Five9
May 3, 2017

Five9 Reports First Quarter Revenue Growth of 24%

40% Growth in LTM Enterprise Subscription Revenue

Positive Operating Cash Flow for Fifth Consecutive Quarter

Raises 2017 Guidance for Revenue and Bottom Line

SAN RAMON, Calif. , May 03, 2017 (GLOBE NEWSWIRE) -- Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud software for the enterprise contact center market, today reported results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Results

"Our first quarter revenue exceeded expectations, growing 24% to a record $47 million. This revenue growth continues to be driven by our Enterprise business, which delivered 40% growth in LTM Enterprise subscription revenue.  I am extremely pleased that we had our second best quarter ever for Enterprise bookings in the first quarter and our sales pipeline reached another all-time high.  Furthermore, we continued to deliver leverage in our business model even as we accelerated hiring in a number of areas, most notably in our professional services capacity, in response to the ongoing momentum in our Enterprise bookings.  In light of our first quarter results and the strength of our pipeline, we are raising our guidance for 2017."

- Mike Burkland, President and CEO, Five9

Business Outlook

For the full year 2017, Five9 expects to report:

For the second quarter of 2017, Five9 expects to report:

Conference Call Details

Five9 will discuss its first quarter 2017 results today, May 3, 2017, via teleconference at 4:30 p.m. Eastern Time.  To access the call (ID 9112490), please dial: 888-395-3186 or 719-325-2295.  An audio replay of the call will be available through May 17, 2017 by dialing 888-203-1112 or 719-457-0820 and entering access code 9112490.  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 or removing the following items to net loss: depreciation, amortization, interest expense, income tax expense, stock-based compensation expense, non-recurring litigation settlement costs, 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 non-recurring litigation settlement costs.  We calculate non-GAAP net loss as net loss excluding stock-based compensation, amortization of acquisition intangibles, amortization of debt discount and issuance costs, non-recurring litigation settlement costs, and non-cash adjustments on investment. 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 factors that do not directly affect what we consider to be our core operating performance, as well as unusual events.  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, enterprise sales momentum and sales pipeline, and the second quarter 2017 and full year 2017 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) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed;  (iii) our recent rapid growth may not be indicative of our future growth, and if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately expand our direct sales force will impede our growth;  (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, security breaches, or other issues, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages;  (vi) the markets in which we participate are highly competitive, and if we do not compete effectively, our operating results could be harmed;  (vii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base;  (viii) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results;  (ix) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern;  (x) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could subject us to, among other things, claims for credits or damages;  (xi) we have a history of losses and we may be unable to achieve or sustain profitability;  (xii) we may not be able 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 annual report on Form 10-K. 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 more than 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 reliable, secure, compliant, and scalable cloud contact center software 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)
 
  March 31, 2017 December 31, 2016
  (Unaudited)  
ASSETS    
Current assets:            
Cash and cash equivalents $56,452  $58,122 
Accounts receivable, net 15,453  13,881 
Prepaid expenses and other current assets 5,117  3,008 
Total current assets 77,022  75,011 
Property and equipment, net 15,830  14,688 
Intangible assets, net 1,422  1,539 
Goodwill 11,798  11,798 
Other assets 2,276  2,203 
Total assets $108,348  $105,239 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $3,394   $3,366 
Accrued and other current liabilities 13,028  9,604 
Accrued federal fees 3,018  2,742 
Sales tax liability 1,138  1,347 
Notes payable  643  742 
Capital leases 6,009  6,230 
Deferred revenue  10,920  10,047 
Total current liabilities 38,150  34,078 
Revolving line of credit 32,594  32,594 
Sales tax liability — less current portion 1,399  1,476  
Notes payable — less current portion 162  318 
Capital leases — less current portion 6,468  5,915 
Other long-term liabilities 590  530 
Total liabilities 79,363   74,911 
Stockholders' equity:    
Common stock 54  53 
Additional paid-in capital 200,637  196,555 
Accumulated deficit (171,706) (166,280)
Total stockholders' equity 28,985  30,328 
Total liabilities and stockholders' equity $108,348  $105,239 


FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
 
  Three Months Ended
  March 31, 2017 March 31, 2016
                         
Revenue $47,014  $38,015 
Cost of revenue 19,971  16,610 
Gross profit 27,043  21,405 
Operating expenses:    
Research and development 6,847  5,802 
Sales and marketing 15,778  12,706 
General and administrative 8,860  6,536 
Total operating expenses 31,485  25,044  
Loss from operations (4,442) (3,639)
Other income (expense), net:    
Interest expense  (882) (1,199)
Interest income and other 118  (45)
Total other income (expense), net (764) (1,244)
Loss before income taxes (5,206) (4,883)
Provision for income taxes 49  28 
Net loss $(5,255) $(4,911)
Net loss per share:    
Basic and diluted $(0.10) $(0.10)
Shares used in computing net loss per share:    
Basic and diluted 53,688  51,377 


FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
  Three Months Ended
   March 31, 2017 March 31, 2016
Cash flows from operating activities:    
Net loss $(5,255) $(4,911)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
    
Depreciation and amortization     2,095  2,103 
Provision for doubtful accounts 24  25 
Stock-based compensation 3,129  1,994 
Loss on disposal of property and equipment 3  1 
Non-cash adjustment on investment (103)  
Amortization of debt discount and issuance costs 20  91 
Accretion of interest 5   
Others (11) (4)
Changes in operating assets and liabilities:    
Accounts receivable (1,595) (1,990)
Prepaid expenses and other current assets (2,129) (1,715)
Other assets 30  (30)
Accounts payable (95) 825 
Accrued and other current liabilities 3,119  1,935 
Accrued federal fees and sales tax liability (11) 93 
Deferred revenue 909  1,659 
Other liabilities 24  (24)
Net cash provided by operating activities 159  52 
Cash flows from investing activities:    
Purchases of property and equipment (514) (252)
Net cash used in investing activities (514) (252)
Cash flows from financing activities:     
Proceeds from exercise of common stock options 793  2,397 
Repayments of notes payable (258) (1,608)
Payments of capital leases (1,850) (1,306)
Net cash used in financing activities (1,315)  (517)
Net decrease in cash and cash equivalents (1,670) (717)
Cash and cash equivalents:    
Beginning of period 58,122  58,484 
End of period $56,452  $57,767 


FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(Unaudited, in thousands, except percentages)
 
           Three Months Ended
       March 31, 2017 March 31, 2016
          
GAAP gross profit      $27,043  $21,405 
GAAP gross margin      57.5% 56.3%
Non-GAAP adjustments:                 
Depreciation      1,488  1,592 
Intangibles amortization      88  88 
Stock-based compensation      434  265 
Adjusted gross profit      $29,053   $23,350 
Adjusted gross margin      61.8% 61.4%


RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(Unaudited, in thousands)
 
  Three Months Ended
  March 31, 2017 March 31, 2016
      
GAAP net loss $(5,255) $(4,911)
Non-GAAP adjustments:    
Depreciation and amortization 2,095  2,103 
Stock-based compensation 3,129  1,994 
Interest expense 882  1,199 
Interest income and other (118) 45 
Legal settlement 1,700   
Legal and indemnification fees related to settlement 135   
Provision for income taxes 49  28 
Adjusted EBITDA $2,617  $458 


FIVE9, INC.
RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING INCOME (LOSS)
(Unaudited, in thousands)
 
  Three Months Ended
  March 31, 2017 March 31, 2016
     
Loss from operations  $(4,442) $(3,639)
Non-GAAP adjustments:    
Stock-based compensation 3,129  1,994 
Intangibles amortization 117  128 
Legal settlement 1,700   
Legal and indemnification fees related to settlement 135   
Non-GAAP operating income (loss) $639  $(1,517)


RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET LOSS
(Unaudited, in thousands, except per share data)
 
  Three Months Ended
  March 31, 2017  March 31, 2016
     
GAAP net loss $(5,255) $(4,911)
Non-GAAP adjustments:    
Stock-based compensation 3,129  1,994 
Intangibles amortization 117  128 
Legal settlement 1,700   
Legal and indemnification fees related to settlement 135   
Non-cash adjustment on investment (103)  
Amortization of debt discount and issuance costs 20  91 
Non-GAAP net loss $(257) $(2,698)
     
GAAP net loss per share:    
Basic and diluted $(0.10) $(0.10)
Non-GAAP net loss per share:    
Basic and diluted $  $(0.05)
Shares used in computing GAAP and non-GAAP net loss per share:    
Basic and diluted 53,688  51,377 


SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(Unaudited, in thousands)
 
  Three Months Ended
  March 31, 2017 March 31, 2016
  Stock-Based
Compensation
 Depreciation Intangibles
Amortization
 Stock-Based
Compensation
 Depreciation Intangibles
Amortization
             
Cost of revenue $434  $1,488  $88   $265  $1,592  $88 
Research and development 637  206    435  148    
Sales and marketing 928  1  29  434  25  28 
General and administrative 1,130  283    860  210  12 
Total  $3,129  $1,978  $117  $1,994  $1,975  $128 


FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS) - GUIDANCE
(Unaudited, in thousands, except per share data)
 
  Three Months Ending Year Ending
  June 30, 2017 December 31, 2017
  Low High Low High
         
GAAP net loss $(5,404) $(6,404) $(16,779) $(19,779)
Non-GAAP adjustments:        
Stock-based compensation 3,968  3,968  15,001  15,001 
Intangibles amortization 116  116  465  465 
Legal settlement     1,700  1,700 
Legal and indemnification fees related to settlement      135  135 
Non-cash adjustment on investment     (103) (103)
Amortization of debt discount and issuance costs 20  20  81  81 
Non-GAAP net income (loss) $(1,300) $(2,300) $500  $(2,500)
         
GAAP net loss per share:        
Basic and diluted $(0.10) $(0.12) $(0.31) $(0.37)
         
Non-GAAP net income (loss) per share:        
Basic $(0.02 ) $(0.04) $0.01  $(0.05)
Diluted $(0.02) $(0.04) $0.01  $(0.05)
         
Shares used in computing GAAP and non-GAAP net income (loss) per share:        
Basic 53,700  53,700  53,800  53,800 
Diluted 53,700  53,700  57,800  53,800 

 

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

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Source: Five9, Inc.

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