Five9, Inc. Q2 FY2025 earnings

Five9 reported record second-quarter revenue of $283.27 million, up 12.4% from the prior-year quarter. Gross profit rose 16.3% to $155.40 million. Gross margin expanded to 54.9% from 53.0%. Operating loss narrowed to $1.56 million from $19.36 million. Operating margin improved to -0.6% from -7.7%. Net income was $1.15 million, compared with a net loss of $12.82 million a year earlier. Diluted EPS was $0.01 versus a loss of $0.17. For the first six months, revenue was $562.97 million, up 12.8%. Gross profit was $309.14 million, up 16.2%. Gross margin was 54.9% versus 53.3%. Operating loss narrowed to $6.99 million from $40.06 million. Operating margin was -1.2% versus -8.0%. Net income was $1.73 million versus a net loss of $19.89 million. Diluted EPS was $0.02 versus a loss of $0.27.

Cash generation improved. Second-quarter operating cash flow was $35.06 million, up 76.4% from $19.88 million. Year-to-date operating cash flow was $83.44 million, up 59.8% from $52.23 million. Capital expenditures fell to $3.49 million from $6.77 million in the quarter. For the first six months, capital expenditures were $8.22 million, down 56.1% from $18.72 million. Deferred revenue was $68.01 million, up 4.2%. Remaining performance obligations were $1.15 billion, up 9.8%. The annual dollar-based retention rate was 108%, flat year over year. Subscription revenue grew 16% year over year. Enterprise AI revenue grew 42% year over year and represented 10% of Enterprise subscription revenue. Enterprise AI bookings more than tripled year over year.

Non-GAAP results also improved. Adjusted gross margin was 63.0% versus 60.5%. Non-GAAP net income was $58.3 million, or $0.76 per diluted share, compared with $38.9 million, or $0.52 per diluted share. Non-GAAP operating income was $54.5 million versus $31.0 million. Adjusted EBITDA was $67.9 million, or 24.0% of revenue, compared with $41.8 million, or 16.6% of revenue. Management said the quarter set a Q2 record for both operating and free cash flow.

Guidance points to continued growth. For the third quarter of 2025, Five9 expects revenue of $283.0 million to $286.0 million. Non-GAAP net income per share is guided to $0.72 to $0.74. For the full year 2025, revenue is guided to $1.1435 billion to $1.1495 billion. Non-GAAP net income per share is guided to $2.86 to $2.90. The company assumes diluted shares of approximately 87.5 million for third-quarter GAAP EPS, 78.1 million for third-quarter non-GAAP EPS, 88.5 million for full-year GAAP EPS, and 77.7 million for full-year non-GAAP EPS.

Cost actions and risks remain in focus. The 2025 reduction in force plan cut global full-time employees by approximately 4%. Five9 incurred $7.8 million in restructuring costs under that plan in the second quarter and first six months, plus $2.1 million in stock-based compensation. The 2024 plan reduced employees by approximately 6% and cost $9.6 million in 2024. As of June 30, 2025, the company had $692.6 million in working capital, including $205.5 million in cash and cash equivalents and $430.4 million in marketable investments. The 2025 convertible notes matured on June 1, 2025, and Five9 settled them with a $434.4 million cash payment. The 2029 convertible notes had $747.5 million in principal outstanding as of June 30, 2025. Management expects macroeconomic challenges, global tariff increases, the Russia-Ukraine conflict, and Middle East conflicts to keep pressuring revenue. The company also faces a securities class action filed on December 4, 2024, an amended complaint filed on May 30, 2025, and a motion to dismiss filed on July 29, 2025. A related derivative action is stayed. Five9 appointed Bryan Lee as chief financial officer effective July 31, 2025.