Five9

Haven’t checked elsewhere but did not see a writeup on this name recently.

Five9 is a CCaaS which is customer care/call center as a service company.

They topped Gartner’s Magic Quadrant rankings. Gartner noted that these leaders “benefit from being able to support varying levels of deployment complexity, including multi-channel deployments and integration to a variety of third-party systems.”

Investment Thesis -
Five9 was one of the first companies to create integrated SaaS contact center software that has the ability to provide both inbound and outbound calling capabilities. This approach brings with it lower capex and often lower operating expenses for the customer. Now that the reliability, call quality, and scalability of cloud solutions for the contact center have been proven, demand has gone through an inflection point. The total addressable market is roughly $23 billion on a global basis with the biggest portion of that market coming from companies with greater than 50 contact center agents.

This market is not a new greenfield growth opportunity, but rather brownfield replacement of legacy vendors led by Avaya and Cisco. The primary source of growth for FIVN is coming from enterprise accounts, those with greater than 50 contact center agents, which now represent 76% of trailing 12 month revenue. The enterprise business is growing over 30% and as the mix of revenue continues to shift to this faster growing category total revenue growth is benefiting. On the margin front profitability continues to improve with the scale of the business and the combination of attractive topline growth and improving margins sets the stage for cash flow growth into the future.

Mkt cap is $2.7bn and is trading at 8x FY19 sales. So, not cheap. Share count up around 6% in a year.

They crushed earnings last Q, non-GAAP estimates were for 4c and they did 11c. Enterprise growth was 37%.

Total revs growth has climbed from 22 to 25 to 28% [estimates were for 18%]. In the past year EBITDA margins have gone from negative to positive. OpMargin came in at 12% vs 5% ests. SME volumes have grown from single to double-digit growth, but this is an enterprise story - replacing the Avaya’s of the world.

RingCentral would be a peer, which is 3x their market cap and growing slightly faster with a higher valuation.

Do your due diligence before investing!

Naj

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Ticker is FIVN, looks like current P/S ratio is pretty close to being around 10.

Might be worth a further look at some point.

-volfan84
no FIVN position, but may take a look at it (came across this as I’m attempting to clear out some old tabs from my browser)

Stock has come off but just reported 30% rev growth, still accelerating, and 37% increase in LTM subscription enterprise revenue. Up 9% AH as of now.

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Finished the day up 14%.

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Five9 held up extremely well during the past quarter, up 2% while most tech stocks here and elsewhere got crushed.

Morgan Stanley upgraded them today, stock rising 10%.

FYI.

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My opinion as a why for Contact-Center-AAS (CCAAS):
Having implemented and ran an enterprise contact center (about 1500 agents and VOIP for another 5000), I would have loved to have found an alternative. The on-prem incumbents require specialized technical skills, a large cost outlay, new features can’t be released quickly and usually require large upgrades, and on top of it developers must learn their flavor of software integration. Additionally, you spend millions of dollars a year with the AT&Ts and Verizon’s of the world to provide connectivity and redundancy. For example, to support the above numbers, I had approximately 4 individuals dedicated with a backlog over a year long and that didn’t count developers. The business would have to wait for a new release with the functionality they wanted, we would then have to upgrade our lab, do a full test (weeks-to-months) and then look for a weekend when we could take the entire system offline for a day or so. Then you’d hope Monday no issues or you’d need to failback to previous version which would take another few hours of business interruption. What a pain! Business rarely has confidence in the contact-center-software, upgrades are buggy and complex, and it costs a ton of money.

When I looked at RingCentral a few years back, it did not look like a viable alternative to the Cisco’s and Avaya’s at that time.

I also find it interesting the two claim different Gartner MQs, with Five9s showing up in Contact-Center-AAS and RingCenter under Unified Communications-AAS. https://goo.gl/images/jo7mYw vs https://goo.gl/images/y1nSkr

This is one I’m adding to my list to do more research about, thanks for bubbling up. It’s another data center technology that frankly no one sees value in having on-prem. The primary reason on-prem vs cloud argument I would imagine is quality of service. As long as you can get appropriate levels of service out of these CCAAS, I would say its a very viable business. If phone service is bad, then customers will run for the hills.

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Five9 reported another great Q this week, stock up 22% ytd, 100% over past 12 months.

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"FIVN reported 4Q18 revenue/non-GAAP EPS of $72.3M/$0.23 compared with our estimate of $66.3M/$0.13 and Street’s $66.5M/$0.14. Revenue growth accelerated to 30.6% from 30.4% last quarter. CFO of $15.5M handily beat our $6.0M and Street’s $12.4M.

Positives: Enterprise growth, net retention rate, seat count, and guidance. (1) Enterprise revenue constituted 77% of total LTM revenue and grew 36% y/y. FIVN currently has 40 customers generating over $1M and annualized ARR doubled in the last two years.

(2) Dollar based net retention rate accelerated to 103% up from 102% last quarter.

(3) Average concurrent seat count grew to 105.3K which represents an acceleration with 28% y/y growth above the 19-23% growth range in last four years.

(4) Management guided 2019 revenue/non-GAAP EPS in the range of $298.5-$301.5M/$0.58-$0.62 as compared to Street’s $295.7M/$0.58.
Issues: Growth coming at a cost. Although the EPS guidance is better than expected (due to higher than expected revenue), reconciling from net income to operating margins implies a guidance of ~11-12%. This is a compression from the 14.2% delivered in FY18. Investments in R&D and S&M are expected to pressure the operating margins. Management, however, expects to deliver 20%+ adjusted EBITDA margins exiting 2019.

Increasing Dec-2019 price target to $58. Our new price target uses 10.5x EV/Sales up from our 8x multiple previously. The significant beat and raise has us expanding the multiple as we see room for upside to estimates in 2019."
~JPM

Note: FIVN doesn’t not sit on top of either the TWLO or AMZN stack for call centers, so if you’re competing with either of those two, you might be much more likely to use Five9.

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With all the talk of Twilio [long TWLO] I forgot to update everyone on Five9’s eps release-
https://www.investors.com/stock-lists/new-highs/five9-stock-…

FIVN reported another great Q, up 40% YTD.

'Five9 earnings for the June quarter rose 82% to 20 cents. Revenue jumped 27% to $77.4 million. Analysts had estimated Five9 earnings of 12 cents on revenue of $72.5 million.

“The company’s Microsoft partnership allows it to continue to move upmarket as Microsoft plans to sell a (Five9) contact center solution on top of its Microsoft Teams product,” …Five9 is also one company improving products with artificial intelligence.

“The firm continues to innovate, most notably with AI, where we expect Five9 to have a commercial product at some point early next year,” Canaccord Genuity analyst David Hynes said in a report to clients.

In addition, Five9 has targeted large companies that are shifting away from internal contact centers that provide customer services. Five9 rents space in internet data centers to host its software.’

Post earnings beat, JPM upgraded to overweight if you care about that sort of thing.

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Interesting, Naj…

I missed the prior posts but it is nice that you kept it all in the same thread for easy reading.

Their revenue growth isn’t super like Twilio and others discussed 'round here, and the stock price hasn’t grown nearly as much either. The valuation shows that. However, it could be an interesting business that seems to be profitable and is disrupting traditional call centers.

I’ll have to take a bit deeper look.

Thanks,
A.J.

and the stock price hasn’t grown nearly as much either

$4 to $64 in under 4 years says different! :slight_smile:

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$4 to $64 in under 4 years says different! :slight_smile:

You mentioned the YTD growth in your previous post. I believe 40%. Again, not the same type of growth as many stocks mentioned on this board. I didn’t know about the name until yesterday let alone 4 years ago.

However, I appreciate you bringing it up.

A.J.

I am long on FIVN and have been for the past 18 months. It has been an okay performer, but took until this latest pop in price to get to 2-bagger status for me. Compared to the other growth stocks discussed on this board, FIVN is certainly not in that classification.

It has been steady and up to the right for the past 3 years. Its currently about a 4.0B market cap. IPO’d in early '14 at approx. $7 and languished under $10 for the first two years. After breaking $10 in mid '16 it has had a fairly steady climb to today’s price.

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While i hadn’t heard of FIVN until today, Ringcentral (RNG) has been one of my 3 largest holdings since i heard Dan Niles recommend it as a potential disruptor on CNBC in 2014.

I took a close look at the highly capable, shareholder friendly CEO and bought a fairly sizeable position that soon ran up. It’s been a fabulous 10 bagger for me and my only regret is trimming on the way up.

Revenue growth has accelerated every year with rising to stable gross profit now at 76%+. Four years ago, the CEO made a $1 billion dollar revenue commitment to the market for 2020, has met every financial projection along the way, is on track to exceed that number next year and suggested in the last Q call that $3 billion revenue is now in sight in future years. i expect more specificity on that within the new few quarters.

I see from earlier posts on this thread that FIVN and RNG might be in the same space. I’m not too tech savvy but i had assumed RNG’s primary competitor was EGHT which RNG has blown away.

FIVN stock has pretty much matched RNG appreciation over the last 5 years so congratulations to investors, and i plan to take a closer look. A quick review suggests the growth/gross profit numbers favor RNG so far. One thing they both have in common that the market likes is rising gross profit margins.

RNG RingCentral certainly qualifies as a 30%+ revenue grower and i think that will continue.

I asked Bert about it shortly after subscribing early this year. He was characteristically generous in his email/responsiveness (wonderful knowledgeable guy, great service). He was a little skeptical, though admittedly unfamiliar with RNG. His expression of skepticism was based around the large number of competitors in the UCaaS space. i am a little ignorant about this important variable of competitors for RNG, which may be the cause of me maintaining my weighting down in the 10% range.

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'Five9 earnings for the June quarter rose 82% to 20 cents. Revenue jumped 27% to $77.4 million. Analysts had estimated Five9 earnings of 12 cents on revenue of $72.5 million.

“The company’s Microsoft partnership allows it to continue to move upmarket as Microsoft plans to sell a (Five9) contact center solution on top of its Microsoft Teams product,” …Five9 is also one company improving products with artificial intelligence.

Five9 reported yesterday, stock up 13% today.

'The cloud software company beat adjusted third-quarter expectations and upped its guidance for the year. Five9 said it lost $1.6 million, or 3 cents a share, in the quarter, compared with a loss of $1.3 million, or 2 cents a share, for the third quarter of 2018. Adjusted for one-time items, the company earned $12.8 million, or 20 cents a share, compared with $11.1 million, or 18 cents a share, a year ago.

Revenue rose 28% to $83.8 million, compared with $65.3 million a year ago. Analysts polled by FactSet had expected adjusted profit of 15 cents a share on sales of $78.7 million for the quarter. The company said it expects 2019 revenue in a range between $321.7 million and $322.7 million, up from a prior guidance of a range between $312.5 million and $314.5 million.

It called for an adjusted net income between $48.8 million and $49.8 million, or 77 cents to 78 cents a share, for the full year. That compares with a previous guidance of a range between $44.7 million and $46.7 million, or 70 cents a share and 73 cents a share. ’

Revenue continuing to accelerate. Hard to imagine pairing cloud-based CCaaS with AI won’t continue to steal share in call centers.

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JPM: 'September was another good quarter in the seasonally strong back half, but the positive tone around enterprise bookings and pipeline was noticeably better than what we have heard in recent quarters, and that says something given the 30%+ growth in the segment. We believe the competitive dynamics are still shifting in favor of FIVN, and with management once again setting a very low bar for the out-year (2020), the numbers look set up to beat and raise for the foreseeable future. We believe multiple expansion is still likely on the back of the consistent results and with the stock trading at a discount to peer RingCentral (RNG/OW).

Beat on both revenue and EPS. FIVN reported 3Q19 revenue/non-GAAP EPS of $83.8M/$0.20 compared to our estimates of $78.5M/$0.14 and Street’s $78.6M/$0.15.

Positives: Enterprise segment, retention rate. (1) FIVN reported ~7% of upside to our revenue expectations for the quarter driven by yet another quarter of 36% growth in LTM enterprise subscription revenue, benefitting from record enterprise bookings and pipeline. We believe the cloud shift is accelerating. (2) Net dollar-based retention rate was 107% for the third straight quarter, another sign of enterprise strength, but also stability in the commercial segment.

Issues: Declines in adjusted gross margin and adjusted EBITDA margin. Adjusted gross margin decreased by 30 bps on a year-over-year basis, from 64.3% in 3Q18 to 64% in 3Q19, and adjusted EBITDA margin fell over 150 bps year-over-year, to adjusted EBITDA of ~$15M. Management attributed these declines to increased R&D and go-to-market investments, and did not lower their adjusted EBITDA guidance for the fourth quarter.

Others: Continuing AI focus, international expansion through public cloud. (1) The company continues to hone its AI development efforts, with management indicating that its cross-tenant cloud capabilities have produced over five billion minutes of data traffic. FIVN has also deepened its integration into Salesforce.com by enabling voice escalation in the company’s AI Einstein bots. (2) The company is expanding its international footprint by doubling its international go-to-market personnel and leveraging existing infrastructure in those geographies, including data centers and public cloud availability zones.

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Five9 reported yesterday, stock up 13% today.

'The cloud software company beat adjusted third-quarter expectations and upped its guidance for the year. Five9 said it lost $1.6 million, or 3 cents a share, in the quarter, compared with a loss of $1.3 million, or 2 cents a share, for the third quarter of 2018. Adjusted for one-time items, the company earned $12.8 million, or 20 cents a share, compared with $11.1 million, or 18 cents a share, a year ago…

Revenue continuing to accelerate. Hard to imagine pairing cloud-based CCaaS with AI won’t continue to steal share in call centers.’

I forgot to update you all on FIVN last month, apologies:
Five9 (NASDAQ:FIVN) -0.7% reports Q4 beats with a Q1 outlook that has upside revenue of $89-90M (consensus: $86.33M) and EPS of $0.15-0.16 (consensus: $0.15).
For FY20, Five9 sees $380.5-383.5M in revenue (consensus: $366.94M) and EPS of $0.83-0.87 (consensus: $0.85).
Q4 Adjusted EBITDA totaled $19.6M, up from $16.4M in last year’s quarter.
Adjusted gross margin was 64.4%, down from 65.1%.

You would think call centers closing due to the virus would be good for them.

With sales growth of 28% last Q, positive earnings, and GAAP gross margin of 59%, I don’t know why this cloud name has never been popular around here.

Stock is UP 13% ytd.

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I rec’d Five9 at $2.7bn less than 3 years ago, today Zoom purchased it for $14.7bn or a 444% return.

Investment Thesis -
Five9 was one of the first companies to create integrated SaaS contact center software that has the ability to provide both inbound and outbound calling capabilities. This approach brings with it lower capex and often lower operating expenses for the customer. Now that the reliability, call quality, and scalability of cloud solutions for the contact center have been proven, demand has gone through an inflection point. The total addressable market is roughly $23 billion…
This market is not a new greenfield growth opportunity, but rather brownfield replacement of legacy vendors led by Avaya and Cisco. The primary source of growth for FIVN is coming from enterprise accounts, those with greater than 50 contact center agents, which now represent 76% of trailing 12 month revenue. The enterprise business is growing over 30% and as the mix of revenue continues to shift to this faster growing category total revenue growth is benefiting. On the margin front profitability continues to improve with the scale of the business and the combination of attractive topline growth and improving margins sets the stage for cash flow growth into the future.

Mkt cap is $2.7bn

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