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Five9 Reports First Quarter Record Revenue Growth of 45% to a Record $137.9 Million

Share:

45% Growth in LTM Enterprise Subscription Revenue

Raised 2021 Guidance for both Revenue and Bottom Line

Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software, today reported results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Results

  • Revenue for the first quarter of 2021 increased 45% to a record $137.9 million, compared to $95.1 million for the first quarter of 2020.
  • GAAP gross margin was 56.6% for the first quarter of 2021, compared to 57.9% for the first quarter of 2020.
  • Adjusted gross margin was 64.0% for the first quarter of 2021, compared to 64.1% for the first quarter of 2020.
  • GAAP net loss for the first quarter of 2021 was $(12.3) million, or $(0.18) per basic share, compared to GAAP net loss of $(7.4) million, or $(0.12) per basic share, for the first quarter of 2020.
  • Non-GAAP net income for the first quarter of 2021 was $16.1 million, or $0.23 per diluted share, compared to non-GAAP net income of $11.1 million, or $0.17 per diluted share, for the first quarter of 2020.
  • Adjusted EBITDA for the first quarter of 2021 was $22.2 million, or 16.1% of revenue, compared to $14.1 million, or 14.9% of revenue, for the first quarter of 2020.
  • GAAP operating cash flow for the first quarter of 2021 was $13.8 million, compared to GAAP operating cash flow of $10.4 million for the first quarter of 2020.

"Our first quarter results exceeded expectations across the board. We delivered record first quarter revenue of $138 million, accelerating 45% year-over-year, an all-time high. Performance was driven by ongoing success with enterprises globally as we continue to close large deals, by our product innovation as a leader in AI-powered automation, and our go-to-market execution. We've started this year off with incredible traction and are well positioned to extend our leadership position as we help organizations digitally transform their business and reimagine their customer experience."

- Rowan Trollope, CEO, Five9

Business Outlook

Five9 provides guidance based on current market conditions and expectations. Five9 emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.

  • For the full year 2021, Five9 expects to report:
    • Revenue in the range of $548.5 to $551.5 million, higher than the guidance range of $518.5 to $521.5 million that was previously provided on February 22, 2021.
    • GAAP net loss in the range of $(63.4) to $(60.4) million, or $(0.91) to $(0.87) per basic share, improved from the guidance range of $(63.9) to $(60.9) million, or $(0.92) to $(0.88) per basic share, that was previously provided on February 22, 2021.
    • Non-GAAP net income in the range of $65.2 to $68.2 million, or $0.89 to $0.93 per diluted share, higher than the guidance range of $59.1 to $62.1 million, or $0.75 to $0.79 per diluted share, that was previously provided on February 22, 2021.
  • For the second quarter of 2021, Five9 expects to report:
    • Revenue in the range of $131.5 to $132.5 million.
    • GAAP net loss in the range of $(25.9) to $(24.9) million, or $(0.38) to $(0.36) per basic share.
    • Non-GAAP net income in the range of $9.1 to $10.1 million, or $0.13 to $0.14 per diluted share.

Conference Call Details

Five9 will discuss its first quarter 2021 results today, April 29, 2021, via Zoom webinar at 4:30 p.m. Eastern Time. To access the webinar, please register by clicking here. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K and will be posted to our website, prior to the conference call.

A live webcast and a replay will be available on the Investor Relations section of the Company's web-site at http://investors.five9.com/.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. We calculate adjusted gross profit and adjusted gross margin by adding back the following items to gross profit: depreciation, intangibles amortization, stock-based compensation and one-time integration costs. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation and amortization, stock-based compensation, interest expense, interest (income) and other, acquisition-related transaction costs and one-time integration costs, contingent consideration expense and provision for (benefit from) income taxes. We calculate non-GAAP operating income by adding back or removing the following items to or from GAAP operating income (loss): stock-based compensation, intangibles amortization, acquisition-related transaction costs and one-time integration costs and contingent consideration expense. We calculate non-GAAP net income by adding back or removing the following items to or from GAAP net income (loss): stock-based compensation, intangibles amortization, amortization of discount and issuance costs on convertible senior notes, acquisition-related transaction costs and one-time integration costs and contingent consideration expense. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of factors that do not directly affect what we consider to be our core operating performance, as well as unusual events. The Company's management uses these measures to (i) illustrate underlying trends in the Company's business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the Company's business and evaluating its performance. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented only as supplemental information for purposes of understanding the Company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures set forth herein and attached to this release.

Forward-Looking Statements

This news release contains certain forward-looking statements, including the statements in the quote from our Chief Executive Officer, including statements regarding Five9's market position, opportunity and expectation of expanding its leadership position, the size of the market opportunity, Five9's growth expectations, and the second quarter and full year 2021 financial projections set forth under the caption "Business Outlook," that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (iii) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately retain and expand our sales force will impede our growth; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (vi) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business; (vii) we have established, and are continuing to increase, our network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (viii) adverse economic conditions may harm our business; (ix) the effects of the COVID-19 pandemic have materially affected how we, our clients and business partners are operating, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain; (x) security breaches and improper access to or disclosure of our data or our clients' data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and our business; (xi) we may acquire other companies or technologies, or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management's attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results; (xii) the markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed; (xiii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (xiv) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results; (xv) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (xvi) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could cause us to lose clients and subject us to claims for credits or damages, among other things; (xvii) we have a history of losses and we may be unable to achieve or sustain profitability; (xviii) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new products in order to maintain and grow our business; (xix) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xx) failure to comply with laws and regulations could harm our business and our reputation; (xxi) we may not have sufficient cash to service our convertible senior notes and repay such notes, if required, and other risks attendant to our convertible senior notes and increased debt levels; and (xxii) the other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Such forward-looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.

About Five9

Five9 is a leading provider of cloud contact center software for the intelligent contact center space, bringing the power of cloud innovation to customers and facilitating more than seven billion call minutes annually. Five9 provides end-to-end solutions with omnichannel routing, analytics, WFO and AI to increase agent productivity and deliver tangible business results. The Five9 Genius platform is reliable, secure, compliant and scalable; designed to create exceptional personalized customer experiences. For more information, visit www.five9.com.

FIVE9, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

March 31, 2021

 

December 31, 2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

176,326

 

 

$

220,372

Marketable investments

 

467,143

 

 

383,171

Accounts receivable, net

 

51,987

 

 

48,731

Prepaid expenses and other current assets

 

19,673

 

 

16,149

Deferred contract acquisition costs, net

 

23,249

 

 

20,695

Total current assets

 

738,378

 

 

689,118

Property and equipment, net

 

58,296

 

 

51,213

Operating lease right-of-use assets

 

44,960

 

 

9,010

Intangible assets, net

 

48,737

 

 

51,684

Goodwill

 

165,420

 

 

165,420

Marketable investments

 

 

 

42,127

Other assets

 

3,135

 

 

3,236

Deferred contract acquisition costs, net — less current portion

 

59,823

 

 

51,934

Total assets

 

$

1,118,749

 

 

$

1,063,742

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

16,056

 

 

$

17,145

Accrued and other current liabilities

 

52,960

 

 

44,450

Operating lease liabilities

 

5,478

 

 

3,912

Accrued federal fees

 

5,024

 

 

3,745

Sales tax liabilities

 

1,168

 

 

1,714

Finance lease liabilities

 

156

 

 

612

Deferred revenue

 

32,835

 

 

31,983

Total current liabilities

 

113,677

 

 

103,561

Convertible senior notes

 

782,241

 

 

643,316

Sales tax liabilities — less current portion

 

862

 

 

857

Operating lease liabilities — less current portion

 

45,135

 

 

5,379

Other long-term liabilities

 

32,628

 

 

31,465

Total liabilities

 

974,543

 

 

784,578

Stockholders' equity:

 

 

 

 

Common stock

 

67

 

 

67

Additional paid-in capital

 

331,528

 

 

476,941

Accumulated other comprehensive income

 

379

 

 

335

Accumulated deficit

 

(187,768

)

 

(198,179

)

Total stockholders' equity

 

144,206

 

 

279,164

Total liabilities and stockholders' equity

 

$

1,118,749

 

 

$

1,063,742

 

 

 

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

 

 

 

Revenue

 

$

137,882

 

 

$

95,088

Cost of revenue

 

59,803

 

 

40,037

 

Gross profit

 

78,079

 

 

55,051

 

Operating expenses:

 

 

 

 

Research and development

 

22,121

 

 

15,189

 

Sales and marketing

 

44,799

 

 

30,160

 

General and administrative

 

22,245

 

 

14,658

 

Total operating expenses

 

89,165

 

 

60,007

 

Loss from operations

 

(11,086

)

 

(4,956

)

Other (expense) income, net:

 

 

 

 

Interest expense

 

(1,938

)

 

(3,484

)

Interest income and other

 

175

 

 

1,072

 

Total other (expense) income, net

 

(1,763

)

 

(2,412

)

Loss before income taxes

 

(12,849

)

 

(7,368

)

(Benefit from) provision for income taxes

 

(517

)

 

69

 

Net loss

 

$

(12,332

)

 

$

(7,437

)

Net loss per share:

 

 

 

 

Basic and diluted

 

$

(0.18

)

 

$

(0.12

)

Shares used in computing net loss per share:

 

 

 

 

Basic and diluted

 

66,721

 

 

61,705

 

 

 

 

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(12,332

)

 

$

(7,437

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

8,763

 

 

4,970

 

Amortization of operating lease right-of-use assets

 

2,389

 

 

1,394

 

Amortization of commission costs

 

5,540

 

 

3,471

 

Amortization of premium on marketable investments

 

1,682

 

 

177

 

Provision for doubtful accounts

 

160

 

 

255

 

Stock-based compensation

 

20,908

 

 

13,794

 

Amortization of discount and issuance costs on convertible senior notes (1)

 

974

 

 

3,320

 

Change in fair of value of contingent consideration

 

2,500

 

 

 

Other

 

186

 

 

147

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(3,543

)

 

(2,620

)

Prepaid expenses and other current assets

 

(3,524

)

 

(2,754

)

Deferred contract acquisition costs

 

(15,983

)

 

(8,166

)

Other assets

 

101

 

 

(2,132

)

Accounts payable

 

351

 

 

(1,121

)

Accrued and other current liabilities

 

5,299

 

 

4,802

 

Accrued federal fees and sales tax liability

 

738

 

 

(707

)

Deferred revenue

 

322

 

 

3,378

 

Other liabilities

 

(766

)

 

(377

)

Net cash provided by operating activities

 

13,765

 

 

10,394

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investments

 

(163,683

)

 

(62,339

)

Proceeds from maturities of marketable investments

 

120,182

 

 

134,610

 

Purchases of property and equipment

 

(8,229

)

 

(6,045

)

Cash paid to acquire substantially all of the assets of Whendu

 

 

 

(100

)

Net cash (used in) provided by investing activities

 

(51,730

)

 

66,126

 

Cash flows from financing activities:

 

 

 

 

Repurchase of a portion of 2023 convertible senior notes, net of costs

 

(7,840

)

 

 

Proceeds from exercise of common stock options

 

2,215

 

 

2,596

 

Payments of finance leases

 

(456

)

 

(1,229

)

Net cash (used in) provided by financing activities

 

(6,081

)

 

1,367

 

Net (decrease) increase in cash and cash equivalents

 

(44,046

)

 

77,887

 

Cash and cash equivalents:

 

 

 

 

Beginning of period

 

220,372

 

 

77,976

 

End of period

 

$

176,326

 

 

$

155,863

 

(1)

During the first quarter of 2021, the Company early adopted ASU 2020-06 which resulted in the elimination of amortization of discount on the convertible senior notes from January 1, 2021.

 

FIVE9, INC.

RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

 

 

 

GAAP gross profit

 

$

78,079

 

 

$

55,051

 

GAAP gross margin

 

56.6

%

 

57.9

%

Non-GAAP adjustments:

 

 

 

 

Depreciation

 

4,140

 

 

2,850

 

Intangibles amortization

 

2,947

 

 

1,090

 

Stock-based compensation

 

3,105

 

 

1,989

 

One-time integration costs

 

30

 

 

 

Adjusted gross profit

 

$

88,301

 

 

$

60,980

 

Adjusted gross margin

 

64.0

%

 

64.1

%

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

 

 

 

GAAP net loss

 

$

(12,332

)

 

 

$

(7,437

)

 

Non-GAAP adjustments:

 

 

 

 

Depreciation and amortization

 

8,763

 

 

 

4,970

 

 

Stock-based compensation

 

20,908

 

 

 

13,794

 

 

Interest expense

 

1,938

 

 

 

3,484

 

 

Interest income and other

 

(175

)

 

 

(1,072

)

 

Acquisition-related transaction costs and one-time integration costs

 

1,094

 

 

 

329

 

 

Contingent consideration expense

 

2,500

 

 

 

 

 

(Benefit from) provision for income taxes

 

(517

)

 

 

69

 

 

Adjusted EBITDA

 

$

22,179

 

 

 

$

14,137

 

 

Adjusted EBITDA as % of revenue

 

16.1

 

%

 

14.9

 

%

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP OPERATING INCOME (LOSS) TO NON-GAAP OPERATING INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

 

 

 

Loss from operations

 

$

(11,086

)

 

$

(4,956

)

Non-GAAP adjustments:

 

 

 

 

Stock-based compensation

 

20,908

 

 

13,794

 

Intangibles amortization

 

2,947

 

 

1,090

 

Acquisition-related transaction costs and one-time integration costs

 

1,094

 

 

329

 

Contingent consideration expense

 

2,500

 

 

 

Non-GAAP operating income

 

$

16,363

 

 

$

10,257

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

 

 

 

GAAP net loss

 

$

(12,332

)

 

$

(7,437

)

Non-GAAP adjustments:

 

 

 

 

Stock-based compensation

 

20,908

 

 

13,794

 

Intangibles amortization

 

2,947

 

 

1,090

 

Amortization of discount and issuance costs on convertible senior notes (1)

 

974

 

 

3,320

 

Acquisition-related transaction costs and one-time integration costs

 

1,094

 

 

329

 

Contingent consideration expense

 

2,500

 

 

 

Non-GAAP net income

 

$

16,091

 

 

$

11,096

 

GAAP net loss per share:

 

 

 

 

Basic and diluted

 

$

(0.18

)

 

$

(0.12

)

Non-GAAP net income per share:

 

 

 

 

Basic

 

$

0.24

 

 

$

0.18

 

Diluted

 

$

0.23

 

 

$

0.17

 

Shares used in computing GAAP net loss per share:

 

 

 

 

Basic and diluted

 

66,721

 

 

61,705

 

Shares used in computing non-GAAP net income per share:

 

 

 

 

Basic

 

66,721

 

 

61,705

 

Diluted

 

70,659

 

 

65,151

 

(1)

During the first quarter of 2021, the Company early adopted ASU 2020-06 which resulted in the elimination of amortization of discount on the convertible senior notes from January 1, 2021.

 

FIVE9, INC.

SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2021

 

March 31, 2020

 

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

3,105

 

$

4,140

 

$

2,947

 

$

1,989

 

$

2,850

 

$

1,090

Research and development

 

4,763

 

596

 

 

2,806

 

465

 

Sales and marketing

 

6,771

 

1

 

 

4,106

 

2

 

General and administrative

 

6,269

 

1,079

 

 

4,893

 

563

 

Total

 

$

20,908

 

$

5,816

 

$

2,947

 

$

13,794

 

$

3,880

 

$

1,090

 

 

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME – GUIDANCE

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ending

 

Year Ending

 

 

June 30, 2021

 

December 31, 2021

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(25,862

)

 

$

(24,862

)

 

$

(63,388

)

 

$

(60,388

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

25,011

 

 

25,011

 

 

96,196

 

 

96,196

 

Intangibles amortization

 

2,947

 

 

2,947

 

 

11,787

 

 

11,787

 

Amortization of issuance costs on convertible senior notes

 

986

 

 

986

 

 

3,931

 

 

3,931

 

Acquisition-related transaction costs and one-time integration costs

 

6,018

 

 

6,018

 

 

14,174

 

 

14,174

 

Contingent consideration expense

 

 

 

 

 

2,500

 

 

2,500

 

Income tax expense effects (1)

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

9,100

 

 

$

10,100

 

 

$

65,200

 

 

$

68,200

 

GAAP net loss per share, basic and diluted

 

$

(0.38

)

 

$

(0.36

)

 

$

(0.91

)

 

$

(0.87

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.13

 

 

$

0.15

 

 

$

0.94

 

 

$

0.98

 

Diluted

 

$

0.13

 

 

$

0.14

 

 

$

0.89

 

 

$

0.93

 

Shares used in computing GAAP net loss per share and non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

68,500

 

 

68,500

 

 

69,400

 

 

69,400

 

Diluted

 

72,500

 

 

72,500

 

 

73,400

 

 

73,400

 

(1)

Non-GAAP adjustments do not have an impact on our income tax provision due to past non-GAAP losses.

 

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