Summary
Five9 reported second quarter 2024 revenue of $252.1 million, up 13.1% from the prior-year quarter. Gross profit rose 12.8% to $133.7 million. Gross margin was 53.0%, down 0.2 percentage points. The operating loss narrowed 23.3% to $19.4 million. Net loss narrowed 41.0% to $12.8 million. Diluted EPS was -$0.17, an improvement of $0.13. Operating margin improved to -7.7%, up 3.6 percentage points. Year-to-date revenue rose 13.1% to $499.1 million. Year-to-date net loss narrowed 59.4% to $19.9 million. Revenue growth was primarily attributable to larger clients, driven by an increase in sales and marketing activities and improved brand awareness. No single client accounted for more than 10% of total revenue. The company continues to make significant expenditures and investments in sales and marketing, research and development, and infrastructure. Five9 primarily evaluates its business based on revenue growth and the efficiency and effectiveness of its investments.
Operating cash flow for the second quarter was $19.9 million, down 9.0%. Year-to-date operating cash flow was $52.2 million, down 5.5%. Capital expenditures were $6.8 million, up 0.8%. Deferred revenue was $65.3 million, up 13.5%. Remaining performance obligations were $1.05 billion, flat up 0.5%. The company's largest source of operating cash inflows is cash collections from clients for subscription and related usage services. Payments from clients for these services are typically received monthly.
Adjusted gross margin was 60.5%, compared with 61.8%. Non-GAAP net income was $38.9 million, or $0.52 per diluted share, compared with $37.4 million, or $0.52 per diluted share. Adjusted EBITDA was $41.8 million, or 16.6% of revenue, compared with $41.5 million, or 18.6% of revenue. The company reached an annual revenue run rate exceeding $1 billion. Last-twelve-month enterprise subscription revenue grew 21% year-over-year. The Annual Dollar-Based Retention Rate was 108%, down from 112%. Five9 served more than 3,000 clients. Subscription and related usage fees accounted for 91% and 92% of revenue for the three and six months ended June 30, 2024. The company also announced innovations to its Five9 Genius AI suite, including GenAI Studio and AI Knowledge. The company's AI solutions are driving tangible business outcomes for some of the world's largest brands.
For the full year 2024, Five9 expects revenue in the range of $1.013 to $1.017 billion. Non-GAAP net income per share is expected in the range of $2.25 to $2.29, assuming diluted shares outstanding of approximately 75.2 million. For the third quarter of 2024, Five9 expects revenue in the range of $254.5 to $255.5 million. Non-GAAP net income per share is expected in the range of $0.57 to $0.59, assuming diluted shares outstanding of approximately 75.5 million. The company reduced its annual revenue guidance by 3.8%, citing recent bookings trends and uncertain economic conditions. Five9 emphasizes that guidance is subject to various cautionary factors, including risks and uncertainties associated with ongoing macroeconomic conditions. The company's guidance assumes basic shares outstanding of approximately 74.5 million for full year GAAP net loss per share and 74.9 million for third quarter GAAP net loss per share.
Five9 agreed to acquire Acqueon for approximately $167.1 million in cash, expected to close in the second half of 2024. The company believes the acquisition will advance its AI-powered CX platform and market reach. The company faces risks from macroeconomic deterioration, continued inflation, increased interest rates, supply chain disruptions, decreased economic output, and currency fluctuations. The Russia-Ukraine conflict and the conflict in Israel also pose risks. The installed base business, which typically contributes about half of annual revenue growth, continues to experience macroeconomic headwinds. The Annual Dollar-Based Retention Rate decreased year-over-year due to these headwinds. Other risks include the ability to attract new clients, client terminations or reductions, sales force retention, AI development and acceptance, competition, international expansion, security breaches, the acquisition may not close including regulatory clearance in the U.S., reliance on third-party telecommunications providers, a history of losses, stock price volatility, and convertible notes. Legal and regulatory proceedings are also a risk. The company also notes that if it is unable to raise additional capital as needed, its business, operating results, and financial condition could be harmed.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $252.1M | $247.0M | +2.1% | $222.9M | +13.1% |
| Gross profit | $133.7M | $132.5M | +0.9% | $118.5M | +12.8% |
| Gross margin | 53.0% | 53.6% | -0.6 pp | 53.2% | -0.1 pp |
| Research & development | $40.7M | $41.5M | -1.9% | $39.2M | +3.8% |
| Sales & marketing | $78.3M | $81.1M | -3.4% | $74.1M | +5.7% |
| General & administrative | $34.0M | $30.5M | +11.3% | $30.5M | +11.5% |
| Total operating expenses | $153.0M | $153.2M | -0.1% | $143.8M | +6.5% |
| Operating income (loss) | -$19.4M | -$20.7M | +6.4% | -$25.2M | +23.3% |
| Operating margin | -7.7% | -8.4% | +0.7 pp | -11.3% | +3.7 pp |
| Net income (loss) | -$12.8M | -$7.1M | -81.1% | -$21.7M | +41.0% |
| Net margin | -5.1% | -2.9% | -2.2 pp | -9.8% | +4.7 pp |
| Diluted EPS | -$0.17 | -$0.10 | -$0.07 | -$0.30 | +$0.13 |
Risks
As of June 30, 2024, $434.4 million of 2025 convertible senior notes were outstanding and mature on June 1, 2025, and $747.5 million of 2029 convertible senior notes were outstanding. The filing states servicing this debt may require significant cash and that failure to settle conversions or repurchase notes upon a fundamental change could cause a default.
The Annual Dollar-Based Retention Rate decreased to 108% for the twelve months ended June 30, 2024 from 112% for the twelve months ended June 30, 2023, primarily due to continued macroeconomic headwinds on the installed base, which typically contributes about half of annual revenue growth.
The conditional conversion features of the 2025 and 2029 convertible senior notes were not triggered during the three months ended June 30, 2024. If triggered in future periods, holders may convert and any election to settle conversions with cash could adversely affect liquidity.
Conversion of the convertible senior notes could dilute existing stockholders if settled with shares, and capped call counterparties may hedge by purchasing or selling common stock, which could negatively affect the market price of the common stock.
The company entered a definitive agreement to acquire Acqueon for approximately $167.1 million in cash expected to close in the second half of 2024, which may increase cash use and future capital requirements. General and administrative expenses for the six months ended June 30, 2024 included a $2.3 million increase in legal and other professional service costs related primarily to the acquisition.
Net cash provided by operating activities was $52.2 million during the six months ended June 30, 2024, down from $55.3 million during the six months ended June 30, 2023. The company also reported operating cash flow down 9.0% for the quarter and down 5.5% year to date.
Interest expense increased 109% for the three months and 74% for the six months ended June 30, 2024 compared to the same periods of 2023, primarily due to the issuance of the 2029 convertible senior notes in March 2024.
SaaS KPIs
All quarters →Annual Dollar-Based Retention Rate
Adjusted EBITDA
Adjusted EBITDA Margin
Adjusted Gross Margin
Total Customers
Non-GAAP Operating Income
LTM Enterprise Subscription Revenue Growth
Summary, forecast, risks and KPIs are extracted from Five9, Inc.'s SEC filings for Q2 FY2024 (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.