EX-99.1 2 a033124ex991earningsrelease.htm EX-99.1 Document

Exhibit 99.1
newfive9logo.jpg

Five9 Reports First Quarter 2024 Results
13% Year-Over-Year Growth in Total Revenue
20% Year-Over-Year Growth in Subscription Revenue
GAAP Operating Cash Flow of $32.4 Million
SAN RAMON, Calif. - May 2, 2024 - Five9, Inc. (NASDAQ:FIVN), the Intelligent CX Platform provider, today reported results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Results
Revenue for the first quarter of 2024 increased 13% to a record $247.0 million, compared to $218.4 million for the first quarter of 2023.
GAAP gross margin was 53.6% for the first quarter of 2024, compared to 52.0% for the first quarter of 2023.
Adjusted gross margin was 60.8% for the first quarter of 2024, compared to 60.4% for the first quarter of 2023.
GAAP net loss for the first quarter of 2024 was $(7.1) million, or $(0.10) per basic share, and (2.9)% of revenue, compared to GAAP net loss of $(27.2) million, or $(0.38) per basic share, and (12.5)% of revenue, for the first quarter of 2023.
Non-GAAP net income for the first quarter of 2024 was $35.7 million, or $0.48 per diluted share, and 14.5% of revenue, compared to non-GAAP net income of $29.4 million, or $0.41 per diluted share, and 13.5% of revenue, for the first quarter of 2023.
Adjusted EBITDA for the first quarter of 2024 was $37.6 million, or 15.2% of revenue, compared to $35.1 million, or 16.1% of revenue, for the first quarter of 2023.
GAAP operating cash flow for the first quarter of 2024 was $32.4 million, compared to GAAP operating cash flow of $33.4 million for the first quarter of 2023.

“We are pleased to report strong first quarter results with subscription revenue growing 20% year-over-year and adjusted EBITDA margin of 15%, helping drive robust LTM operating cash flow of $128 million. Five9 is changing the game for many of the largest brands in the world as we help them reimagine CX with our AI-infused data-centric platform combined with our passionate experts. We are also very excited to share that we signed our largest deal ever, a Fortune 50 financial services company, which is a testament to our continuing success in marching up-market. The market remains
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massive and underpenetrated, we believe we are a clear market leader, and we see a long runway ahead for durable growth.”

- Mike Burkland, Chairman and CEO, Five9
Business Outlook
Five9 provides guidance based on current market conditions and expectations. Five9 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 ongoing macroeconomic conditions.
For the full year 2024, Five9 expects to report:
Revenue in the range of $1.053 to $1.057 billion.
GAAP net loss per share in the range of $(0.44) to $(0.35), assuming basic shares outstanding of approximately 74.2 million.
Non-GAAP net income per share in the range of $2.15 to $2.19, assuming diluted shares outstanding of approximately 75.2 million.
For the second quarter of 2024, Five9 expects to report:
Revenue in the range of $244.0 to $245.0 million.
GAAP net loss per share in the range of $(0.28) to $(0.23), assuming basic shares outstanding of approximately 74.3 million.
Non-GAAP net income per share in the range of $0.42 to $0.44, assuming diluted shares outstanding of approximately 74.9 million.

With respect to Five9’s guidance as provided above, please refer to the “Reconciliation of GAAP Net Loss to Non-GAAP net income - Guidance” table for more details, including important assumptions upon which such guidance is based.

Conference Call Details
Five9 will discuss its first quarter 2024 results today, May 2, 2024, via Zoom webinar at 4:30 p.m. Eastern Time. To access the webinar, please register by clicking here. 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 website, prior to the conference call.
A live webcast and a replay 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, exit costs related to the closure and relocation of our Russian operations, acquisition
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and related transaction costs and one-time integration costs, and lease amortization for finance leases. 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, gain on early extinguishment of debt, interest income and other, exit costs related to closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, lease amortization for finance leases and provision for income taxes. We calculate non-GAAP operating income by adding back or removing the following items to or from GAAP loss from operations: stock-based compensation, intangibles amortization, exit costs related to the closure and relocation of our Russian operations, and acquisition and related transaction costs and one-time integration costs. We calculate non-GAAP net income by adding back or removing the following items to or from GAAP net loss: stock-based compensation, intangibles amortization, amortization of discount and issuance costs on convertible senior notes, exit costs related to the closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, and gain on early extinguishment of debt. For the periods presented, these adjustments from GAAP net loss to non-GAAP net income do not include any presentation of the net tax effect of such adjustments given our significant net operating loss carryforwards. 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. The Company 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 in this release.

Forward-Looking Statements
This news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements in the quote from our Chairman and Chief Executive Officer, including statements regarding Five9’s market opportunity and size and ability to capitalize on that opportunity, up-market momentum and outlook, market position, AI and automation initiatives and the advantages thereof, results and outlook, and the second quarter and full year 2024 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 impact of adverse economic conditions, including the impact of macroeconomic deterioration, including continued inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of the conflict in Israel, and other factors, may continue to harm our business; (ii) 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; (iii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, or fail to grow subscriptions at the rate they have in the past or that we might expect, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (iv) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be
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immediately reflected in our operating results and may be difficult to discern; (v) 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; (vi) we have established, and are continuing to increase, our network of technology solution distributors and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (vii) 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; (viii) if we are unable to attract and retain highly skilled leaders and other employees, our business and results of operations may be adversely affected; (ix) our historical 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; (x) failure to adequately retain and expand our sales force will impede our growth; (xi) further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed; (xii) the AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks; (xiii) the use of AI by our workforce may present risks to our business; (xiv) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new cloud contact center solutions, which we refer to as our solution, in order to maintain and grow our business; (xv) 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; (xvi) the markets in which we participate involve a high number of competitors that is continuing to increase, and if we do not compete effectively, our operating results could be harmed; (xvii) we continue to expand our international operations, which exposes us to significant macroeconomic and other risks; (xviii) security breaches and improper access to, use of, or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation, our business or financial results; (xix) we may acquire other companies, or technologies, or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders or use a significant amount of our cash resources and otherwise disrupt our operations and harm our operating results; (xx) 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; (xxi) 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; (xxii) we have a history of losses and we may be unable to achieve or sustain profitability; (xxiii) our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control; (xxiv) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xxv) failure to comply with laws and regulations could harm our business and our reputation; (xxvi) 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 (xxvii) 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.

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About Five9
The Five9 Intelligent CX Platform provides a comprehensive suite of solutions for orchestrating fluid customer experiences. Our cloud-native, multi-tenant, scalable, reliable, and secure platform includes contact center; omni-channel engagement; Workforce Engagement Management; extensibility through more than 1,000 partners; and innovative, practical AI, automation and journey analytics that are embedded as part of the platform. Five9 brings the power of people, technology, and partners to more than 3,000 organizations worldwide. For more information, visit www.five9.com.


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FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, 2024December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$240,190 $143,201 
Marketable investments843,212 587,096 
Accounts receivable, net103,157 97,424 
Prepaid expenses and other current assets35,627 34,622 
Deferred contract acquisition costs, net67,169 61,711 
Total current assets1,289,355 924,054 
Property and equipment, net113,640 108,572 
Operating lease right-of-use assets36,215 38,873 
Finance lease right-of-use assets4,108 4,564 
Intangible assets, net35,675 38,323 
Goodwill227,269 227,412 
Other assets16,668 16,199 
Deferred contract acquisition costs, net — less current portion148,408 136,571 
Total assets$1,871,338 $1,494,568 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$25,671 $24,399 
Accrued and other current liabilities79,185 62,131 
Operating lease liabilities9,880 10,731 
Finance lease liabilities1,791 1,767 
Deferred revenue67,019 68,187 
Total current liabilities183,546 167,215 
Convertible senior notes 1,160,972 742,125 
Operating lease liabilities — less current portion34,207 36,378 
Finance lease liabilities — less current portion2,414 2,877 
Other long-term liabilities6,601 7,888 
Total liabilities1,387,740 956,483 
Stockholders’ equity:
Common stock74 73 
Additional paid-in capital895,754 942,280 
Accumulated other comprehensive (loss) income (303)582 
Accumulated deficit(411,927)(404,850)
Total stockholders’ equity483,598 538,085 
Total liabilities and stockholders’ equity$1,871,338 $1,494,568 
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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended
March 31, 2024March 31, 2023
Revenue$247,010 $218,439 
Cost of revenue114,530 104,756 
Gross profit132,480 113,683 
Operating expenses:
Research and development41,518 38,108 
Sales and marketing81,109 76,314 
General and administrative30,548 28,258 
Total operating expenses153,175 142,680 
Loss from operations(20,695)(28,997)
Other income (expense), net:
Interest expense(2,567)(1,845)
Gain on early extinguishment of debt6,615 — 
Interest income and other10,559 4,121 
Total other income (expense), net14,607 2,276 
Loss before income taxes(6,088)(26,721)
Provision for income taxes989 527 
Net loss$(7,077)$(27,248)
Net loss per share:
Basic and diluted$(0.10)$(0.38)
Shares used in computing net loss per share:
Basic and diluted73,488 71,259 


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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
Cash flows from operating activities:
Net loss$(7,077)$(27,248)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization12,183 11,347 
Amortization of operating lease right-of-use assets3,323 2,934 
Amortization of deferred contract acquisition costs16,269 12,423 
Accretion of discount on marketable investments(4,935)(1,863)
Provision for credit losses352 317 
Stock-based compensation44,684 50,743 
Amortization of discount and issuance costs on convertible senior notes 1,074 908 
Gain on early extinguishment of debt(6,615)— 
Deferred taxes248 59 
Other(286)439 
Changes in operating assets and liabilities:
Accounts receivable(6,085)(908)
Prepaid expenses and other current assets(1,003)(2,307)
Deferred contract acquisition costs(33,565)(20,665)
Other assets(781)(4,231)
Accounts payable1,279 1,557 
Accrued and other current liabilities15,832 7,725 
Deferred revenue(1,452)181 
Other liabilities(1,092)2,001 
Net cash provided by operating activities32,353 33,412 
Cash flows from investing activities:
Purchases of marketable investments(524,865)(140,892)
Proceeds from sales of marketable investments12,517 — 
Proceeds from maturities of marketable investments260,619 76,940 
Purchases of property and equipment(11,951)(9,928)
Capitalization of software development costs(3,242)(1,806)
Cash paid to acquire Aceyus99 — 
Net cash used in investing activities(266,823)(75,686)
Cash flows from financing activities:
Proceeds from issuance of 2029 convertible senior notes, net of issuance costs 728,873 — 
Payments for capped call transactions associated with the 2029 convertible senior notes(93,438)— 
Repurchase of a portion of 2025 convertible senior notes, net of costs(304,485)— 
Cash received from partial termination of capped calls associated with the 2025 convertible senior notes539 — 
Proceeds from exercise of common stock options386 3,125 
Payment of finance lease liabilities(479)— 
Net cash provided by financing activities331,396 3,125 
Net increase (decrease) in cash and cash equivalents96,926 (39,149)
Cash, cash equivalents and restricted cash:
Beginning of period144,842 180,987 
End of period$241,768 $141,838 

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FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except percentages)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
GAAP gross profit$132,480 $113,683 
GAAP gross margin53.6 %52.0 %
Non-GAAP adjustments:
Depreciation6,965 6,061 
Intangibles amortization2,648 2,846 
Stock-based compensation7,603 9,333 
Exit costs related to closure and relocation of Russian operations— 23 
Acquisition and related transaction costs and one-time integration costs— 34 
Lease amortization for finance leases457 — 
Adjusted gross profit$150,153 $131,980 
Adjusted gross margin60.8 %60.4 %


FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(In thousands, except percentages)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
GAAP net loss$(7,077)$(27,248)
Non-GAAP adjustments:
Depreciation and amortization12,183 11,347 
Stock-based compensation44,684 50,743 
Interest expense2,567 1,845 
Gain on early extinguishment of debt(6,615)— 
Interest income and other(10,559)(4,121)
Exit costs related to closure and relocation of Russian operations (1)
25 596 
Acquisition and related transaction costs and one-time integration costs932 1,455 
Lease amortization for finance leases457 — 
Provision for income taxes989 527 
Adjusted EBITDA$37,586 $35,144 
Adjusted EBITDA as % of revenue15.2 %16.1 %
(1) Exit costs related to the closure and relocation of our Russian operations was $0.1 million during the three months ended March 31, 2024. The $0.0 million adjustment presented above was net of $0.1 million included in “Interest (income) and other.” Exit costs related to the closure and relocation of our Russian operations was $0.7 million during the three months ended March 31, 2024. The $0.6 million adjustment presented above was net of $0.1 million included in “Interest (income) and other.”

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FIVE9, INC.
RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
Loss from operations$(20,695)$(28,997)
Non-GAAP adjustments:
Stock-based compensation44,684 50,743 
Intangibles amortization2,648 2,846 
Exit costs related to closure and relocation of Russian operations25 596 
Acquisition and related transaction costs and one-time integration costs932 1,455 
Non-GAAP operating income$27,594 $26,643 

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FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
GAAP net loss$(7,077)$(27,248)
Non-GAAP adjustments:
Stock-based compensation44,684 50,743 
Intangibles amortization2,648 2,846 
Amortization of discount and issuance costs on convertible senior notes1,074 908 
Gain on early extinguishment of debt(6,615)— 
Exit costs related to closure and relocation of Russian operations94 741 
Acquisition and related transaction costs and one-time integration costs932 1,455 
Income tax expense effects (1)
— — 
Non-GAAP net income$35,740 $29,445 
GAAP net loss per share:
Basic and diluted$(0.10)$(0.38)
Non-GAAP net income per share:
Basic$0.49 $0.41 
Diluted$0.48 $0.41 
Shares used in computing GAAP net loss per share:
Basic and diluted73,488 71,259 
Shares used in computing non-GAAP net income per share:
Basic73,488 71,259 
Diluted74,404 72,330 
(1)Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.
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FIVE9, INC.
SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2024March 31, 2023
Stock-Based CompensationDepreciationIntangibles AmortizationStock-Based CompensationDepreciationIntangibles Amortization
Cost of revenue$7,603 $6,965 $2,648 $9,333 $6,061 $2,846 
Research and development10,930 890 — 12,382 872 — 
Sales and marketing14,020 27 — 17,045 — 
General and administrative12,131 1,653 — 11,983 1,567 — 
Total$44,684 $9,535 $2,648 $50,743 $8,501 $2,846 



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FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME – GUIDANCE(1)
(In thousands, except per share data)
(Unaudited)

Three Months EndingYear Ending
June 30, 2024December 31, 2024
LowHighLowHigh
GAAP net loss$(20,587)$(17,089)$(32,884)$(25,876)
Non-GAAP adjustments:
Stock-based compensation(2)
46,315 44,315 179,560 175,560 
Intangibles amortization2,643 2,643 10,575 10,575 
Amortization of discount and issuance costs on convertible senior notes1,433 1,433 5,542 5,542 
Exit costs related to closure and relocation of Russian operations— — 94 94 
Acquisition and related transaction costs and one-time integration costs(3)
1,654 1,654 5,610 5,610 
Gain on early extinguishment of debt— — (6,615)(6,615)
Income tax expense effects(4)
— — — — 
Non-GAAP net income$31,458 $32,956 $161,882 $164,890 
GAAP net loss per share, basic and diluted$(0.28)$(0.23)$(0.44)$(0.35)
Non-GAAP net income per share:
Basic$0.42 $0.44 $2.18 $2.22 
Diluted$0.42 $0.44 $2.15 $2.19 
Shares used in computing GAAP net loss per share and non-GAAP net income per share:
Basic74,300 74,300 74,200 74,200 
Diluted74,900 74,900 75,200 75,200 
(1)Represents guidance discussed on May 2, 2024. Reader shall not construe presentation of this information after May 2, 2024 as an update or reaffirmation of such guidance.
(2)Stock-based compensation expenses are based on a range of probable significance, assuming market price for our common stock that is approximately consistent with current levels.
(3)Acquisition and related transaction costs and one-time integration costs are based on a range of probable significance for completed acquisitions, and no new acquisitions assumed.
(4)Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.



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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


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