Five9(FIVN) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Highlights Key Performance Indicators 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] - Enterprise AI revenue growth accelerated to 42% year-over-year in Q2 2025, representing 10% of Enterprise subscription revenue[1][3] - Q2 2025 saw a record operating cash flow of $35 million[1][3] - Adjusted EBITDA margin increased to a record 24% in Q2 2025[3] CEO Commentary 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] - Enterprise AI bookings more than tripled year-over-year in Q2[3] - Customers are benefiting from the Genius AI suite, with recent launches including Agentic AI Agents and AI Trust & Governance[5] Second Quarter 2025 Financial Results Overview Key Financial Metrics 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 Full Year 2025 Financial Guidance 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 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 Chief Financial Officer Appointment 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] - Lee previously served as interim CFO and Executive Vice President of Finance and Treasurer since joining Five9 in 2014[10][12] - As CFO, Lee will oversee Five9's global financial operations, including financial planning and analysis, accounting, procurement, treasury, and investor relations[13] Conference Call Information Conference Call Details 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] - A live webcast and replay will be accessible on the Investor Relations section of Five9's website[15] Non-GAAP Financial Measures Explanation Definition and Rationale 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] - 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] - 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] Forward-Looking Statements and Risk Factors Key Risks and Uncertainties 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] - Challenges in attracting new customers, retaining existing ones, or selling additional services could harm revenue and gross margins[18] - 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] - 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][19] Company Overview (About Five9) Company Description 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] - The platform includes contact center, omni-channel engagement, Workforce Engagement Management, and integrates with over 1,000 partners[20] - Innovative and practical AI, automation, and journey analytics are embedded within the platform[20] - Five9 serves more than 3,000 organizations worldwide[20] Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets 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 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 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 GAAP Gross Profit to Adjusted Gross Profit 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 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 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 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 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 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 Contact Information 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] - Lisa Laukkanen of The Blueshirt Group can be contacted at 415-217-4967 or Lisa@blueshirtgroup.com[45]