interest expense from new convertible notes Operating Results as a Percentage of Revenue | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | 100% | 100% | 100% | 100% | | Gross profit | 55% | 53% | 55% | 53% | | Loss from operations | (1)% | (8)% | (1)% | (8)% | | Net income (loss) | 0% | (5)% | 0% | (4)% | - Revenue increased by **12%** and **13%** for the three and six months ended June **30**, **2025**, respectively, primarily due to growth from larger customers and enhanced brand awareness[152](index=152&type=chunk) - Gross profit increased by **16%** for both the three and six months ended June **30**, **2025**, compared to the same periods in **2024**, with gross margin improving from **53%** to **55%**[154](index=154&type=chunk) - Interest income and other decreased by **43%** and **25%** for the three and six months ended June **30**, **2025**, respectively, due to lower investable balances after the **2025** convertible notes maturity and increased foreign currency transaction losses[163](index=163&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily supported by sales, equity, and debt financings. As of June 30, 2025, it had $692.6 million in working capital. The 2025 convertible senior notes were repaid, and the 2029 notes remain outstanding. The company expects existing cash and equivalents to cover needs for the next 12 months but may seek additional financing for growth initiatives and potential acquisitions - As of June **30**, **2025**, working capital was **$692.6 million**, including **$205.5 million** in cash and cash equivalents and **$430.4 million** in marketable investments[164](index=164&type=chunk) - The company repaid **$434.4 million** for the maturity of the **2025** convertible senior notes on June **1**, **2025**[164](index=164&type=chunk)[176](index=176&type=chunk) - Net cash provided by operating activities increased to **$83.4 million** for the six months ended June **30**, **2025**, from **$52.2 million** in the prior year[171](index=171&type=chunk)[173](index=173&type=chunk) - Net cash provided by investing activities was **$191.1 million** in the six months ended June **30**, **2025**, a significant shift from a net outflow of **$360.1 million** in the prior year[174](index=174&type=chunk)[175](index=175&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states that there have been no material changes to the company's critical accounting policies and estimates since its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to critical accounting policies and estimates were reported since the Annual Report on Form **10-K** for the fiscal year ended December **31**, **2024**[179](index=179&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) This section refers readers to Note 1 of the condensed consolidated financial statements for information on recent accounting pronouncements - Refer to Note **1** for details on recent accounting pronouncements[180](index=180&type=chunk) [Contractual and Other Obligations](index=42&type=section&id=Contractual%20and%20Other%20Obligations) This section details the company's material cash requirements from contractual obligations, including convertible senior notes, leases, cloud services, software and maintenance agreements, and hosting and telecommunication usage services. It also addresses indemnification agreements and legal contingencies - The **2025** convertible senior notes matured on June **1**, **2025**, and were settled in cash. **$747.5 million** aggregate principal amount of **2029** convertible senior notes remain outstanding[182](index=182&type=chunk)[183](index=183&type=chunk) - Outstanding operating lease obligations totaled **$51.3 million** as of June **30**, **2025**, with **$6.8 million** due in the remainder of **2025**[185](index=185&type=chunk) - Outstanding finance lease obligations totaled **$20.4 million** as of June **30**, **2025**, with **$5.1 million** due in the remainder of **2025**[185](index=185&type=chunk) - Commitments for cloud services and software/maintenance agreements totaled **$25.5 million**, and hosting/telecommunication usage services totaled **$12.0 million** as of June **30**, **2025**[186](index=186&type=chunk)[187](index=187&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosure about Market Risk](index=44&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates. It notes no material changes in market risk exposure since December 31, 2024, and details the impact of these risks on investments and operations [Interest Rate Sensitivity](index=44&type=section&id=Interest%20Rate%20Sensitivity) The company's cash, cash equivalents, and marketable securities totaled $635.9 million as of June 30, 2025, invested in highly rated securities. A hypothetical 100 basis point change in interest rates would not materially impact the value of these investments. The 2029 convertible senior notes bear fixed interest rates, limiting interest rate risk - Cash, cash equivalents, and marketable securities totaled **$635.9 million** as of June **30**, **2025**, primarily invested in U.S. government and agency securities[193](index=193&type=chunk) - A hypothetical **100** basis point change in interest rates would not have a material impact on the value of the company's cash and marketable investments[193](index=193&type=chunk) - The **2029** convertible senior notes bear fixed interest rates, making them not subject to interest rate risk[195](index=195&type=chunk) [Foreign Currency Risk](index=44&type=section&id=Foreign%20Currency%20Risk) The company's sales are primarily U.S. dollar-denominated, limiting direct foreign currency risk on revenue. However, operating expenses are largely in local currencies, exposing the company to fluctuations. A hypothetical 10% change in foreign currency exchange rates could impact operating expenses by up to $5.8 million - Sales are primarily denominated in U.S. dollars, but operating expenses are generally in local currencies, creating foreign currency risk[196](index=196&type=chunk) - A hypothetical **10%** change in foreign currency exchange rates could impact operating expenses by a maximum of **$5.8 million** during the six months ended June **30**, **2025**[197](index=197&type=chunk) - The company has not entered into any hedging arrangements for foreign currency risk[197](index=197&type=chunk) [ITEM 4. Controls and Procedures](index=45&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting. Management concluded that disclosure controls were effective as of June 30, 2025, and no material changes occurred in internal control during the quarter [Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely - The CEO and CFO concluded that disclosure controls and procedures were effective as of June **30**, **2025**[199](index=199&type=chunk) - Disclosure controls are designed to provide reasonable assurance of timely and accurate reporting of information required under the Exchange Act[199](index=199&type=chunk) [Changes in Internal Control over Financial Reporting](index=45&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the three months ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the three months ended June **30**, **2025**[201](index=201&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information [ITEM 1. Legal Proceedings](index=46&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 10 of the condensed consolidated financial statements for information regarding legal proceedings - Information on legal proceedings is incorporated by reference from Note **10** to the condensed consolidated financial statements[204](index=204&type=chunk) [ITEM 1A. Risk Factors](index=46&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to Risk Factors were reported since the Annual Report on Form **10-K** for the fiscal year ended December **31**, **2024**[205](index=205&type=chunk) [ITEM 2. 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 marked as not applicable for this reporting period - This item is not applicable[206](index=206&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=46&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This item reports that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[207](index=207&type=chunk) [ITEM 4. Mine Safety Disclosures](index=46&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable for this reporting period - This item is not applicable[208](index=208&type=chunk) [ITEM 5. Other Information](index=46&type=section&id=ITEM%205.%20Other%20Information) This section discloses information regarding Rule 10b5-1 trading arrangements adopted, modified, or terminated by the company's directors and officers during the fiscal quarter ended June 30, 2025 Rule 10b5-1 Trading Arrangements (Fiscal Quarter Ended June 30, 2025) | Name | Title | Adoption Date | Expiration Date | Aggregate of securities to be sold | | :------------ | :-------------------- | :------------ | :-------------- | :----------------------------------- | | Panos Kozanian | EVP, Product Engineering | May 14, 2025 | March 31, 2026 | 39,623 | - The disclosed Rule **10b5-1** trading arrangement is intended to satisfy the affirmative defense conditions of Rule **10b5-1(c)**[209](index=209&type=chunk) [ITEM 6. Exhibits](index=47&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and the cover page interactive data file - Exhibits include certifications from the CEO and CFO (**31.1**, **31.2**, **32.1**) and various XBRL taxonomy documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**)[211](index=211&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) This section contains the duly authorized executive signatures affirming the submission of the report [Executive Signatures](index=48&type=section&id=Executive%20Signatures) This section contains the duly authorized signatures of Five9, Inc.'s Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, affirming the submission of the report - The report is signed by Michael Burkland (Chief Executive Officer), Bryan Lee (Chief Financial Officer), and Leena Mansharamani (Chief Accounting Officer) on July **31**, **2025**[214](index=214&type=chunk)

[Q2 2025 Earnings Highlights](index=1&type=section&id=Q2%202025%20Earnings%20Highlights) [Key Performance Indicators](index=1&type=section&id=Key%20Performance%20Indicators) Five9 reported record revenue of $283 million for Q2 2025, marking a 12% year-over-year increase. Enterprise AI revenue growth accelerated significantly to 42% year-over-year, now constituting 10% of Enterprise subscription revenue. The company also achieved a record operating cash flow of $35 million and an all-time high Adjusted EBITDA margin of 24% - Five9 reported record revenue of **$283 million** for the second quarter of 2025[1](index=1&type=chunk) - Enterprise AI revenue growth accelerated to **42% year-over-year** in Q2 2025, representing **10% of Enterprise subscription revenue**[1](index=1&type=chunk)[3](index=3&type=chunk) - Q2 2025 saw a record operating cash flow of **$35 million**[1](index=1&type=chunk)[3](index=3&type=chunk) - Adjusted EBITDA margin increased to a record **24%** in Q2 2025[3](index=3&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mike Burkland expressed satisfaction with strong Q2 results, highlighting accelerated subscription revenue growth (16% YoY) driven by Enterprise AI. He noted strong sales execution with Enterprise AI bookings more than tripling YoY and emphasized the meaningful benefits customers are realizing from the Genius AI suite, including new Agentic AI Agents and AI Trust & Governance - Subscription revenue accelerated to **16% year-over-year growth**[3](index=3&type=chunk) - Enterprise AI bookings more than **tripled year-over-year** in Q2[3](index=3&type=chunk) - Customers are benefiting from the Genius AI suite, with recent launches including Agentic AI Agents and AI Trust & Governance[5](index=5&type=chunk) [Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Overview) [Key Financial Metrics](index=1&type=section&id=Key%20Financial%20Metrics) Five9's second quarter 2025 financial performance showed significant improvements across key metrics compared to Q2 2024, including revenue growth, increased gross margins, and a shift from GAAP net loss to net income. Non-GAAP profitability also saw substantial gains | Metric | Q2 2025 | Q2 2024 | YoY Change | YoY % Change | | :-------------------------------- | :---------- | :---------- | :--------- | :----------- | | Revenue | $283.3 million | $252.1 million | $31.2 million | 12% | | GAAP Gross Margin | 54.9% | 53.0% | 1.9% | - | | Adjusted Gross Margin | 63.0% | 60.5% | 2.5% | - | | GAAP Net Income (Loss) | $1.2 million | $(12.8) million | $14.0 million | - | | GAAP EPS (Diluted) | $0.01 | $(0.17) | $0.18 | - | | Non-GAAP Net Income | $58.3 million | $38.9 million | $19.4 million | 49.9% | | Non-GAAP EPS (Diluted) | $0.76 | $0.52 | $0.24 | 46.2% | | Adjusted EBITDA | $67.9 million | $41.8 million | $26.1 million | 62.4% | | Adjusted EBITDA as % of Revenue | 24.0% | 16.6% | 7.4% | - | | GAAP Operating Cash Flow | $35.1 million | $19.9 million | $15.2 million | 76.4% | [Business Outlook and Guidance](index=2&type=section&id=Business%20Outlook%20and%20Guidance) [Full Year 2025 Financial Guidance](index=2&type=section&id=Full%20Year%202025%20Financial%20Guidance) Five9 provided guidance for the full year 2025, projecting revenue between $1.1435 billion and $1.1495 billion, GAAP net income per share between $0.23 and $0.30, and non-GAAP net income per share between $2.86 and $2.90 | Metric | Low | High | | :-------------------------- | :------------------- | :------------------- | | Revenue | $1.1435 billion | $1.1495 billion | | GAAP Net Income per Share | $0.23 | $0.30 | | Non-GAAP Net Income per Share | $2.86 | $2.90 | [Third Quarter 2025 Financial Guidance](index=2&type=section&id=Third%20Quarter%202025%20Financial%20Guidance) For the third quarter of 2025, Five9 expects revenue to be in the range of $283.0 million to $286.0 million, with GAAP net income per share between $0.06 and $0.12, and non-GAAP net income per share between $0.72 and $0.74 | Metric | Low | High | | :-------------------------- | :------------------- | :------------------- | | Revenue | $283.0 million | $286.0 million | | GAAP Net Income per Share | $0.06 | $0.12 | | Non-GAAP Net Income per Share | $0.72 | $0.74 | [Corporate News](index=2&type=section&id=Corporate%20News) [Chief Financial Officer Appointment](index=2&type=section&id=Chief%20Financial%20Officer%20Appointment) Five9 announced the official appointment of Bryan Lee as Chief Financial Officer, effective July 31, 2025. Lee, who previously served as interim CFO and Executive Vice President of Finance and Treasurer, will lead global financial operations, including financial planning and analysis, accounting, procurement, treasury, and investor relations - Bryan Lee has been appointed Chief Financial Officer, effective **July 31, 2025**[9](index=9&type=chunk) - Lee previously served as interim CFO and Executive Vice President of Finance and Treasurer since joining Five9 in **2014**[10](index=10&type=chunk)[12](index=12&type=chunk) - As CFO, Lee will oversee Five9's global financial operations, including financial planning and analysis, accounting, procurement, treasury, and investor relations[13](index=13&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Five9 will host a Zoom webinar on July 31, 2025, at 4:30 p.m. Eastern Time to discuss its second quarter 2025 results. A live webcast and replay will be available on the Investor Relations section of the company's website - Five9 will discuss Q2 2025 results via Zoom webinar on **July 31, 2025, at 4:30 p.m. Eastern Time**[14](index=14&type=chunk) - A live webcast and replay will be accessible on the Investor Relations section of Five9's website[15](index=15&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) [Definition and Rationale](index=3&type=section&id=Definition%20and%20Rationale) Five9 utilizes non-GAAP financial measures such as adjusted gross profit, adjusted EBITDA, non-GAAP operating income, and non-GAAP net income to provide a clearer view of its core operating performance. These measures exclude items like stock-based compensation, depreciation, amortization, and acquisition-related costs, which management uses for budgeting and performance evaluation, and are considered useful supplemental information for investors - Non-GAAP financial measures include adjusted gross profit, adjusted EBITDA, non-GAAP operating income, and non-GAAP net income[16](index=16&type=chunk) - Adjustments typically add back or remove items such as depreciation, intangibles amortization, stock-based compensation, acquisition costs, lease amortization, and costs related to reduction in force plans[16](index=16&type=chunk) - These non-GAAP measures are used by management to illustrate underlying business trends, establish budgets, and evaluate performance, and are considered useful supplemental information for investors[17](index=17&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) [Key Risks and Uncertainties](index=4&type=section&id=Key%20Risks%20and%20Uncertainties) The news release contains forward-looking statements subject to numerous risks and uncertainties. These include the impact of adverse economic conditions, challenges in attracting and retaining customers, potential service outages, the evolving role of AI in contact centers, competition, international operational risks, cybersecurity threats, and the ability to achieve or sustain profitability - Risks include the impact of adverse economic conditions, such as macroeconomic challenges, inflation, high interest rates, and geopolitical conflicts[18](index=18&type=chunk) - Challenges in attracting new customers, retaining existing ones, or selling additional services could harm revenue and gross margins[18](index=18&type=chunk) - The increasing role of AI solutions in contact centers presents risks if Five9 cannot replace subscription revenue with AI solution sales or if AI development is unsuccessful[18](index=18&type=chunk) - Other risks include managing technical operations, competition, international expansion, security breaches, acquisitions, long sales cycles for larger organizations, reliance on third-party service providers, and the ability to achieve or sustain profitability[18](index=18&type=chunk)[19](index=19&type=chunk) [Company Overview (About Five9)](index=5&type=section&id=Company%20Overview%20%28About%20Five9%29) [Company Description](index=5&type=section&id=Company%20Description) Five9, Inc. provides the Intelligent CX Platform, a cloud-native, multi-tenant, scalable, reliable, and secure suite of solutions for orchestrating customer experiences. Its offerings include contact center, omni-channel engagement, Workforce Engagement Management, extensive partner integrations, and embedded AI, automation, and journey analytics, serving over 3,000 organizations globally - Five9 offers the Intelligent CX Platform, a cloud-native, multi-tenant, scalable, reliable, and secure solution[20](index=20&type=chunk) - The platform includes contact center, omni-channel engagement, Workforce Engagement Management, and integrates with over **1,000 partners**[20](index=20&type=chunk) - Innovative and practical AI, automation, and journey analytics are embedded within the platform[20](index=20&type=chunk) - Five9 serves more than **3,000 organizations worldwide**[20](index=20&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $2,051,214 thousand at December 31, 2024, to $1,704,860 thousand at June 30, 2025, primarily due to a reduction in cash, cash equivalents, and marketable investments. Total liabilities also decreased significantly, driven by the repayment of convertible senior notes | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $205,479 | $362,546 | | Marketable investments | 430,397 | 643,410 | | Accounts receivable, net | 127,835 | 115,172 | | Total current assets | 894,194 | 1,248,568 | | Property and equipment, net | 154,499 | 144,888 | | Goodwill | 366,698 | 365,436 | | Total assets | $1,704,860 | $2,051,214 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $31,063 | $26,282 | | Deferred revenue | 68,009 | 79,173 | | Convertible senior notes (current portion) | — | 433,490 | | Total current liabilities | 201,589 | 641,691 | | Convertible senior notes (non-current portion) | 733,620 | 731,855 | | Total liabilities | 987,483 | 1,429,022 | | Total stockholders' equity | 717,377 | 622,192 | | Total liabilities and stockholders' equity | $1,704,860 | $2,051,214 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, Five9 reported a net income of $1,154 thousand, a significant improvement from a net loss of $(12,816) thousand in the prior year. Revenue increased by 12% year-over-year, and gross profit also saw a healthy rise. For the six months, the company moved from a net loss to a net income of $1,730 thousand | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $283,269 | $252,086 | $562,974 | $499,096 | | Cost of revenue | 127,865 | 118,414 | 253,838 | 232,944 | | Gross profit | 155,404 | 133,672 | 309,136 | 266,152 | | Total operating expenses | 156,965 | 153,037 | 316,125 | 306,212 | | Loss from operations | (1,561) | (19,365) | (6,989) | (40,060) | | Total other income (expense), net | 4,097 | 9,894 | 10,285 | 24,501 | | Income (loss) before income taxes | 2,536 | (9,471) | 3,296 | (15,559) | | Provision for income taxes | 1,382 | 3,345 | 1,566 | 4,334 | | Net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Net income (loss) per share: Basic | $0.02 | $(0.17) | $0.02 | $(0.27) | | Net income (loss) per share: Diluted | $0.01 | $(0.17) | $0.02 | $(0.27) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $83,445 thousand from $52,231 thousand in the prior year. Investing activities generated a net cash inflow of $191,063 thousand, a significant reversal from a net outflow in the previous year, primarily due to changes in marketable investment activities. Financing activities resulted in a net cash outflow of $(431,125) thousand, largely due to the repayment of convertible senior notes | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $83,445 | $52,231 | | Net cash used in (provided by) investing activities | $191,063 | $(360,103) | | Net cash (used in) provided by financing activities | $(431,125) | $340,412 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(156,617) | $32,540 | | Cash, cash equivalents and restricted cash: End of period | $207,568 | $177,382 | [Reconciliation of Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [GAAP Gross Profit to Adjusted Gross Profit](index=9&type=section&id=GAAP%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit) Five9's adjusted gross profit and margin for Q2 2025 significantly improved compared to Q2 2024, reflecting the impact of non-GAAP adjustments such as depreciation, intangibles amortization, stock-based compensation, and costs related to a reduction in force plan | (In thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP gross profit | $155,404 | $133,672 | $309,136 | $266,152 | | GAAP gross margin | 54.9% | 53.0% | 54.9% | 53.3% | | Non-GAAP adjustments | 23,141 | 10,937 | 39,524 | 21,471 | | Adjusted gross profit | $178,545 | $152,409 | $353,160 | $302,615 | | Adjusted gross margin | 63.0% | 60.5% | 62.7% | 60.6% | [GAAP Net Income (Loss) to Adjusted EBITDA](index=10&type=section&id=GAAP%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 reached $67,950 thousand, a substantial increase from $41,781 thousand in Q2 2024, with the Adjusted EBITDA margin rising to 24.0%. This improvement is driven by adjustments for depreciation, stock-based compensation, and various one-time costs | (In thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Non-GAAP adjustments | 66,796 | 54,597 | 118,922 | 99,259 | | Adjusted EBITDA | $67,950 | $41,781 | $120,652 | $79,366 | | Adjusted EBITDA as % of revenue | 24.0% | 16.6% | 21.4% | 15.9% | [GAAP Operating Loss to Non-GAAP Operating Income](index=11&type=section&id=GAAP%20Operating%20Loss%20to%20Non-GAAP%20Operating%20Income) Five9 converted a GAAP operating loss of $(1,561) thousand in Q2 2025 to a non-GAAP operating income of $54,454 thousand, reflecting significant adjustments for stock-based compensation, intangibles amortization, and other operational costs | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss from operations | $(1,561) | $(19,365) | $(6,989) | $(40,060) | | Non-GAAP adjustments | 56,015 | 50,401 | 101,747 | 98,689 | | Non-GAAP operating income | $54,454 | $31,036 | $94,758 | $58,629 | [GAAP Net Income (Loss) to Non-GAAP Net Income](index=12&type=section&id=GAAP%20Net%20Income%20%28Loss%29%20to%20Non-GAAP%20Net%20Income) For Q2 2025, Five9 reported non-GAAP net income of $58,273 thousand, a substantial increase from $38,874 thousand in Q2 2024. This translates to a non-GAAP diluted EPS of $0.76, up from $0.52, after accounting for various non-GAAP adjustments | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net income (loss) | $1,154 | $(12,816) | $1,730 | $(19,893) | | Non-GAAP adjustments | 57,119 | 51,690 | 103,882 | 94,506 | | Non-GAAP net income | $58,273 | $38,874 | $105,612 | $74,613 | | Non-GAAP net income per share: Diluted | $0.76 | $0.52 | $1.37 | $1.00 | [Summary of Stock-Based Compensation, Depreciation and Intangibles Amortization](index=13&type=section&id=Summary%20of%20Stock-Based%20Compensation%2C%20Depreciation%20and%20Intangibles%20Amortization) This section provides a breakdown of stock-based compensation, depreciation, and intangibles amortization across different cost categories for both the three and six months ended June 30, 2025 and 2024 | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | **Stock-Based Compensation** | | | | Cost of revenue | $7,296 | $7,789 | | Research and development | 8,829 | 9,827 | | Sales and marketing | 13,355 | 13,824 | | General and administrative | 12,379 | 12,192 | | Total | $41,859 | $43,632 | | **Depreciation** | | | | Cost of revenue | $8,697 | $7,773 | | Research and development | 799 | 741 | | Sales and marketing | 27 | 26 | | General and administrative | 1,662 | 1,750 | | Total | $11,185 | $10,290 | | **Intangibles Amortization** | | | | Cost of revenue | $3,464 | $2,648 | | Total | $3,464 | $2,648 | | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | **Stock-Based Compensation** | | | | Cost of revenue | $14,480 | $15,392 | | Research and development | 17,519 | 20,757 | | Sales and marketing | 24,929 | 27,844 | | General and administrative | 24,176 | 24,323 | | Total | $81,104 | $88,316 | | **Depreciation** | | | | Cost of revenue | $16,480 | $14,738 | | Research and development | 1,479 | 1,631 | | Sales and marketing | 63 | 53 | | General and administrative | 3,553 | 3,403 | | Total | $21,575 | $19,825 | | **Intangibles Amortization** | | | | Cost of revenue | $7,564 | $5,296 | | Total | $7,564 | $5,296 | [GAAP Net Income to Non-GAAP Net Income – Guidance](index=14&type=section&id=GAAP%20Net%20Income%20to%20Non-GAAP%20Net%20Income%20%E2%80%93%20Guidance) Five9's guidance for Q3 and full year 2025 shows a significant difference between GAAP and non-GAAP net income, primarily due to adjustments for stock-based compensation, intangibles amortization, and other one-time costs. For the full year, non-GAAP net income is projected to be between $221,944 thousand and $225,052 thousand | (In thousands, except per share data) | Three Months Ending September 30, 2025 (Low) | Three Months Ending September 30, 2025 (High) | Year Ending December 31, 2025 (Low) | Year Ending December 31, 2025 (High) | | :------------------------------------ | :------------------------------------------- | :-------------------------------------------- | :---------------------------------- | :---------------------------------- | | GAAP net income | $5,515 | $10,077 | $20,238 | $26,346 | | Non-GAAP adjustments | 50,718 | 47,718 | 201,706 | 198,706 | | Non-GAAP net income | $56,233 | $57,795 | $221,944 | $225,052 | | Non-GAAP net income per share: Diluted | $0.72 | $0.74 | $2.86 | $2.90 | [Investor Relations Contacts](index=15&type=section&id=Investor%20Relations%20Contacts) [Contact Information](index=15&type=section&id=Contact%20Information) For investor relations inquiries, individuals can contact Bryan Lee, Chief Financial Officer of Five9, or Lisa Laukkanen from The Blueshirt Group - Bryan Lee, Chief Financial Officer, can be reached at **925-201-2000** or IR@five9.com[45](index=45&type=chunk) - Lisa Laukkanen of The Blueshirt Group can be contacted at **415-217-4967** or Lisa@blueshirtgroup.com[45](index=45&type=chunk)