Summary
Five9 ended fiscal 2022 with fourth quarter revenue of $208.3 million, up 20% from the prior-year quarter. Full-year revenue reached $778.8 million, up 28%. The company said growth came from its enterprise business, where last-twelve-month subscription revenue grew 32% year over year. International revenue for 2022 grew 44%. Five9 reported more than 2,500 clients. Management also introduced two new products that use GPT-3 from OpenAI, AI Insights and AI Summaries. Those additions expand its AI Automation portfolio to eight modules. The company closed its Russia office during 2022 and established a European development center in Portugal. The top-line story remains strong even as the company works through a tougher macro backdrop.
Profitability on a GAAP basis remains the weak spot. Fourth quarter gross profit rose 19.4% to $112.1 million, but GAAP gross margin was 53.8%, down 0.3 percentage points from the prior-year quarter. Operating loss widened to $13.3 million. Net loss widened to $13.7 million, or -$0.19 per diluted share. For the full year, gross profit rose 21.5% to $411.3 million. Full-year gross margin was 52.8%, down 2.7 percentage points. Full-year operating loss widened to $87.6 million. Full-year net loss widened to $94.7 million, or -$1.35 per diluted share. Non-GAAP results look different. Adjusted gross margin was 62.3% in the quarter, compared with 62.8% a year earlier. Non-GAAP net income was $39.0 million, or $0.54 per diluted share. Adjusted EBITDA was $46.2 million, or 22.2% of revenue. For the full year, non-GAAP net income was $106.7 million, or $1.50 per diluted share, and adjusted EBITDA was $140.4 million, or 18.0% of revenue. Full-year adjusted gross margin was 61.3%, compared with 63.5% in 2021.
Cash generation improved sharply. Fourth quarter operating cash flow was $32.7 million, up 278.5%. Full-year operating cash flow was $88.9 million, up 206.5%. Capital expenditures fell 54.5% to $6.2 million in the quarter. For the full year, capital expenditures rose 23.8% to $52.3 million. Deferred revenue, current portion, was $57.8 million, up 32.2%. Remaining performance obligations were $758.9 million, up 39.4%. Operating margin was -6.4% in the quarter, up 0.5 percentage points. For the full year, operating margin was -11.2%, down 2.0 percentage points.
Guidance points to slower growth in the near term. For the first quarter of 2023, Five9 guided revenue to $207.0 million to $208.0 million. For full-year 2023, revenue guidance is $900.0 million to $903.0 million. Non-GAAP net income per share guidance is $0.23 to $0.25 for the first quarter and $1.67 to $1.71 for the full year. The annual dollar-based retention rate slipped to 115% from 122%. Management cited macroeconomic headwinds on the installed base, especially in the healthcare and consumer verticals, which are seasonally strong in the fourth quarter. The mid-market portion of net new clients also saw some adverse impact. Other risks include the Russia-Ukraine conflict, inflation, higher interest rates, supply chain disruptions, currency fluctuations, client retention, competition, security breaches, and the company's history of losses. Five9 expects adverse economic conditions to continue to affect revenue in future periods. The company also said the COVID-19 benefit has mostly dissipated, and it continues to face risks from its CEO transition, reliance on third-party telecommunications providers, and outstanding convertible notes.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $208.3M | $198.3M | +5.0% | $173.6M | +20.0% |
| Gross profit | $112.1M | $104.2M | +7.5% | $93.8M | +19.4% |
| Gross margin | 53.8% | 52.5% | +1.2 pp | 54.0% | -0.3 pp |
| Research & development | $36.9M | $34.1M | +8.1% | $30.4M | +21.1% |
| Sales & marketing | $65.9M | $67.4M | -2.1% | $53.4M | +23.5% |
| General & administrative | $22.5M | $24.5M | -8.1% | $22.0M | +2.4% |
| Total operating expenses | $125.3M | $126.0M | -0.5% | $105.8M | +18.4% |
| Operating income (loss) | -$13.3M | -$21.7M | +39.0% | -$12.0M | -10.6% |
| Operating margin | -6.4% | -11.0% | +4.6 pp | -6.9% | +0.5 pp |
| Net income (loss) | -$13.7M | -$23.2M | +41.2% | -$3.6M | -279.1% |
| Net margin | -6.5% | -11.7% | +5.1 pp | -2.1% | -4.5 pp |
| Diluted EPS | -$0.20 | -$0.33 | +$0.13 | -$0.05 | -$0.15 |
Risks
MD&A states the company continues to experience macroeconomic headwinds on its installed base business, which typically contributes about half of revenue growth, particularly in healthcare and consumer verticals, and some adverse impact on the mid-market portion of net new clients. Risk factors also cite increased inflation, increased interest rates, supply chain disruptions, decreased economic output, currency fluctuations, and the Russia-Ukraine conflict.
Risk factors emphasize that a significant percentage of revenue comes from existing clients, so downturns in new sales are not immediately reflected, and clients can reduce agent seats on 30 days' notice. MD&A reports Annual Dollar-Based Retention Rate decreased to 115% for the twelve months ended December 31, 2022 from 122% for the prior-year period.
Risk factors note that larger clients typically require more professional services, which have lower margins, and usage revenues also carry lower margins, so an unfavorable mix can reduce gross margins. Reported figures show gross margin fell 2.7 percentage points for FY2022 year to date versus FY2021 year to date.
Risk factors state the company's AI-powered applications may not achieve sufficient accuracy, may lack sufficient training data, or may contain biased data, and competitors may incorporate AI features more quickly or successfully. The filing specifically notes Microsoft recently introduced solutions aimed at companies building their own contact centers, alongside Amazon and Twilio.
Risk factors describe a highly competitive contact center market with increasing entrants, including legacy vendors Avaya and Cisco, cloud providers Genesys and NICE, smaller providers Content Guru and Talkdesk, unified communications vendors such as Zoom, and CRM vendors that may reduce or terminate partnerships. The company has no long-term contracts and clients can switch on short notice.
Risk factors state that sales to larger organizations require longer sales and implementation cycles, greater configuration and integration services, and more sales support, with a typical sales cycle of four to six months that may increase. MD&A attributes revenue growth primarily to larger clients, increasing exposure to this dynamic.
Risk factors describe the March 2022 decision to close the Russia office and establish a European development center in Portugal, noting operational disruptions and no assurance the new operations will be as effective or efficient. MD&A reports approximately $7.9 million in costs related to the closure and relocation during FY2022.
Risk factors highlight GDPR, U.S. state privacy laws including CCPA, CPA, CTDPA, UCPA and VCDPA, and other data protection regimes, with potential fines up to 20 million euros or 4% of worldwide annual turnover under GDPR and private rights of action under CCPA. Compliance may require changes to data practices and increase costs.
Risk factors state the company may not have sufficient cash flow to service or repay its convertible senior notes, including $747.5 million aggregate principal amount of 2025 convertible senior notes outstanding as of December 31, 2022, and the conditional conversion feature could require cash settlement. Failure to repurchase or pay conversions could cause defaults.
Risk factors note the recent CEO transition could disrupt operations, result in additional executive and personnel transitions, and make it harder to hire and retain employees. The company also depends on retaining and expanding its direct sales force, and new sales representatives can take several months to become fully productive.
SaaS KPIs
All quarters →Annual Dollar-Based Retention Rate
Adjusted EBITDA
Adjusted EBITDA Margin
Adjusted Gross Margin
Non-GAAP Operating Income
Total clients
LTM Enterprise Subscription Revenue Growth
Summary, forecast, risks and KPIs are extracted from Five9, Inc.'s SEC filings for Q4 FY2022 (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.