Five9(US:FIVN)2022-07-28 20:18Revenue and Growth - Revenue increased to $189.4 million and $372.2 million for the three and six months ended June 30, 2022, compared to $143.8 million and $281.7 million for the same periods in 2021, representing growth driven by larger clients and increased sales and marketing activities [112]. - Revenue for the three months ended June 30, 2022, was $189.4 million, a 32% increase from $143.8 million in the same period of 2021 [129]. - The increase in revenue was primarily driven by larger clients and improved brand awareness due to increased sales and marketing activities [129]. Subscription and Retention - Subscription and related usage fees accounted for 91% of total revenue for the three and six months ended June 30, 2022, slightly down from 92% in the same periods of 2021 [109]. - The Annual Dollar-Based Retention Rate decreased to 118% for the twelve months ended June 30, 2022, down from 123% in the prior year, primarily due to the dissipating benefits from the COVID-19 pandemic [116]. Financial Performance - A net loss of $23.7 million and $57.8 million was reported for the three and six months ended June 30, 2022, compared to a net loss of $16.5 million and $28.9 million for the same periods in 2021 [112]. - Adjusted EBITDA for the three months ended June 30, 2022, was $33.1 million, compared to $24.0 million for the same period in 2021, indicating improved operational performance [119]. - The net loss for the three months ended June 30, 2022, was 12% of revenue, compared to 11% in the same period of 2021 [129]. Expenses and Investments - Cost of revenue for the three months ended June 30, 2022, was $88.2 million, representing 47% of revenue, compared to 45% in the same period of 2021 [130]. - Gross profit for the three months ended June 30, 2022, was $101.2 million, a 27% increase from $79.4 million in the same period of 2021, with a gross margin of 53% [132]. - Research and development expenses for the three months ended June 30, 2022, were $35.0 million, a 42% increase from $24.6 million in the same period of 2021, representing 18% of revenue [133]. - Sales and marketing expenses for the three months ended June 30, 2022, were $64.1 million, a 39% increase from $46.0 million in the same period of 2021, representing 34% of revenue [134]. - General and administrative expenses for the three months ended June 30, 2022, were $23.8 million, a 4% increase from $22.9 million in the same period of 2021, representing 12% of revenue [136]. - The increase in operating expenses is attributed to higher personnel costs and investments in growth initiatives [134]. - Significant investments continue in sales and marketing, research and development, and infrastructure to support future growth [112]. Cash Flow and Liquidity - As of June 30, 2022, the company had $513.4 million in working capital, including $101.3 million in cash and cash equivalents and $397.1 million in short-term marketable investments [138]. - Net cash provided by operating activities was $25.6 million for the six months ended June 30, 2022, compared to $25.2 million for the same period in 2021 [143][144]. - The company reported a net loss of $57.8 million for the six months ended June 30, 2022, with adjustments resulting in net cash provided by operating activities of $130.3 million [143]. - Net cash provided by investing activities was $25.6 million for the six months ended June 30, 2022, primarily from cash proceeds of $215.2 million from sales and maturities of marketable investments [145]. - Net cash used in financing activities was $(40.8) million for the six months ended June 30, 2022, mainly due to $34.0 million related to 2023 convertible senior note settlements [148]. - The company plans to finance future operations primarily through sales of its solutions and net proceeds from equity and debt financings [138]. - The company’s liquidity could be harmed if it is unable to raise additional capital as needed, depending on financial performance and market conditions [140]. Operational Changes - The company incurred approximately $1.1 million and $3.9 million in costs related to the closure and relocation of its Russian operations during the three and six months ended June 30, 2022 [111]. - The company closed its Russia office in June 2022 and established a new European development center in Porto, Portugal [161]. Market and Risk Factors - The COVID-19 pandemic had a moderately positive impact on financial results, but the company believes that most of this benefit has now dissipated [111]. - The company has not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments [161]. - The company's sales are primarily denominated in U.S. dollars, reducing direct exposure to foreign currency risk [161]. - The fair value of the convertible senior notes is subject to interest rate risk and market risk due to their conversion features [160]. - A hypothetical 100 basis point change in interest rates would not have a material impact on the value of cash and cash equivalents or marketable investments [160]. - The effect of a hypothetical 10% change in foreign currency exchange rates would have a maximum impact of $2.8 million on operating expenses during the six months ended June 30, 2022 [161]. Compliance and Control - There were no changes in internal control over financial reporting that materially affected the company during the three months ended June 30, 2022 [165].