34% Growth in LTM Enterprise Subscription
Revenue
Fourth Quarter GAAP Net Income of $0.8
Million
Fourth Quarter Adjusted EBITDA of $19.6
Million, or 21.2% of Revenue
Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact
center software for the digital enterprise, today reported results
for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Financial Results
- Revenue for the fourth quarter of 2019 increased 28% to a
record $92.3 million, compared to $72.3 million for the fourth
quarter of 2018.
- GAAP gross margin was 58.9% for the fourth quarter of 2019,
compared to 60.8% for the fourth quarter of 2018.
- Adjusted gross margin was 64.4% for the fourth quarter of 2019,
compared to 65.1% for the fourth quarter of 2018.
- GAAP net income for the fourth quarter of 2019 was $0.8
million, or $0.01 per diluted share, compared to GAAP net income of
$3.7 million, or $0.06 per diluted share, for the fourth quarter of
2018.
- Non-GAAP net income for the fourth quarter of 2019 was $17.0
million, or $0.27 per diluted share, compared to non-GAAP net
income of $14.5 million, or $0.23 per diluted share, for the fourth
quarter of 2018.
- Adjusted EBITDA for the fourth quarter of 2019 was $19.6
million, or 21.2% of revenue, compared to $16.4 million, or 22.7%
of revenue, for the fourth quarter of 2018.
- GAAP operating cash flow for the fourth quarter of 2019 was
$15.6 million, compared to GAAP operating cash flow of $15.5
million for the fourth quarter of 2018.
2019 Financial Results
- Total revenue for 2019 increased 27% to a record $328.0
million, compared to $257.7 million in 2018.
- GAAP gross margin was 59.0% for 2019, compared to 59.6% in
2018.
- Adjusted gross margin was 64.2% for 2019, compared to 63.9% in
2018.
- GAAP net loss for 2019 was $(4.6) million, or $(0.08) per basic
share, compared to a GAAP net loss of $(0.2) million, or $(0.00)
per basic share, in 2018.
- Non-GAAP net income for 2019 was $52.1 million, or $0.82 per
diluted share, compared to a non-GAAP net income of $37.0 million,
or $0.60 per diluted share, in 2018.
- Adjusted EBITDA for 2019 was $60.8 million, or a record 18.5%
of revenue, compared to $46.4 million, or 18.0% of revenue, in
2018.
- GAAP operating cash flow for 2019 was $51.2 million, compared
to GAAP operating cash flow of $38.6 million in 2018.
“We delivered very strong fourth quarter results, leading to a
great close of the year. Fourth quarter revenue was $92.3 million,
up 28% year-over-year, and was driven by our success in our
Enterprise business. In 2019, we believe we set the foundation for
our next decade of growth. We significantly strengthened the
leadership team and expanded our product and platform to deliver
the best-of-breed experiences for large enterprises. We made
strides in further improving our bottom line and operating cash
flow despite increased investments in R&D and go-to-market. We
believe these investments position us well to continue to deliver
sustained profitable growth as we execute in this massive,
underpenetrated market that is being driven by two trends: the
migration of premise to the cloud and the increasing focus on
improving customer experience as part of overall digital
transformation.”
- Rowan Trollope, CEO, Five9
Business Outlook
- For the full year 2020, Five9 expects to report:
- Revenue in the range of $380.5 to $383.5 million.
- GAAP net loss in the range of $(30.9) to $(27.9) million, or
$(0.48) to $(0.43) per basic share.
- Non-GAAP net income in the range of $55.5 to $58.5 million, or
$0.83 to $0.87 per diluted share.
- For the first quarter of 2020, Five9 expects to report:
- Revenue in the range of $89.0 to $90.0 million.
- GAAP net loss in the range of $(9.9) to $(8.9) million, or a
loss of $(0.16) to $(0.14) per basic share.
- Non-GAAP net income in the range of $9.5 to $10.5 million, or
$0.15 to $0.16 per diluted share.
Conference Call Details
Five9 will discuss its fourth quarter and full year 2019 results
today, February 19, 2020, via teleconference at 4:30 p.m. Eastern
Time. To access the call (ID 2305392), please dial: 800-263-0877 or
786-460-7199. An audio replay of the call will be available through
March 4, 2020 by dialing 888-203-1112 or 719-457-0820 and entering
access code 2305392. 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 and adjusted gross margin 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 income
(loss): depreciation and amortization, stock-based compensation,
interest expense, interest (income) and other, acquisition related
transaction costs, non-recurring litigation settlement costs and
related indemnification fees, and provision for income taxes. We
calculate non-GAAP operating income as GAAP operating income
excluding stock-based compensation, intangibles amortization,
acquisition related transaction costs, and non-recurring litigation
settlement costs and related indemnification fees. We calculate
non-GAAP net income as GAAP net income (loss) excluding stock-based
compensation, intangibles amortization, amortization of debt
discount and issuance costs, amortization of discount and issuance
costs on convertible senior notes, acquisition related transaction
costs, 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 expectations for
future growth and profitability, market position, business
momentum, product advantages and positioning, expected benefits
from recent acquisitions and vision for the future, the Company’s
long-term goals, and the first 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) 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 retain
and expand our sales force will 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)
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; (vii) 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; (viii) adverse
economic conditions may harm our business; (ix) 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; (x) 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; (xi) 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; (xii) 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; (xiii) 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; (xiv) 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; (xv) we have a history of losses
and we may be unable to achieve or sustain profitability; (xvi) 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; (xvii) we
may not be able to secure additional financing on favorable terms,
or at all, to meet our future capital needs; (xviii) 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; (xix) failure to
comply with laws and regulations could harm our business and our
reputation; (xx) we may not have sufficient cash to service our
convertible senior notes and repay such notes, if required; and
(xxi) 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 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
77,976
$
81,912
Marketable investments
241,973
209,907
Accounts receivable, net
37,655
24,797
Prepaid expenses and other current
assets
10,656
8,014
Deferred contract acquisition costs
13,014
9,372
Total current assets
381,274
334,002
Property and equipment, net
33,190
25,885
Operating lease right-of-use assets
8,746
—
Intangible assets, net
15,533
631
Goodwill
11,798
11,798
Other assets
1,184
836
Deferred contract acquisition costs — less
current portion
30,655
21,514
Total assets
$
482,380
$
394,666
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
10,156
$
7,010
Accrued and other current liabilities
18,385
13,771
Operating lease liabilities
5,064
—
Accrued federal fees
2,303
1,434
Sales tax liabilities
1,885
1,741
Finance lease liabilities
3,518
6,647
Deferred revenue
24,681
17,391
Total current liabilities
65,992
47,994
Convertible senior notes
209,604
196,763
Sales tax liabilities — less current
portion
838
841
Operating lease liabilities — less current
portion
4,329
—
Finance lease liabilities — less current
portion
809
4,509
Other long-term liabilities
4,350
1,811
Total liabilities
285,922
251,918
Stockholders’ equity:
Common stock
61
59
Additional paid-in capital
351,870
294,279
Accumulated other comprehensive income
(loss)
576
(93)
Accumulated deficit
(156,049)
(151,497)
Total stockholders’ equity
196,458
142,748
Total liabilities and stockholders’
equity
$
482,380
$
394,666
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Revenue
$
92,263
$
72,335
$
328,006
$
257,664
Cost of revenue
37,940
28,339
134,511
104,034
Gross profit
54,323
43,996
193,495
153,630
Operating expenses:
Research and development
12,168
8,451
45,190
34,172
Sales and marketing
25,627
18,793
95,592
72,001
General and administrative
13,496
10,766
49,446
40,448
Total operating expenses
51,291
38,010
190,228
146,621
Income from operations
3,032
5,986
3,267
7,009
Other income (expense), net:
Interest expense
(3,506)
(3,462)
(13,794)
(10,245)
Interest income and other
1,384
1,359
6,079
3,315
Total other income (expense), net
(2,122)
(2,103)
(7,715)
(6,930)
Income (loss) before income taxes
910
3,883
(4,448)
79
Provision for income taxes
74
150
104
300
Net income (loss)
$
836
$
3,733
$
(4,552)
$
(221)
Net income (loss) per share:
Basic
$
0.01
$
0.06
$
(0.08)
$
—
Diluted
$
0.01
$
0.06
$
(0.08)
$
—
Shares used in computing net income (loss)
per share:
Basic
61,253
58,926
60,371
58,076
Diluted
65,962
62,071
60,371
58,076
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
December 31, 2019
December 31, 2018
Cash flows from operating
activities:
Net loss
$
(4,552)
$
(221)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
14,374
10,274
Amortization of operating lease
right-of-use assets
4,735
—
Amortization of premium on marketable
investments
(1,108)
(670)
Provision for doubtful accounts
90
90
Stock-based compensation
42,065
28,484
Amortization of discount and issuance
costs on convertible senior notes
12,788
7,881
Gain on sale of convertible note held for
investment
(217)
(312)
Others
448
160
Changes in operating assets and
liabilities:
Accounts receivable
(12,935)
(5,829)
Prepaid expenses and other current
assets
(2,671)
(2,806)
Deferred contract acquisition costs
(12,783)
(7,748)
Other assets
(348)
193
Accounts payable
2,549
2,418
Accrued and other current liabilities
(544)
1,865
Accrued federal fees and sales tax
liability
1,010
495
Deferred revenue
8,695
3,956
Other liabilities
(375)
392
Net cash provided by operating
activities
51,221
38,622
Cash flows from investing
activities:
Purchases of marketable investments
(360,958)
(220,704)
Proceeds from maturities of marketable
investments
330,228
11,293
Purchases of property and equipment
(19,228)
(9,261)
Cash paid to acquire substantially all of
the assets of Whendu, LLC
(13,890)
—
Proceeds from sale of convertible note
held for investment
217
1,923
Net cash used in investing activities
(63,631)
(216,749)
Cash flows from financing
activities:
Proceeds from issuance of convertible
senior notes, net of issuance costs paid of $8,039
—
250,711
Payments for capped call transactions
—
(31,412)
Proceeds from exercise of common stock
options
7,705
7,779
Proceeds from sale of common stock under
ESPP
7,823
5,730
Payments of employee taxes related to
vested common stock
—
(260)
Repayments on revolving line of credit
—
(32,594)
Payments of notes payable
—
(318)
Payments of finance leases
(7,054)
(8,544)
Net cash provided by financing
activities
8,474
191,092
Net increase (decrease) in cash and cash
equivalents
(3,936)
12,965
Cash and cash equivalents:
Beginning of period
81,912
68,947
End of period
$
77,976
$
81,912
FIVE9, INC.
RECONCILIATION OF GAAP GROSS
PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
GAAP gross profit
$
54,323
$
43,996
$
193,495
$
153,630
GAAP gross margin
58.9
%
60.8
%
59.0
%
59.6
%
Non-GAAP adjustments:
Depreciation
2,766
2,041
9,974
7,456
Intangibles amortization
618
88
882
352
Stock-based compensation
1,745
942
6,334
3,333
Adjusted gross profit
$
59,452
$
47,067
$
210,685
$
164,771
Adjusted gross margin
64.4
%
65.1
%
64.2
%
63.9
%
FIVE9, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
GAAP net income (loss)
$
836
$
3,733
$
(4,552)
$
(221)
Non-GAAP adjustments:
Depreciation and amortization
4,324
2,838
14,374
10,274
Stock-based compensation
11,868
7,493
42,065
28,484
Interest expense
3,506
3,462
13,794
10,245
Interest (income) and other
(1,384)
(1,359)
(6,079)
(3,315)
Legal settlement
—
—
420
—
Legal and indemnification fees related to
settlement
—
93
356
592
Acquisition related transaction costs
338
—
338
—
Provision for income taxes
74
150
104
300
Adjusted EBITDA
$
19,562
$
16,410
$
60,820
$
46,359
Adjusted EBITDA as % of revenue
21.2
%
22.7
%
18.5
%
18.0
%
FIVE9, INC.
RECONCILIATION OF GAAP
OPERATING INCOME TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
GAAP operating income
$
3,032
$
5,986
$
3,267
$
7,009
Non-GAAP adjustments:
Stock-based compensation
11,868
7,493
42,065
28,484
Intangibles amortization
618
93
882
442
Legal settlement
—
—
420
—
Legal and indemnification fees related to
settlement
—
93
356
592
Acquisition related transaction costs
338
—
338
—
Non-GAAP operating income
$
15,856
$
13,665
$
47,328
$
36,527
FIVE9, INC.
RECONCILIATION OF GAAP NET
INCOME (LOSS) TO NON-GAAP NET INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
GAAP net income (loss)
$
836
$
3,733
$
(4,552)
$
(221)
Non-GAAP adjustments:
Stock-based compensation
11,868
7,493
42,065
28,484
Intangibles amortization
618
93
882
442
Amortization of debt discount and issuance
costs
—
—
—
129
Amortization of discount and issuance
costs on convertible senior notes
3,304
3,099
12,788
7,881
Legal settlement
—
—
420
—
Legal and indemnification fees related to
settlement
—
93
356
592
Acquisition related transaction costs
338
—
338
—
Non-cash adjustment on investment
—
—
(217)
(352)
Non-GAAP net income
$
16,964
$
14,511
$
52,080
$
36,955
GAAP net income (loss) per share:
Basic
$
0.01
$
0.06
$
(0.08)
$
—
Diluted
$
0.01
$
0.06
$
(0.08)
$
—
Non-GAAP net income per share:
Basic
$
0.28
$
0.25
$
0.86
$
0.64
Diluted
$
0.27
$
0.23
$
0.82
$
0.60
Shares used in computing GAAP net income
(loss) per share:
Basic
61,253
58,926
60,371
58,076
Diluted
65,962
62,071
60,371
58,076
Shares used in computing non-GAAP net
income per share:
Basic
61,253
58,926
60,371
58,076
Diluted
63,853
62,071
63,245
61,428
FIVE9, INC.
SUMMARY OF STOCK-BASED
COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended
December 31, 2019
December 31, 2018
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
1,745
$
2,766
$
618
$
942
$
2,041
$
88
Research and development
2,259
461
—
1,010
331
—
Sales and marketing
3,353
2
—
1,747
1
5
General and administrative
4,511
477
—
3,794
372
—
Total
$
11,868
$
3,706
$
618
$
7,493
$
2,745
$
93
Twelve Months Ended
December 31, 2019
December 31, 2018
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
6,334
$
9,974
$
882
$
3,333
$
7,456
$
352
Research and development
7,658
1,801
—
5,303
1,036
—
Sales and marketing
11,368
6
—
6,307
5
90
General and administrative
16,705
1,711
—
13,541
1,335
—
Total
$
42,065
$
13,492
$
882
$
28,484
$
9,832
$
442
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
March 31, 2020
December 31, 2020
Low
High
Low
High
GAAP net loss
$
(9,916)
$
(8,916)
$
(30,933)
$
(27,933)
Non-GAAP adjustments:
Stock-based compensation
13,977
13,977
62,289
62,289
Intangibles amortization
1,084
1,084
4,265
4,265
Amortization of discount and issuance
costs on convertible senior notes
3,238
3,238
13,338
13,338
One-time integration costs and
expenses
1,117
1,117
6,541
6,541
Income tax expense effects (1)
—
—
—
—
Non-GAAP net income
$
9,500
$
10,500
$
55,500
$
58,500
GAAP net loss per share, basic and
diluted
$
(0.16)
$
(0.14)
$
(0.48)
$
(0.43)
Non-GAAP net income per share:
Basic
$
0.15
$
0.17
$
0.86
$
0.91
Diluted
$
0.15
$
0.16
$
0.83
$
0.87
Shares used in computing GAAP net loss per
share and non-GAAP net income per share:
Basic
62,500
62,500
64,400
64,400
Diluted
65,200
65,200
67,100
67,100
(1) Non-GAAP adjustments do not have an
impact on our income tax provision due to past losses and valuation
allowance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200219005910/en/
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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