Five9 Inc (FIVN) Q3 2024 Earnings Call Highlights: Strong AI Growth and Record Cash Flow Propel ...

GuruFocus News
4 min read

In This Article:

  • Total Revenue: $264.2 million, a 15% year-over-year increase.

  • Subscription Revenue: Grew 20% year-over-year, comprising nearly 80% of total revenue.

  • Adjusted EBITDA Margin: 19.8% of revenue, up 1.9 percentage points year-over-year.

  • Operating Cash Flow: Record $41 million, or 16% of revenue.

  • AI Revenue Growth: 40% year-over-year, with Agent Assist growing 158% year-over-year.

  • Gross Margin: 61.8%, up 1.2 percentage points year-over-year.

  • Non-GAAP EPS: $0.67 per diluted share, up $0.15 from Q3 2023.

  • GAAP Net Loss: $4.5 million, with adjustments for one-time items.

  • Telecom Usage Revenue: 13% of Q3 revenue, declining in the low single digits year-over-year.

  • Professional Services Revenue: 7% of total revenue.

  • Guidance for Q4 2024 Revenue: Midpoint of $267.5 million.

  • Full Year 2024 Revenue Guidance: Raised to a midpoint of $1.031 billion.

  • Full Year 2024 Non-GAAP EPS Guidance: Raised to a midpoint of $2.37 per diluted share.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Five9 Inc (NASDAQ:FIVN) exceeded guidance across all key metrics for the third quarter, with subscription revenue growth accelerating to 20% year over year.

  • AI products accounted for over 20% of enterprise new logo ACV bookings in Q3, indicating strong momentum in AI adoption.

  • The acquisition of Acqueon is expected to enhance Five9 Inc (NASDAQ:FIVN)'s intelligent CX platform, expanding capabilities across digital channels and unlocking new revenue streams.

  • Five9 Inc (NASDAQ:FIVN) was named a leader in the Gartner Magic Quadrant for CCaaS and ranked number 16 in the 2024 Fortune Best Places to Work list in the large technology category.

  • The company reported record quarterly operating cash flow of $41 million, equivalent to 16% of revenue, showcasing strong financial performance.

Negative Points

  • Five9 Inc (NASDAQ:FIVN) faces substantial risks and uncertainties, including macroeconomic deterioration, inflation, and supply chain disruptions, which could adversely affect future results.

  • Telecom usage revenue declined year-over-year in the low single digits, reflecting a shift as larger customers opt to provide their own telephony.

  • The company is experiencing a mix shift from usage to subscription revenue, which, while positive long-term, indicates a decline in telecom usage revenue.

  • Despite strong AI adoption, there is a learning curve for companies in implementing AI, which could slow down decision-making and adoption rates.

  • The India data center, while a strategic investment, currently represents a burden on gross margins due to its initial costs and low current revenue.

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