UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 21, 2024
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) | ||||||
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (925 ) 201-2000
Not Applicable
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
_______________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
| Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||
| Emerging Growth Company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 21, 2024, Five9, Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 31, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1 furnished herewith) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01 Other Events.
The Company’s Board of Directors has determined that the Company’s 2024 Annual Meeting of Stockholders (the “Annual Meeting”) will be held on May 14, 2024 virtually via the Internet beginning at 8:30 a.m. Pacific Daylight Time. Stockholders of record at the close of business on the record date, March 18, 2024, may vote at the Annual Meeting, including any adjournment or postponement thereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIVE9, INC. | ||||||||||||||||||||||||||
Date: February 21, 2024 | By: | /s/ Barry Zwarenstein | ||||||||||||||||||||||||
| Barry Zwarenstein | ||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||
Exhibit 99.1
Five9 Reports Full Year 2023 Revenue Growth of 17% to a Record $910 Million
2023 Enterprise Subscription Revenue Growth of 25%
Q4 Revenue Growth of 15% to $239 Million
Q4 Record GAAP Operating Cash Flow of $37 Million
SAN RAMON, Calif. - February 21, 2024 - Five9, Inc. (NASDAQ:FIVN), the Intelligent CX Platform provider, today reported results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Results
•Revenue for the fourth quarter of 2023 increased 15% to a record $239.1 million, compared to $208.3 million for the fourth quarter of 2022.
•GAAP gross margin was 52.9% for the fourth quarter of 2023, compared to 53.8% for the fourth quarter of 2022.
•Adjusted gross margin was 61.3% for the fourth quarter of 2023, compared to 62.3% for the fourth quarter of 2022.
•GAAP net loss for the fourth quarter of 2023 was $(12.4) million, or (5.2)% of revenue and $(0.17) per basic share, compared to GAAP net loss of $(13.7) million, or (6.6)% of revenue and $(0.19) per basic share, for the fourth quarter of 2022.
•Non-GAAP net income for the fourth quarter of 2023 was $45.1 million, or 18.9% of revenue and $0.61 per diluted share, compared to non-GAAP net income of $39.0 million, or 18.7% of revenue and $0.54 per diluted share, for the fourth quarter of 2022.
•Adjusted EBITDA for the fourth quarter of 2023 was $48.3 million, or 20.2% of revenue, compared to $46.2 million, or 22.2% of revenue, for the fourth quarter of 2022.
•GAAP operating cash flow for the fourth quarter of 2023 was $36.5 million, compared to GAAP operating cash flow of $32.7 million for the fourth quarter of 2022.
2023 Financial Results
•Total revenue for 2023 increased 17% to a record $910.5 million, compared to $778.8 million in 2023.
•GAAP gross margin was 52.5% for 2023, compared to 52.8% in 2022.
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•Adjusted gross margin was 61.0% for 2023, compared to 61.3% in 2022.
•GAAP net loss for 2023 was $(81.8) million, or (9.0)% of revenue and $(1.13) per basic share, compared to GAAP net loss of $(94.7) million, or (12.2)% of revenue and $(1.35) per basic share, in 2022.
•Non-GAAP net income for 2023 was $149.9 million, or 16.5% of revenue and $2.05 per diluted share, compared to non-GAAP net income of $106.7 million, or 13.7% of revenue and $1.50 per diluted share, in 2022.
•Adjusted EBITDA for 2023 was $166.3 million, or 18.3% of revenue, compared to $140.4 million, or 18.0% of revenue, in 2022.
•GAAP operating cash flow for 2023 was $128.8 million, compared to GAAP operating cash flow of $88.9 million, in 2022.
“We are pleased to report strong revenue growth of 17% for full year 2023. This growth continues to be driven by our Enterprise business where subscription revenue grew 25% in 2023. In the fourth quarter, revenue grew 15% year-over-year, and we achieved adjusted EBITDA margin of 20%, which drove a fourth quarter record for GAAP operating cash flow. We continue to strengthen our AI leadership in CX, gaining meaningful traction with our offerings and significantly enhancing our platform throughout 2023. In addition, we are experiencing strong momentum up-market, evidenced by our fourth quarter record in Enterprise bookings, an acceleration in top-of-funnel growth, and pipeline reaching another all-time high. The market remains massive and underpenetrated, and we believe we are well positioned to capitalize on this durable, multi-year opportunity as we focus on further strengthening our platform, marching up-market and expanding internationally.”
- Mike Burkland, Chairman and CEO, Five9
Business Outlook
Five9 provides guidance based on current market conditions and expectations. Five9 emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with ongoing macroeconomic conditions.
•For the full year 2024, Five9 expects to report:
•Revenue in the range of $1.053 to $1.057 billion.
•GAAP net loss per share in the range of $(0.61) to $(0.53), assuming basic shares outstanding of approximately 74.6 million.
•Non-GAAP net income per share in the range of $2.14 to $2.18, assuming diluted shares outstanding of approximately 75.9 million.
•For the first quarter of 2024, Five9 expects to report:
•Revenue in the range of $239.0 to $240.0 million.
•GAAP net loss per share in the range of $(0.34) to $(0.28), assuming basic shares outstanding of approximately 73.6 million.
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•Non-GAAP net income per share in the range of $0.37 to $0.39, assuming diluted shares outstanding of approximately 74.7 million.
With respect to Five9’s guidance as provided above, please refer to the “Reconciliation of GAAP Net Loss to Non-GAAP net income – Guidance” table for more details, including important assumptions upon which such guidance is based.
Conference Call Details
Five9 will discuss its fourth quarter 2023 results today, February 21, 2024, via Zoom webinar at 4:30 p.m. Eastern Time. To access the webinar, please register by clicking here. 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 website, prior to the conference call.
A live webcast and a replay will be available on the Investor Relations section of the Company’s web-site 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 and adjusted gross margin by adding back the following items to gross profit: depreciation, intangibles amortization, stock-based compensation, exit costs related to the closure and relocation of our Russian operations, acquisition and related transaction and one-time integration costs, lease amortization for finance leases and refund for prior year overpayment of USF fees. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net loss: depreciation and amortization, stock-based compensation, interest expense, interest (income) and other, exit costs related to closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, contingent consideration expense, refund for prior year overpayment of USF fees, lease amortization for finance leases and provision for income taxes. We calculate non-GAAP operating income by adding back or removing the following items to or from GAAP loss from operations: stock-based compensation, intangibles amortization, exit costs related to the closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, contingent consideration expense and refund for prior year overpayment of USF fees. We calculate non-GAAP net income by adding back or removing the following items to or from GAAP net loss: stock-based compensation, intangibles amortization, amortization of discount and issuance costs on convertible senior notes, exit costs related to the closure and relocation of our Russian operations, acquisition and related transaction costs and one-time integration costs, contingent consideration expense, refund for prior year overpayment of USF fees and tax provision associated with acquired companies. For the periods presented, these adjustments from GAAP net loss to non-GAAP net income do not include any presentation of the net tax effect of such adjustments given our significant net operating loss carryforwards. 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. The Company 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
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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 in this release.
Forward-Looking Statements
This news release contains certain forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995, including the statements in the quote from our Chairman and Chief Executive Officer, including statements regarding Five9’s enterprise growth market opportunity and size and ability to capitalize on that opportunity, up-market momentum and outlook, market position, AI and automation initiatives, results and outlook, platform strengthening initiatives, international expansion, and the first quarter and full year 2024 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) the impact of adverse economic conditions, including the impact of macroeconomic deterioration, including continued inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of the conflict in Israel, and other factors, that may continue to harm our business; (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) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, or fail to grow subscriptions at the rate they have in the past or that we might expect, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (iv) 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; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, 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) we have established, and are continuing to increase, our network of technology solution distributors and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (vii) our quarterly and annual results may fluctuate significantly, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (viii) our historical growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (ix) failure to adequately retain and expand our sales force will impede our growth; (x) further development of our AI solutions may not be successful and may result in reputational harm and our future operating results could be materially harmed; (xi) the AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks; (xii) the use of AI by our workforce may present risks to our business; (xiii) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new cloud contact center solutions, which we refer to as our solution, in order to maintain and grow our business;
(xiv) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business; (xv) the markets in which we participate involve a high number of competitors that is continuing to increase, and if we do not compete effectively, our operating results could be harmed; (xvi) we continue to expand our international operations, which exposes us to significant macroeconomic and
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other risks; (xvii) security breaches and improper access to, use of, or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation, our business or financial results; (xviii) we may acquire other companies, or technologies, or be the target of strategic transactions, or be impacted by transactions by other companies, which could divert our management’s attention, result in additional dilution to our stockholders or use a significant amount of our cash resources and otherwise disrupt our operations and harm our operating results; (xix) 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; (xx) 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 cause us to lose clients and subject us to claims for credits or damages, among other things; (xxi) we have a history of losses and we may be unable to achieve or sustain profitability; (xxii) our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control; (xxiii) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xxiv) failure to comply with laws and regulations could harm our business and our reputation; (xxv) we may not have sufficient cash to service our convertible senior notes and repay such notes, if required, and other risks attendant to our convertible senior notes and increased debt levels; and (xxvi) 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 and quarterly reports 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
The Five9 Intelligent CX Platform provides a comprehensive suite of solutions for orchestrating fluid customer experiences. Our cloud-native, multi-tenant, scalable, reliable, and secure platform includes contact center; omni-channel engagement; Workforce Engagement Management; extensibility through more than 1,000 partners; and innovative, practical AI, automation and journey analytics that are embedded as part of the platform. Five9 brings the power of people, technology, and partners to more than 3,000 organizations worldwide. For more information, visit www.five9.com.
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FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2023 | December 31, 2022 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 143,201 | $ | 180,520 | ||||||||||
| Marketable investments | 587,096 | 433,743 | ||||||||||||
| Accounts receivable, net | 97,424 | 87,494 | ||||||||||||
| Prepaid expenses and other current assets | 34,622 | 29,711 | ||||||||||||
| Deferred contract acquisition costs, net | 61,711 | 47,242 | ||||||||||||
| Total current assets | 924,054 | 778,710 | ||||||||||||
| Property and equipment, net | 108,572 | 101,221 | ||||||||||||
| Operating lease right-of-use assets | 38,873 | 44,120 | ||||||||||||
| Finance lease right-of-use assets | 4,564 | — | ||||||||||||
| Intangible assets, net | 38,323 | 28,192 | ||||||||||||
| Goodwill | 227,412 | 165,420 | ||||||||||||
| Marketable investments | — | 885 | ||||||||||||
| Other assets | 16,199 | 11,057 | ||||||||||||
| Deferred contract acquisition costs, net — less current portion | 136,571 | 114,880 | ||||||||||||
| Total assets | $ | 1,494,568 | $ | 1,244,485 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 24,399 | $ | 23,629 | ||||||||||
| Accrued and other current liabilities | 62,131 | 58,536 | ||||||||||||
| Operating lease liabilities | 10,731 | 10,626 | ||||||||||||
| Finance lease liabilities | 1,767 | — | ||||||||||||
| Deferred revenue | 68,187 | 57,816 | ||||||||||||
| Convertible senior notes | — | 169 | ||||||||||||
| Total current liabilities | 167,215 | 150,776 | ||||||||||||
| Convertible senior notes - less current portion | 742,125 | 738,376 | ||||||||||||
| Operating lease liabilities — less current portion | 36,378 | 41,389 | ||||||||||||
| Finance lease liabilities — less current portion | 2,877 | — | ||||||||||||
| Other long-term liabilities | 7,888 | 3,979 | ||||||||||||
| Total liabilities | 956,483 | 934,520 | ||||||||||||
| Stockholders’ equity: | ||||||||||||||
| Common stock | 73 | 71 | ||||||||||||
| Additional paid-in capital | 942,280 | 635,668 | ||||||||||||
| Accumulated other comprehensive income (loss) | 582 | (2,688) | ||||||||||||
| Accumulated deficit | (404,850) | (323,086) | ||||||||||||
| Total stockholders’ equity | 538,085 | 309,965 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,494,568 | $ | 1,244,485 | ||||||||||
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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Revenue | $ | 239,062 | $ | 208,345 | $ | 910,488 | $ | 778,846 | ||||||||||||||||||
| Cost of revenue | 112,493 | 96,294 | 432,690 | 367,501 | ||||||||||||||||||||||
| Gross profit | 126,569 | 112,051 | 477,798 | 411,345 | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research and development | 38,873 | 36,865 | 156,582 | 141,794 | ||||||||||||||||||||||
| Sales and marketing | 72,956 | 65,928 | 296,713 | 261,990 | ||||||||||||||||||||||
| General and administrative | 33,338 | 22,509 | 123,079 | 95,143 | ||||||||||||||||||||||
| Total operating expenses | 145,167 | 125,302 | 576,374 | 498,927 | ||||||||||||||||||||||
| Loss from operations | (18,598) | (13,251) | (98,576) | (87,582) | ||||||||||||||||||||||
| Other income (expense), net: | ||||||||||||||||||||||||||
| Interest expense | (1,963) | (1,887) | (7,646) | (7,493) | ||||||||||||||||||||||
| Interest income and other | 8,322 | 2,706 | 26,799 | 4,813 | ||||||||||||||||||||||
| Total other income (expense), net | 6,359 | 819 | 19,153 | (2,680) | ||||||||||||||||||||||
| Loss before income taxes | (12,239) | (12,432) | (79,423) | (90,262) | ||||||||||||||||||||||
| Provision for income taxes | 119 | 1,221 | 2,341 | 4,388 | ||||||||||||||||||||||
| Net loss | $ | (12,358) | $ | (13,653) | $ | (81,764) | $ | (94,650) | ||||||||||||||||||
| Net loss per share: | ||||||||||||||||||||||||||
| Basic and diluted | $ | (0.17) | $ | (0.19) | $ | (1.13) | $ | (1.35) | ||||||||||||||||||
| Shares used in computing net loss per share: | ||||||||||||||||||||||||||
| Basic and diluted | 72,926 | 70,704 | 72,048 | 69,920 | ||||||||||||||||||||||
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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Twelve Months Ended | ||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | $ | (81,764) | $ | (94,650) | ||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 48,515 | 44,671 | ||||||||||||
| Amortization of operating lease right-of-use assets | 12,642 | 10,377 | ||||||||||||
| Amortization of deferred contract acquisition costs | 55,384 | 41,034 | ||||||||||||
| (Accretion of discount) on marketable investments | (11,351) | (90) | ||||||||||||
| Provision for credit losses | 989 | 1,105 | ||||||||||||
| Stock-based compensation | 206,292 | 172,507 | ||||||||||||
| Amortization of discount and issuance costs on convertible senior notes | 3,749 | 3,743 | ||||||||||||
| Deferred taxes | 53 | 3,088 | ||||||||||||
| Change in fair of value of contingent consideration | — | 260 | ||||||||||||
| Payment of contingent consideration liability in excess of acquisition-date fair value | — | (5,900) | ||||||||||||
| Other | 807 | 188 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | (9,844) | (4,899) | ||||||||||||
| Prepaid expenses and other current assets | (3,532) | 661 | ||||||||||||
| Deferred contract acquisition costs | (91,544) | (85,197) | ||||||||||||
| Other assets | (3,988) | (319) | ||||||||||||
| Accounts payable | 2,932 | 845 | ||||||||||||
| Accrued and other current liabilities | (9,274) | (7,878) | ||||||||||||
| Deferred revenue | 4,958 | 13,176 | ||||||||||||
| Other liabilities | 3,814 | (3,857) | ||||||||||||
| Net cash provided by operating activities | 128,838 | 88,865 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Purchases of marketable investments | (795,002) | (435,768) | ||||||||||||
| Proceeds from sales of marketable investments | 1,211 | 600 | ||||||||||||
| Proceeds from maturities of marketable investments | 655,588 | 524,568 | ||||||||||||
| Purchases of property and equipment | (31,234) | (52,272) | ||||||||||||
| Capitalization of software development costs | (9,537) | (3,899) | ||||||||||||
| Payments of initial direct costs | — | (266) | ||||||||||||
| Cash paid for an equity investment in a privately-held company | — | (2,000) | ||||||||||||
| Cash paid to acquire Aceyus | (80,588) | — | ||||||||||||
| Net cash (used in) provided by investing activities | (259,562) | 30,963 | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Repurchase of a portion of 2023 convertible senior notes, net of costs | — | (34,067) | ||||||||||||
| Repayment of outstanding 2023 convertible senior notes at maturity | (169) | — | ||||||||||||
| Cash received from the settlement at maturity of the outstanding capped calls associated with the 2023 convertible senior notes | 74,453 | — | ||||||||||||
| Proceeds from exercise of common stock options | 9,127 | 8,522 | ||||||||||||
| Proceeds from sale of common stock under ESPP | 15,927 | 13,413 | ||||||||||||
| Payment of employee taxes related to vested RSUs | (3,270) | — | ||||||||||||
| Payment of contingent consideration liability up to acquisition-date fair value | — | (18,100) | ||||||||||||
| Payment of holdback related to acquisition | (500) | — | ||||||||||||
| Payments of finance leases | (989) | — | ||||||||||||
| Net cash provided by (used in) financing activities | 94,579 | (30,232) | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | (36,145) | 89,596 | ||||||||||||
| Cash, cash equivalents and restricted cash: | ||||||||||||||
| Beginning of period | 180,987 | 91,391 | ||||||||||||
| End of period | $ | 144,842 | $ | 180,987 | ||||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except percentages)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| GAAP gross profit | $ | 126,569 | $ | 112,051 | $ | 477,798 | $ | 411,345 | ||||||||||||||||||
| GAAP gross margin | 52.9 | % | 53.8 | % | 52.5 | % | 52.8 | % | ||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Depreciation | 7,162 | 5,913 | 26,540 | 23,250 | ||||||||||||||||||||||
| Intangibles amortization | 3,146 | 2,890 | 12,019 | 11,705 | ||||||||||||||||||||||
| Stock-based compensation | 9,182 | 8,638 | 38,259 | 33,297 | ||||||||||||||||||||||
| Exit costs related to closure and relocation of Russian operations | 12 | 219 | 105 | 698 | ||||||||||||||||||||||
| Acquisition and related transaction costs and one-time integration costs | — | 86 | 34 | 401 | ||||||||||||||||||||||
| Lease amortization for finance leases | 449 | — | 941 | — | ||||||||||||||||||||||
| Refund for prior year overpayment of USF fees | — | — | — | (3,511) | ||||||||||||||||||||||
| Adjusted gross profit | $ | 146,520 | $ | 129,797 | $ | 555,696 | $ | 477,185 | ||||||||||||||||||
| Adjusted gross margin | 61.3 | % | 62.3 | % | 61.0 | % | 61.3 | % | ||||||||||||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(In thousands, except percentages)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| GAAP net loss | $ | (12,358) | $ | (13,653) | $ | (81,764) | $ | (94,650) | ||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Depreciation and amortization | 12,962 | 11,021 | 48,515 | 44,671 | ||||||||||||||||||||||
| Stock-based compensation | 49,571 | 43,824 | 206,292 | 172,507 | ||||||||||||||||||||||
| Interest expense | 1,963 | 1,887 | 7,646 | 7,493 | ||||||||||||||||||||||
| Interest (income) and other | (8,322) | (2,706) | (26,799) | (4,813) | ||||||||||||||||||||||
Exit costs related to closure and relocation of Russian operations(1) | 243 | 2,975 | 2,313 | 7,190 | ||||||||||||||||||||||
| Acquisition related transaction costs and one-time integration costs | 3,670 | 1,605 | 6,780 | 6,901 | ||||||||||||||||||||||
| Contingent consideration expense | — | — | — | 260 | ||||||||||||||||||||||
| Refund for prior year overpayment of USF fees | — | — | — | (3,511) | ||||||||||||||||||||||
| Lease amortization for finance leases | 449 | — | 941 | — | ||||||||||||||||||||||
| Provision for income taxes | 119 | 1,221 | 2,341 | 4,388 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 48,297 | $ | 46,174 | $ | 166,265 | $ | 140,436 | ||||||||||||||||||
| Adjusted EBITDA as % of revenue | 20.2 | % | 22.2 | % | 18.3 | % | 18.0 | % | ||||||||||||||||||
(1) Exit costs related to the closure and relocation of our Russian operations were $2.8 million during the year ended December 31, 2023. The $2.3 million adjustment presented above was net of $0.5 million included in “Interest (income) and other.” Exit costs related to the closure and relocation of our Russian operations were $7.9 million during the year ended December 31, 2022. The $7.2 million adjustment presented above was net of $0.8 million included in “Depreciation and amortization” and $(0.1) million included in “Interest (income) and other.”
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FIVE9, INC.
RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Loss from operations | $ | (18,598) | $ | (13,251) | $ | (98,576) | $ | (87,582) | ||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Stock-based compensation | 49,571 | 43,824 | 206,292 | 172,507 | ||||||||||||||||||||||
| Intangibles amortization | 3,146 | 2,890 | 12,019 | 11,705 | ||||||||||||||||||||||
| Exit costs related to closure and relocation of Russian operations | 243 | 2,975 | 2,313 | 7,964 | ||||||||||||||||||||||
| Acquisition and related transaction costs and one-time integration costs | 3,670 | 1,605 | 6,780 | 6,901 | ||||||||||||||||||||||
| Contingent consideration expense | — | — | — | 260 | ||||||||||||||||||||||
| Refund for prior year overpayment of USF fees | — | — | — | (3,511) | ||||||||||||||||||||||
| Non-GAAP operating income | $ | 38,032 | $ | 38,043 | $ | 128,828 | $ | 108,244 | ||||||||||||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| GAAP net loss | $ | (12,358) | $ | (13,653) | $ | (81,764) | $ | (94,650) | ||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Stock-based compensation | 49,571 | 43,824 | 206,292 | 172,507 | ||||||||||||||||||||||
| Intangibles amortization | 3,146 | 2,890 | 12,019 | 11,705 | ||||||||||||||||||||||
| Amortization of discount and issuance costs on convertible senior notes | 956 | 947 | 3,749 | 3,743 | ||||||||||||||||||||||
| Exit costs related to closure and relocation of Russian operations | 91 | 3,344 | 2,796 | 7,932 | ||||||||||||||||||||||
| Acquisition and related transaction costs and one-time integration costs | 3,670 | 1,605 | 6,780 | 6,901 | ||||||||||||||||||||||
| Contingent consideration expense | — | — | — | 260 | ||||||||||||||||||||||
| Refund for prior year overpayment of USF fees | — | — | — | (3,511) | ||||||||||||||||||||||
| Tax provision associated with acquired companies | — | — | — | 1,830 | ||||||||||||||||||||||
Income tax expense effects (1) | — | — | — | — | ||||||||||||||||||||||
| Non-GAAP net income | $ | 45,076 | $ | 38,957 | $ | 149,872 | $ | 106,717 | ||||||||||||||||||
| GAAP net loss per share: | ||||||||||||||||||||||||||
| Basic and diluted | $ | (0.17) | $ | (0.19) | $ | (1.13) | $ | (1.35) | ||||||||||||||||||
| Non-GAAP net income per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.62 | $ | 0.55 | $ | 2.08 | $ | 1.53 | ||||||||||||||||||
| Diluted | $ | 0.61 | $ | 0.54 | $ | 2.05 | $ | 1.50 | ||||||||||||||||||
| Shares used in computing GAAP net loss per share: | ||||||||||||||||||||||||||
| Basic and diluted | 72,926 | 70,704 | 72,048 | 69,920 | ||||||||||||||||||||||
| Shares used in computing non-GAAP net income per share: | ||||||||||||||||||||||||||
| Basic | 72,926 | 70,704 | 72,048 | 69,920 | ||||||||||||||||||||||
| Diluted | 73,785 | 71,537 | 73,011 | 71,229 | ||||||||||||||||||||||
(1)Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.
12
FIVE9, INC.
SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 9,182 | $ | 7,162 | $ | 3,146 | $ | 8,638 | $ | 5,913 | $ | 2,890 | ||||||||||||||||||||||||||
| Research and development | 12,055 | 1,012 | — | 11,799 | 768 | — | ||||||||||||||||||||||||||||||||
| Sales and marketing | 15,389 | 27 | — | 15,152 | 1 | — | ||||||||||||||||||||||||||||||||
| General and administrative | 12,945 | 1,615 | — | 8,235 | 1,449 | — | ||||||||||||||||||||||||||||||||
| Total | $ | 49,571 | $ | 9,816 | $ | 3,146 | $ | 43,824 | $ | 8,131 | $ | 2,890 | ||||||||||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 38,259 | $ | 26,540 | $ | 12,019 | $ | 33,297 | $ | 23,250 | $ | 11,705 | ||||||||||||||||||||||||||
| Research and development | 50,430 | 3,583 | — | 44,367 | 3,164 | — | ||||||||||||||||||||||||||||||||
| Sales and marketing | 66,229 | 65 | — | 59,300 | 4 | — | ||||||||||||||||||||||||||||||||
| General and administrative | 51,374 | 6,308 | — | 35,543 | 6,548 | — | ||||||||||||||||||||||||||||||||
| Total | $ | 206,292 | $ | 36,496 | $ | 12,019 | $ | 172,507 | $ | 32,966 | $ | 11,705 | ||||||||||||||||||||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME – GUIDANCE(1)
(In thousands, except per share data)
(Unaudited)
| Three Months Ending | Year Ending | |||||||||||||||||||||||||
| March 31, 2024 | December 31, 2024 | |||||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||||
| GAAP net loss | $ | (25,349) | $ | (20,855) | $ | (45,238) | $ | (39,202) | ||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
Stock-based compensation(2) | 46,249 | 44,249 | 184,415 | 182,415 | ||||||||||||||||||||||
| Intangibles amortization | 2,643 | 2,643 | 10,570 | 10,570 | ||||||||||||||||||||||
| Amortization of discount and issuance costs on convertible senior notes | 938 | 938 | 3,808 | 3,808 | ||||||||||||||||||||||
Acquisition and related transaction costs and one-time integration costs(3) | 3,159 | 2,159 | 8,817 | 7,817 | ||||||||||||||||||||||
Income tax expense effects(4) | — | — | — | — | ||||||||||||||||||||||
| Non-GAAP net income | $ | 27,640 | $ | 29,134 | $ | 162,372 | $ | 165,408 | ||||||||||||||||||
| GAAP net loss per share, basic and diluted | $ | (0.34) | $ | (0.28) | $ | (0.61) | $ | (0.53) | ||||||||||||||||||
| Non-GAAP net income per share: | ||||||||||||||||||||||||||
| Basic | $ | 0.38 | $ | 0.40 | $ | 2.18 | $ | 2.22 | ||||||||||||||||||
| Diluted | $ | 0.37 | $ | 0.39 | $ | 2.14 | $ | 2.18 | ||||||||||||||||||
| Shares used in computing GAAP net loss per share and non-GAAP net income per share: | ||||||||||||||||||||||||||
| Basic | 73,600 | 73,600 | 74,600 | 74,600 | ||||||||||||||||||||||
| Diluted | 74,700 | 74,700 | 75,900 | 75,900 | ||||||||||||||||||||||
(1)Represents guidance discussed on February 21, 2024. Reader shall not construe presentation of this information after February 21, 2024 as an update or reaffirmation of such guidance.
(2)Stock-based compensation expenses are based on a range of probable significance, assuming market price for our common stock that is approximately consistent with current levels.
(3)Acquisition and related transaction costs and one-time integration costs are based on a range of probable significance for completed acquisitions, and no new acquisitions assumed.
(4)Non-GAAP adjustments do not have an impact on our federal income tax provision due to past non-GAAP losses, and state taxes are immaterial.
14
Investor Relations Contacts:
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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