Updated Aug 7 at 6:04pm ET.
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Five9 reported solid results for the second quarter, with revenue reaching about 312 million dollars. While total sales grew 10 percent, the more important subscription revenue grew 14 percent. This suggests that the company is successfully moving customers to its cloud platform even as the broader software market faces tighter spending. The company also earned 70 cents per share, slightly ahead of the 68 cents analysts expected.
The stock rose about 20 percent following the report, likely fueled by the announcement of a new customer contract worth roughly 100 million dollars. This large win helps answer concerns that AI might make traditional customer service software less valuable. Instead, Five9 is showing it can still sign massive deals by layering automation tools on top of its core service. While profit margins on each sale dipped slightly compared to last year, the business remains profitable on a GAAP basis, which is a measure that includes all costs like stock-based pay.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Five9 is set to report its latest results today. Analysts are looking for revenue of about 310 million dollars and earnings of 68 cents per share. The company has a long streak of beating these targets, having topped expectations in each of the last eight quarters.
Beyond the headline numbers, the focus is on how well the company is moving customers toward its AI tools. Investors are watching to see if revenue from automated AI interactions can grow fast enough to offset any drop in traditional seat-based software sales as bots handle more customer queries.
D.A. Davidson set a price target of $22 for the stock. This is about 25 percent lower than where the stock is currently trading and sits near the average target of 23 dollars across all Wall Street firms. This suggests analysts remain cautious about the company's valuation as it navigates the shift from selling software per human agent to selling AI-driven customer service tools.
Source: D.A. Davidson
Five9 granted restricted stock units to its new technology and sales leaders. These are inducement awards, which are common incentives used to attract high-level executives to a company. While these awards involve a large number of shares, they are a routine part of hiring and do not change the underlying business outlook.
Source: Business Wire
Analysts have recently lowered their price expectations for the stock following a series of legal concerns and earnings reports. While 25 of 41 analysts still rate it a buy, the average target of $23 is 31% below the current price.
Management has cleared the bar eight quarters in a row, usually by about 7 cents. This suggests they are conservative with their forecasts and have a good handle on the business.
