Five9 Reports Third Quarter Revenue Growth of 34% to a Record $112.1 Million

35% Growth in LTM Enterprise Subscription Revenue 

Nineteenth Consecutive Quarter of Positive Operating Cash Flow at $22.8 Million 

Raised 2020 Guidance for both Revenue and Bottom Line 

SAN RAMON, Calif. - October 29, 2020 - Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software, today reported results for the third quarter ended September 30, 2020. 

Third Quarter 2020 Financial Results 

• Revenue for the third quarter of 2020 increased 34% to a record $112.1 million, compared to $83.8 million for the third quarter of 2019.
   
• GAAP gross margin was 58.5% for the third quarter of 2020, compared to 58.8% for the third quarter of 2019.
   
• Adjusted gross margin was 65.4% for the third quarter of 2020, compared to 64.0% for the third quarter of 2019. 
   
• GAAP net loss for the third quarter of 2020 was $(11.4) million, or $(0.17) per basic share, compared to GAAP net loss of $(1.6) million, or $(0.03) per basic share, for the third quarter of 2019. 
   
• Non-GAAP net income for the third quarter of 2020 was $18.5 million, or $0.27 per diluted share, compared to non-GAAP net income of $12.8 million, or $0.20 per diluted share, for the third quarter of 2019. 
   
• Adjusted EBITDA for the third quarter of 2020 was $24.1 million, or 21.5% of revenue, compared to $15.0 million, or 18.0% of revenue, for the third quarter of 2019. 
   
• GAAP operating cash flow for the third quarter of 2020 was $22.8 million, compared to GAAP operating cash flow of $17.7 million for the third quarter of 2019. 
   

"We delivered outstanding third quarter results with revenue of $112.1 million, growing 34% year-over-year and 12% sequentially, both all-time highs for us as a public company, and Adjusted EBITDA margin was 21.5%, also a third quarter record. Positive industry trends continue to accelerate and help drive our performance. The contact center is the new front door for many businesses. We believe the premise to cloud transition and digital transformation trends will accelerate, and demand for AI driven automation will increase, placing Five9 at the forefront of a massive opportunity. We continue to execute on our go-to-market initiatives, which balance the strength of our direct salesforce with a diverse group of channel partners. Additionally, we are receiving very positive feedback on the enhanced product capabilities we have delivered over the last quarter. Finally, today we announced the execution of a definitive agreement to acquire Inference Solutions Inc. ("Inference"), a leader in the emerging Intelligent Virtual Agent market. Leveraging virtual agents to meet increasing customer interactions is rapidly becoming a requirement of the modern contact center. We are excited to build upon this acquisition and believe we are well positioned for continued growth.” 

- Rowan Trollope, CEO, Five9 


Business Outlook 

Five9 provides guidance based on current market conditions and expectations. The Company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic. 

For the full year 2020, Five9 expects to report: 
 

• Revenue in the range of $421.5 to $422.5 million, higher than the guidance range of $399.0 to $401.0 million that was previously provided on August 3, 2020. 
   
• GAAP net loss in the range of $(49.4) to $(48.4) million, or $(0.76) to $(0.75) per basic share, improved from the guidance range of $(56.4) to $(54.4) million, or $(0.88) to $(0.85) per basic share, that was previously provided on August 3, 2020. 
    
• Non-GAAP net income in the range of $59.7 to $60.7 million, or $0.87 to $0.88 per diluted share, higher than the guidance range of $52.7 to $54.7 million, or $0.77 to $0.80 per diluted share, that was previously provided on August 3, 2020. 

• Revenue in the range of $114.5 to $115.5 million. 
   
• GAAP net loss in the range of $(14.5) to $(13.5) million, or $(0.21) to $(0.20) per basic share. 
   
• Non-GAAP net income in the range of $16.0 to $17.0 million, or $0.22 to $0.24 per diluted share.  
   

This news release contains certain forward-looking statements, including the statements in the quote from our Chief Executive Officer, including statements regarding Five9’s expectations for market acceleration from on premise contact centers to the cloud, and digital transformation, and drivers thereof, Five9’s expectations regarding the acceleration of growth in demand for AI-driven automation, benefits of its go-to-market strategy, the benefits being delivered by Five9's new product capabilities, Five9’s growth expectations, the potential closing of the Inference acquisition, and the fourth quarter and full year 2020 financial projections set forth under the caption “Business Outlook,” that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) the effects of the COVID-19 pandemic have materially affected how we, our clients and business partners are operating, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain; (ii) adverse economic conditions may harm our business; (iii) our quarterly and annual results may fluctuate significantly, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (iv) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (v) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (vi) failure to adequately retain and expand our sales force will impede our growth; (vii) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (viii) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business; (ix) we have established, and are continuing to increase, our network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (x) security breaches and improper access to or disclosure of our data or our clients’ data, their customers’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and our business; (xi) the markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed; (xii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (xiii) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results; (xiv) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (xv) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could cause us to lose clients and subject us to claims for credits or damages, among other things; (xvi) we have a history of losses and we may be unable to achieve or sustain profitability; (xvii) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new products in order to maintain and grow our business; (xviii) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xix) we may acquire other companies or technologies, such as Inference, or be the target of strategic transactions, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results; (xx) failure to comply with laws and regulations could harm our business and our reputation; (xxi) we may not have sufficient cash to service our convertible senior notes and repay such notes, if required, and other risks attendant to our convertible senior notes and increased debt levels; (xxii) our acquisition of Inference is subject to various conditions to closing that may not be satisfied, and the amount of consideration to be paid for Inference is dependent on various purchase price adjustments, as well as whether or not certain earn-out metrics are satisfied; and (xxiii) the other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Such forward-looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements. 

About Five9 

Five9 is a leading provider of cloud contact center software for the intelligent contact center space, bringing the power of cloud innovation to customers and facilitating more than six billion call minutes annually. Five9 provides end-to-end solutions with omnichannel routing, analytics, WFO and AI to increase agent productivity and deliver tangible business results. The Five9 Genius platform is reliable, secure, compliant and scalable; designed to create exceptional personalized customer experiences. For more information, visit www.five9.com.