Five9 delivered a first quarter that met Wall Street's expectations for both revenue and profitability, reflecting the company's execution in subscription-driven growth and operational discipline. Management attributed the quarter’s performance to strong enterprise demand for its cloud-based contact center solutions, particularly from larger customers seeking advanced AI capabilities. CEO Mike Burkland cited the company's AI-powered platform as a key differentiator, noting, “Enterprise AI revenue grew 32% year-over-year in the first quarter, making up 9% of enterprise subscription revenue.” The company also highlighted continued expansion in its installed base and increased efficiency from recent transformation initiatives.
Is now the time to buy FIVN? Find out in our full research report (it’s free).
Five9 (FIVN) Q1 CY2025 Highlights:
- Revenue: $279.7 million vs analyst estimates of $272.5 million (13.2% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.62 vs analyst estimates of $0.48 (28.4% beat)
- Adjusted Operating Income: $40.31 million vs analyst estimates of $31.1 million (14.4% margin, 29.6% beat)
- The company reconfirmed its revenue guidance for the full year of $1.14 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $2.76 at the midpoint, a 6.2% increase
- Operating Margin: -1.9%, up from -8.4% in the same quarter last year
- Annual Recurring Revenue: $1.06 billion at quarter end, up 11.6% year on year
- Billings: $275.3 million at quarter end, up 12% year on year
- Market Capitalization: $2.03 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Five9’s Q1 Earnings Call
- Robert Morelli (Needham): Asked if the first quarter would be the trough for subscription revenue growth; CFO Bryan Lee clarified that while headwinds persist, prudent guidance assumes only modest sequential improvement, with most incremental revenue coming from the installed base.
- Siti Panigrahi (Mizuho): Inquired about elongated sales cycles in the enterprise segment; President Andy Dignan explained this trend is concentrated in large deals and attributed to macroeconomic factors, but deals are generally being delayed rather than lost.
- Raimo Lenschow (Barclays): Questioned the internal impact of transformation efforts; Lee emphasized workforce reductions were broad-based but sales and AI-focused investments were preserved to support growth priorities.
- Willow Miller (RBC): Asked about international resistance to U.S. vendors; CEO Mike Burkland noted this trend is more apparent in new deals than the existing customer base and represents a limited portion of total revenue.
- Samad Samana (Jefferies): Sought clarity on the AI revenue definition and its gross margin impact; Burkland affirmed that only advanced AI products are counted and that AI is expected to be a tailwind for gross margin, not a headwind.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be closely watching (1) the pace of AI product adoption and upsell rates within the existing customer base, (2) evidence of sustained margin expansion from operational changes and cost controls, and (3) progress in strategic partnerships, particularly as new integrations with Salesforce and ServiceNow are rolled out. The impact of macroeconomic conditions and international market dynamics will also be key areas of focus.
Five9 currently trades at $27, up from $25.10 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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