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

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].