Five9 Shares Climb After Q4 Results, Outlook Top Street View

Shares of Five9 Inc FIVN surged 10 percent after the provider of cloud software for contact centers reported better-than-expected results for the fourth quarter. The company's revenue outlook for the first quarter and full year also topped Street view.

The company reported a loss of $0.07 per share and adjusted loss of $0.03 a share for the fourth quarter. Revenue rose 27 percent to $36 million in the period. The results topped Street view for a loss of $0.08 a share on revenue of $33.2 million.

For the first quarter, Five9 sees a loss of $0.06-$0.08 a share, while projects revenue of $35.5 million to $36.5 million. Analysts, on average, expect a loss of $0.08 a share on revenue of $34.93 million.

Five9 expects a full-year loss of $0.21-$0.27 a share, with revenue ranging from $148 million to $151 million. Street analysts, on average, expect a loss of $0.27 a share on revenue of $147.89 million.

What Does The Street Think?

"Five9 reported an excellent finish to what was an important year for this team to rebuild credibility with investors. With six straight beat and raises, it's fair to say that this business is firmly on track," Cancaccord Genuity analyst David Hynes Jr. said in a note to clients.

The analyst said the bullish scenario for Five9 is that revenue growth holds or perhaps even accelerates from current levels as the Enterprise continues to become a larger part of the mix, customer/dollar retention gradually inches higher, and the firm sustains profitability earlier than expected on its way to 20 percent EBITDA margins over the next 3-4 years.

The analyst, who has a Buy rating and raised the price target by $1 to $10, expects Five9 to be more or less EBITDA breakeven for the year and to begin showing operating cash flow profits in the third/fourth quarter time frame.

Pacific Crest's Brendan Barnicle raised his first quarter revenue estimate to $36.0 million from $35.1 million and narrowed his loss estimate to $0.07 from $0.09. The analyst is also raising his 2016 revenue estimate to $150.0 million from $148.2 million and narrowed his 2016 loss estimate to $0.24 a share from $0.29 a share.

"While we are encouraged by the estimate increases, margins may not improve by as much in 2016 as in 2015," said Barnicle who has a Sector Weight on the stock.

However, the analyst said the call center industry remains in the early stages in the transition to the cloud. But increased adoption of the cloud and Five9's leadership may be enough for the company to continue to enjoy strong and ongoing momentum.

In addition, Michael Latimore of Northland Capital Markets reiterated his Outperform rating. He raised his first quarter revenue estimate to $35.9 million from $35.1 million and 2016 revenue forecast to $150.3 million from $148.9 million. However, his loss estimate for the quarter and the full year remained at $0.07 a share and $0.24 a share, respectively.

Shares have been trading in the range of $3.48 -$9.06 during the past 52-weeks.