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Five9 (FIVN) Q2 Revenue Jumps 12%
The Motley Fool· 2025-08-02 08:13
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]
Five9(FIVN) - 2025 Q1 - Earnings Call Transcript
2025-05-01 21:32
Financial Data and Key Metrics Changes - Subscription revenue grew 14% year over year, now comprising 80% of total revenue [4][28] - Adjusted EBITDA margin reached 19% for Q1, with operating cash flow at a record $48 million, representing 17% of revenue [4][30] - Free cash flow also hit an all-time high of $35 million, or 12% of revenue [4][30] - Q1 revenue growth was reported at 13% year over year, primarily driven by subscription revenue [28] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 20% year over year, contributing significantly to overall subscription revenue growth [4] - Enterprise AI revenue grew 32% year over year, making it the fastest-growing category in the product portfolio [28][15] - The commercial business, representing 10% of total revenue, declined in the single digits on an LTM basis [28] Market Data and Key Metrics Changes - The total addressable market (TAM) for the core CCaaS market is estimated at $24 billion, with ongoing cloud migrations presenting significant opportunities [16] - The company is experiencing increased volume in new logo wins year over year, despite longer sales cycles for larger deals [22] Company Strategy and Development Direction - The company is focused on transformation initiatives to bolster long-term competitive positioning and aims to achieve the "Rule of 40" by 2027 [5] - Investment in AI and go-to-market initiatives is prioritized to drive revenue growth and capitalize on an expanding TAM [5][19] - The company is enhancing partnerships, such as with Salesforce, to deliver better AI-powered customer experiences [8][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic challenges, including inflation and uncertainty in consumer spending, which may impact future performance [2][22] - The company remains optimistic about long-term growth opportunities, particularly in the upper end of the market, which is the least penetrated [16] - Management has adopted a more prudent stance in guidance due to heightened macro uncertainty [34] Other Important Information - A 4% reduction in the global workforce was announced, expected to result in annualized compensation-related non-GAAP expense reductions of $20 to $25 million [32] - The company plans to retire $434 million in convertible notes in cash when they mature in June [31] Q&A Session Summary Question: Will Q1 be the trough for subscription revenue growth? - Management has not provided specific guidance on subscription growth but maintains annual total revenue guidance unchanged at $1.14 billion [38] Question: Can you elaborate on the longer sales cycles due to macro conditions? - Longer sales cycles are primarily observed in the large enterprise market, with some deals slipping into the next quarter [49][51] Question: How does Genius AI fit into the current environment? - The AI revolution is prompting companies to accelerate their AI initiatives, with significant momentum in decision-making observed [60][61] Question: What is the impact of the transformation on different divisions? - The reduction in force affected most departments, but sales capacity remains unaffected, with continued investment in go-to-market initiatives [63] Question: What is driving the growth in BYOT with Salesforce? - The growth is attributed to Salesforce's investment in AI and the simplification of the go-to-market strategy through Five9 Fusion [68] Question: How is the relationship with BT progressing after recent tariff announcements? - The relationship remains strong, with ongoing good activity and deal wins [96]
Five9(FIVN) - 2025 Q1 - Earnings Call Transcript
2025-05-01 20:30
Financial Data and Key Metrics Changes - Subscription revenue grew 14% year over year, now comprising 80% of total revenue [3][27] - Adjusted EBITDA margin reached 19% for Q1, with operating cash flow at a record $48 million, representing 17% of revenue [3][30] - Free cash flow also hit an all-time high of $35 million, or 12% of revenue [3][30] - Non-GAAP EPS was $0.62 per diluted share, up 29% year over year [29] Business Line Data and Key Metrics Changes - Enterprise subscription revenue grew 20% year over year, contributing significantly to overall subscription revenue growth [3][27] - Enterprise AI revenue increased by 32% year over year, making it the fastest-growing category in the product portfolio [14][27] Market Data and Key Metrics Changes - The total addressable market (TAM) for the core CCaaS market is estimated at $24 billion, with ongoing cloud migrations expected to drive growth [15] - International business represents about 12% of total revenue, with some resistance noted in international regions towards US vendors [20][83] Company Strategy and Development Direction - The company aims to reestablish itself as a "Rule of 40" company by targeting adjusted EBITDA above 40 and approaching the same for free cash flow by 2027 [4][43] - Focus on AI and go-to-market initiatives to drive revenue growth and capitalize on an expanding TAM [4][15] - A recent operational review led to a 4% reduction in the global workforce, aimed at improving profitability and reallocating resources towards strategic areas [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth despite macroeconomic challenges, including inflation and consumer spending uncertainty [3][20] - The company is maintaining its full-year revenue guidance at $1.14 billion, with a cautious outlook due to macro uncertainties [34][80] Other Important Information - The company has deepened its partnership with Salesforce through the launch of Five9 Fusion, enhancing AI-powered customer experiences [7][66] - The AI blueprint program has shown promising results, with 50% of customers participating purchasing AI products [15][60] Q&A Session Summary Question: Will Q1 be the trough for subscription revenue growth this year? - Management has not provided specific guidance on subscription growth but maintains the annual revenue guidance unchanged at $1.14 billion, reflecting stable macro conditions [38][39] Question: Can you elaborate on the longer sales cycles in the enterprise market? - Longer sales cycles are primarily observed in larger enterprise deals, with some deals slipping into the next quarter due to macro conditions [48][51] Question: How does the Genius AI play into the current environment? - The AI revolution is prompting companies to accelerate their AI initiatives, with significant momentum in decision-making and ROI delivery from AI solutions [55][60] Question: What is driving the growth in BYOT (Bring Your Own Telephony)? - The growth in BYOT is driven by Salesforce's investment in AI and the simplification of the go-to-market strategy through Five9 Fusion [66] Question: How has the international business been affected by recent geopolitical events? - International business represents a small portion of total revenue, and while there is some resistance, confidence remains strong among existing customers [83][85]