36% Growth in LTM Enterprise Subscription
Revenue
Thirteenth Consecutive Quarter of Positive
Operating Cash Flow at $11.2 Million
Raises 2019 Guidance for Both Revenue and
Bottom Line
Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact
center software for the digital enterprise, today reported results
for the first quarter ended March 31, 2019.
First Quarter 2019 Financial Results
- Revenue for the first quarter of 2019
increased 27% to a record $74.5 million, compared to $58.9 million
for the first quarter of 2018.
- GAAP gross margin was 58.6% for the
first quarter of 2019, compared to 58.1% for the first quarter of
2018.
- Adjusted gross margin was 63.4% for the
first quarter of 2019, compared to 62.3% for the first quarter of
2018.
- GAAP net loss for the first quarter of
2019 was $(1.9) million, or $(0.03) per basic share, compared to
GAAP net loss of $(0.6) million, or $(0.01) per basic share, for
the first quarter of 2018.
- Non-GAAP net income for the first
quarter of 2019 was $10.0 million, or $0.16 per diluted share,
compared to non-GAAP net income of $4.5 million, or $0.08 per
diluted share, for the first quarter of 2018.
- Adjusted EBITDA for the first quarter
of 2019 was $11.8 million, or 15.9% of revenue, compared to $7.5
million, or 12.7% of revenue, for the first quarter of 2018.
- GAAP operating cash flow for the first
quarter of 2019 was $11.2 million, compared to GAAP operating cash
flow of $8.0 million for the first quarter of 2018.
“We started off 2019 with a strong first quarter. Revenue of
$74.5 million grew 27% year-over-year, a Q1 record growth rate as a
public company, and continued to be driven by our Enterprise
business, which delivered 36% growth in LTM Enterprise subscription
revenue. We also enjoyed ongoing momentum on the technology front.
Our Spring 2019 release provides new capabilities to even larger
and more sophisticated enterprises as they customize their contact
center technology to meet specific business requirements. With
regards to AI, we continue to establish our leadership and
demonstrated what we believe is an industry-first integration
between Google and Salesforce at the Next conference. As customer
experience becomes an increasingly important spend category for IT,
we see our role as a trusted partner to larger enterprises
continuing to accelerate.”
- Rowan Trollope, CEO, Five9
Business Outlook
- For the full year 2019, Five9
expects to report:
- Revenue in the range of $304.0 to
$307.0 million, up from the prior guidance range of $298.5 to
$301.5 million that was previously provided on February 19,
2019.
- GAAP net loss in the range of $(17.3)
to $(14.3) million or $(0.29) to $(0.24) per basic share, improved
from the prior guidance range of $(22.1) to $(19.1) million, or
$(0.36) to $(0.31) per basic share, that was previously provided on
February 19, 2019.
- Non-GAAP net income in the range of
$39.3 to $42.3 million or $0.61 to $0.66 per diluted share,
improved from the prior guidance range of $36.8 to $39.8 million,
or $0.58 to $0.62 per diluted share, that was previously provided
on February 19, 2019.
- For the second quarter of 2019,
Five9 expects to report:
- Revenue in the range of $72.0 to $73.0
million.
- GAAP net loss in the range of $(6.7) to
$(5.7) million, or a loss of $(0.11) to $(0.09) per basic
share.
- Non-GAAP net income in the range of
$7.0 to $8.0 million, or $0.11 to $0.13 per diluted share.
Conference Call Details
Five9 will discuss its first quarter 2019 results today,
May 1, 2019, via teleconference at 4:30 p.m. Eastern Time. To
access the call (ID 5680922), please dial: 888-204-4368 or
323-794-2423. An audio replay of the call will be available through
May 15, 2019 by dialing 888-203-1112 or 719-457-0820 and entering
access code 5680922. 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 website 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 by adding back the following items to gross profit:
depreciation, intangibles amortization and stock-based
compensation. We calculate adjusted EBITDA by adding back or
removing the following items to or from GAAP net loss:
depreciation, amortization, stock-based compensation, interest
expense, interest (income) and other, non-recurring litigation
settlement costs and related indemnification fees, and provision
for (benefit from) income taxes. We calculate non-GAAP operating
income as operating loss excluding stock-based compensation,
intangibles amortization, and non-recurring litigation settlement
costs and related indemnification fees. We calculate non-GAAP net
income as GAAP net loss excluding stock-based compensation,
intangibles amortization, amortization of debt discount and
issuance costs, amortization of discount and issuance costs on
convertible senior notes, non-recurring litigation settlement costs
and related indemnification fees, and gain on sale of convertible
note held for investment. 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 market position,
business momentum, expectations for future growth, product
positioning, value to and role with enterprise customers, our
vision for the future, our long-term goals, and the second quarter
and full year 2019 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) 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; (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) 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; (iv) failure
to adequately expand our sales force could impede our growth; (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) security breaches and improper access to 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 and adversely affect our business; (vii) 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; (viii) 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; (ix)
our growth depends in part on the success of our strategic
relationships with third parties and our failure to successfully
grow and manage these relationships could harm our business; (x) 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; (xi) 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; (xii) 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; (xiii) 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;
(xiv) we have a history of losses and we may be unable to achieve
or sustain profitability; (xv) 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; (xvi) we may not be able to secure
additional financing on favorable terms, or at all, to meet our
future capital needs; (xvii) failure to comply with laws and
regulations could harm our business and our reputation; (xviii) we
may not have sufficient cash to service our convertible senior
notes and repay such notes, if required; and (xix) 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 report 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 digital enterprise, bringing the power of cloud innovation to
customers and facilitating more than five 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 platform is reliable, secure, compliant and scalable;
designed to transform customer experiences into customer love. For
more information, visit www.five9.com.
FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 31, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 93,492 $ 81,912 Marketable investments
205,450 209,907
Accounts receivable, net
25,840 24,797 Prepaid expenses and other current assets 9,719 8,014
Deferred contract acquisition costs 10,095 9,372
Total current assets 344,596 334,002 Property and equipment, net
27,496 25,885 Operating lease right-of-use assets 6,735 —
Intangible assets, net
543 631 Goodwill 11,798 11,798 Other assets 936 836 Deferred
contract acquisition costs — less current portion 23,262
21,514
Total assets $ 415,366 $ 394,666
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 7,233 $ 7,010 Accrued and other
current liabilities 17,965 13,771 Operating lease liabilities 4,322
— Accrued federal fees 1,348 1,434 Sales tax liabilities 1,404
1,741 Finance lease liabilities 6,208 6,647 Deferred revenue 17,853
17,391 Total current liabilities 56,333 47,994
Convertible senior notes 199,842 196,763 Sales tax liabilities —
less current portion 839 841 Operating lease liabilities — less
current portion 3,012 — Finance lease liabilities — less current
portion 3,316 4,509 Other long-term liabilities 1,358 1,811
Total liabilities 264,700 251,918
Stockholders’ equity: Common stock 60 59 Additional paid-in
capital 303,946 294,279 Accumulated other comprehensive income
(loss) 81 (93 ) Accumulated deficit (153,421 ) (151,497 )
Total
stockholders’ equity 150,666 142,748
Total
liabilities and stockholders’ equity $ 415,366 $ 394,666
FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 Revenue $ 74,538 $ 58,905 Cost
of revenue 30,851 24,702 Gross profit 43,687 34,203
Operating expenses: Research and development 10,546 7,772 Sales and
marketing 21,701 17,478 General and administrative 11,762
9,103 Total operating expenses 44,009 34,353
Loss from operations (322 ) (150 ) Other income (expense), net:
Interest expense (3,396 ) (810 ) Interest income and other 1,745
398 Total other income (expense), net (1,651 ) (412 )
Loss before income taxes (1,973 ) (562 ) Provision for (benefit
from) income taxes (49 ) 45 Net loss $ (1,924 ) $ (607 ) Net
loss per share: Basic and diluted $ (0.03 ) $ (0.01 ) Shares used
in computing net loss per share: Basic and diluted 59,367
56,399
FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 Cash flows from operating
activities: Net loss $ (1,924 ) $ (607 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 3,192 2,320 Amortization of operating
lease right-of-use asset 1,010 — Amortization of premium on
marketable investments (421 ) — Provision for doubtful accounts 14
48 Stock-based compensation 8,686 5,325 Gain on sale of convertible
note held for investment (217 ) (312 ) Amortization of discount and
issuance costs on convertible senior notes 3,079 — Others (17 ) (14
) Changes in operating assets and liabilities: Accounts receivable
(1,046 ) 519 Prepaid expenses and other current assets (1,721 )
(1,833 ) Deferred contract acquisition costs (2,471 ) (1,662 )
Other assets (7,845 ) (90 ) Accounts payable 552 1,181 Accrued and
other current liabilities 7,724 2,791 Accrued federal fees and
sales tax liability (425 ) (115 ) Deferred revenue 416 121 Other
liabilities 2,604 325 Net cash provided by operating
activities 11,190 7,997
Cash flows from investing
activities: Purchases of marketable investments (34,427 ) —
Proceeds from maturities of marketable investments 39,497 —
Purchases of property and equipment (3,985 ) (433 ) Proceeds from
sale of convertible note held for investment 217 1,923
Net cash provided by investing activities 1,302 1,490
Cash flows from financing activities: Proceeds from
exercise of common stock options 982 4,751 Payments of notes
payable — (157 ) Payments of finance leases (1,894 ) (2,352 ) Net
cash (used in) provided by financing activities (912 ) 2,242
Net increase in cash and cash equivalents 11,580 11,729
Cash and
cash equivalents: Beginning of period 81,912 68,947
End of period $ 93,492 $ 80,676
FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO
ADJUSTED GROSS PROFIT
(In thousands, except percentages)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 GAAP gross profit $ 43,687 $
34,203 GAAP gross margin 58.6 % 58.1 % Non-GAAP adjustments:
Depreciation 2,278 1,706 Intangibles amortization 88 88 Stock-based
compensation 1,229 678 Adjusted gross profit $ 47,282
$ 36,675 Adjusted gross margin 63.4 % 62.3 %
FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO
ADJUSTED EBITDA
(In thousands, except percentages)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 GAAP net loss $ (1,924 ) $ (607
) Non-GAAP adjustments: Depreciation and amortization 3,192 2,320
Stock-based compensation 8,686 5,325 Interest expense 3,396 810
Interest income and other (1,745 ) (398 ) Legal and indemnification
fees related to settlement 292 — Provision for (benefit from)
income taxes (49 ) 45 Adjusted EBITDA $ 11,848 $
7,495 Adjusted EBITDA as % of revenue 15.9 % 12.7 %
FIVE9, INC.
RECONCILIATION OF GAAP OPERATING LOSS
TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 Loss from operations $ (322 ) $
(150 ) Non-GAAP adjustments: Stock-based compensation 8,686 5,325
Intangibles amortization 88 116 Legal and indemnification fees
related to settlement 292 — Non-GAAP operating income
$ 8,744 $ 5,291
FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO
NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018 GAAP net loss $ (1,924 ) $ (607
) Non-GAAP adjustments: Stock-based compensation 8,686 5,325
Intangibles amortization 88 116 Amortization of debt discount and
issuance costs — 20 Amortization of discount and issuance costs on
convertible senior notes 3,079 — Legal and indemnification fees
related to settlement 292 — Gain on sale of convertible note held
for investment (217 ) (352 ) Non-GAAP net income $ 10,004 $
4,502 GAAP net loss per share: Basic and diluted $ (0.03 ) $
(0.01 ) Non-GAAP net income per share: Basic $ 0.17 $ 0.08
Diluted $ 0.16 $ 0.08 Shares used in computing
GAAP net loss per share: Basic and diluted
59,367
56,399 Shares used in computing non-GAAP net income
per share: Basic 59,367 56,399 Diluted 62,754
59,744
FIVE9, INC.
SUMMARY OF STOCK-BASED COMPENSATION,
DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended March 31, 2019
March 31, 2018
Stock-BasedCompensation
Depreciation
IntangiblesAmortization
Stock-BasedCompensation
Depreciation
IntangiblesAmortization
Cost of revenue $ 1,229 $ 2,278 $ 88 $ 678 $ 1,706 $ 88
Research and development 1,470 440 — 877 194 — Sales and marketing
2,249 1 — 1,362 1 28 General and administrative 3,738 385
— 2,408 303 — Total $ 8,686 $
3,104 $ 88 $ 5,325 $ 2,204 $ 116
FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO
NON-GAAP NET INCOME – GUIDANCE
(In thousands, except per share data)
(Unaudited)
Three Months Ending Year Ending
June 30, 2019 December 31, 2019 Low
High Low High GAAP net loss $
(6,713 ) $ (5,713 ) $ (17,255 ) $ (14,255 ) Non-GAAP adjustments:
Stock-based compensation 10,461 10,461 43,328 43,328 Intangibles
amortization 88 88 351 351 Amortization of discount and issuance
costs on convertible senior notes 3,164 3,164 12,801 12,801 Legal
and indemnification fees related to settlement — — 292 292 Gain on
sale of convertible note held for investment — — (217 ) (217 )
Income tax expense effects (1) — — — —
Non-GAAP net income $ 7,000 $ 8,000 $ 39,300 $
42,300 GAAP net loss per share, basic and diluted $ (0.11 )
$ (0.09 ) $ (0.29 ) $ (0.24 ) Non-GAAP net income per share: Basic
$ 0.12 $ 0.13 $ 0.65 $ 0.70 Diluted $
0.11 $ 0.13 $ 0.61 $ 0.66 Shares used
in computing GAAP net loss per share and non-GAAP net income per
share: Basic 60,200 60,200 60,500 60,500
Diluted 64,000 64,000 64,500 64,500
(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/20190501005862/en/
Investor Relations Contacts:
Five9, Inc.Barry ZwarensteinChief Financial Officer925-201-2000
ext. 5959IR@five9.com
The Blueshirt Group for Five9, Inc.Lisa
Laukkanen415-217-4967Lisa@blueshirtgroup.com
Five9 (NASDAQ:FIVN)
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