Five9's (NASDAQ:FIVN) Q2 Sales Top Estimates, Stock Soars

Adam Hejl /
2022/07/28 4:27 pm EDT
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Call center software provider Five9 (NASDAQ: FIVN) reported Q2 FY2022 results that beat analyst expectations, with revenue up 31.7% year on year to $189.3 million. The company expects that next quarter's revenue would be around $193 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. Five9 made a GAAP loss of $23.6 million, down on its loss of $16.5 million, in the same quarter last year.

Is now the time to buy Five9? Access our full analysis of the earnings results here, it's free.

Five9 (FIVN) Q2 FY2022 Highlights:

  • Revenue: $189.3 million vs analyst estimates of $180 million (5.16% beat)
  • EPS (non-GAAP): $0.34 vs analyst estimates of $0.18 ($0.16 beat)
  • Revenue guidance for Q3 2022 is $193 million at the midpoint, roughly in line with what analysts were expecting
  • The company lifted revenue guidance for the full year, from $771.5 million to $781.5 million at the midpoint, a 1.29% increase
  • Free cash flow was negative $26 million, down from positive free cash flow of $15.7 million in previous quarter
  • Gross Margin (GAAP): 53.4%, down from 55.2% same quarter last year

“Despite the macro environment uncertainties, we continued to experience strong growth with second quarter record bookings for both new logos and our installed base. Given the mission criticality of contact centers and a massive yet barely penetrated TAM, as well as our leading platform, go-to-market machine and proven execution, we remain confident in delivering durable and profitable growth,” said Rowan Trollope, CEO, Five9

Started in 2001, Five9 (NASDAQ: FIVN) offers software as a service that makes it easier for companies to set up and efficiently run call centers, and offer more tailored customer support.

Work is becoming more distributed, both across geographies and devices. In order for businesses to keep functioning efficiently, they need to be able to communicate as well as they did when the teams were co-located, which drives the demand for integrated communication platforms.

Sales Growth

As you can see below, Five9's revenue growth has been very strong over the last year, growing from quarterly revenue of $143.7 million, to $189.3 million.

Five9 Total Revenue

And unsurprisingly, this was another great quarter for Five9 with revenue up 31.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $6.6 million in Q2, compared to $9.17 million in Q1 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates Five9 is expecting revenue to grow 25% year on year to $193 million, slowing down from the 37.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 22.5% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Five9's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 53.4% in Q2.

Five9 Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.53 left to spend on developing new products, marketing & sales and the general administrative overhead. While it improved significantly from the previous quarter this would still be considered a low gross margin for a SaaS company and we would like to see the improvements continue.

Key Takeaways from Five9's Q2 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Five9’s balance sheet, but we note that with a market capitalization of $6.63 billion and more than $498.3 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We enjoyed seeing Five9’s improve their gross margin materially this quarter. And we were also excited to see that it outperformed Wall St’s revenue expectations. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. The company is up 8.25% on the results and currently trades at $106.5 per share.

Should you invest in Five9 right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.