Five9 Inc

Five9, Inc. (Five9) (NASDAQ: FIVN) is a provider of cloud software for contact centers. The Company's purpose-built Virtual Contact Center (VCC) cloud platform delivers a suite of applications that enable the breadth of contact center-related customer service, sales, and marketing functions.

Recent Business and Financial Updates

• Strong Revenue Performance: In the fourth quarter of 2024 (Q4 2024), Five9, Inc. (FIVN) reported a robust revenue increase of 17%, reaching a record USD278.7 million, up from USD239.1 million in Q4 2023. This growth was propelled by a 19% surge in subscription revenue, reflecting the company’s ability to capitalize on heightened demand for its Intelligent CX Platform and reinforcing its leadership in the customer experience sector.
• Enhanced Profitability Metrics: FIVN showcased significant improvements in profitability during Q4 2024, achieving a GAAP gross margin of 56.0% (up from 52.9% in Q4 2023) and an adjusted gross margin of 63.5% (up from 61.3%). The quarter also saw a record adjusted EBITDA of USD64.3 million, or 23.1% of revenue, compared to USD48.3 million or 20.2% in the prior year, underscoring operational efficiency and a strong margin profile that exceeds industry standards.
• Positive Earnings Turnaround: The company transitioned from a GAAP net loss of USD12.4 million (or -5.2% of revenue) in Q4 2023 to a GAAP net income of USD11.6 million (or 4.2% of revenue) in Q4 2024, equating to USD0.13 per diluted share. Non-GAAP net income further improved to USD60.3 million, or USD0.79 per diluted share, from USD45.1 million, or USD0.61 per diluted share, reflecting robust earnings growth driven by operational enhancements and AI-driven innovations.
• Record Cash Flow Generation: FIVN achieved an all-time high GAAP operating cash flow of USD49.8 million in Q4 2024, compared to USD36.5 million in Q4 2023, marking a significant milestone in liquidity generation. This record cash flow, bolstered by an annual operating cash flow of USD143.2 million for 2024 (up from USD128.8 million in 2023), provides the company with substantial financial flexibility to pursue its strategic initiatives and sustain long-term growth.
• AI-Driven Market Leadership: The company’s focus on artificial intelligence solidified its competitive edge, with Enterprise AI revenue surging 46% year-over-year in Q4 2024. This growth, coupled with enhancements to its AI-powered platform, positions FIVN to meet evolving market demands and deliver superior customer experiences. With guidance projecting 2025 revenue between USD1.140 billion and USD1.144 billion, FIVN is well-equipped to build on this momentum and drive durable growth into the future.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 54.28, currently upward trending, with expectations of a consolidation or some upward momentum if the important support level of USD 38-USD 40 holds. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given for Five9, Inc. (Five9) (NASDAQ: FIVN) at the closing market price of USD 41.69, as of February 20, 2025. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is February 20, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.