51% Growth in LTM Enterprise Subscription
Revenue
Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact
center software, today reported results for the fourth quarter and
full year ended December 31, 2021.
Fourth Quarter 2021 Financial Results
- Revenue for the fourth quarter of 2021 increased 36% to a
record $173.6 million, compared to $127.9 million for the fourth
quarter of 2020.
- GAAP gross margin was 54.1% for the fourth quarter of 2021,
compared to 59.9% for the fourth quarter of 2020.
- Adjusted gross margin was 62.8% for the fourth quarter of 2021,
compared to 66.4% for the fourth quarter of 2020.
- GAAP net loss for the fourth quarter of 2021 was $(3.6)
million, or $(0.05) per diluted share, compared to GAAP net loss of
$(7.2) million, or $(0.11) per diluted share, for the fourth
quarter of 2020.
- Non-GAAP net income for the fourth quarter of 2021 was $30.1
million, or $0.42 per diluted share, compared to non-GAAP net
income of $23.7 million, or $0.34 per diluted share, for the fourth
quarter of 2020.
- Adjusted EBITDA for the fourth quarter of 2021 was $36.9
million, or 21.3% of revenue, compared to $29.2 million, or 22.8%
of revenue, for the fourth quarter of 2020.
- GAAP operating cash flow for the fourth quarter of 2021 was
$8.1 million, compared to GAAP operating cash flow of $19.3 million
for the fourth quarter of 2020.
2021 Financial Results
- Total revenue for 2021 increased 40% to a record $609.6
million, compared to $434.9 million in 2020.
- GAAP gross margin was 55.5% for 2021, compared to 58.5% in
2020.
- Adjusted gross margin was 63.5% for 2021, compared to 65.5% in
2020.
- GAAP net loss for 2021 was $(53.0) million, or $(0.79) per
basic share, compared to a GAAP net loss of $(42.1) million, or
$(0.66) per basic share, in 2020.
- Non-GAAP net income for 2021 was $82.2 million, or $1.16 per
diluted share, compared to a non-GAAP net income of $67.4 million,
or $0.99 per diluted share, in 2020.
- Adjusted EBITDA for 2021 was $110.5 million, or 18.1% of
revenue, compared to $85.7 million, or 19.7% of revenue, in
2020.
- GAAP operating cash flow for 2021 was $28.5 million, compared
to GAAP operating cash flow of $67.3 million in 2020.
“We are pleased to report that we finished the year with
excellent results for the fourth quarter. Revenue grew 36%
year-over-year to a record $173.6 million, driven by the continuing
strength of our Enterprise business where LTM subscription revenue
grew 51% year-over-year. Our results were driven by the growing
market adoption of our AI and Automation offerings, in addition to
the success we have made in our march up market, as prospective
enterprise customers turn to Five9 for the reliable and innovative
platform we have built as a company. We continue to build out our
leadership position while delivering on a massive and barely
penetrated opportunity, and we plan to continue investing in key
strategic initiatives around AI, product innovation, traction with
larger enterprises and global expansion to drive growth in the year
ahead.”
- Rowan Trollope, 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 COVID-19 pandemic.
- For the full year 2022, Five9 expects to report:
- Revenue in the range of $754.5 to $757.5 million.
- Non-GAAP net income per share in the range of $1.12 to $1.16,
assuming diluted shares outstanding of approximately 73
million.
- For the first quarter of 2022, Five9 expects to report:
- Revenue in the range of $170.0 to $171.0 million.
- Non-GAAP net income per share in the range of $0.12 to $0.14,
assuming diluted shares outstanding of approximately 71
million.
With respect to Five9’s guidance as provided above, Five9 has
not reconciled its expectations as to non-GAAP net income per share
to GAAP net loss per share because stock-based compensation and
one-time integration costs cannot be reasonably calculated or
predicted at this time. Accordingly, a reconciliation is not
available without unreasonable effort.
Conference Call Details
Five9 will discuss its fourth quarter and full year 2021 results
today, February 23, 2022, 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 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,
stock-based compensation, COVID-19 relief bonus for employees and
one-time integration costs. 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, loss on early extinguishment of debt, interest income and
other (expense), acquisition-related transaction costs and one-time
integration costs, COVID-19 relief bonus for employees, contingent
consideration expense and provision for (benefit from) income
taxes. We calculate non-GAAP operating income by adding back or
removing the following items to or from GAAP operating income
(loss): stock-based compensation, intangibles amortization,
acquisition-related transaction costs and one-time integration
costs, COVID-19 relief bonus for employees and contingent
consideration expense. 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, loss on
early extinguishment of debt, acquisition-related transaction costs
and one-time integration costs, COVID-19 relief bonus for
employees, contingent consideration expense, and tax benefit
associated with acquired companies. 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 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 growth prospects,
market momentum, product innovation and go-to-market capabilities,
and the first quarter and full year 2022 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.
Other 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) the markets in which we participate involve many
and an increasing number of competitors, and if we do not compete
effectively, our operating results could be harmed; (ix) adverse
economic conditions may harm our business; (x) 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; (xi) 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 our business; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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;
(xvi) 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;
(xvii) we have a history of losses and we may be unable to achieve
or sustain profitability; (xviii) the contact center software
solutions market is subject to rapid technological change, and we
must develop and sell incremental and new solutions in order to
maintain and grow our business; (xix) we may not be able to secure
additional financing on favorable terms, or at all, to meet our
future capital needs; (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 nine 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, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
90,878
$
220,372
Marketable investments
378,980
383,171
Accounts receivable, net
83,731
48,731
Prepaid expenses and other current
assets
30,342
16,149
Deferred contract acquisition costs,
net
33,295
20,695
Total current assets
617,226
689,118
Property and equipment, net
77,785
51,213
Operating lease right-of-use assets
48,703
9,010
Intangible assets, net
39,897
51,684
Goodwill
165,420
165,420
Marketable investments
147,377
42,127
Other assets
11,871
3,236
Deferred contract acquisition costs, net —
less current portion
84,663
51,934
Total assets
$
1,192,942
$
1,063,742
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
20,510
$
17,145
Accrued and other current liabilities
78,577
44,450
Operating lease liabilities
9,826
3,912
Accrued federal fees
2,282
3,745
Sales tax liabilities
2,660
1,714
Finance lease liabilities
—
612
Deferred revenue
43,720
31,983
Total current liabilities
157,575
103,561
Convertible senior notes
768,599
643,316
Sales tax liabilities — less current
portion
877
857
Operating lease liabilities — less current
portion
47,088
5,379
Other long-term liabilities
7,671
31,465
Total liabilities
981,810
784,578
Stockholders’ equity:
Common stock
68
67
Additional paid-in capital
439,787
476,941
Accumulated other comprehensive (loss)
income
(287
)
335
Accumulated deficit
(228,436
)
(198,179
)
Total stockholders’ equity
211,132
279,164
Total liabilities and stockholders’
equity
$
1,192,942
$
1,063,742
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Revenue
$
173,599
$
127,885
$
609,591
$
434,908
Cost of revenue
79,764
51,233
271,099
180,284
Gross profit
93,835
76,652
338,492
254,624
Operating expenses:
Research and development
30,448
18,676
106,897
68,747
Sales and marketing
53,394
37,053
193,929
132,413
General and administrative
21,972
18,258
93,916
65,769
Total operating expenses
105,814
73,987
394,742
266,929
(Loss) income from operations
(11,979
)
2,665
(56,250
)
(12,305
)
Other (expense) income, net:
Interest expense
(2,024
)
(9,481
)
(8,027
)
(28,348
)
Loss on early extinguishment of debt
—
(887
)
—
(6,964
)
Other (expense) and interest income
(43
)
501
(8
)
3,034
Total other (expense) income, net
(2,067
)
(9,867
)
(8,035
)
(32,278
)
Loss before income taxes
(14,046
)
(7,202
)
(64,285
)
(44,583
)
(Benefit from) provision for income
taxes
(10,445
)
8
(11,285
)
(2,453
)
Net loss
$
(3,601
)
$
(7,210
)
$
(53,000
)
$
(42,130
)
Net loss per share:
Basic
$
(0.05
)
$
(0.11
)
$
(0.79
)
$
(0.66
)
Diluted
$
(0.05
)
$
(0.11
)
$
(0.79
)
$
(0.66
)
Shares used in computing net loss per
share:
Basic
68,207
66,133
67,512
64,154
Diluted
68,207
66,133
67,512
64,154
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
December 31, 2021
December 31, 2020
Cash flows from operating
activities:
Net loss
$
(53,000
)
$
(42,130
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
38,732
25,087
Amortization of operating lease
right-of-use assets
8,698
5,687
Amortization of deferred contract
acquisition costs
26,050
16,495
Amortization of premium on marketable
investments
6,385
3,090
Provision for doubtful accounts
808
754
Stock-based compensation
108,805
64,747
Amortization of discount and issuance
costs on convertible senior notes (1)
3,957
25,738
Loss on early extinguishment of debt
—
6,964
Change in fair value of contingent
consideration
5,640
—
Deferred taxes
(6,907
)
(178
)
Tax benefit of valuation allowance
associated with an acquisition
—
(2,910
)
Other
396
(147
)
Changes in operating assets and
liabilities:
Accounts receivable
(35,986
)
(9,958
)
Prepaid expenses and other current
assets
(14,193
)
(5,313
)
Deferred contract acquisition costs
(71,380
)
(45,454
)
Other assets
(1,729
)
(1,911
)
Accounts payable
4,305
6,181
Accrued and other current liabilities
20,562
9,374
Accrued federal fees and sales tax
liability
(497
)
1,302
Deferred revenue
10,462
7,971
Other liabilities
(22,623
)
1,913
Net cash provided by operating
activities
28,485
67,302
Cash flows from investing
activities:
Purchases of marketable investments
(680,490
)
(620,948
)
Proceeds from sales of marketable
investments
44,288
1,899
Proceeds from maturities of marketable
investments
527,940
432,579
Purchases of property and equipment
(42,216
)
(30,422
)
Cash paid to acquire Inference and Virtual
Observer
—
(165,338
)
Cash paid to acquire substantially all of
the assets of Whendu
—
(100
)
Net cash used in investing activities
(150,478
)
(382,330
)
Cash flows from financing
activities:
Proceeds from issuance of convertible
senior notes, net of issuance costs
—
728,812
Payments for capped call transactions
—
(90,448
)
Repurchase of a portion of 2023
convertible senior notes, net of costs
(24,688
)
(200,350
)
Proceeds from exercise of common stock
options
7,402
11,656
Proceeds from sale of common stock under
ESPP
15,397
11,469
Payment of holdbacks related to
acquisitions
(5,000
)
—
Payments of finance leases
(612
)
(3,715
)
Net cash (used in) provided by financing
activities
(7,501
)
457,424
Net (decrease) increase in cash and cash
equivalents
(129,494
)
142,396
Cash and cash equivalents:
Beginning of period
220,372
77,976
End of period
$
90,878
$
220,372
(1) During the first quarter of 2021, the Company early adopted ASU
2020-06 which resulted in the elimination of amortization of
discount on the convertible senior notes from January 1, 2021.
FIVE9, INC.
RECONCILIATION OF GAAP GROSS
PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
GAAP gross profit
$
93,835
$
76,652
$
338,492
$
254,624
GAAP gross margin
54.1
%
59.9
%
55.5
%
58.5
%
Non-GAAP adjustments:
Depreciation
5,354
3,665
19,083
13,330
Intangibles amortization
2,947
2,283
11,787
6,849
Stock-based compensation
6,854
2,331
17,734
9,422
COVID-19 relief bonus for employees
—
—
—
618
One-time integration costs
43
—
112
—
Adjusted gross profit
$
109,033
$
84,931
$
387,208
$
284,843
Adjusted gross margin
62.8
%
66.4
%
63.5
%
65.5
%
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO ADJUSTED EBITDA
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
GAAP net loss
$
(3,601
)
$
(7,210
)
$
(53,000
)
$
(42,130
)
Non-GAAP adjustments:
Depreciation and amortization
10,538
7,337
38,732
25,087
Stock-based compensation
35,601
16,876
108,805
64,747
Interest expense
2,024
9,481
8,027
28,348
Other (expense) and interest income
43
(501
)
8
(3,034
)
Acquisition related transaction costs and
one-time integration costs
2,351
2,339
13,576
6,335
COVID-19 relief bonuses for employees
—
—
—
1,817
Loss on early extinguishment of debt
—
887
—
6,964
Contingent consideration expense
380
—
5,640
—
(Benefit from) provision for income
taxes
(10,445
)
8
(11,285
)
(2,453
)
Adjusted EBITDA
$
36,891
$
29,217
$
110,503
$
85,681
Adjusted EBITDA as % of revenue
21.3
%
22.8
%
18.1
%
19.7
%
FIVE9, INC.
RECONCILIATION OF GAAP
OPERATING (LOSS) INCOME TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
(Loss) income from operations
$
(11,979
)
$
2,665
$
(56,250
)
$
(12,305
)
Non-GAAP adjustments:
Stock-based compensation
35,601
16,876
108,805
64,747
Intangibles amortization
2,947
2,283
11,787
6,849
Acquisition related transaction costs and
one-time integration costs
2,351
2,339
13,576
6,335
COVID-19 relief bonus for employees
—
—
—
1,817
Contingent consideration expense
380
—
5,640
—
Non-GAAP operating income
$
29,300
$
24,163
$
83,558
$
67,443
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO NON-GAAP NET INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2021
December 31, 2020
December 31, 2021
December 31, 2020
GAAP net loss
$
(3,601
)
$
(7,210
)
$
(53,000
)
$
(42,130
)
Non-GAAP adjustments:
Stock-based compensation
35,601
16,876
108,805
64,747
Intangibles amortization
2,947
2,283
11,787
6,849
Amortization of discount and issuance
costs on convertible senior notes
997
8,534
3,957
25,738
Acquisition related transaction costs and
one-time integration costs
2,351
2,339
13,576
6,335
COVID-19 relief bonus for employees
—
—
—
1,817
Loss on early extinguishment of debt
—
887
—
6,964
Contingent consideration expense
380
—
5,640
—
Tax benefit associated with acquired
companies
(8,573
)
—
(8,573
)
(2,910
)
Non-GAAP net income
$
30,102
$
23,709
$
82,192
$
67,410
GAAP net loss per share:
Basic
$
(0.05
)
$
(0.11
)
$
(0.79
)
$
(0.66
)
Diluted
$
(0.05
)
$
(0.11
)
$
(0.79
)
$
(0.66
)
Non-GAAP net income per share:
Basic
$
0.44
$
0.36
$
1.22
$
1.05
Diluted
$
0.42
$
0.34
$
1.16
$
0.99
Shares used in computing GAAP net loss per
share:
Basic
68,207
66,133
67,512
64,154
Diluted
68,207
66,133
67,512
64,154
Shares used in computing non-GAAP net
income per share:
Basic
68,207
66,133
67,512
64,154
Diluted
70,878
70,320
70,735
68,040
FIVE9, INC.
SUMMARY OF STOCK-BASED
COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended
December 31, 2021
December 31, 2020
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
6,854
$
5,354
$
2,947
$
2,331
$
3,665
$
2,283
Research and development
9,163
948
—
3,675
488
—
Sales and marketing
11,987
1
—
5,366
2
—
General and administrative
7,597
1,288
—
5,504
899
—
Total
$
35,601
$
7,591
$
2,947
$
16,876
$
5,054
$
2,283
Twelve Months Ended
December 31, 2021
December 31, 2020
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
17,734
$
19,083
$
11,787
$
9,422
$
13,330
$
6,849
Research and development
29,179
3,277
—
14,043
1,964
—
Sales and marketing
35,269
4
—
20,164
5
—
General and administrative
26,623
4,581
—
21,118
2,939
—
Total
$
108,805
$
26,945
$
11,787
$
64,747
$
18,238
$
6,849
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220223005839/en/
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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