Five9 Shares Fall 6% After Revenue Beat, Guidance Miss

Five9 reported second-quarter revenue that topped analysts' estimates. The cloud contact-center software company's third-quarter forecast missed expectations, sending shares lower in after-hours trading.

Revenue came in at $295.3 million for the quarter ended June 30, up 15% from a year earlier and ahead of the $291 million analysts had expected. Subscription revenue rose 17% to $278.5 million. Enterprise subscription revenue grew 18%.

The company posted a GAAP net loss of $18.3 million, or 24 cents a share, compared with a loss of $15.5 million, or 21 cents a share, in the same quarter last year. On an adjusted basis, earnings were 43 cents a share, beating the 37-cent consensus.

"We had a solid second quarter with revenue above the high end of our guidance range," Chief Executive Amit Mathradas said on the call. "Enterprise subscription revenue grew 18% year over year, and we added 78 enterprise customers with annual recurring revenue over $100,000."

Five9 forecast third-quarter revenue of $296 million to $298 million, below the $300.7 million analysts were looking for. The company sees adjusted earnings of 38 to 40 cents a share, compared with the 42-cent consensus.

Mathradas attributed the soft guidance to deal-timing in the enterprise segment. "We have a number of large enterprise opportunities that we expect will close in the fourth quarter rather than the third quarter," he said. "This is not a demand issue. Our pipeline is strong."

For the full year, Five9 raised its revenue outlook to a range of $1.192 billion to $1.198 billion, up from prior guidance of $1.185 billion to $1.195 billion. The midpoint of $1.195 billion is above the $1.192 billion consensus. The company also lifted its adjusted earnings forecast to $1.66 to $1.70 a share, from $1.60 to $1.66 previously.

Gross margin in the second quarter was 60.2%, up from 59.1% a year ago. Operating cash flow was $50.6 million, compared with $37.5 million in the same period last year. Five9 ended the quarter with $890 million in cash and investments.

The company's AI-powered digital engagement platform remains a key growth driver. Mathradas said more than half of enterprise deals in the quarter included some form of AI functionality, up from roughly a third a year earlier. "Our AI-native approach is resonating with customers who want to automate service interactions without replacing agents," he said.

Five9's non-GAAP operating margin came in at 19.5%, above the 18% target it set for the year. Chief Financial Officer Bryan Lee said the company expects margins to expand further in the second half as revenue scales.

"We are managing the business for durable growth and margin expansion," Lee said. "The guidance reflects prudent planning around enterprise deal timing, not a change in the demand environment."

The stock fell about 6% in after-hours trading following the guidance miss.

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