Five9 Reports Third Quarter Revenue Growth of 16% to a Record $230.1 Million

28% Growth in LTM Enterprise Subscription Revenue

Record GAAP Operating Cash Flow of $37.0 Million

Five9, Inc. (NASDAQ:FIVN), the Intelligent CX Platform provider, today reported results for the third quarter ended September 30, 2023.

Third Quarter 2023 Financial Results

  • Revenue for the third quarter of 2023 increased 16% to a record $230.1 million, compared to $198.3 million for the third quarter of 2022.
  • GAAP gross margin was 51.7% for the third quarter of 2023, compared to 52.6% for the third quarter of 2022.
  • Adjusted gross margin was 60.6% for the third quarter of 2023, compared to 61.4% for the third quarter of 2022.
  • GAAP net loss for the third quarter of 2023 was $(20.4) million, or $(0.28) per basic share, and (8.9)% of revenue, compared to GAAP net loss of $(23.2) million, or $(0.33) per basic share, and (11.7)% of revenue, for the third quarter of 2022.
  • Non-GAAP net income for the third quarter of 2023 was $38.0 million, or $0.52 per diluted share, and 16.5% of revenue, compared to non-GAAP net income of $27.8 million, or $0.39 per diluted share, and 14.0% of revenue, for the third quarter of 2022.
  • Adjusted EBITDA for the third quarter of 2023 was $41.3 million, or 17.9% of revenue, compared to $36.7 million, or 18.5% of revenue, for the third quarter of 2022.
  • GAAP operating cash flow for the third quarter of 2023 was $37.0 million, compared to GAAP operating cash flow of $30.5 million for the third quarter of 2022.

“We are pleased to report strong third quarter results with revenue growing 16% year-over-year to a record $230.1 million. This growth continues to be driven by our Enterprise business where LTM subscription revenue grew 28% year-over-year. In the third quarter, we achieved adjusted EBITDA margin of 18%, which drove an all-time record for GAAP operating cash flow. We continue to focus on innovation with our industry leading AI and Automation portfolio, where we are seeing unprecedented adoption. We also continue to see strong momentum up-market as our pipeline increased to a record level. We are confident in the market opportunity ahead as we empower enterprises to enhance their customer experience and we continue to execute on product innovation, our march up-market and international expansion.”

- 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 conditions.

  • For the full year 2023, Five9 expects to report:
    • Revenue in the range of $908.5 to $909.5 million.
    • GAAP net loss per share in the range of $(1.39) to $(1.33), assuming basic shares outstanding of approximately 72.1 million.
    • Non-GAAP net income per share in the range of $1.91 to $1.93, assuming diluted shares outstanding of approximately 73.0 million.
  • For the fourth quarter of 2023, Five9 expects to report:
    • Revenue in the range of $237.1 to $238.1 million.
    • GAAP net loss per share in the range of $(0.42) to $(0.36), assuming basic shares outstanding of approximately 73.0 million.
    • Non-GAAP net income per share in the range of $0.47 to $0.49, assuming diluted shares outstanding of approximately 73.8 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 third quarter 2023 results today, November 2, 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 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, stock-based compensation, exit costs related to the closure and relocation of our Russian operations, acquisition-related transaction and one-time integration costs, lease amortization for finance leases and refund for prior year overpayment of USF fees. 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, refund for prior year overpayment of USF fees, lease amortization for finance leases 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, contingent consideration expense and refund for prior year overpayment of USF fees. 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, refund for prior year overpayment of USF fees 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 within the meaning of Private Securities Litigation Reform Act of 1995, including the statements in the quote from our Chairman and Chief Executive Officer, including statements regarding Five9’s business strategies and areas of emphasis, market opportunity and ability to capitalize on that opportunity, up-market momentum, Five9's AI and automation initiatives, results and outlook, international expansion, and the fourth 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 continuing inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of the conflict in Israel, 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 or 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, 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) failure to adequately retain and expand our sales force will impede our growth; (ix) 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; (x) further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed; (xi) the AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks; (xii) the use of AI by our workforce may present risks to our business; (xiii) 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; (xiv) 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; (xv) we continue to expand our international operations, which exposes us to significant macroeconomic and other risks; (xvi) 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, our business or financial results; (xvii) 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; (xviii) 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; (xix) 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; (xx) we have a history of losses and we may be unable to achieve or sustain profitability; (xxi) 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; (xxii) our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control; (xxiii) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xxiv) failure to comply with laws and regulations could harm our business and our reputation; (xxv) 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 (xxvi) 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

The Five9 Intelligent CX Platform provides a comprehensive suite of solutions for orchestrating fluid customer experiences. Our cloud-native, multi-tenant, scalable, reliable, and secure platform includes contact center; omni-channel engagement; Workforce Engagement Management; extensibility through more than 1,000 partners; and innovative, practical AI, automation and journey analytics that are embedded as part of the platform. Five9 brings the power of people, technology, and partners to more than 2,500 organizations worldwide. For more information, visit www.five9.com.

FIVE9, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

September 30, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

127,828

 

 

$

180,520

 

Marketable investments

 

 

572,462

 

 

 

433,743

 

Accounts receivable, net

 

 

94,436

 

 

 

87,494

 

Prepaid expenses and other current assets

 

 

37,627

 

 

 

29,711

 

Deferred contract acquisition costs, net

 

 

58,320

 

 

 

47,242

 

Total current assets

 

 

890,673

 

 

 

778,710

 

Property and equipment, net

 

 

102,029

 

 

 

101,221

 

Operating lease right-of-use assets

 

 

41,522

 

 

 

44,120

 

Finance lease right-of-use assets

 

 

4,612

 

 

 

 

Intangible assets, net

 

 

41,469

 

 

 

28,192

 

Goodwill

 

 

227,412

 

 

 

165,420

 

Marketable investments

 

 

 

 

 

885

 

Other assets

 

 

16,603

 

 

 

11,057

 

Deferred contract acquisition costs, net — less current portion

 

 

132,124

 

 

 

114,880

 

Total assets

 

$

1,456,444

 

 

$

1,244,485

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

28,528

 

 

$

23,629

 

Accrued and other current liabilities

 

 

59,511

 

 

 

53,092

 

Operating lease liabilities

 

 

11,454

 

 

 

10,626

 

Finance lease liabilities

 

 

1,617

 

 

 

 

Accrued federal fees

 

 

3,336

 

 

 

2,471

 

Sales tax liabilities

 

 

2,965

 

 

 

2,973

 

Deferred revenue

 

 

64,565

 

 

 

57,816

 

Convertible senior notes

 

 

 

 

 

169

 

Total current liabilities

 

 

171,976

 

 

 

150,776

 

Convertible senior notes - less current portion

 

 

741,169

 

 

 

738,376

 

Sales tax liabilities — less current portion

 

 

919

 

 

 

899

 

Operating lease liabilities — less current portion

 

 

38,336

 

 

 

41,389

 

Finance lease liabilities — less current portion

 

 

3,048

 

 

 

 

Other long-term liabilities

 

 

7,126

 

 

 

3,080

 

Total liabilities

 

 

962,574

 

 

 

934,520

 

Stockholders’ equity:

 

 

 

 

Common stock

 

 

73

 

 

 

71

 

Additional paid-in capital

 

 

887,087

 

 

 

635,668

 

Accumulated other comprehensive loss

 

 

(798

)

 

 

(2,688

)

Accumulated deficit

 

 

(392,492

)

 

 

(323,086

)

Total stockholders’ equity

 

 

493,870

 

 

 

309,965

 

Total liabilities and stockholders’ equity

 

$

1,456,444

 

 

$

1,244,485

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

 

 

 

 

 

 

 

 

 

Revenue

 

$

230,105

 

 

$

198,342

 

 

$

671,426

 

 

$

570,501

 

Cost of revenue

 

 

111,080

 

 

 

94,111

 

 

 

320,197

 

 

 

271,207

 

Gross profit

 

 

119,025

 

 

 

104,231

 

 

 

351,229

 

 

 

299,294

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

40,391

 

 

 

34,113

 

 

 

117,709

 

 

 

104,929

 

Sales and marketing

 

 

73,366

 

 

 

67,353

 

 

 

223,757

 

 

 

196,062

 

General and administrative

 

 

31,006

 

 

 

24,496

 

 

 

89,741

 

 

 

72,634

 

Total operating expenses

 

 

144,763

 

 

 

125,962

 

 

 

431,207

 

 

 

373,625

 

Loss from operations

 

 

(25,738

)

 

 

(21,731

)

 

 

(79,978

)

 

 

(74,331

)

Other income (expense), net:

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,972

)

 

 

(1,879

)

 

 

(5,683

)

 

 

(5,606

)

Interest income and other

 

 

8,233

 

 

 

982

 

 

 

18,477

 

 

 

2,107

 

Total other income (expense), net

 

 

6,261

 

 

 

(897

)

 

 

12,794

 

 

 

(3,499

)

Loss before income taxes

 

 

(19,477

)

 

 

(22,628

)

 

 

(67,184

)

 

 

(77,830

)

Provision for income taxes

 

 

942

 

 

 

579

 

 

 

2,222

 

 

 

3,167

 

Net loss

 

$

(20,419

)

 

$

(23,207

)

 

$

(69,406

)

 

$

(80,997

)

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.28

)

 

$

(0.33

)

 

$

(0.97

)

 

$

(1.16

)

Shares used in computing net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

72,356

 

 

 

70,232

 

 

 

71,751

 

 

 

69,656

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(69,406

)

 

$

(80,997

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

35,553

 

 

 

33,650

 

Amortization of operating lease right-of-use assets

 

 

9,234

 

 

 

7,491

 

Amortization of deferred contract acquisition costs

 

 

40,088

 

 

 

29,245

 

(Accretion of discount) amortization of premium on marketable investments

 

 

(7,684

)

 

 

1,006

 

Provision for credit losses

 

 

795

 

 

 

812

 

Stock-based compensation

 

 

156,721

 

 

 

128,682

 

Amortization of discount and issuance costs on convertible senior notes

 

 

2,793

 

 

 

2,796

 

Deferred taxes

 

 

438

 

 

 

2,076

 

Change in fair of value of contingent consideration

 

 

 

 

 

260

 

Payment of contingent consideration liability in excess of acquisition-date fair value

 

 

 

 

 

(5,900

)

Other

 

 

669

 

 

 

503

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(6,661

)

 

 

(5,337

)

Prepaid expenses and other current assets

 

 

(6,537

)

 

 

(2,228

)

Deferred contract acquisition costs

 

 

(68,410

)

 

 

(62,835

)

Other assets

 

 

(4,892

)

 

 

(213

)

Accounts payable

 

 

5,562

 

 

 

1,008

 

Accrued and other current liabilities

 

 

(2,006

)

 

 

796

 

Accrued federal fees and sales tax liability

 

 

877

 

 

 

(2,001

)

Deferred revenue

 

 

1,544

 

 

 

9,519

 

Other liabilities

 

 

3,616

 

 

 

(2,208

)

Net cash provided by operating activities

 

 

92,294

 

 

 

56,125

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investments

 

 

(544,713

)

 

 

(250,278

)

Proceeds from sales of marketable investments

 

 

971

 

 

 

600

 

Proceeds from maturities of marketable investments

 

 

415,117

 

 

 

321,311

 

Purchases of property and equipment

 

 

(19,941

)

 

 

(46,028

)

Capitalization of software development costs

 

 

(5,820

)

 

 

(2,420

)

Cash paid to acquire Aceyus

 

 

(80,588

)

 

 

 

Payments of initial direct costs

 

 

 

 

 

(282

)

Cash paid for an equity investment in a privately-held company

 

 

 

 

 

(2,000

)

Net cash (used in) provided by investing activities

 

 

(234,974

)

 

 

20,903

 

Cash flows from financing activities:

 

 

 

 

Repayment of outstanding 2023 convertible senior notes at maturity

 

 

(169

)

 

 

 

Cash received from the settlement at maturity of the outstanding capped calls associated with the 2023 convertible senior notes

 

 

74,453

 

 

 

 

Repurchase of a portion of 2023 convertible senior notes, net of costs

 

 

 

 

 

(34,057

)

Proceeds from exercise of common stock options

 

 

8,315

 

 

 

5,358

 

Proceeds from sale of common stock under ESPP

 

 

9,444

 

 

 

8,338

 

Payment of contingent consideration liability up to acquisition-date fair value

 

 

 

 

 

(18,100

)

Payment of hold back related to an acquisition

 

 

(500

)

 

 

 

Payments of finance leases

 

 

(496

)

 

 

 

Net cash provided by (used in) financing activities

 

 

91,047

 

 

 

(38,461

)

Net (decrease) increase in cash and cash equivalents

 

 

(51,633

)

 

 

38,567

 

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning of period

 

 

180,987

 

 

 

91,391

 

End of period

 

$

129,354

 

 

$

129,958

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

119,025

 

 

$

104,231

 

 

$

351,229

 

 

$

299,294

 

GAAP gross margin

 

 

51.7

%

 

 

52.6

%

 

 

52.3

%

 

 

52.5

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation

 

 

6,893

 

 

 

5,970

 

 

 

19,378

 

 

 

17,336

 

Intangibles amortization

 

 

3,182

 

 

 

2,934

 

 

 

8,873

 

 

 

8,816

 

Stock-based compensation

 

 

9,856

 

 

 

8,329

 

 

 

29,077

 

 

 

24,659

 

Exit costs related to closure and relocation of Russian operations

 

 

18

 

 

 

96

 

 

 

93

 

 

 

479

 

Acquisition-related and one-time integration costs

 

 

 

 

 

187

 

 

 

34

 

 

 

315

 

Lease amortization for finance leases

 

 

492

 

 

 

 

 

 

492

 

 

 

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

 

 

 

 

 

 

(3,511

)

Adjusted gross profit

 

$

139,466

 

 

$

121,747

 

 

$

409,176

 

 

$

347,388

 

Adjusted gross margin

 

 

60.6

%

 

 

61.4

%

 

 

60.9

%

 

 

60.9

%

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(20,419

)

 

$

(23,207

)

 

$

(69,406

)

 

$

(80,997

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

12,482

 

 

 

11,215

 

 

 

35,553

 

 

 

33,650

 

Stock-based compensation

 

 

52,611

 

 

 

44,503

 

 

 

156,721

 

 

 

128,682

 

Interest expense

 

 

1,972

 

 

 

1,879

 

 

 

5,683

 

 

 

5,606

 

Interest (income) and other

 

 

(8,233

)

 

 

(982

)

 

 

(18,477

)

 

 

(2,107

)

Exit costs related to closure and relocation of Russian operations (1)

 

 

659

 

 

 

774

 

 

 

2,070

 

 

 

4,215

 

Acquisition-related transaction and one-time integration costs

 

 

778

 

 

 

1,944

 

 

 

3,110

 

 

 

5,296

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

 

 

 

 

 

 

(3,511

)

Lease amortization for finance leases

 

 

492

 

 

 

 

 

 

492

 

 

 

 

Provision for income taxes

 

 

942

 

 

 

579

 

 

 

2,222

 

 

 

3,167

 

Adjusted EBITDA

 

$

41,284

 

 

$

36,705

 

 

$

117,968

 

 

$

94,261

 

Adjusted EBITDA as % of revenue

 

 

17.9

%

 

 

18.5

%

 

 

17.6

%

 

 

16.5

%

(1) Exit costs related to the closure and relocation of our Russian operations was $0.9 million and $2.7 million during the three and nine months ended September 30, 2023. The $0.7 million and $2.1 million adjustments presented above were net of $0.2 million and $0.6 million included in “Interest (income) and other.” Exit costs related to the closure and relocation of our Russian operations was $0.7 million and $4.6 million during the three and nine months ended September 30, 2022. The $0.8 million and $4.2 million adjustments presented above were net of $0.0 million and $0.8 million included in “Depreciation and amortization” and $(0.1) million and $(0.4) 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

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

 

 

 

 

Loss from operations

 

$

(25,738

)

 

$

(21,731

)

 

$

(79,978

)

 

$

(74,331

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

52,611

 

 

 

44,503

 

 

 

156,721

 

 

 

128,682

 

Intangibles amortization

 

 

3,182

 

 

 

2,934

 

 

 

8,873

 

 

 

8,816

 

Exit costs related to closure and relocation of Russian operations

 

 

659

 

 

 

774

 

 

 

2,070

 

 

 

4,989

 

Acquisition-related transaction and one-time integration costs

 

 

778

 

 

 

1,944

 

 

 

3,110

 

 

 

5,296

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

 

 

 

 

 

 

(3,511

)

Non-GAAP operating income

 

$

31,492

 

 

$

28,424

 

 

$

90,796

 

 

$

70,201

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(20,419

)

 

$

(23,207

)

 

$

(69,406

)

 

$

(80,997

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

52,611

 

 

 

44,503

 

 

 

156,721

 

 

 

128,682

 

Intangibles amortization

 

 

3,182

 

 

 

2,934

 

 

 

8,873

 

 

 

8,816

 

Amortization of discount and issuance costs on convertible senior notes

 

 

954

 

 

 

944

 

 

 

2,793

 

 

 

2,796

 

Exit costs related to closure and relocation of Russian operations

 

 

854

 

 

 

714

 

 

 

2,705

 

 

 

4,588

 

Acquisition-related transaction and one-time integration costs

 

 

778

 

 

 

1,944

 

 

 

3,110

 

 

 

5,296

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

 

 

 

 

 

 

(3,511

)

Tax provision associated with acquired companies

 

 

 

 

 

 

 

 

 

 

 

1,830

 

Income tax expense effects (1)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

37,960

 

 

$

27,832

 

 

$

104,796

 

 

$

67,760

 

GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.28

)

 

$

(0.33

)

 

$

(0.97

)

 

$

(1.16

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.40

 

 

$

1.46

 

 

$

0.97

 

Diluted

 

$

0.52

 

 

$

0.39

 

 

$

1.44

 

 

$

0.95

 

Shares used in computing GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

72,356

 

 

 

70,232

 

 

 

71,751

 

 

 

69,656

 

Shares used in computing non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

72,356

 

 

 

70,232

 

 

 

71,751

 

 

 

69,656

 

Diluted

 

 

73,426

 

 

 

71,441

 

 

 

72,790

 

 

 

71,054

 

 

 

 

 

 

 

 

 

 

(1)

Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.

FIVE9, INC.

SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

9,856

 

$

6,893

 

$

3,182

 

$

8,329

 

$

5,970

 

$

2,934

Research and development

 

 

12,980

 

 

831

 

 

 

 

10,603

 

 

768

 

 

Sales and marketing

 

 

16,404

 

 

36

 

 

 

 

15,761

 

 

1

 

 

General and administrative

 

 

13,371

 

 

1,540

 

 

 

 

9,810

 

 

1,542

 

 

Total

 

$

52,611

 

$

9,300

 

$

3,182

 

$

44,503

 

$

8,281

 

$

2,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

29,077

 

$

19,378

 

$

8,873

 

$

24,659

 

$

17,336

 

$

8,816

Research and development

 

 

38,375

 

 

2,571

 

 

 

 

32,567

 

 

2,396

 

 

Sales and marketing

 

 

50,840

 

 

38

 

 

 

 

44,148

 

 

3

 

 

General and administrative

 

 

38,429

 

 

4,693

 

 

 

 

27,308

 

 

5,099

 

 

Total

 

$

156,721

 

$

26,680

 

$

8,873

 

$

128,682

 

$

24,834

 

$

8,816

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

 

 

December 31, 2023

 

December 31, 2023

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(30,698

)

 

$

(26,222

)

 

$

(100,096

)

 

$

(95,636

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation(2)

 

 

52,275

 

 

 

50,275

 

 

 

208,996

 

 

 

206,996

 

Intangibles amortization

 

 

3,645

 

 

 

3,645

 

 

 

12,518

 

 

 

12,518

 

Amortization of discount and issuance costs on convertible senior notes

 

 

956

 

 

 

956

 

 

 

3,749

 

 

 

3,749

 

Exit costs related to closure and relocation of Russian operations

 

 

630

 

 

 

630

 

 

 

3,335

 

 

 

3,335

 

Acquisition-related transaction and one-time integration costs(3)

 

 

7,878

 

 

 

6,878

 

 

 

10,988

 

 

 

9,988

 

Income tax expense effects(4)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

34,686

 

 

$

36,162

 

 

$

139,490

 

 

$

140,950

 

GAAP net loss per share, basic and diluted

 

$

(0.42

)

 

$

(0.36

)

 

$

(1.39

)

 

$

(1.33

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.50

 

 

$

1.93

 

 

$

1.95

 

Diluted

 

$

0.47

 

 

$

0.49

 

 

$

1.91

 

 

$

1.93

 

Shares used in computing GAAP net loss per share and non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

73,000

 

 

 

73,000

 

 

 

72,100

 

 

 

72,100

 

Diluted

 

 

73,800

 

 

 

73,800

 

 

 

73,000

 

 

 

73,000

 

 

 

 

 

 

 

 

 

 

(1)

Represents guidance discussed on November 2, 2023. Reader shall not construe presentation of this information after November 2, 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 transaction costs and one-time integration costs are based on a range of probable significance for completed acquisitions, and no new acquisitions assumed.

(4)

Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.

 

Contacts

Investor Relations Contacts:

Five9, Inc.

Barry Zwarenstein

Chief Financial Officer

925-201-2000 ext. 5959

IR@five9.com

The Blueshirt Group for Five9, Inc.

Lauren Sloane

lauren@blueshirtgroup.com

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