Summary
Five9 reported first quarter 2023 revenue of $218.4 million, up 20% from the prior year quarter. Gross margin improved to 52.0%. The company narrowed its operating loss to $29.0 million. Net loss was $27.2 million, or $0.38 per diluted share, narrowing from the prior year quarter. Operating cash flow reached a record $33.4 million, up 16.3% from the prior year quarter. Adjusted EBITDA was $35.1 million, or 16.1% of revenue, compared to $24.5 million, or 13.4% of revenue. Non-GAAP net income was $29.4 million, or $0.41 per diluted share, compared to $15.6 million, or $0.22 per diluted share. Adjusted gross margin was 60.4%, compared to 60.5%. Revenue growth was driven by larger clients, and no single client accounted for more than 10% of total revenue.
Operational highlights included 31% growth in last twelve months (LTM) enterprise subscription revenue and 48% growth in LTM international revenue. The company ended the quarter with more than 2,500 clients. Subscription and related usage fees accounted for 92% of revenue. Annual dollar-based retention rate was 114%, down from 120% a year earlier, due to macroeconomic headwinds. Deferred revenue rose 24.7% to $58.1 million. Remaining performance obligations (RPO) jumped 52.3% to $918.3 million. Capital expenditures were $9.9 million, down 19.9% from the prior year quarter. Operating margin improved to -13.3%. The company continues to invest in AI and automation, which it sees as increasingly important in the contact center and customer experience market. Five9 is a leading provider of cloud contact center software with a SaaS business model that generates recurring subscriptions. It charges monthly subscription fees based on agent seats and offers monthly, annual, and multiple-year contracts. Larger clients typically choose annual contracts.
For the full year 2023, Five9 guided non-GAAP net income per share to $1.73 to $1.77, assuming diluted shares outstanding of approximately 73.4 million. For the second quarter of 2023, the company guided non-GAAP net income per share to $0.38 to $0.40, assuming diluted shares outstanding of approximately 72.8 million. The company also provided revenue and GAAP net loss per share guidance, but those figures are not detailed here. The guidance is subject to various cautionary factors, including risks and uncertainties associated with ongoing macroeconomic deterioration. The company expects gross margin to increase in the long term despite continued investments. It also expects research and development, sales and marketing, and general and administrative expenses to increase in absolute dollars.
The company faces ongoing macroeconomic headwinds, particularly in its second largest installed base vertical, financial services. The Russia-Ukraine conflict led to the closure of its Russia office and relocation to Portugal. The COVID-19 pandemic had a moderately positive impact that has now mostly dissipated. The 2023 convertible senior notes matured on May 1, 2023 and were settled in a combination of cash and shares. The company believes its existing cash and cash equivalents will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months. Five9 remains focused on executing against its long-term market opportunity, leveraging its intelligent CX platform to deliver enhanced customer experience. The company continues to monitor the direct and indirect impacts of macroeconomic events on its business and financial results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $218.4M | $208.3M | +4.8% | $182.8M | +19.5% |
| Gross profit | $113.7M | $112.1M | +1.5% | $93.9M | +21.1% |
| Gross margin | 52.0% | 53.8% | -1.7 pp | 51.4% | +0.7 pp |
| Research & development | $38.1M | $36.9M | +3.4% | $35.8M | +6.4% |
| Sales & marketing | $76.3M | $65.9M | +15.8% | $64.6M | +18.1% |
| General & administrative | $28.3M | $22.5M | +25.5% | $24.3M | +16.2% |
| Total operating expenses | $142.7M | $125.3M | +13.9% | $124.7M | +14.4% |
| Operating income (loss) | -$29.0M | -$13.3M | -118.8% | -$30.8M | +6.0% |
| Operating margin | -13.3% | -6.4% | -6.9 pp | -16.9% | +3.6 pp |
| Net income (loss) | -$27.2M | -$13.7M | -99.6% | -$34.1M | +20.1% |
| Net margin | -12.5% | -6.5% | -5.9 pp | -18.7% | +6.2 pp |
| Diluted EPS | -$0.38 | -$0.20 | -$0.18 | -$0.49 | +$0.11 |
Risks
Adverse economic conditions are expected to continue to have an adverse impact on revenue in future periods. The company continues to experience macroeconomic headwinds on its installed base business, which typically contributes approximately half of annual revenue growth, and in Q1 2023 the largest headwind was within its second largest installed base vertical, financial services.
Annual Dollar-Based Retention Rate decreased year-over-year to 114% for the twelve months ended March 31, 2023 from 120% for the twelve months ended March 31, 2022, primarily due to macroeconomic headwinds that began in 2022 and continued in Q1 2023.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA Margin
Adjusted Gross Margin
Non-GAAP Operating Income
Total clients
LTM Enterprise Subscription Revenue Growth
Non-GAAP Net Income
Non-GAAP Net Income Margin
GAAP operating cash flow
Subscription and related usage fees as % of revenue
Summary, forecast, risks and KPIs are extracted from Five9, Inc.'s SEC filings for Q1 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.