Five9 Inc: Cloud Stock up 182% Since March, Has Another Record Quarter

COVID-19 Means More Demand for Five9 Inc

Five9 Inc (NASDAQ:FIVN) has been providing shareholders with amazing growth over the last number of years. Since late October 2015, Five9 stock has rocketed 3,497%. Since the start of 2016, FIVN stock has soared 1,630% and more recently, it has advanced 153% year-over-year.

A provider of cloud-based call-center based software, Five9 was obviously a great stock before COVID-19, but with stay-at-home orders and more and more people working remotely than ever before, it has become an even better opportunity.

FIVN stock is up 126% year-to-date, and it has soared 182% since the coronavirus-fueled sell-off in March.

The reason for the ongoing bullishness over FIVN is pretty simple; a storied history of reporting record revenue growth and strong outlooks.

Chart courtesy of StockCharts.com

Five9 Inc Overview

Five9, which provides cloud software for contact centers, has more than 2,000 customers around the world. The San Ramon-CA-based company’s proprietary infrastructure technology helps its clients increase productivity, lower costs, and create a better customer experience. (Source: “Q3 2020 Investor Presentation,” Five9 Inc, last accessed October 30, 2020.)

The company’s Virtual Contact Center cloud platform and Artificial Intelligence (AI) technology allows its clients to manage customer interactions across numerous channels, including voice, chat, email, web, social media, and mobile.

Some of Five9 Inc’s 2,000+ global customers include Expedia Group Inc (NASDAQ:EXPE), Fitbit Inc (NYSE:FIT), and Lululemon Athletica Inc (NASDAQ:LULU).

Acquisition of Inference Solutions

On October 29, Five9 announced it had signed a definitive agreement to acquire Inference Solutions, the most widely deployed Intelligent Virtual Agent (IVA) platform. (Source: “Five9 To Acquire Inference Solutions, The Market Leading Intelligent Virtual Agent Platform,” Five9 Inc, October 29, 2020.)

In addition to its market leading solution, the acquisition adds operations in Australia to Five9’s global footprint and expands marquee global service provider relationships, such as Evolve IT in Europe, Telstra in APAC, and AT&T Inc. (NYSE:T) in North America.

Record Third-Quarter Revenue

On October 29, Five9 announced that revenue for the third quarter ended September 30 increased 34% year-over-year to a record $112.1 million. (Source: “Five9 Reports Third Quarter Revenue Growth of 34% To A Record $112.4 Million,” Five9 Inc, October 29, 2020.)

The company reported a third-quarter net loss of $11.4 million, or a loss of $0.17 per share, compared to a third-quarter 2019 net loss of $1.6 million, or a loss of $0.03 per share.

Adjusted net income was $18.5 million, or $0.27 per share, compared to adjusted net income of $12.8 million, or $0.20 per share in the same period last year.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $24.1 million, or 21.5% of revenue, compared to $15.0 million, or 18.0% of revenue in the third quarter of 2019.

Five9 reported third-quarter operating cash flow of $22.8 million, compared to $17.7 million in the third quarter of 2019.

Five9 Inc’s Business Outlook

For the fourth quarter of 2020, FIVN expects to report:

• Revenue in the range of $114.5 million to $115.5 million, compared to a record $92.3 million in Q4 2019.
• Net loss in the range of $14.5 to $13.5 million, or $0.21 to $0.20 per basic share versus net income of $0.8 million, or $0.01 per share, in the same period last year.
• Adjusted net income in the range of $16.0 to $17.0 million, or $0.22 to $0.24 per diluted share versus adjusted net income of $17.0 million, or $0.27 per diluted share, in the fourth quarter of 2019.

For fiscal 2020, Five9 expects to report:

• Revenue in the range of $421.5 to $422.5 million, which is higher than the guidance range of $399.0 to $401.0 million provided in August. In 2019, Five9 reported record revenue of $328.0 million.
• Net loss in the range of $49.4 to $48.4 million, or a loss of $0.76 to $0.75 per basic share, up from the guidance range of a net loss of $56.4 to $54.4 million, or a loss of $0.88 to $0.85 per basic share, provided in August.
• Adjusted net income in the range of $59.7 to $60.7 million, or $0.87 to $0.88 per diluted share, which is higher than the guidance range of $52.7 to $54.7 million, or $0.77 to $0.80 per diluted share, provided in August.

Analyst Take

It’s hard not to love what Five9 Inc is doing, especially during the coronavirus pandemic. Since the start of 2018, the company has reported record revenue growth every single quarter.

Judging by its phenomenal long-term growth, it’s fair to say that the company will continue to do well even after everything returns to normal. And that bodes well for Five9 stock.