Summary
Five9's third quarter of fiscal 2017 was marked by a solid revenue increase to $50.1 million, up 22% from the prior year. The company emphasized its strong presence in the cloud software for contact centers, attributing its revenue growth to its larger clients. Subscription and related usage fees were critical, accounting for over 90% of revenue. Despite the positive revenue trend, the company reported a decrease in its annual dollar-based retention rate to 98%, mainly because of last year's numbers being bolstered by one client ramping up.
The company is heavily investing in sales, marketing, R&D, and infrastructure to enhance its product offerings and increase market reach, thereby setting the stage for capturing bigger market opportunities. These investments have led to a $5.18 million adjusted EBITDA for the quarter, suggesting effective management of finances despite ongoing transformations.
Cash flows were notably stronger, with operating cash more than doubling compared to the previous year. This was driven by better financial results and effective cash management strategies, reflecting underlying business growth. Net cash from operations reached $8.2 million, a significant improvement.
However, there are risks of fluctuating revenue in future quarters due to market acceptance variability, client growth challenges, and competitive pressures. The company highlights its ability to attract new customers and enhance existing client relationships as vital to maintaining revenue momentum. Failing to effectively manage rapid growth and sufficiently expand its sales and service teams could pose significant risks, impacting strategic client relationships and business operations.
The firm is maintaining focus on large contact centers, riding the wave of businesses transitioning from on-premise systems to cloud solutions. By offering a range of subscription models, including bundled plans, and maintaining flexibility with agent seats, Five9 is positioning itself as a versatile and adaptable service provider in this space.
Anticipating lower relative operational costs as revenue scales up, Five9 notes potential economies of scale, especially in expanding its client base without substantial incremental development costs, suggesting a positive outlook on long-term financial operating leverage.
The path forward for Five9 seems clear and positive, but not without challenges. Execution against its growth strategies and effective management of its workforce and operational scale will be crucial to maintaining its upward trajectory.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2017 | Q2 FY2017 | QoQ | Q3 FY2016 | YoY |
|---|---|---|---|---|---|
| Revenue | $50.1M | $47.7M | +4.9% | $41.0M | +22.2% |
| Gross profit | $29.6M | $27.5M | +7.8% | $23.2M | +27.6% |
| Gross margin | 59.1% | 57.5% | +1.5 pp | 56.6% | +2.5 pp |
| Research & development | $6.7M | $6.8M | -2.2% | $6.0M | +10.7% |
| Sales & marketing | $16.5M | $16.9M | -2.5% | $12.9M | +27.7% |
| General & administrative | $4.7M | $6.8M | -31.6% | $6.1M | -23.8% |
| Total operating expenses | $27.9M | $30.6M | -9.0% | $25.1M | +11.0% |
| Operating income (loss) | $1.7M | -$3.2M | +154.3% | -$1.9M | +189.4% |
| Operating margin | 3.4% | -6.6% | +10.0 pp | -4.7% | +8.1 pp |
| Net income (loss) | $924.0K | -$4.0M | +123.1% | -$3.9M | +123.8% |
| Net margin | 1.9% | -8.4% | +10.3 pp | -9.5% | +11.3 pp |
| Diluted EPS | $0.02 | — | — | — | — |
Risks
Quarterly and annual revenues may vary significantly, potentially lowering the stock's value. This is due in part to market acceptance, client renewal rates, and competitive dynamics.
The inability to expand sales and service teams adequately could impact revenue and revenue growth. Client relationships and sales of additional functionalities hinge on this capacity expansion.
Recent rapid growth may not continue, and failure to manage this growth could impact operational effectiveness. Key challenges include expanding sales and service teams and strategic client relationships.
SaaS KPIs
All quarters →Annual Dollar-Based Retention Rate
Adjusted EBITDA
Revenue
Summary, forecast, risks and KPIs are extracted from Five9, Inc.'s SEC filings for Q3 FY2017 (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 Aug 4, 2026.