Core Insights - Five9 Inc. has launched Five9 Fusion for ServiceNow, an AI-powered solution aimed at enhancing customer service experiences through unified voice and digital interactions [1][2]. Group 1: Product Launch and Features - Five9 Fusion integrates voice and digital interactions via an AI transcription stream, featuring a single routing engine to improve customer service delivery [2]. - The solution combines Five9's real-time system actions with ServiceNow's Customer Service Management (CSM), creating a unified AI-powered platform for businesses [2][4]. - The integration reduces expenses and provides end-to-end visibility across the customer journey, equipping agents with instant context and tools for quicker issue resolution [3]. Group 2: Benefits and Impact - Five9 Fusion aims to eliminate the friction of using multiple systems, empowering agents with a single interface for more efficient and personalized interactions [4]. - The integration enhances the customer experience by making every touchpoint more intuitive and impactful for both customers and agents [4]. - Five9's use of Generative AI in its cloud contact center platform aims to deliver more human-like and efficient customer interactions through its Genius AI Suite [4].

Core Viewpoint - Five9 Inc. is classified as a Zombie Stock due to its high cash burn, lack of profitability, and declining revenue growth, despite recent revenue increases driven by enterprise AI [3][4][6][8]. Financial Performance - Five9's subscription revenue grew 16% year-over-year (YoY) in 2Q25, primarily due to a 42% increase in enterprise AI revenue [4]. - Total revenue increased by 12% YoY in 2Q25, and management raised its full-year 2025 revenue guidance to 10% YoY [4]. - The company has not generated annual profits since 2019 and has a negative free cash flow (FCF) [4][10]. Cash Position and Burn Rate - Five9's cash on hand decreased from $1.1 billion in the TTM ended 2Q24 to $636 million in the TTM ended 2Q25, indicating a significant cash burn [7]. - The company has burned through a cumulative $1.1 billion in FCF since 2017, with a TTM cash burn of -$299 million [11][10]. Profitability and Valuation - Five9 is the least profitable company in its industry, with a negative net operating profit after tax (NOPAT) of -$5 million in the TTM [15][17]. - To justify its current stock price of $26/share, Five9 would need to achieve $8.5 billion in revenue by 2034, which is nearly 8 times its TTM revenue [20]. - If revenue grows at consensus and industry forecast rates, the stock could be worth just $6/share today, indicating a 77% downside [22]. Competitive Landscape - Competitors like Microsoft and Nice Ltd. maintain competitive advantages by offering full-service solutions, while Five9 remains focused on niche offerings [18]. - Analysts expect Five9's revenue growth to lag behind the projected 22% compounded annual growth rate of the cloud-based contact center market from 2025 to 2034 [14].

Core Insights - Five9 has been recognized as a Leader in the Magic Quadrant for Contact Center as a Service (CCaaS) by Gartner for the eighth time, highlighting its Completeness of Vision and Ability to Execute [1] Company Performance - The recognition by Gartner reflects Five9's consistent innovation and trusted expertise in the industry [1] - The company's proven ability to deliver exceptional customer service is emphasized through this accolade [1]

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]