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1. Company Snapshot

1.a. Company Description

Five9, Inc., together with its subsidiaries, provides cloud software for contact centers in the United States and internationally.The company offers virtual contact center cloud platform that delivers a suite of applications, which enables the breadth of contact center-related customer service, sales, and marketing functions.Its solution enables its clients to manage these customer interactions across various channels, including voice, video, chat, email, website, social media, click-to-call, callback, and mobile channels, as well as through APIs; and provides natural language processing and automatic speech recognition solutions.


The company serves customers in various industries comprising banking and financial services, business process outsourcers, consumer, healthcare, technology, and education.Five9, Inc.was incorporated in 2001 and is headquartered in San Ramon, California.

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1.b. Last Insights on FIVN

Five9, Inc.'s recent performance has been negatively impacted by a securities fraud class action complaint that survived a motion to dismiss, with investigations led by law firms such as Grabar Law Office, Kuehn Law, and Halper Sadeh LLC. These investigations concern alleged breaches of fiduciary duties by certain officers and directors, specifically regarding misrepresentation of the company's financial condition, net new business, and bookings momentum. Additionally, the company's growth has been scrutinized, with Piper Sandler downgrading Five9 due to slowing growth and rising competition.

1.c. Company Highlights

2. Five9's Q4 Results Exceed Expectations, Driven by Strong Enterprise AI Growth

Five9 reported solid Q4 results, with total revenue at $300 million, up 8% year-over-year, and subscription revenue growing 12% year-over-year. The company's adjusted EBITDA margin increased to 26%, and free cash flow more than doubled year-over-year to a margin of 22%. The earnings per share (EPS) came in at $0.8, slightly beating estimates of $0.79. For 2025, the company guides total revenue to $1.15 billion, growing 10% year-over-year, and subscription revenue growing 13% year-over-year. The adjusted EBITDA margin is expected to expand to 23%.

Publication Date: Feb -22

📋 Highlights
  • Q4 Revenue Growth:: Total revenue reached $300 million, up 8% YoY, with subscription revenue rising 12% YoY.
  • Enterprise AI Surge:: AI revenue grew 50% YoY, achieving an annual run rate exceeding $100 million.
  • Margin Expansion:: Adjusted EBITDA margin hit 26%, and free cash flow doubled to a 22% margin YoY.
  • Bookings Momentum:: Enterprise AI bookings more than doubled YoY, driving a 50% growth acceleration in AI revenue.
  • 2026 Guidance:: Revenue target of $1.254 billion midpoint, with non-GAAP EPS at $3.18 and double-digit growth expected by H2 2026.

Strong Momentum in Enterprise AI Revenue

Enterprise AI revenue grew 50% year-over-year, with an annual run rate surpassing $100 million. The AI revenue is all consumption and capacity-based, with the two biggest contributors being AI Agents and Agent Assist. The company sees strong momentum and acceleration across its AI portfolio, driven by both new logo attach and penetration into the installed base. The partnership with Google Cloud and the launch of their joint Enterprise CX AI solution are driving strong traction with large brands.

Guidance and Outlook

For 2026, Five9 guides revenue to a midpoint of $1.254 billion and non-GAAP EPS to a midpoint of $3.18 per diluted share. The company expects revenue to return to double-digit growth in the second half of 2026, driven by its strong backlog of bookings. The guidance suggests continued growth from both core CCaaS and AI, with AI adoption driving revenue growth and enterprise AI revenue growth offering a significant opportunity.

Valuation and Metrics

With a P/E Ratio of 37.99 and an EV/EBITDA of 10.26, the market seems to be pricing in a certain level of growth for Five9. The company's Free Cash Flow Yield of 12.08% is also attractive. The return on equity (ROE) stands at 5.36%, indicating a relatively modest return on shareholders' equity. As the company continues to grow its AI revenue and expand its margins, investors will be watching to see if the company can maintain its growth trajectory and improve its returns.

Operational Highlights

The company's net retention rate (NRR) inflected upward, driven by both core CCaaS and AI. The consumer and healthcare verticals saw a more favorable uptick than expected, although telecom usage revenue was weaker than last year. The company sees strength in its largest verticals: financial services, healthcare, and retail, with AI adoption driving growth and AI features helping land new customers and expand existing relationships.

3. NewsRoom

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FIVN Investor News: Rosen Law Firm Announces Investigation of Breaches of Fiduciary Duties by the Directors and Officers of Five9, Inc. – FIVN

Mar -23

Source: globenewswire.com

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FIVN Investor News: Rosen Law Firm Announces Investigation of Breaches of Fiduciary Duties by the Directors and Officers of Five9, Inc. - FIVN

Mar -23

Source: newsfilecorp.com

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FIVN Investor News: Rosen Law Firm Announces Investigation of Breaches of Fiduciary Duties by the Directors and Officers of Five9, Inc. - FIVN

Mar -19

Source: prnewswire.com

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Five9, Inc. Investor News: Rosen Law Firm Announces Investigation of Breaches of Fiduciary Duties by the Directors and Officers of Five9, Inc. – FIVN

Mar -17

Source: businesswire.com

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Kuehn Law Encourages Investors of Five9, Inc. to Contact Law Firm

Mar -13

Source: prnewswire.com

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Software sector sees C-suite shake-ups amid AI disruption fears

Mar -13

Source: youtube.com

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Did Cummins Inc. Insiders Breach their Fiduciary Duties to Shareholders?

Mar -12

Source: prnewswire.com

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Five9 Strengthens Open Platform Strategy with Evolution of Five9 Fusion

Mar -10

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.23%)

6. Segments

Cloud Software

Expected Growth: 11.23%

Five9's Cloud Software growth is driven by increasing adoption of cloud-based contact center solutions, rising demand for omnichannel customer engagement, and growing need for AI-powered customer service. Additionally, the shift to remote work and digital transformation initiatives across industries are fueling growth. The company's strategic partnerships and innovative product offerings are also contributing to its rapid expansion.

7. Detailed Products

Cloud Contact Center

A cloud-based contact center solution that provides a comprehensive set of tools for managing customer interactions across multiple channels, including voice, email, chat, and social media.

Automatic Call Distribution (ACD)

A feature that automatically routes incoming calls to the most suitable agent based on factors such as skill level, language, and availability.

Interactive Voice Response (IVR)

A feature that allows customers to interact with a company's phone system using voice commands or keypad inputs, providing automated self-service options.

Workforce Management (WFM)

A solution that enables contact center managers to forecast, schedule, and manage agent workloads, ensuring that the right agents are available to handle customer interactions.

Quality Management

A feature that enables contact center managers to evaluate and improve agent performance, providing real-time feedback and coaching.

Analytics and Reporting

A feature that provides real-time insights and analytics on contact center performance, enabling data-driven decision-making.

8. Five9, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Five9, Inc. is medium due to the presence of alternative cloud-based contact center solutions. However, the company's strong brand recognition and customer loyalty mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's strong relationships with its clients and the customized nature of its solutions, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's diversified supplier base and the availability of alternative suppliers, reducing the dependence on any single supplier.

Threat Of New Entrants

The threat of new entrants is high due to the growing demand for cloud-based contact center solutions and the relatively low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established players in the industry, such as Amazon Connect and Genesys, and the ongoing competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.38%
Debt Cost 3.95%
Equity Weight 41.62%
Equity Cost 8.20%
WACC 5.72%
Leverage 140.24%

11. Quality Control: Five9, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Marqeta

A-Score: 4.6/10

Value: 5.1

Growth: 7.4

Quality: 3.4

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Verint Systems

A-Score: 4.4/10

Value: 6.0

Growth: 4.6

Quality: 6.1

Yield: 0.0

Momentum: 4.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
MongoDB

A-Score: 4.2/10

Value: 4.0

Growth: 7.9

Quality: 4.4

Yield: 0.0

Momentum: 7.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Remitly Global

A-Score: 3.2/10

Value: 3.2

Growth: 6.0

Quality: 6.2

Yield: 0.0

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Five9

A-Score: 3.2/10

Value: 3.5

Growth: 7.4

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Confluent

A-Score: 3.2/10

Value: 4.4

Growth: 6.6

Quality: 4.0

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.07$

Current Price

16.07$

Potential

-0.00%

Expected Cash-Flows