Summary
Five9, a cloud software provider for contact centers, showed strong revenue growth in Q3 2018, delivering $65.3 million, up from $50.1 million in Q3 2017. This increase is primarily driven by the expansion among larger clients, a focus that Five9 has cultivated since 2009. The company has over 2,000 clients across multiple industries, none of which account for more than 10% of total revenue. Despite this growth, Five9 reported a net loss of $1.3 million for the quarter, compared to a net income of $0.9 million in the same period last year, reflecting the company's continued investment in sales, marketing, and R&D efforts.
A particularly noteworthy financial metric is the annual dollar-based retention rate, which increased to 101% from 98% year-on-year, indicating successful upsell and cross-sell strategies among existing customers. Adjusted EBITDA also improved significantly to $12.8 million from $5.2 million in Q3 2017, illustrating improved operational efficiency despite the company's strategic investments for future growth.
Strategically, Five9 is committed to expanding its market presence both domestically and internationally. The company's SaaS model, primarily driven by subscription fees based on the number of agent seats, is designed to scale with client needs via monthly, annual, or multi-year contracts. Almost all clients also purchase related telephony usage, although a minority opts for third-party providers.
Looking at potential risks, the financial statements highlight the importance of effectively managing its convertible senior notes. These notes include a conditional conversion feature that, if triggered, could demand significant cash payment obligations, potentially affecting liquidity and reclassifying portions of the debt from long-term to current liabilities.
Overall, Five9 is positioned for continued growth, leveraging its cloud platform's flexibility to gain a competitive edge over traditional, on-premise systems. However, to remain on a positive trajectory, careful management of its growing operational expenses and convertible debt strategy will be crucial, as will its ability to continue attracting and retaining large clients.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2018 | Q2 FY2018 | QoQ | Q3 FY2017 | YoY |
|---|---|---|---|---|---|
| Revenue | $65.3M | $61.1M | +6.8% | $50.1M | +30.4% |
| Gross profit | $39.1M | $36.3M | +7.8% | $29.6M | +32.3% |
| Gross margin | 59.9% | 59.4% | +0.5 pp | 59.1% | +0.8 pp |
| Research & development | $9.6M | $8.4M | +14.5% | $6.7M | +43.3% |
| Sales & marketing | $17.8M | $17.9M | -0.5% | $16.5M | +8.0% |
| General & administrative | $10.7M | $9.8M | +9.3% | $4.7M | +129.7% |
| Total operating expenses | $38.1M | $36.1M | +5.6% | $27.9M | +36.9% |
| Operating income (loss) | $979.0K | $194.0K | +404.6% | $1.7M | -42.9% |
| Operating margin | 1.5% | 0.3% | +1.2 pp | 3.4% | -1.9 pp |
| Net income (loss) | -$1.3M | -$2.0M | +36.1% | $924.0K | -241.2% |
| Net margin | -2.0% | -3.3% | +1.3 pp | 1.9% | -3.9 pp |
| Diluted EPS | -$0.02 | — | — | $0.02 | -$0.04 |
Risks
The conditional conversion feature of the convertible senior notes could adversely affect liquidity if triggered, as it requires settling conversion obligations through cash payments, potentially reclassifying notes as current liabilities and reducing net working capital.
SaaS KPIs
All quarters →Annual Dollar-Based Retention Rate
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from Five9, Inc.'s SEC filings for Q3 FY2018 (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.