31% Growth in LTM Enterprise Subscription
Revenue
48% Growth in LTM International Revenue
Record GAAP Operating Cash Flow of $33.4
Million
Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact
center software, today reported results for the first quarter ended
March 31, 2023.
First Quarter 2023 Financial Results
- Revenue for the first quarter of 2023 increased 20% to a record
$218.4 million, compared to $182.8 million for the first quarter of
2022.
- GAAP gross margin was 52.0% for the first quarter of 2023,
compared to 51.4% for the first quarter of 2022.
- Adjusted gross margin was 60.4% for the first quarter of 2023,
compared to 60.5% for the first quarter of 2022.
- GAAP net loss for the first quarter of 2023 was $(27.2)
million, or $(0.38) per basic share, and (12.5)% of revenue,
compared to GAAP net loss of $(34.1) million, or $(0.49) per basic
share, and (18.7)% of revenue, for the first quarter 2022.
- Non-GAAP net income for the first quarter of 2023 was $29.4
million, or $0.41 per diluted share, and 13.5% of revenue, compared
to non-GAAP net income of $15.6 million, or $0.22 per diluted
share, and 8.6% of revenue, for the first quarter of 2022.
- Adjusted EBITDA for the first quarter of 2023 was $35.1
million, or 16.1% of revenue, compared to $24.5 million, or 13.4%
of revenue, for the first quarter of 2022.
- GAAP operating cash flow for the first quarter of 2023 was
$33.4 million, compared to GAAP operating cash flow of $28.7
million for the first quarter of 2022.
“We are pleased to report strong first quarter results with
revenue growing 20% year-over-year to a record $218.4 million,
exceeding our expectations. This growth was driven by the continued
strength of our Enterprise business where LTM subscription revenue
grew 31% year-over-year. Our investments in international expansion
are also paying off as LTM international revenue grew 48%
year-over-year. In the first quarter, we achieved another record
for GAAP operating cash flow, driven by adjusted EBITDA margin
reaching 16%. These financial results demonstrate that we continue
to be a leader in delivering on a massive, under-penetrated market
opportunity. We continue to be a leader in the industry in AI and
Automation, which is becoming front and center in the contact
center and CX market, and we are focused on leveraging our unique
position to harness its power in a way that will deliver the most
value for customers. We had a strong start to the year and are
keenly focused on executing against our long-term market
opportunity as we take advantage of the growing strategic
importance of delivering enhanced customer experience through our
intelligent CX platform.”
- 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
deterioration.
- For the full year 2023, Five9 expects to report:
- Revenue in the range of $906.0 to $909.0 million.
- GAAP net loss per share in the range of $(1.48) to $(1.39),
assuming basic shares outstanding of approximately 72.0
million.
- Non-GAAP net income per share in the range of $1.73 to $1.77,
assuming diluted shares outstanding of approximately 73.4
million.
- For the second quarter of 2023, Five9 expects to report:
- Revenue in the range of $213.5 to $214.5 million.
- GAAP net loss per share in the range of $(0.45) to $(0.40),
assuming basic shares outstanding of approximately 71.6
million.
- Non-GAAP net income per share in the range of $0.38 to $0.40,
assuming diluted shares outstanding of approximately 72.8
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 2023 results today, May 4,
2023, 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, exit costs related to the closure and
relocation of our Russian operations, and acquisition-related
transaction 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, interest (income) and other, exit
costs related to closure and relocation of our Russian operations,
acquisition-related transaction costs and one-time integration
costs, contingent consideration expense 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,
acquisition-related transaction and one-time integration costs, 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, exit costs related to the closure and relocation of our
Russian operations, acquisition-related transaction costs and
one-time integration costs, contingent consideration expense and
tax provision associated with acquired companies. 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,
including the statements in the quotes from our Chairman and Chief
Executive Officer, including statements regarding Five9’s market
opportunity and ability to capitalize on that opportunity, Five9's
business strategies and market position, Five9's AI and automation
initiatives and the potential value thereof, and the second quarter
and full year 2023 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 increased inflation, increased interest rates, supply
chain disruptions, decreased economic output and fluctuations in
currency rates, the impact of the Russia-Ukraine conflict, and
other factors, that 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, 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 immediately reflected in our operating results and may
be difficult to discern; (v) we have established, and are
continuing to increase, our network of technology solution brokers
and resellers to sell our solution; our failure to effectively
develop, manage, and maintain this network could materially harm
our revenues; (vi) 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, and may not fully
reflect the underlying performance of our business and may result
in decreases in the price of our common stock; (vii) 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; (viii) our recent Chief Executive Officer transition
could disrupt our operations, result in additional executive and
personnel transitions and make it more difficult for us to hire and
retain employees; (ix) failure to adequately retain and expand our
sales force will impede our growth; (x) 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; (xi) 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; (xii) the
markets in which we participate involve a high number of
competitors that are continuing to increase, and if we do not
compete effectively, our operating results could be harmed; (xiii)
we continue to expand our international operations, which exposes
us to significant macroeconomic and other risks; (xiv) 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; (xv) 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;
(xvi) 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; (xvii) 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; (xviii) we have a history of losses and we may be
unable to achieve or sustain profitability; (xix) 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; (xx) our stock price has
been volatile, may continue to be volatile and may decline,
including due to factors beyond our control; (xxi) we may not be
able to secure additional financing on favorable terms, or at all,
to meet our future capital needs; (xxii) failure to comply with
laws and regulations could harm our business and our reputation;
(xxiii) 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 (xxiv) 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. 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, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
141,359
$
180,520
Marketable investments
488,381
433,743
Accounts receivable, net
88,085
87,494
Prepaid expenses and other current
assets
32,018
29,711
Deferred contract acquisition costs,
net
50,566
47,242
Total current assets
800,409
778,710
Property and equipment, net
101,057
101,221
Operating lease right-of-use assets
45,339
44,120
Intangible assets, net
25,346
28,192
Goodwill
165,420
165,420
Marketable investments
13,498
885
Other assets
15,240
11,057
Deferred contract acquisition costs, net —
less current portion
119,799
114,880
Total assets
$
1,286,108
$
1,244,485
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
22,461
$
23,629
Accrued and other current liabilities
62,196
53,092
Operating lease liabilities
11,739
10,626
Accrued federal fees
3,360
2,471
Sales tax liabilities
2,209
2,973
Deferred revenue
58,082
57,816
Convertible senior notes
169
169
Total current liabilities
160,216
150,776
Convertible senior notes - less current
portion
739,284
738,376
Sales tax liabilities — less current
portion
906
899
Operating lease liabilities — less current
portion
41,703
41,389
Other long-term liabilities
4,913
3,080
Total liabilities
947,022
934,520
Stockholders’ equity:
Common stock
72
71
Additional paid-in capital
690,309
635,668
Accumulated other comprehensive loss
(961
)
(2,688
)
Accumulated deficit
(350,334
)
(323,086
)
Total stockholders’ equity
339,086
309,965
Total liabilities and stockholders’
equity
$
1,286,108
$
1,244,485
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Revenue
$
218,439
$
182,777
Cost of revenue
104,756
88,867
Gross profit
113,683
93,910
Operating expenses:
Research and development
38,108
35,824
Sales and marketing
76,314
64,611
General and administrative
28,258
24,314
Total operating expenses
142,680
124,749
Loss from operations
(28,997
)
(30,839
)
Other (expense) income, net:
Interest expense
(1,845
)
(1,870
)
Interest income and other
4,121
845
Total other income (expense), net
2,276
(1,025
)
Loss before income taxes
(26,721
)
(31,864
)
Provision for income taxes
527
2,256
Net loss
$
(27,248
)
$
(34,120
)
Net loss per share:
Basic and diluted
$
(0.38
)
$
(0.49
)
Shares used in computing net loss per
share:
Basic and diluted
71,259
68,974
FIVE9, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Cash flows from operating
activities:
Net loss
$
(27,248
)
$
(34,120
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
11,347
10,795
Amortization of operating lease
right-of-use assets
2,934
2,403
Amortization of deferred contract
acquisition costs
12,423
8,678
(Accretion of discount) amortization of
premium on marketable investments
(1,863
)
700
Provision for credit losses
317
222
Stock-based compensation
50,743
39,394
Amortization of discount and issuance
costs on convertible senior notes
908
930
Deferred taxes
59
1,889
Other
439
470
Changes in operating assets and
liabilities:
Accounts receivable
(908
)
5,566
Prepaid expenses and other current
assets
(2,307
)
(2,162
)
Deferred contract acquisition costs
(20,665
)
(20,160
)
Other assets
(4,231
)
234
Accounts payable
1,557
11,133
Accrued and other current liabilities
7,599
2,096
Accrued federal fees and sales tax
liability
133
(1,239
)
Deferred revenue
181
2,659
Other liabilities
1,994
(764
)
Net cash provided by operating
activities
33,412
28,724
Cash flows from investing
activities:
Purchases of marketable investments
(140,892
)
(105,277
)
Proceeds from sales of marketable
investments
—
600
Proceeds from maturities of marketable
investments
76,940
130,821
Purchases of property and equipment
(9,928
)
(12,398
)
Capitalization of software development
costs
(1,806
)
(569
)
Cash paid for an equity investment in a
privately-held company
—
(2,000
)
Net cash (used in) provided by investing
activities
(75,686
)
11,177
Cash flows from financing
activities:
Repurchase of a portion of 2023
convertible senior notes, net of costs
—
(31,905
)
Proceeds from exercise of common stock
options
3,125
1,277
Net cash provided by (used in) financing
activities
3,125
(30,628
)
Net (decrease) increase in cash and cash
equivalents
(39,149
)
9,273
Cash, cash equivalents and restricted
cash:
Beginning of period
180,987
90,878
End of period
$
141,838
$
100,151
FIVE9, INC.
RECONCILIATION OF GAAP GROSS
PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
GAAP gross profit
$
113,683
$
93,910
GAAP gross margin
52.0
%
51.4
%
Non-GAAP adjustments:
Depreciation
6,061
5,553
Intangibles amortization
2,846
2,947
Stock-based compensation
9,333
7,793
Exit costs related to closure and
relocation of Russian operations
23
380
Acquisition-related and one-time
integration costs
34
48
Adjusted gross profit
$
131,980
$
110,631
Adjusted gross margin
60.4
%
60.5
%
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO ADJUSTED EBITDA
(In thousands, except
percentages)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
GAAP net loss
$
(27,248
)
$
(34,120
)
Non-GAAP adjustments:
Depreciation and amortization
11,347
10,795
Stock-based compensation
50,743
39,394
Interest expense
1,845
1,870
Interest (income) and other
(4,121
)
(845
)
Exit costs related to closure and
relocation of Russian operations (1)
596
3,227
Acquisition-related transaction and
one-time integration costs
1,455
1,638
Contingent consideration expense
—
260
Provision for income taxes
527
2,256
Adjusted EBITDA
$
35,144
$
24,475
Adjusted EBITDA as % of revenue
16.1
%
13.4
%
(1) Exit costs related to the closure and
relocation of our Russian operations was $0.7 million and $2.7
million during the three months ended March 31, 2023 and 2022,
respectively. The $0.6 million and $3.2 million adjustments
presented above were net of $0.0 million and $0.1 million included
in “Depreciation and amortization” and $0.1 million and $(0.6)
million included in “Interest (income) and other.”
FIVE9, INC.
RECONCILIATION OF GAAP
OPERATING LOSS TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Loss from operations
$
(28,997
)
$
(30,839
)
Non-GAAP adjustments:
Stock-based compensation
50,743
39,394
Intangibles amortization
2,846
2,947
Exit costs related to closure and
relocation of Russian operations
596
3,332
Acquisition-related transaction and
one-time integration costs
1,455
1,638
Contingent consideration expense
—
260
Non-GAAP operating income
$
26,643
$
16,732
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO NON-GAAP NET INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
GAAP net loss
$
(27,248
)
$
(34,120
)
Non-GAAP adjustments:
Stock-based compensation
50,743
39,394
Intangibles amortization
2,846
2,947
Amortization of discount and issuance
costs on convertible senior notes
908
930
Exit costs related to closure and
relocation of Russian operations
741
2,749
Acquisition-related transaction and
one-time integration costs
1,455
1,638
Contingent consideration expense
—
260
Tax provision associated with acquired
companies
—
1,830
Non-GAAP net income
$
29,445
$
15,628
GAAP net loss per share:
Basic and diluted
$
(0.38
)
$
(0.49
)
Non-GAAP net income per share:
Basic
$
0.41
$
0.23
Diluted
$
0.41
$
0.22
Shares used in computing GAAP net loss per
share:
Basic and diluted
71,259
68,974
Shares used in computing non-GAAP net
income per share:
Basic
71,259
68,974
Diluted
72,330
70,671
FIVE9, INC.
SUMMARY OF STOCK-BASED
COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Stock-Based
Compensation
Depreciation
Intangibles
Amortization
Cost of revenue
$
9,333
$
6,061
$
2,846
$
7,793
$
5,553
$
2,947
Research and development
12,382
872
—
10,145
825
—
Sales and marketing
17,045
1
—
13,424
1
—
General and administrative
11,983
1,567
—
8,032
1,469
—
Total
$
50,743
$
8,501
$
2,846
$
39,394
$
7,848
$
2,947
FIVE9, INC.
RECONCILIATION OF GAAP NET
LOSS TO NON-GAAP NET INCOME – GUIDANCE(1)
(In thousands, except per share
data)
(Unaudited)
Three Months Ending
Year Ending
June 30, 2023
December 31, 2023
Low
High
Low
High
GAAP net loss
$
(32,392
)
$
(28,936
)
$
(106,701
)
$
(99,765
)
Non-GAAP adjustments:
Stock-based compensation(2)
55,554
53,554
214,196
210,196
Intangibles amortization
2,884
2,884
11,498
11,498
Amortization of discount and issuance
costs on convertible senior notes
931
931
3,894
3,894
Exit costs related to closure and
relocation of Russian operations
687
687
2,628
2,628
Acquisition-related transaction and
one-time integration costs(3)
—
—
1,455
1,455
Income tax expense effects(4)
—
—
—
—
Non-GAAP net income
$
27,664
$
29,120
$
126,970
$
129,906
GAAP net loss per share, basic and
diluted
$
(0.45
)
$
(0.40
)
$
(1.48
)
$
(1.39
)
Non-GAAP net income per share:
Basic
$
0.39
$
0.41
$
1.76
$
1.80
Diluted
$
0.38
$
0.40
$
1.73
$
1.77
Shares used in computing GAAP net loss per
share and non-GAAP net income per share:
Basic
71,600
71,600
72,000
72,000
Diluted
72,800
72,800
73,400
73,400
(1)
Represents guidance discussed on May 4,
2023. Reader shall not construe presentation of this information
after May 4, 2023 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-related one-time integration
costs are based on a range of probable significance for completed
acquisitions, and no new acquisitions are assumed.
(4)
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/20230504005778/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
Five9 (NASDAQ:FIVN)
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