Five9 (FIVN) AI Stock Analysis

• Market Cap: $1.74B
• Dividend Yield: N/A
• Average Volume (3M): 1.93M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.82
• Revenue Growth: 14.44%
• EPS Growth: 84.58%
• Country: US
• Employees: 3,073
• Sector: Technology
• Sector Strength: 40
• Industry: Software - Infrastructure
• EPS (TTM): -0.20
• Shares Outstanding: 75,809,560
• 10 Day Avg. Volume: 1,789,662
• 30 Day Avg. Volume: 1,927,609
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.19
• Price to Cash Flow (P/CF): 11.50
• P/FCF Ratio: 11.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $52.31
• Price Target Upside: 130.85% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19

Five9's overall stock score reflects robust revenue and cash flow growth, bolstered by promising strategic partnerships and a focus on AI. However, significant challenges remain in achieving profitability and managing high leverage, compounded by macroeconomic uncertainties. While recent leadership changes are positive, technical indicators suggest caution with a bearish trend in stock performance.

Positive Factors

Financial Performance

Five9 delivered a revenue beat and management guided FY25 revenue and EPS above consensus due to solid AI traction sustaining momentum.

Strategic Investments

Five9 is prioritizing investment in key strategic areas like AI to drive innovation.

Negative Factors

Cost Management

Cash costs associated with the reduction in force are expected to be significant.

Workforce Management

The company announced a 4% reduction in force targeting global full-time employees, following a 7% reduction in August '24.

Five9 Business Overview & Revenue Model

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.

How the Company Makes Money

Five9 generates revenue primarily through a subscription-based model, offering its cloud-based contact center software solutions on a recurring basis. The company charges clients based on the number of agent seats or the volume of interactions handled by its platform. This model provides a steady stream of revenue, with additional income generated from professional services such as implementation, training, and support. Five9's strategic partnerships with major technology companies and system integrators further enhance its market reach and contribute to its financial performance. Key factors influencing its earnings include customer retention, upselling additional features or services, and expanding its client base across various industries.

Five9 Financial Statement Overview

Summary

Five9 exhibits strong revenue growth and effective cash flow management, which are positives in its financial performance. However, the company faces challenges in achieving profitability and managing high leverage on its balance sheet. Continuous focus on cost management and debt reduction will be crucial for long-term financial stability and growth.

Income Statement

Five9 has demonstrated solid revenue growth with a 14.4% increase in 2024 compared to 2023. The gross profit margin improved slightly to 54.2%, indicating efficient management of production costs. However, the company remains unprofitable with a negative net income and deteriorating net profit margin, which stands at -1.2%. The EBIT and EBITDA margins are negative, reflecting challenges in managing operational expenses effectively.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 1.98, suggesting significant leverage and potential financial risk. However, the return on equity has improved to -2.1% as net losses have reduced. The equity ratio is 30.3%, indicating that a fair portion of the assets is financed by equity, but caution is needed due to high liabilities.

Cash Flow

Five9's cash flow is robust, with a notable increase in free cash flow by 14.4% year-over-year. The operating cash flow to net income ratio is strong, highlighting effective cash management. The free cash flow to net income ratio is positive, showing the company generates cash even with net losses, which is a positive indicator for liquidity and operational efficiency.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.04B	910.49M	778.85M	609.59M	434.91M
	Gross Profit
564.40M	477.80M	411.35M	338.49M	254.62M
	EBIT
-51.30M	-98.58M	-87.58M	-56.25M	-9.27M
	EBITDA
54.96M	-10.62M	13.31M	-8.82M	14.54M
	Net Income Common Stockholders
-12.79M	-81.76M	-94.65M	-53.00M	-42.13M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
362.55M	730.30M	614.26M	469.86M	603.54M
	Total Assets
2.05B	1.49B	1.24B	1.19B	1.06B
	Total Debt
1.23B	793.88M	790.56M	825.51M	653.22M
	Net Debt
870.58M	650.68M	610.04M	734.63M	432.85M
	Total Liabilities
1.43B	956.48M	934.52M	981.81M	784.58M
	Stockholders Equity
622.19M	538.09M	309.96M	211.13M	279.16M
Cash Flow		Free Cash Flow
78.56M	88.07M	32.69M	-13.73M	36.88M
	Operating Cash Flow
143.17M	128.84M	88.86M	28.48M	67.30M
	Investing Cash Flow
-266.55M	-259.56M	30.96M	-150.48M	-382.33M
	Financing Cash Flow
342.73M	94.58M	-30.23M	-7.50M	457.42M

Five9 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.66
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FIVN, the sentiment is Negative. The current price of 22.66 is below the 20-day moving average (MA) of 28.40, below the 50-day MA of 34.85, and below the 200-day MA of 36.17, indicating a bearish trend. The MACD of -2.30 indicates Negative momentum. The RSI at 26.46 is Positive, neither overbought nor oversold. The STOCH value of 11.84 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FIVN.

Five9 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOUR	75 Outperform	$6.46B	24.42	31.22%	―	29.86%	128.19%
QLYS	73 Outperform	$4.33B	25.48	41.09%	―	10.40%	14.78%
ZS	73 Outperform	$27.03B	―	-1.21%	―	27.77%	89.39%
S	64 Neutral	$5.57B	―	-17.68%	―	32.25%	20.56%
FIVN	62 Neutral	$1.74B	―	-2.21%	―	14.44%	84.58%
Sector *	57 Neutral	$18.52B	9.81	-13.96%	2.71%	5.07%	-23.65%
VRNS	56 Neutral	$4.32B	―	-20.26%	―	10.38%	6.88%

Five9 Corporate Events

Five9 Appoints Andy Dignan as New President

On March 10, 2025, Five9, Inc. appointed Andy Dignan as its new President, following his tenure as Chief Operating Officer since November 2023. This strategic promotion is accompanied by a comprehensive compensation package, including a base salary, bonus eligibility, and stock awards, aligning his incentives with the company’s performance goals. This move is expected to strengthen Five9’s leadership team and potentially enhance its market position within the cloud contact center industry.

Five9 Announces CFO Retirement and Interim Appointment

On February 20, 2025, Five9 announced the retirement of its CFO, Barry Zwarenstein, effective March 31, 2025. Zwarenstein, who has been with the company for over 13 years, will assist with the transition until June 30, 2025, and continue as a consultant until September 30, 2025. Bryan Lee, the current Executive Vice President of Finance, will assume the role of Interim CFO starting April 1, 2025, as the company searches for a permanent replacement. Lee, having been with Five9 since 2014 and holding various finance positions, is expected to provide continuity and leadership in the interim period.

Five9 Extends Key Employee Severance Plan to 2027

Five9, Inc. announced an extension of its 2019 Key Employee Severance Benefit Plan (KESP) for two additional years, now set to expire on April 4, 2027. This extension maintains the same benefits for senior executives, including lump sum payments and health coverage based on employment termination circumstances. The plan also addresses benefits in the event of a change in control, ensuring continued support for executives during transitions.

Five9’s EVP Daniel Burkland Transitions to Consultant Role

On February 7, 2025, Five9, Inc. announced that Daniel Burkland will transition from his role as Executive Vice President, Go-to-Market Strategy to a consultant under a six-month agreement beginning March 8, 2025. This transition allows Mr. Burkland to provide advisory services in sales, marketing, partnerships, and customer relationships, which may impact Five9’s operations and market strategy.