×

Five9 Reports Third Quarter Total Revenue Growth of 27%

LTM Enterprise Subscription Revenue Growth Accelerates to 43%

YTD GAAP Operating Cash Flow Improves by $16.9M

Raises 2016 Guidance for Revenue and Bottom Line

SAN RAMON, Calif., Nov. 01, 2016 (GLOBE NEWSWIRE) -- Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud software for the enterprise contact center market, today reported results for the third quarter 2016 ended September 30, 2016.

Third Quarter 2016 Financial Results

  • Total revenue for the third quarter of 2016 increased 27% to a record $41.0 million, compared to $32.3 million for the third quarter of 2015
  • GAAP gross margin was 56.6% for the third quarter of 2016, compared to 54.1% for the third quarter of 2015
  • Adjusted gross margin was 61.5% for the third quarter of 2016, compared to 59.4% for the third quarter of 2015
  • GAAP net loss for the third quarter of 2016 was $(3.9) million, or $(0.07) per share, compared to a GAAP net loss of $(6.0) million, or $(0.12) per share, for the third quarter of 2015
  • Non-GAAP net loss for the third quarter of 2016 was $(0.2) million, or $(0.00) per share, compared to a non-GAAP net loss of $(3.9) million, or $(0.08) per share, for the third quarter of 2015
  • GAAP operating cash flow for the third quarter of 2016 was $1.7 million, compared to a GAAP operating cash outflow of $(3.2) million for the third quarter of 2015
  • Adjusted EBITDA for the third quarter of 2016 was $2.7 million, or 6.7% of revenue, compared to a loss of $(1.1) million, or (3.4)% of revenue, for the third quarter of 2015

“Our third quarter results were once again outstanding. Our revenue grew 27% year-over-year resulting in record revenue of $41.0 million. This revenue growth was driven primarily by the continued acceleration in our enterprise business, which delivered 43% growth in LTM enterprise subscription revenue and which drives high marginal profitability. Additionally, Five9 was once again named a leader in this year’s Gartner Magic Quadrant for Contact Center as a Service, North America, published on October 24th, and we were positioned highest on ability to execute. We see this as further validation of our leadership position in the enterprise market. We believe we are still in the early days of a massive push towards modernization of customer service and contact center technologies. Given our leadership position in this market and the strong momentum in our business, we are again raising 2016 guidance.”

- Mike Burkland, President and CEO, Five9

Q3 Business Highlights

  • Third quarter record for enterprise bookings
  • LTM enterprise subscription revenue grew 43% year-over-year, up from 35% in the year ago period
  • LTM enterprise revenue increased to 68% of total revenue, up from 63% in the year ago period
  • Annual dollar-based retention rate was 100%, up from 95% in the year ago period

Business Outlook

  • For the full year 2016, Five9 expects to report:
    • Revenue in the range of $159.2 to $160.2 million, up from the prior guidance range of $155.8 to $157.8 million that was previously provided on August 3, 2016
    • GAAP net loss in the range of $(15.8) to $(16.8) million, including a $1.0 million write-off of unamortized fees and discounts as well as a prepayment penalty from the termination of our prior term debt facility, or a loss of $(0.30) to $(0.32) per share, improved from the prior guidance range of $(17.8) to $(19.8) million, or a loss of $(0.34) to $(0.38) per share, that was previously provided on August 3, 2016
    • Non-GAAP net loss in the range of $(4.5) to $(5.5) million, or $(0.09) to $(0.11) per share, improved from the prior guidance range of $(6.5) to $(8.5) million, or $(0.12) to $(0.16) per share, that was previously provided on August 3, 2016
  • For the fourth quarter of 2016, Five9 expects to report:
    • Revenue in the range of $41.3 to $42.3 million
    • GAAP net loss in the range of $(3.5) to $(4.5) million, or a loss of $(0.07) to $(0.09) per share
    • Non-GAAP net loss in the range of $(0.8) to $(1.8) million, or a loss of $(0.02) to $(0.03) per share

Conference Call Details

Five9 will discuss its third quarter 2016 results today, November 1, 2016, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 2120093), please dial: 888-437-9362 or 719-325-2492. An audio replay of the call will be available through November 15, 2016 by dialing 888-203-1112 or 719-457-0820 and entering access code 2120093. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K, and will be posted to our web site, prior to the conference call.

A webcast of the call will be available on the Investor Relations section of the Company’s website at http://investors.five9.com/.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. We calculate adjusted gross profit by adding back the following items to gross profit: depreciation, amortization, and stock-based compensation expenses. We calculate adjusted EBITDA by adding back the following items to net loss: depreciation, amortization, interest expense, income tax expense, stock-based compensation expense, and interest and other, which consists primarily of interest income and foreign exchange gains and losses. We calculate non-GAAP operating income (loss) as operating loss excluding stock-based compensation, amortization of acquisition intangibles and an immaterial one time out of period adjustment for sales taxes. We calculate non-GAAP net loss as net loss excluding stock-based compensation, amortization of acquisition intangibles, extinguishment of debt, amortization of debt discount and issuance costs, and an immaterial one time out of period adjustment for sales taxes. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of unusual events, as well as factors that do not directly affect what we consider to be our core operating performance. The Company’s management uses these measures to (i) illustrate underlying trends in the Company’s business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the Company’s business and evaluating its performance. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented only as supplemental information for purposes of understanding the Company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures set forth herein and attached to this release.

Forward Looking Statements

This news release contains certain forward-looking statements, including the statements in the quote from our Chief Executive Officer, including statements regarding Five9’s market position, customer service and contact center market trends, increasing demand for Five9’s solutions, and the fourth quarter 2016 and full year 2016 financial projections set forth under the caption “Business Outlook,” that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) we may be unable to attract new clients or sell additional services and functionality to our existing clients or could experience a reduction in seats or revenues from existing clients; (iii) our recent rapid growth may not be indicative of our future growth and we may fail to manage our growth effectively; (iv) we may not be able to grow our sales and support staff sufficiently to continue to grow our business; (v) the markets in which we participate are highly competitive and we may be unable to compete effectively; (vi) we may be unable to manage our technical operations infrastructure, which could cause our existing clients to experience service outages, cause our new clients to experience delays in the deployment of our solution and subject us to, among other things, claims for credits or damages; (vii) a decline in our dollar-based retention rate could cause our revenues and gross margins to decrease and our net loss to increase and we may be required to spend more money to grow our client base to maintain our revenues; (viii) sales of our solutions to larger organizations may require longer sales and implementation cycles and we may be unable to offer the configuration and integration services or customized features and functions required by larger organizations, which could delay or prevent sales of our solution to them; (ix) downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (x) third-party telecommunications and internet service providers on which we rely may fail to provide our clients and their customers with reliable telecommunication services and connectivity to our cloud contact center software; (xi) we may be unable to achieve or sustain profitability; (xii) we may be unable to secure additional financing on favorable terms, or at all, to meet our future capital needs; and (xiii) the other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent quarterly report on Form 10-Q. Such forward looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.

About Five9

Five9 is a leading provider of cloud software for the enterprise contact center market, bringing the power of the cloud to thousands of customers and facilitating over three billion customer interactions annually. Since 2001, Five9 has led the cloud revolution in contact centers, helping organizations transition from legacy premise-based solutions to the cloud. Five9 provides businesses with cloud contact center software that it reliable, secure, compliant and scalable which is designed to create exceptional customer experiences, increase agent productivity and deliver tangible business results. For more information visit www.five9.com.

FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, 2016 December 31, 2015
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $57,333 $58,484
Accounts receivable, net 12,899 10,567
Prepaid expenses and other current assets 4,097 2,184
Total current assets 74,329 71,235
Property and equipment, net 13,690 13,225
Intangible assets, net 1,657 2,041
Goodwill 11,798 11,798
Other assets 1,225 934
Total assets $102,699 $99,233
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $3,609 $2,569
Accrued and other current liabilities 10,500 7,911
Accrued federal fees 5,873 5,684
Sales tax liability 1,307 1,262
Revolving line of credit 12,500
Notes payable 1,070 7,212
Capital leases 5,634 4,972
Deferred revenue 8,838 6,413
Total current liabilities 36,831 48,523
Revolving line of credit — less current portion 32,594
Sales tax liability — less current portion 1,591 1,915
Notes payable — less current portion 470 17,327
Capital leases — less current portion 4,902 4,606
Other long-term liabilities 532 582
Total liabilities 76,920 72,953
Stockholders’ equity:
Common stock 53 51
Additional paid-in capital 192,415 180,649
Accumulated deficit (166,689) (154,420)
Total stockholders’ equity 25,779 26,280
Total liabilities and stockholders’ equity $102,699 $99,233


FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
Revenue $40,982 $32,287 $117,883 $92,835
Cost of revenue 17,790 14,812 51,164 43,860
Gross profit 23,192 17,475 66,719 48,975
Operating expenses:
Research and development 6,041 5,473 17,642 17,079
Sales and marketing 12,925 10,797 38,268 31,322
General and administrative 6,143 6,087 18,561 19,389
Total operating expenses 25,109 22,357 74,471 67,790
Loss from operations (1,917) (4,882) (7,752) (18,815)
Other income (expense), net:
Interest expense (961) (1,235) (3,357) (3,529)
Extinguishment of debt (1,026) (1,026)
Interest income and other 12 119 (66) 72
Total other income (expense), net (1,975) (1,116) (4,449) (3,457)
Loss before income taxes (3,892) (5,998) (12,201) (22,272)
Provision for (benefit from) income taxes (2) 50 68 48
Net loss $(3,890) $(6,048) $(12,269) $(22,320)
Net loss per share:
Basic and diluted $(0.07) $(0.12) $(0.24) $(0.45)
Shares used in computing net loss per share:
Basic and diluted 52,708 50,369 52,078 49,931


FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended
September 30, 2016 September 30, 2015
Cash flows from operating activities:
Net loss $(12,269) $(22,320)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 6,302 5,525
Provision for doubtful accounts 58 157
Stock-based compensation 6,927 6,010
Loss on disposal of property and equipment 1 10
Loss on extinguishment of debt 1,026
Amortization of debt discount and issuance costs 221 260
Accretion of interest 11
Others (10) 40
Changes in operating assets and liabilities:
Accounts receivable (2,383) (1,149)
Prepaid expenses and other current assets (1,927) (957)
Other assets (25) (178)
Accounts payable 1,039 (1,329)
Accrued and other current liabilities 2,749 788
Accrued federal fees and sales tax liability (90) 161
Deferred revenue 2,449 192
Other liabilities (75) (83)
Net cash provided by (used in) operating activities 4,004 (12,873)
Cash flows from investing activities:
Purchases of property and equipment (973) (689)
(Increase) Decrease in restricted cash (60) 806
Purchase of short-term investments (20,000)
Proceeds from maturity of short-term investments 40,000
Net cash (used in) provided by investing activities (1,033) 20,117
Cash flows from financing activities:
Proceeds from exercise of common stock options 4,050 419
Proceeds from sale of common stock under ESPP 792 680
Repayments of notes payable (23,866) (2,622)
Proceeds from revolving line of credit 32,594
Payment of prepayment penalty and related fees (368)
Payments for debt issuance costs (206)
Payments of capital leases (4,618) (4,509)
Repayments on revolving line of credit (12,500)
Net cash used in financing activities (4,122) (6,032)
Net (decrease) increase in cash and cash equivalents (1,151) 1,212
Cash and cash equivalents:
Beginning of period 58,484 58,289
End of period $57,333 $59,501


FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(Unaudited, in thousands, except percentages)
Three Months Ended Nine Months Ended
September 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
GAAP gross profit $23,192 $17,475 $66,719 $48,975
GAAP gross margin 56.6% 54.1% 56.6% 52.8%
Non-GAAP adjustments:
Depreciation 1,580 1,382 4,700 4,203
Intangibles amortization 88 88 264 264
Stock-based compensation 357 233 951 639
Adjusted gross profit $25,217 $19,178 $72,634 $54,081
Adjusted gross margin 61.5% 59.4% 61.6% 58.3%


RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
GAAP net loss $(3,890) $(6,048) $(12,269) $(22,320)
Non-GAAP adjustments:
Depreciation and amortization 2,140 1,840 6,302 5,525
Stock-based compensation 2,519 1,945 6,927 6,010
Interest expense 961 1,235 3,357 3,529
Extinguishment of debt 1,026 1,026
Interest income and other (12) (119) 66 (72)
Provision for (benefit from) income taxes (2) 50 68 48
Out of period adjustment for sales tax liability (G&A) 765
Adjusted EBITDA $2,742 $(1,097) $5,477 $(6,515)


FIVE9, INC.
RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING INCOME (LOSS)
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
Loss from operations $(1,917) $(4,882) $(7,752) $(18,815)
Non-GAAP adjustments:
Stock-based compensation 2,519 1,945 6,927 6,010
Intangibles amortization 129 128 384 $384
Out of period adjustment for sales tax liability (G&A) 765
Non-GAAP operating income (loss) $731 $(2,809) $(441) $(11,656)


RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
GAAP net loss $(3,890) $(6,048) $(12,269) $(22,320)
Non-GAAP adjustments:
Stock-based compensation 2,519 1,945 6,927 6,010
Intangibles amortization 129 128 384 384
Amortization of debt discount and issuance costs 43 89 221 260
Extinguishment of debt 1,026 1,026
Out of period adjustment for sales tax liability (G&A) 765
Non-GAAP net loss $(173) $(3,886) $(3,711) $(14,901)
GAAP net loss per share:
Basic and diluted $(0.07) $(0.12) $(0.24) $(0.45)
Non-GAAP net loss per share:
Basic and diluted $ $(0.08) $(0.07) $(0.30)
Shares used in computing GAAP and non-GAAP net loss per share:
Basic and diluted 52,708 50,369 52,078 49,931


SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(Unaudited, in thousands)
Three Months Ended
September 30, 2016 September 30, 2015
Stock-Based
Compensation
Depreciation Intangibles
Amortization
Stock-Based
Compensation
Depreciation Intangibles
Amortization
Cost of revenue $357 $1,580 $88 $233 $1,382 $88
Research and development 547 204 475 126
Sales and marketing 626 27 29 448 23 29
General and administrative 989 200 12 789 181 11
Total $2,519 $2,011 $129 $1,945 $1,712 $128
Nine Months Ended
September 30, 2016 September 30, 2015
Stock-Based
Compensation
Depreciation Intangibles
Amortization
Stock-Based
Compensation
Depreciation Intangibles
Amortization
Cost of revenue $951 $4,700 $264 $639 $4,203 $264
Research and development 1,510 513 1,389 315
Sales and marketing 1,604 78 85 1,430 67 85
General and administrative 2,862 627 35 2,552 556 35
Total $6,927 $5,918 $384 $6,010 $5,141 $384


FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS – GUIDANCE
(Unaudited, in thousands, except per share data)
Three Months Ending Year Ending
December 31, 2016 December 31, 2016
Low High Low High
GAAP net loss $(3,520) $(4,520) $(15,789) $(16,789)
Non-GAAP adjustments:
Stock-based compensation 2,579 2,579 9,506 9,506
Intangibles amortization 116 116 500 500
Amortization of debt discount and issuance costs 25 25 247 247
Extinguishment of debt $ $ $1,026 $1,026
Non-GAAP net loss $(800) $(1,800) $(4,510) $(5,510)
GAAP net loss per share, basic and diluted $(0.07) $(0.09) $(0.30) $(0.32)
Non-GAAP net loss per share, basic and diluted $(0.02) $(0.03) $(0.09) $(0.11)
Shares used in computing GAAP and non-GAAP net loss per share:
Basic and diluted 53,000 53,000 52,300 52,300


Investor Relations Contact: Five9, Inc. Barry Zwarenstein Chief Financial Officer 925-201-2000 ext. 5959 IR@five9.com The Blueshirt Group for Five9, Inc. Lisa Laukkanen 415-217-4967 Lisa@blueshirtgroup.com Tony Righetti 415-489-2186 Tony@blueshirtgroup.com

Source:Five9, Inc.