Five9 (FIVN) shares have dropped 42.8% year to date (YTD), underperforming the Zacks Computer and Technology sector’s decline of 12.5% and the Zacks Internet – Software industry’s fall of 11.1%.FIVN has underperformed its industry peers, StoneCo (STNE) , BlackBerry (BB) and Affirm (AFRM) .Over the same time frame, StoneCo shares have risen 37.8%, while BlackBerry and Affirm shares have lost 16.9% and 33.1%, respectively.This underperformance raises the question of whether investors should cut their losses a ...

Core Insights - Five9 (FIVN) currently presents a better value opportunity compared to F5 Networks (FFIV) based on various financial metrics and rankings [1][3]. Valuation Metrics - Five9 has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while F5 Networks has a Zacks Rank of 3 (Hold) [3]. - The forward P/E ratio for Five9 is 8.26, significantly lower than F5 Networks' forward P/E of 16.84, suggesting that Five9 is undervalued [5]. - Five9's PEG ratio is 0.49, indicating strong expected EPS growth relative to its price, whereas F5 Networks has a PEG ratio of 2.38, suggesting less favorable growth prospects [5]. - Five9 has a P/B ratio of 2.60, compared to F5 Networks' P/B of 4.30, further supporting the argument that Five9 is a more attractive value option [6]. - Overall, Five9's Value grade is B, while F5 Networks' Value grade is D, highlighting the superior valuation metrics of Five9 [6].

Financial Performance and Guidance - Five9, Inc. expects its results for Q1 2025 to be in-line with or better than previous guidance for revenue and net loss per share [4]. - The preliminary results for Q1 2025 are based on unaudited financial information and are subject to normal quarterly closing processes [5]. - Five9, Inc. will provide guidance for Q2 2025 and the fiscal year 2025 in its next earnings call, expected in early May 2025 [5]. Workforce Reduction and Cost Management - The company plans to reduce its global full-time employees by approximately 4%, with estimated cash expenditures of $7 million to $9 million related to severance and benefits [8]. - Non-cash expenditures associated with the reduction in force are estimated to be approximately $1 million to $1.5 million due to share-based awards [8]. - The actions related to the reduction in force are expected to be substantially complete by the end of Q2 2025 [10]. Strategic Focus and Investments - The company is prioritizing investments in key strategic areas, including artificial intelligence, to drive profitable growth and increase shareholder value [7]. Risks and Challenges - The company faces risks including potential disruptions to business operations and the impact of macroeconomic challenges on revenue growth [12]. - Five9, Inc. has a history of losses and may struggle to achieve or sustain profitability in the future [12]. - The company continues to expand its international operations, which exposes it to significant macroeconomic risks [12].

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against Five9, Inc. due to a class action lawsuit alleging breaches of fiduciary duties by the board of directors during a specified class period [1][2]. Group 1: Lawsuit Details - The class action complaint was filed on December 4, 2024, covering a class period from June 4, 2024, to August 8, 2024 [1]. - Allegations include that Five9's net new business was not strong and was negatively impacted by macroeconomic factors, including constrained customer budgets [2]. - The lawsuit claims that Five9 faced challenges in bookings due to sales execution issues and lacked sufficient information regarding customer retention rates, leading to misleading statements [2]. Group 2: Investor Information - Long-term stockholders of Five9 are encouraged to reach out for more information regarding the claims and their rights [3]. - The law firm offers assistance without any cost or obligation to the investors [3]. Group 3: Law Firm Background - Bragar Eagel & Squire, P.C. is a nationally recognized law firm that represents investors in various complex litigations across state and federal courts [4].

Core Viewpoint - The stock price of Five9 (FIVN) has recently experienced a bearish trend, losing 14% over the past week, but the formation of a hammer chart pattern suggests a potential trend reversal as buying interest may be increasing [1][2]. Technical Analysis - The hammer chart pattern indicates a potential bottom in the stock price, suggesting that selling pressure may be exhausting and that bulls could be gaining control [2][4]. - A hammer pattern forms when there is a small candle body with a long lower wick, typically occurring during a downtrend, signaling a possible reversal if it appears at the bottom of the trend [3][4]. Fundamental Analysis - There is rising optimism among Wall Street analysts regarding Five9's future earnings, with a significant upward revision in earnings estimates, which is a bullish indicator [2][6]. - Over the last 30 days, the consensus EPS estimate for Five9 has increased by 63.7%, indicating that analysts expect better earnings than previously predicted [7]. - Five9 currently holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which historically outperform the market [8].

Group 1 - TruConnect has been awarded the CX Leader of the Year Award by Five9 for its innovative approach to customer experience and AI integration [1][2] - The New Era of CX Awards recognize companies that redefine customer experience and AI in business, celebrating excellence in aligning CX strategies with business goals [1][2] - TruConnect's strategies include enhancing customer interactions, improving employee experiences, and addressing regulatory challenges while expanding access to connectivity services [2] Group 2 - TruConnect is the fastest-growing premium low-cost wireless service provider in the U.S., focusing on expanding wireless and internet service plans through the Lifeline program [4] - The company aims to bridge the digital divide by providing no-contract plans and easy-to-use devices to underserved Americans [4]

Core Viewpoint - Five9 (FIVN) shows potential for significant upside, with a mean price target of $54.21 indicating a 29.8% increase from its current price of $41.77 [1] Price Target Analysis - The mean estimate consists of 19 short-term price targets with a standard deviation of $8.70, suggesting variability in analyst predictions [2] - The lowest estimate is $40, indicating a potential decline of 4.2%, while the highest estimate suggests a 60.4% increase to $67 [2] - A low standard deviation indicates a high degree of agreement among analysts regarding price movement direction [7] Earnings Estimates - Analysts have shown increasing optimism about Five9's earnings prospects, with a strong consensus in revising EPS estimates higher [9] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 254.8%, with two estimates moving higher and one lower [10] - Five9 currently holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [11] Analyst Behavior - Analysts often set overly optimistic price targets due to business incentives, which can lead to inflated expectations [6] - Despite skepticism around price targets, the direction they imply can serve as a useful guide for potential stock movement [12]

Core Insights - Five9 reported strong fourth-quarter results, exceeding Wall Street estimates, with a stock price increase of 19.7% initially, but later settling at a 5.2% increase due to management changes [1][4] Financial Performance - Fourth-quarter revenues increased by 16.6% year over year to $279 million, surpassing analyst expectations of approximately $267 million [2] - Adjusted earnings per diluted share rose from $0.61 to $0.79, exceeding the analyst consensus of $0.70 per share [2] Growth Drivers - Record revenues were driven by a 19% year-over-year increase in renewable subscription sales [3] - The integration of artificial intelligence (AI) tools in call center services has helped limit operational costs and is emerging as a significant growth driver, particularly through personalized AI agents [3] Management Changes - The unexpected retirement announcement of longtime CFO Barry Zwarenstein after 13 years has dampened investor enthusiasm, despite the amicable nature of the separation [4] - Zwarenstein will remain until summer to ensure a smooth transition to his successor, indicating that the positive financial report should outweigh concerns regarding management changes [4]

Core Viewpoint - Five9 reported exceptional earnings for Q4 2024, with record revenue and profitability that exceeded market expectations, driven by cloud adoption and advancements in AI [1][2]. Financial Performance - Non-GAAP EPS for Q4 2024 was $0.79, surpassing Wall Street forecasts of $0.70, and showing a year-over-year increase of 29.5% from $0.61 in Q4 2023 [3][8]. - Revenue for the quarter reached $278.7 million, exceeding expectations of $267 million and reflecting a 16.6% increase compared to $239.1 million in Q4 2023 [3][7]. - Adjusted gross margin improved to 63.5%, up from 61.3% in the previous year, indicating better cost management [3][8]. - Operating cash flow was reported at $49.8 million, a significant increase of 36.4% from $36.5 million in the prior year [3][8]. Business Strategy and Focus - Five9 specializes in cloud-based contact center software solutions, enhancing customer service operations through cloud technology, which aligns with trends towards remote work [4]. - The company is focusing on integrating artificial intelligence to improve customer interaction efficiency, which is reflected in subscription revenue growth and operational efficiencies [5][6]. - Five9 is accelerating the transition from legacy systems to modern cloud-based solutions, optimizing customer experience through AI and automation [6]. Market Position and Growth - The company achieved a 19% growth in subscription revenue, highlighting its effective strategy in driving cloud-based offerings [7]. - Enterprise AI revenue grew by 46% year-over-year, reinforcing Five9's leadership in AI-driven customer experience solutions [9]. - Five9 is committed to innovation and partnership growth, which are essential for maintaining a competitive edge in a challenging market [10]. Future Outlook - For the upcoming year, Five9 projects revenue between $1.140 billion and $1.144 billion, with non-GAAP EPS expected to range from $2.58 to $2.62 [11]. - The first quarter revenue guidance is set between $271.5 million to $272.5 million, indicating confidence in navigating macroeconomic uncertainties [11].

Financial Data and Key Metrics Changes - The company reported annual revenue exceeding $1 billion, with fourth quarter revenue growth accelerating to 17% year-over-year, primarily driven by subscription revenue growth of 19% [7][56] - Adjusted EBITDA margin for the fourth quarter reached a record 23%, contributing to record operating cash flow of $50 million, or 18% of revenue, and record free cash flow of $33 million, or 12% of revenue [8][62] - For the full year 2024, revenue grew 14.4% year-over-year, with adjusted gross margin expanding by approximately 70 basis points to 61.7% and adjusted EBITDA margin expanding by approximately 50 basis points to 18.8% [60][61] Business Line Data and Key Metrics Changes - Subscription revenue made up 79% of total revenue in Q4, while usage revenue accounted for 14% and professional services made up 7% [57] - The enterprise AI revenue grew 46% year-over-year, now constituting 9% of enterprise subscription revenue [10][56] Market Data and Key Metrics Changes - The company experienced strong enterprise new logo bookings in Q4, with the highest number of $1 million-plus ARR new logo wins in any quarter of 2024 [43] - Installed base bookings in Q4 reached the highest level seen in 8 quarters, indicating robust demand [44] Company Strategy and Development Direction - The company is focused on leveraging AI for customer experience, with a strong emphasis on delivering accurate and personalized AI agents [10][12] - Partnerships with major companies like Salesforce, ServiceNow, Microsoft, and Google are being strengthened to enhance product offerings and customer acquisition [29][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the execution and bookings momentum, particularly in the $1 million-plus ARR segment, and highlighted the importance of AI in driving future growth [9][39] - The company anticipates continued growth in AI revenue and is well-positioned to capitalize on market opportunities despite macroeconomic uncertainties [39][66] Other Important Information - The CFO announced his retirement effective March 31, with Bryan Lee appointed as interim CFO [39][41] - The company will not host an analyst day in the first half of the year due to the CFO transition [64] Q&A Session Summary Question: Changes in customer conversations since the election and potential upside drivers for 2025 - Management noted that customer conversations are increasingly focused on leveraging AI, with subscription revenue growth being a key metric [73][75] Question: Monetization of contextual data and competition with other AI vendors - Management emphasized that their platform serves as a control point for contextual data, which is critical for AI-driven self-service, and they monetize this through voice stream and transcript stream [84][90] Question: Seasonal expansion and deal cadence in Q4 - Management indicated that Q4 showed better-than-expected performance, particularly in consumer and healthcare sectors, with strong usage trends [94][96] Question: AI's impact on human agents and customer strategies - Management clarified that customers are cautiously integrating AI, aiming for a gradual shift towards self-service while maintaining a focus on customer experience [102][106] Question: Trends in usage and NRR trajectory - Management acknowledged a typical Q1 decline but emphasized a prudent guidance philosophy, reflecting seasonal trends and macroeconomic factors [140][141]