33% Growth in LTM Enterprise Subscription
Revenue
Seventeenth Consecutive Quarter of Positive
Operating Cash Flow at $10.4 Million
Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact
center software, today reported results for the first quarter ended
March 31, 2020.
First Quarter 2020 Financial Results
- Revenue for the first quarter of 2020 increased 28% to a record
$95.1 million, compared to $74.5 million for the first quarter of
2019.
- GAAP gross margin was 57.9% for the first quarter of 2020,
compared to 58.6% for the first quarter of 2019.
- Adjusted gross margin was 64.1% for the first quarter of 2020,
compared to 63.4% for the first quarter of 2019.
- GAAP net loss for the first quarter of 2020 was $(7.4) million,
or $(0.12) per basic share, compared to GAAP net loss of $(1.9)
million, or $(0.03) per basic share, for the first quarter of
2019.
- Non-GAAP net income for the first quarter of 2020 was $11.1
million, or $0.17 per diluted share, compared to non-GAAP net
income of $10.0 million, or $0.16 per diluted share, for the first
quarter of 2019.
- Adjusted EBITDA for the first quarter of 2020 was $14.1
million, or 14.9% of revenue, compared to $11.8 million, or 15.9%
of revenue, for the first quarter of 2019.
- GAAP operating cash flow for the first quarter of 2020 was
$10.4 million, compared to GAAP operating cash flow of $11.2
million for the first quarter of 2019.
“We delivered strong first quarter results, with revenue of
$95.1 million, up 28% year-over-year, driven by our continued
success in our Enterprise business. I am extremely proud of the
ways in which we’ve delivered exceptional service to our customers
during the COVID-19 pandemic. In recent weeks we’ve helped our
customers transition tens of thousands of agents to work from home,
and mobilized a rapid response team and toolset to give customers
flexibility to scale up and scale down on the platform. Throughout
this challenging time and when it mattered most, we delivered the
highest uptime in the history of the Company. We believe the steady
migration of premise to cloud only stands to accelerate given the
crucial need for people to work from home, and, the increasing
importance around customer service and retention. As we move
through 2020, we will strive to continue to deliver the
extraordinary service Five9 is known for and maintain our focus on
disciplined and balanced growth.”
- Rowan Trollope, CEO, Five9
Business Outlook
Five9 provides guidance based on current market conditions and
expectations. The Company emphasizes that the guidance is subject
to various important cautionary factors referenced in the section
entitled "Forward-Looking Statements" below, including risks and
uncertainties associated with the COVID-19 pandemic.
- For the full year 2020, Five9 expects to report:
- Revenue in the range of $380.5 to $383.5 million, same as the
prior guidance range that was previously provided on February 19,
2020.
- GAAP net loss in the range of $(45.4) to $(42.4) million, or
$(0.72) to $(0.67) per basic share, lower than the prior guidance
range of $(30.9) to $(27.9) million, or $(0.48) to $(0.43) per
basic share, that was previously provided on February 19,
2020.
- Non-GAAP net income in the range of $48.3 to $51.3 million, or
$0.72 to $0.76 per diluted share, lower than the prior guidance
range of $55.5 to $58.5 million, or $0.83 to $0.87 per diluted
share, that was previously provided on February 19, 2020.
- For the second quarter of 2020, Five9 expects to report:
- Revenue in the range of $90.5 to $91.5 million.
- GAAP net loss in the range of $(16.7) to $(15.7) million, or
$(0.27) to $(0.25) per basic share.
- Non-GAAP net income in the range of $9.8 to $10.8 million, or
$0.15 to $0.16 per diluted share.
Conference Call Details
Five9 will discuss its first quarter 2020 results today, May 4,
2020, via teleconference at 4:30 p.m. Eastern Time. To access the
call (ID 6923609), please dial: 888-394-8218 or 720-452-9217. An
audio replay of the call will be available through May 18, 2020 by
dialing 888-203-1112 or 719-457-0820 and entering access code
6923609. A copy of this press release will be furnished to the
Securities and Exchange Commission on a Current Report on Form 8-K
and will be posted to our web-site, prior to the conference
call.
A webcast of the call will be available on the Investor
Relations section of the Company’s web-site at
http://investors.five9.com/.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), this press release and the accompanying tables contain
certain non-GAAP financial measures. We calculate adjusted gross
profit and adjusted gross margin by adding back the following items
to gross profit: depreciation, intangibles amortization and
stock-based compensation. We calculate adjusted EBITDA by adding
back or removing the following items to or from GAAP net loss:
depreciation and amortization, stock-based compensation, interest
expense, interest (income) and other, acquisition-related
transaction costs, non-recurring litigation settlement costs and
related indemnification fees, and provision for (benefit from)
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
loss excluding stock-based compensation, intangibles amortization,
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
acceleration from on premise contact centers to the cloud and
drivers thereof, Five9’s ability to continue to deliver a high
level of service to its customers, and Five9’s growth expectations,
and the second quarter and full year 2020 financial projections set
forth under the caption “Business Outlook,” that are based on our
current expectations and involve numerous risks and uncertainties
that may cause these forward-looking statements to be inaccurate.
Risks that may cause these forward-looking statements to be
inaccurate include, among others: (i) the effects of the COVID-19
pandemic have materially affected how we, our clients and business
partners are operating, and the duration and extent to which this
will impact our future results of operations and overall financial
performance remains uncertain; (ii) our quarterly and annual
results may fluctuate significantly, including as a result of the
timing and success of new product and feature introductions by us,
may not fully reflect the underlying performance of our business
and may result in decreases in the price of our common stock; (iii)
if we are unable to attract new clients or sell additional services
and functionality to our existing clients, our revenue and revenue
growth will be harmed; (iv) our recent rapid growth may not be
indicative of our future growth, and even if we continue to grow
rapidly, we may fail to manage our growth effectively; (v) failure
to adequately retain and expand our sales force will impede our
growth; (vi) if we fail to manage our technical operations
infrastructure, our existing clients may experience service
outages, our new clients may experience delays in the deployment of
our solution and we could be subject to, among other things, claims
for credits or damages; (vii) our growth depends in part on the
success of our strategic relationships with third parties and our
failure to successfully maintain, grow and manage these
relationships could harm our business; (viii) we have established,
and are continuing to increase, our network of master agents and
resellers to sell our solution; our failure to effectively develop,
manage, and maintain this network could materially harm our
revenues; (ix) adverse economic conditions may harm our business;
(x) security breaches and improper access to or disclosure of our
data or our clients’ data, their customers’ data, or other cyber
attacks on our systems, could result in litigation and regulatory
risk, harm our reputation and our business; (xi) the markets in
which we participate involve numerous competitors and are highly
competitive, and if we do not compete effectively, our operating
results could be harmed; (xii) if our existing clients terminate
their subscriptions or reduce their subscriptions and related
usage, our revenues and gross margins will be harmed and we will be
required to spend more money to grow our client base; (xiii) we
sell our solution to larger organizations that require longer sales
and implementation cycles and often demand more configuration and
integration services or customized features and functions that we
may not offer, any of which could delay or prevent these sales and
harm our growth rates, business and operating results; (xiv)
because a significant percentage of our revenue is derived from
existing clients, downturns or upturns in new sales will not be
immediately reflected in our operating results and may be difficult
to discern; (xv) we rely on third-party telecommunications and
internet service providers to provide our clients and their
customers with telecommunication services and connectivity to our
cloud contact center software and any failure by these service
providers to provide reliable services could cause us to lose
clients and subject us to claims for credits or damages, among
other things; (xvi) we have a history of losses and we may be
unable to achieve or sustain profitability; (xvii) the contact
center software solutions market is subject to rapid technological
change, and we must develop and sell incremental and new products
in order to maintain and grow our business; (xviii) we may not be
able to secure additional financing on favorable terms, or at all,
to meet our future capital needs; (xix) we may acquire other
companies or technologies or be the target of strategic
transactions, which could divert our management’s attention, result
in additional dilution to our stockholders and otherwise disrupt
our operations and harm our operating results; (xx) failure to
comply with laws and regulations could harm our business and our
reputation; (xxi) we may not have sufficient cash to service our
convertible senior notes and repay such notes, if required; and
(xxii) the other risks detailed from time-to-time under the caption
“Risk Factors” and elsewhere in our Securities and Exchange
Commission filings and reports, including, but not limited to, our
most recent annual report on Form 10-K and quarterly reports on
Form 10-Q. Such forward-looking statements speak only as of the
date hereof and readers should not unduly rely on such statements.
We undertake no obligation to update the information contained in
this press release, including in any forward-looking
statements.
About Five9
Five9 is a leading provider of cloud contact center software for
the intelligent contact center space, bringing the power of cloud
innovation to customers and facilitating more than six billion call
minutes annually. Five9 provides end-to-end solutions with
omnichannel routing, analytics, WFO and AI to increase agent
productivity and deliver tangible business results. The Five9
Genius platform is reliable, secure, compliant and scalable;
designed to create exceptional personalized customer experiences.
For more information, visit www.five9.com.
FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
155,863
$
77,976
Marketable investments
170,433
241,973
Accounts receivable, net
39,972
37,655
Prepaid expenses and other current
assets
13,396
10,656
Deferred contract acquisition costs
14,317
13,014
Total current assets
393,981
381,274
Property and equipment, net
34,940
33,190
Operating lease right-of-use assets
11,034
8,746
Intangible assets, net
14,543
15,533
Goodwill
11,798
11,798
Other assets
3,316
1,184
Deferred contract acquisition costs — less
current portion
34,047
30,655
Total assets
$
503,659
$
482,380
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
8,367
$
10,156
Accrued and other current liabilities
24,738
18,385
Operating lease liabilities
6,087
5,064
Accrued federal fees
1,754
2,303
Sales tax liabilities
1,723
1,885
Finance lease liabilities
2,812
3,518
Deferred revenue
25,632
24,681
Total current liabilities
71,113
65,992
Convertible senior notes
212,924
209,604
Sales tax liabilities — less current
portion
843
838
Operating lease liabilities — less current
portion
5,438
4,329
Finance lease liabilities — less current
portion
286
809
Other long-term liabilities
6,589
4,350
Total liabilities
297,193
285,922
Stockholders’ equity:
Common stock
62
61
Additional paid-in capital
368,260
351,870
Accumulated other comprehensive income
1,630
576
Accumulated deficit
(163,486
)
(156,049
)
Total stockholders’ equity
206,466
196,458
Total liabilities and stockholders’
equity
$
503,659
$
482,380
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
Revenue
$
95,088
$
74,538
Cost of revenue
40,037
30,851
Gross profit
55,051
43,687
Operating expenses:
Research and development
15,189
10,546
Sales and marketing
30,160
21,701
General and administrative
14,658
11,762
Total operating expenses
60,007
44,009
Loss from operations
(4,956
)
(322
)
Other income (expense), net:
Interest expense
(3,484
)
(3,396
)
Interest income and other
1,072
1,745
Total other income (expense), net
(2,412
)
(1,651
)
Loss before income taxes
(7,368
)
(1,973
)
Provision for (benefit from) income
taxes
69
(49
)
Net loss
$
(7,437
)
$
(1,924
)
Net loss per share:
Basic and diluted
$
(0.12
)
$
(0.03
)
Shares used in computing net loss per
share:
Basic and diluted
61,705
59,367
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
Cash flows from operating
activities:
Net loss
$
(7,437
)
$
(1,924
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
4,970
3,192
Amortization of operating lease
right-of-use assets
1,394
1,010
Amortization of premium on marketable
investments
177
(421
)
Provision for doubtful accounts
255
14
Stock-based compensation
13,794
8,686
Gain on sale of convertible note held for
investment
—
(217
)
Amortization of discount and issuance
costs on convertible senior notes
3,320
3,079
Others
147
(17
)
Changes in operating assets and
liabilities:
Accounts receivable
(2,620
)
(1,046
)
Prepaid expenses and other current
assets
(2,754
)
(1,721
)
Deferred contract acquisition costs
(4,695
)
(2,471
)
Other assets
(2,132
)
(7,845
)
Accounts payable
(1,121
)
552
Accrued and other current liabilities
4,802
7,724
Accrued federal fees and sales tax
liability
(707
)
(425
)
Deferred revenue
3,378
416
Other liabilities
(377
)
2,604
Net cash provided by operating
activities
10,394
11,190
Cash flows from investing
activities:
Purchases of marketable investments
(62,339
)
(34,427
)
Proceeds from maturities of marketable
investments
134,610
39,497
Purchases of property and equipment
(6,045
)
(3,985
)
Cash paid to acquire substantially all of
the assets of Whendu LLC
(100
)
—
Proceeds from sale of convertible note
held for investment
—
217
Net cash provided by investing
activities
66,126
1,302
Cash flows from financing
activities:
Proceeds from exercise of common stock
options
2,596
982
Payments of finance leases
(1,229
)
(1,894
)
Net cash provided by (used in) financing
activities
1,367
(912
)
Net increase in cash and cash
equivalents
77,887
11,580
Cash and cash equivalents:
Beginning of period
77,976
81,912
End of period
$
155,863
$
93,492
FIVE9, INC.
RECONCILIATION OF GAAP GROSS
PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
GAAP gross profit
$
55,051
$
43,687
GAAP gross margin
57.9
%
58.6
%
Non-GAAP adjustments:
Depreciation
2,850
2,278
Intangibles amortization
1,090
88
Stock-based compensation
1,989
1,229
Adjusted gross profit
$
60,980
$
47,282
Adjusted gross margin
64.1
%
63.4
%
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO ADJUSTED EBITDA
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
GAAP net loss
$
(7,437
)
$
(1,924
)
Non-GAAP adjustments:
Depreciation and amortization
4,970
3,192
Stock-based compensation
13,794
8,686
Interest expense
3,484
3,396
Interest income and other
(1,072
)
(1,745
)
Legal and indemnification fees related to
settlement
—
292
Acquisition-related transaction costs
329
—
Provision for (benefit from) income
taxes
69
(49
)
Adjusted EBITDA
$
14,137
$
11,848
Adjusted EBITDA as % of revenue
14.9
%
15.9
%
FIVE9, INC.
RECONCILIATION OF GAAP
OPERATING LOSS TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
Loss from operations
$
(4,956
)
$
(322
)
Non-GAAP adjustments:
Stock-based compensation
13,794
8,686
Intangibles amortization
1,090
88
Legal and indemnification fees related to
settlement
—
292
Acquisition-related transaction costs
329
—
Non-GAAP operating income
$
10,257
$
8,744
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO NON-GAAP NET INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
GAAP net loss
$
(7,437
)
$
(1,924
)
Non-GAAP adjustments:
Stock-based compensation
13,794
8,686
Intangibles amortization
1,090
88
Amortization of discount and issuance
costs on convertible senior notes
3,320
3,079
Legal and indemnification fees related to
settlement
—
292
Acquisition-related transaction costs
329
—
Gain on sale of convertible note held for
investment
—
(217
)
Non-GAAP net income
$
11,096
$
10,004
GAAP net loss per share:
Basic and diluted
$
(0.12
)
$
(0.03
)
Non-GAAP net income per share:
Basic
$
0.18
$
0.17
Diluted
$
0.17
$
0.16
Shares used in computing GAAP net loss per
share:
Basic and diluted
61,705
59,367
Shares used in computing non-GAAP net
income per share:
Basic
61,705
59,367
Diluted
65,161
62,754
FIVE9, INC.
SUMMARY OF STOCK-BASED
COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
1,989
$
2,850
$
1,090
$
1,229
$
2,278
$
88
Research and development
2,806
465
—
1,470
440
—
Sales and marketing
4,106
2
—
2,249
1
—
General and administrative
4,893
563
—
3,738
385
—
Total
$
13,794
$
3,880
$
1,090
$
8,686
$
3,104
$
88
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, 2020
December 31, 2020
Low
High
Low
High
GAAP net loss
$
(16,692
)
$
(15,692
)
$
(45,438
)
$
(42,438
)
Non-GAAP adjustments:
Stock-based compensation
16,300
16,300
62,465
62,465
Intangibles amortization
2,862
2,862
9,604
9,604
Amortization of discount and issuance
costs on convertible senior notes
3,290
3,290
13,424
13,424
One-time integration costs and
expenses
2,274
2,274
6,479
6,479
One-time COVID-19 relief bonus for
employees
1,766
1,766
1,766
1,766
Income tax expense effects (1)
—
—
—
—
Non-GAAP net income
$
9,800
$
10,800
$
48,300
$
51,300
GAAP net loss per share, basic and
diluted
$
(0.27
)
$
(0.25
)
$
(0.72
)
$
(0.67
)
Non-GAAP net income per share:
Basic
$
0.16
$
0.17
$
0.77
$
0.82
Diluted
$
0.15
$
0.16
$
0.72
$
0.76
Shares used in computing GAAP net loss per
share and non-GAAP net income per share:
Basic
62,500
62,500
62,900
62,900
Diluted
67,400
67,400
67,500
67,500
(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/20200504005501/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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