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Aug. 3, 2020, 4:06 p.m. EDT

Five9 Reports Second Quarter Revenue Growth of 29% to a Record $99.8 Million

33% Growth in LTM Enterprise Subscription RevenueEighteenth Consecutive Quarter of Positive Operating Cash Flow at $14.8 MillionRaised 2020 Guidance for both Revenue and Bottom Line

Five9, Inc. /zigman2/quotes/209043265/composite FIVN +0.07% , a leading provider of cloud contact center software, today reported results for the second quarter ended June 30, 2020.

Second Quarter 2020 Financial Results

  • Revenue for the second quarter of 2020 increased 29% to a record $99.8 million, compared to $77.4 million for the second quarter of 2019.

  • GAAP gross margin was 57.5% for the second quarter of 2020, compared to 59.6% for the second quarter of 2019.

  • Adjusted gross margin was 65.7% for the second quarter of 2020, compared to 65.0% for the second quarter of 2019.

  • GAAP net loss for the second quarter of 2020 was $(16.1) million, or $(0.25) per basic share, compared to GAAP net loss of $(1.9) million, or $(0.03) per basic share, for the second quarter of 2019.

  • Non-GAAP net income for the second quarter of 2020 was $14.1 million, or $0.21 per diluted share, compared to non-GAAP net income of $12.3 million, or $0.20 per diluted share, for the second quarter of 2019.

  • Adjusted EBITDA for the second quarter of 2020 was $18.3 million, or 18.3% of revenue, compared to $14.4 million, or 18.6% of revenue, for the second quarter of 2019.

  • GAAP operating cash flow for the second quarter of 2020 was $14.8 million, compared to GAAP operating cash flow of $6.8 million for the second quarter of 2019.

"We delivered exceptionally strong second quarter results with revenue of $99.8 million. Revenue growth accelerated to 29% year-over-year and 5% sequentially, adjusted EBITDA margin was 18.3%, and we delivered our eighteenth consecutive quarter of positive operating cash flow. We believe the on-premises to cloud and digital transformation trends driving our massive market opportunity are likely to accelerate as work-from-home trends continue and retail sales personnel are increasingly displaced by contact center agents. Our better-than-expected second quarter results and pipeline also demonstrate the strength of our core business and, most importantly, our consistent sales execution. Our increased go-to-market investments are paying dividends, most notably with system integrators and AT&T. Meanwhile, our enhanced product and engineering leadership team is driving faster product innovation at greater scale. We remain focused on driving superb execution and disciplined, balanced 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:

  • For the third quarter of 2020, Five9 expects to report:

Conference Call Details

Five9 will discuss its second quarter 2020 results today, August 3, 2020, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 1396522), please dial: 866-248-8441 or 720-452-9102. An audio replay of the call will be available through August 17, 2020 by dialing 888-203-1112 or 719-457-0820 and entering access code 1396522. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K and will be posted to our web-site, prior to the conference call.

A webcast of the call will be available on the Investor Relations section of the Company’s web-site at http://investors.five9.com/ .

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. We calculate adjusted gross profit and adjusted gross margin by adding back the following items to gross profit: depreciation, intangibles amortization, stock-based compensation and COVID-19 relief bonus for employees. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net loss: depreciation and amortization, stock-based compensation, interest expense, interest (income) and other, acquisition-related transaction costs and one-time integration costs, non-recurring litigation settlement costs and related indemnification fees, COVID-19 relief bonus for employees and provision for (benefit from) income taxes. We calculate non-GAAP operating income as GAAP operating income (loss) excluding stock-based compensation, intangibles amortization, acquisition-related transaction costs and one-time integration costs, non-recurring litigation settlement costs and related indemnification fees, and COVID-19 relief bonus for employees. We calculate non-GAAP net income as GAAP net loss excluding stock-based compensation, intangibles amortization, amortization of discount and issuance costs on convertible senior notes, acquisition-related transaction costs and one-time integration costs, non-recurring litigation settlement costs and related indemnification fees, gain on sale of convertible note held for investment, COVID-19 relief bonus for employees, loss on early extinguishment of debt, and tax benefit of valuation allowance associated with an acquisition. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of factors that do not directly affect what we consider to be our core operating performance, as well as unusual events. The Company’s management uses these measures to (i) illustrate underlying trends in the Company’s business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the Company’s business and evaluating its performance. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented only as supplemental information for purposes of understanding the Company’s operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures set forth herein and attached to this release.

Forward-Looking Statements

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 drivers thereof, Five9’s expectations regarding the benefits of its go-to-market investments, Five9's sales pipeline, Five9's faster product innovation and greater scale, and Five9’s growth expectations, and the third 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) 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; (iii) 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; (iv) 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; (v) failure to adequately retain and expand our sales force will impede our growth; (vi) 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; (vii) 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; (viii) 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; (ix) adverse economic conditions may harm our business; (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 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; and (xxii) 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 .

FIVE9, INC.
    June 30, 2020   December 31, 2019
ASSETS        
Current assets:        
Cash and cash equivalents   $ 233,235     $ 77,976  
Marketable investments   452,708     241,973  
Accounts receivable, net   39,607     37,655  
Prepaid expenses and other current assets   17,529     10,656  
Deferred contract acquisition costs   16,151     13,014  
Total current assets   759,230     381,274  
Property and equipment, net   39,799     33,190  
Operating lease right-of-use assets   10,006     8,746  
Intangible assets, net   25,605     15,533  
Goodwill   34,444     11,798  
Marketable investments   82,064      
Other assets   2,789     1,184  
Deferred contract acquisition costs — less current portion   39,366     30,655  
Total assets   $ 993,303     $ 482,380  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable   $ 12,045     $ 10,156  
Accrued and other current liabilities   34,817     18,385  
Operating lease liabilities   5,247     5,064  
Accrued federal fees   1,670     2,303  
Sales tax liabilities   1,565     1,885  
Finance lease liabilities   2,032     3,518  
Deferred revenue   26,306     24,681  
Total current liabilities   83,682     65,992  
Convertible senior notes   642,203     209,604  
Sales tax liabilities — less current portion   847     838  
Operating lease liabilities — less current portion   5,249     4,329  
Finance lease liabilities — less current portion   100     809  
Other long-term liabilities   6,814     4,350  
Total liabilities   738,895     285,922  
Stockholders’ equity:        
Common stock   65     61  
Additional paid-in capital   432,877     351,870  
Accumulated other comprehensive income   1,004     576  
Accumulated deficit   (179,538)     (156,049)  
Total stockholders’ equity   254,408     196,458  
Total liabilities and stockholders’ equity   $ 993,303     $ 482,380  
         
FIVE9, INC.
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
                 
Revenue   $ 99,792     $ 77,436     $ 194,880     $ 151,974  
Cost of revenue   42,453     31,248     82,490     62,099  
Gross profit   57,339     46,188     112,390     89,875  
Operating expenses:                
Research and development   17,208     10,811     32,397     21,357  
Sales and marketing   32,231     23,250     62,391     44,951  
General and administrative   16,129     12,042     30,787     23,804  
Total operating expenses   65,568     46,103     125,575     90,112  
Income (loss) from operations   (8,229)     85     (13,185)     (237)  
Other income (expense), net:                
Interest expense   (5,734)     (3,406)     (9,218)     (6,802)  
Interest income and other   (4,965)     1,490     (3,893)     3,235  
Total other income (expense), net   (10,699)     (1,916)     (13,111)     (3,567)  
Loss before income taxes   (18,928)     (1,831)     (26,296)     (3,804)  
Provision for (benefit from) income taxes   (2,876)     29     (2,807)     (20)  
Net loss   $ (16,052)     (1,860)     $ (23,489)     $ (3,784)  
Net loss per share:                
Basic and diluted   $ (0.25)     $ (0.03)     $ (0.38)     $ (0.06)  
Shares used in computing net loss per share:                
Basic and diluted   63,282     60,058     62,494     59,714  
                 
FIVE9, INC.
    Six Months Ended
    June 30, 2020   June 30, 2019
Cash flows from operating activities:        
Net loss   $ (23,489)     $ (3,784)  
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization   11,213     6,553  
Amortization of operating lease right-of-use assets   2,786     2,147  
Amortization of premium on marketable investments   630     (883)  
Provision for doubtful accounts   353     30  
Stock-based compensation   30,585     19,122  
Loss on early extinguishment of debt   5,794      
Gain on sale of convertible note held for investment       (217)  
Amortization of discount and issuance costs on convertible senior notes   8,571     6,234  
Tax benefit of valuation allowance associated with an acquisition   (2,910)      
Others   82     (23)  
Changes in operating assets and liabilities:        
Accounts receivable   (2,119)     (3,378)  
Prepaid expenses and other current assets   (7,065)     (4,053)  
Deferred contract acquisition costs   (11,848)     (5,488)  
Other assets   (1,604)     (12,571)  
Accounts payable   2,553     159  
Accrued and other current liabilities   9,561     6,516  
Accrued federal fees and sales tax liability   (945)     (337)  
Deferred revenue   3,292     2,539  
Other liabilities   (281)     5,412  
Net cash provided by operating activities   25,159     17,978  
Cash flows from investing activities:        
Purchases of marketable investments   (460,899)     (151,308)  
Proceeds from maturities of marketable investments   167,850     165,354  
Purchases of property and equipment   (14,891)     (8,226)  
Cash paid to acquire Virtual Observer   (28,313)      
Cash paid to acquire substantially all of the assets of Whendu LLC   (100)      
Proceeds from sale of convertible note held for investment       217  
Net cash (used in) provided by investing activities   (336,353)     6,037  
Cash flows from financing activities:        
Proceeds from issuance of 2025 convertible senior notes, net of issuance costs   728,812      
Payments for capped call transactions related to the 2025 convertible senior notes   (90,448)      
Repurchase of a portion of 2023 convertible senior notes, net of costs   (181,462)      
Proceeds from exercise of common stock options   6,080     4,248  
Proceeds from sale of common stock under ESPP   5,666     3,996  
Payments of finance leases   (2,195)     (3,702)  
Net cash provided by financing activities   466,453     4,542  
Net increase in cash and cash equivalents   155,259     28,557  
Cash and cash equivalents:        
Beginning of period   77,976     81,912  
End of period   $ 233,235     $ 110,469  
         
FIVE9, INC.
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
                 
GAAP gross profit   $ 57,339     $ 46,188     $ 112,390     $ 89,875  
GAAP gross margin   57.5 %   59.6 %   57.7 %   59.1 %
Non-GAAP adjustments:                
Depreciation   3,382     2,416     6,232     4,694  
Intangibles amortization   1,738     88     2,828     176  
Stock-based compensation   2,499     1,658     4,488     2,887  
COVID-19 relief bonus for employees   618         618      
Adjusted gross profit   $ 65,576     $ 50,350     $ 126,556     $ 97,632  
Adjusted gross margin   65.7 %   65.0 %   64.9 %   64.2 %
FIVE9, INC.
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
                 
GAAP net loss   $ (16,052)     $ (1,860)     $ (23,489)     $ (3,784)  
Non-GAAP adjustments:                
Depreciation and amortization   6,243     3,361     11,213     6,553  
Stock-based compensation   16,791     10,436     30,585     19,122  
Interest expense   5,734     3,406     9,218     6,802  
Interest income and other   4,965     (1,490)     3,893     (3,235)  
Legal settlement       420         420  
Legal and indemnification fees related to settlement       64         356  
Acquisition-related transaction costs and one-time integration costs   1,637         1,966      
COVID-19 relief bonus for employees   1,817         1,817      
Provision for (benefit from) income taxes   (2,876)     29     (2,807)     (20)  
Adjusted EBITDA   $ 18,259     $ 14,366     $ 32,396     $ 26,214  
Adjusted EBITDA as % of revenue   18.3 %   18.6 %   16.6 %   17.2 %
                 
FIVE9, INC.
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
                 
Income (loss) from operations   $ (8,229)     $ 85     $ (13,185)     $ (237)  
Non-GAAP adjustments:                
Stock-based compensation   16,791     10,436     30,585     19,122  
Intangibles amortization   1,738     88     2,828     176  
Legal settlement       420         420  
Legal and indemnification fees related to settlement       64         356  
Acquisition-related transaction costs and one-time integration costs   1,637         1,966      
COVID-19 relief bonus for employees   1,817         1,817      
Non-GAAP operating income   $ 13,754     $ 11,093     $ 24,011     $ 19,837  
                 
FIVE9, INC.
    Three Months Ended   Six Months Ended
    June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019
                 
GAAP net loss   $ (16,052)     $ (1,860)     $ (23,489)     $ (3,784)  
Non-GAAP adjustments:                
Stock-based compensation   16,791     10,436     30,585     19,122  
Intangibles amortization   1,738     88     2,828     176  
Amortization of discount and issuance costs on convertible senior notes   5,251     3,155     8,571     6,234  
Legal settlement       420         420  
Legal and indemnification fees related to settlement       64         356  
Acquisition-related transaction costs and one-time integration costs   1,637         1,966      
COVID-19 relief bonus for employees   1,817         1,817      
Loss on early extinguishment of debt   5,794         5,794      
Gain on sale of convertible note held for investment               (217)  
Tax benefit of valuation allowance associated with an acquisition   (2,910)         (2,910)      
Non-GAAP net income   $ 14,066     $ 12,303     $ 25,162     $ 22,307  
GAAP net loss per share:                
Basic and diluted   $ (0.25)     $ (0.03)     $ (0.38)     $ (0.06)  
Non-GAAP net income per share:                
Basic   $ 0.22     $ 0.20     $ 0.40     $ 0.37  
Diluted   $ 0.21     $ 0.20     $ 0.38     $ 0.35  
Shares used in computing GAAP net loss per share:                
Basic and diluted   63,282     60,058     62,494     59,714  
Shares used in computing non-GAAP net income per share:                
Basic   63,282     60,058     62,494     59,714  
Diluted   67,171     62,950     65,960     62,843  
                 
FIVE9, INC.
    Three Months Ended
    June 30, 2020   June 30, 2019
    Stock-Based Compensation   Depreciation   Intangibles Amortization   Stock-Based Compensation   Depreciation   Intangibles Amortization
                         
Cost of revenue   $ 2,499     $ 3,382     $ 1,738     $ 1,658     $ 2,416     $ 88  
Research and development   3,684     497         1,907     450      
Sales and marketing   5,265     2         2,749     1      
General and administrative   5,343     624         4,122     406      
Total   $ 16,791     $ 4,505     $ 1,738     $ 10,436     $ 3,273     $ 88  
                         
    Six Months Ended
    June 30, 2020   June 30, 2019
    Stock-Based Compensation   Depreciation   Intangibles Amortization   Stock-Based Compensation   Depreciation   Intangibles Amortization
                         
Cost of revenue   $ 4,488     $ 6,232     $ 2,828     $ 2,887     $ 4,694     $ 176  
Research and development   6,491     963         3,377     890      
Sales and marketing   9,371     3         4,998     2      
General and administrative   10,235     1,187         7,860     791      
Total   $ 30,585     $ 8,385     $ 2,828     $ 19,122     $ 6,377     $ 176  
FIVE9, INC.
    Three Months Ending   Year Ending
    September 30, 2020   December 31, 2020
    Low   High   Low   High
                 
GAAP net loss   $ (18,938)     $ (17,938)     $ (56,402)     $ (54,402)  
Non-GAAP adjustments:                
Stock-based compensation   17,618     17,618     66,191     66,191  
Intangibles amortization   1,738     1,738     6,232     6,232  
Amortization of discount and issuance costs on convertible senior notes   8,637     8,637     25,975     25,975  
Loss on early extinguishment of debt           5,794     5,794  
Acquisition-related transaction costs and one-time integration costs   2,545     2,545     6,003     6,003  
COVID-19 relief bonus for employees           1,817     1,817  
Tax benefit of valuation allowance associated with an acquisition           (2,910)     (2,910)  
Income tax expense effects (1)                
Non-GAAP net income   $ 11,600     $ 12,600     $ 52,700     $ 54,700  
GAAP net loss per share, basic and diluted   $ (0.29)     $ (0.28)     $ (0.88)     $ (0.85)  
Non-GAAP net income per share:                
Basic   $ 0.18     $ 0.19     $ 0.82     $ 0.85  
Diluted   $ 0.17     $ 0.18     $ 0.77     $ 0.80  
Shares used in computing GAAP net loss per share and non-GAAP net income per share:                
Basic   64,900     64,900     64,200     64,200  
Diluted   69,100     69,100     68,100     68,100  
                 
  1. Non-GAAP adjustments do not have an impact on our income tax provision due to past non-GAAP losses.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200803005548/en/

SOURCE: Five9, Inc.

Investor Relations Contacts: Five9, Inc.
Barry Zwarenstein
Chief Financial Officer
925-201-2000 ext. 5959
IR@five9.com The Blueshirt Group for Five9, Inc.
Lisa Laukkanen
415-217-4967
Lisa@blueshirtgroup.com

COMTEX_368814163/2456/2020-08-03T16:05:32

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/zigman2/quotes/209043265/composite
US : U.S.: Nasdaq
$ 119.94
+0.08 +0.07%
Volume: 540,783
Sept. 17, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$7.83 billion
Rev. per Employee
$262,120
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