Five9 Reports First Quarter Record Revenue Growth of 45% to a Record $137.9 Million

Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software, today reported results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Results

  • Revenue for the first quarter of 2021 increased 45% to a record $137.9 million, compared to $95.1 million for the first quarter of 2020.
  • GAAP gross margin was 56.6% for the first quarter of 2021, compared to 57.9% for the first quarter of 2020.
  • Adjusted gross margin was 64.0% for the first quarter of 2021, compared to 64.1% for the first quarter of 2020.
  • GAAP net loss for the first quarter of 2021 was $(12.3) million, or $(0.18) per basic share, compared to GAAP net loss of $(7.4) million, or $(0.12) per basic share, for the first quarter of 2020.
  • Non-GAAP net income for the first quarter of 2021 was $16.1 million, or $0.23 per diluted share, compared to non-GAAP net income of $11.1 million, or $0.17 per diluted share, for the first quarter of 2020.
  • Adjusted EBITDA for the first quarter of 2021 was $22.2 million, or 16.1% of revenue, compared to $14.1 million, or 14.9% of revenue, for the first quarter of 2020.
  • GAAP operating cash flow for the first quarter of 2021 was $13.8 million, compared to GAAP operating cash flow of $10.4 million for the first quarter of 2020.

“Our first quarter results exceeded expectations across the board. We delivered record first quarter revenue of $138 million, accelerating 45% year-over-year, an all-time high. Performance was driven by ongoing success with enterprises globally as we continue to close large deals, by our product innovation as a leader in AI-powered automation, and our go-to-market execution. We’ve started this year off with incredible traction and are well positioned to extend our leadership position as we help organizations digitally transform their business and reimagine their customer experience."

- 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 2021, Five9 expects to report:
    • Revenue in the range of $548.5 to $551.5 million, higher than the guidance range of $518.5 to $521.5 million that was previously provided on February 22, 2021.
    • GAAP net loss in the range of $(63.4) to $(60.4) million, or $(0.91) to $(0.87) per basic share, improved from the guidance range of $(63.9) to $(60.9) million, or $(0.92) to $(0.88) per basic share, that was previously provided on February 22, 2021.
    • Non-GAAP net income in the range of $65.2 to $68.2 million, or $0.89 to $0.93 per diluted share, higher than the guidance range of $59.1 to $62.1 million, or $0.75 to $0.79 per diluted share, that was previously provided on February 22, 2021.
  • For the second quarter of 2021, Five9 expects to report:
    • Revenue in the range of $131.5 to $132.5 million.
    • GAAP net loss in the range of $(25.9) to $(24.9) million, or $(0.38) to $(0.36) per basic share.
    • Non-GAAP net income in the range of $9.1 to $10.1 million, or $0.13 to $0.14 per diluted share.

Conference Call Details

Five9 will discuss its first quarter 2021 results today, April 29, 2021, 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 and one-time integration costs. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation and amortization, stock-based compensation, interest expense, interest (income) and other, acquisition-related transaction costs and one-time integration costs, 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 and contingent consideration expense. We calculate non-GAAP net income by adding back or removing the following items to or from GAAP net income (loss): stock-based compensation, intangibles amortization, amortization of discount and issuance costs on convertible senior notes, acquisition-related transaction costs and one-time integration costs and contingent consideration expense. 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 market position, opportunity and expectation of expanding its leadership position, the size of the market opportunity, Five9’s growth expectations, and the second quarter and full year 2021 financial projections set forth under the caption “Business Outlook,” that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (iii) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately retain and expand our sales force will impede our growth; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (vi) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business; (vii) we have established, and are continuing to increase, our network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (viii) adverse economic conditions may harm our business; (ix) 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; (x) 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; (xi) 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 and otherwise disrupt our operations and harm our operating results; (xii) 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; (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 products 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 seven 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, 2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

176,326

$

220,372

Marketable investments

467,143

383,171

Accounts receivable, net

51,987

48,731

Prepaid expenses and other current assets

19,673

16,149

Deferred contract acquisition costs, net

23,249

20,695

Total current assets

738,378

689,118

Property and equipment, net

58,296

51,213

Operating lease right-of-use assets

44,960

9,010

Intangible assets, net

48,737

51,684

Goodwill

165,420

165,420

Marketable investments

42,127

Other assets

3,135

3,236

Deferred contract acquisition costs, net — less current portion

59,823

51,934

Total assets

$

1,118,749

$

1,063,742

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

16,056

$

17,145

Accrued and other current liabilities

52,960

44,450

Operating lease liabilities

5,478

3,912

Accrued federal fees

5,024

3,745

Sales tax liabilities

1,168

1,714

Finance lease liabilities

156

612

Deferred revenue

32,835

31,983

Total current liabilities

113,677

103,561

Convertible senior notes

782,241

643,316

Sales tax liabilities — less current portion

862

857

Operating lease liabilities — less current portion

45,135

5,379

Other long-term liabilities

32,628

31,465

Total liabilities

974,543

784,578

Stockholders’ equity:

Common stock

67

67

Additional paid-in capital

331,528

476,941

Accumulated other comprehensive income

379

335

Accumulated deficit

(187,768

)

(198,179

)

Total stockholders’ equity

144,206

279,164

Total liabilities and stockholders’ equity

$

1,118,749

$

1,063,742

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

Revenue

$

137,882

$

95,088

Cost of revenue

59,803

40,037

Gross profit

78,079

55,051

Operating expenses:

Research and development

22,121

15,189

Sales and marketing

44,799

30,160

General and administrative

22,245

14,658

Total operating expenses

89,165

60,007

Loss from operations

(11,086

)

(4,956

)

Other (expense) income, net:

Interest expense

(1,938

)

(3,484

)

Interest income and other

175

1,072

Total other (expense) income, net

(1,763

)

(2,412

)

Loss before income taxes

(12,849

)

(7,368

)

(Benefit from) provision for income taxes

(517

)

69

Net loss

$

(12,332

)

$

(7,437

)

Net loss per share:

Basic and diluted

$

(0.18

)

$

(0.12

)

Shares used in computing net loss per share:

Basic and diluted

66,721

61,705

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

Cash flows from operating activities:

Net loss

$

(12,332

)

$

(7,437

)

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

Depreciation and amortization

8,763

4,970

Amortization of operating lease right-of-use assets

2,389

1,394

Amortization of commission costs

5,540

3,471

Amortization of premium on marketable investments

1,682

177

Provision for doubtful accounts

160

255

Stock-based compensation

20,908

13,794

Amortization of discount and issuance costs on convertible senior notes (1)

974

3,320

Change in fair of value of contingent consideration

2,500

Other

186

147

Changes in operating assets and liabilities:

Accounts receivable

(3,543

)

(2,620

)

Prepaid expenses and other current assets

(3,524

)

(2,754

)

Deferred contract acquisition costs

(15,983

)

(8,166

)

Other assets

101

(2,132

)

Accounts payable

351

(1,121

)

Accrued and other current liabilities

5,299

4,802

Accrued federal fees and sales tax liability

738

(707

)

Deferred revenue

322

3,378

Other liabilities

(766

)

(377

)

Net cash provided by operating activities

13,765

10,394

Cash flows from investing activities:

Purchases of marketable investments

(163,683

)

(62,339

)

Proceeds from maturities of marketable investments

120,182

134,610

Purchases of property and equipment

(8,229

)

(6,045

)

Cash paid to acquire substantially all of the assets of Whendu

(100

)

Net cash (used in) provided by investing activities

(51,730

)

66,126

Cash flows from financing activities:

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

(7,840

)

Proceeds from exercise of common stock options

2,215

2,596

Payments of finance leases

(456

)

(1,229

)

Net cash (used in) provided by financing activities

(6,081

)

1,367

Net (decrease) increase in cash and cash equivalents

(44,046

)

77,887

Cash and cash equivalents:

Beginning of period

220,372

77,976

End of period

$

176,326

$

155,863

(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

March 31, 2021

March 31, 2020

GAAP gross profit

$

78,079

$

55,051

GAAP gross margin

56.6

%

57.9

%

Non-GAAP adjustments:

Depreciation

4,140

2,850

Intangibles amortization

2,947

1,090

Stock-based compensation

3,105

1,989

One-time integration costs

30

Adjusted gross profit

$

88,301

$

60,980

Adjusted gross margin

64.0

%

64.1

%

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(In thousands, except percentages)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

GAAP net loss

$

(12,332

)

$

(7,437

)

Non-GAAP adjustments:

Depreciation and amortization

8,763

4,970

Stock-based compensation

20,908

13,794

Interest expense

1,938

3,484

Interest income and other

(175

)

(1,072

)

Acquisition-related transaction costs and one-time integration costs

1,094

329

Contingent consideration expense

2,500

(Benefit from) provision for income taxes

(517

)

69

Adjusted EBITDA

$

22,179

$

14,137

Adjusted EBITDA as % of revenue

16.1

%

14.9

%

FIVE9, INC.

RECONCILIATION OF GAAP OPERATING INCOME (LOSS) TO NON-GAAP OPERATING INCOME

(In thousands)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

Loss from operations

$

(11,086

)

$

(4,956

)

Non-GAAP adjustments:

Stock-based compensation

20,908

13,794

Intangibles amortization

2,947

1,090

Acquisition-related transaction costs and one-time integration costs

1,094

329

Contingent consideration expense

2,500

Non-GAAP operating income

$

16,363

$

10,257

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

GAAP net loss

$

(12,332

)

$

(7,437

)

Non-GAAP adjustments:

Stock-based compensation

20,908

13,794

Intangibles amortization

2,947

1,090

Amortization of discount and issuance costs on convertible senior notes (1)

974

3,320

Acquisition-related transaction costs and one-time integration costs

1,094

329

Contingent consideration expense

2,500

Non-GAAP net income

$

16,091

$

11,096

GAAP net loss per share:

Basic and diluted

$

(0.18

)

$

(0.12

)

Non-GAAP net income per share:

Basic

$

0.24

$

0.18

Diluted

$

0.23

$

0.17

Shares used in computing GAAP net loss per share:

Basic and diluted

66,721

61,705

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

Basic

66,721

61,705

Diluted

70,659

65,151

(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.

SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION

(In thousands)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

Stock-Based

Compensation

Depreciation

Intangibles

Amortization

Stock-Based

Compensation

Depreciation

Intangibles

Amortization

Cost of revenue

$

3,105

$

4,140

$

2,947

$

1,989

$

2,850

$

1,090

Research and development

4,763

596

2,806

465

Sales and marketing

6,771

1

4,106

2

General and administrative

6,269

1,079

4,893

563

Total

$

20,908

$

5,816

$

2,947

$

13,794

$

3,880

$

1,090

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, 2021

December 31, 2021

Low

High

Low

High

GAAP net loss

$

(25,862

)

$

(24,862

)

$

(63,388

)

$

(60,388

)

Non-GAAP adjustments:

Stock-based compensation

25,011

25,011

96,196

96,196

Intangibles amortization

2,947

2,947

11,787

11,787

Amortization of issuance costs on convertible senior notes

986

986

3,931

3,931

Acquisition-related transaction costs and one-time integration costs

6,018

6,018

14,174

14,174

Contingent consideration expense

2,500

2,500

Income tax expense effects (1)

Non-GAAP net income

$

9,100

$

10,100

$

65,200

$

68,200

GAAP net loss per share, basic and diluted

$

(0.38

)

$

(0.36

)

$

(0.91

)

$

(0.87

)

Non-GAAP net income per share:

Basic

$

0.13

$

0.15

$

0.94

$

0.98

Diluted

$

0.13

$

0.14

$

0.89

$

0.93

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

Basic

68,500

68,500

69,400

69,400

Diluted

72,500

72,500

73,400

73,400

(1)

Non-GAAP adjustments do not have an impact on our income tax provision due to past non-GAAP losses.

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.
Lisa Laukkanen
415-217-4967
Lisa@blueshirtgroup.com

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