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Five9 Reports Second Quarter Revenue Growth of 18% to a Record $222.9 Million

28% Growth in LTM Enterprise Subscription Revenue

Q2 Record GAAP Operating Cash Flow of $21.9 Million

Five9, Inc. (NASDAQ:FIVN), the intelligent CX Platform provider, today reported results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Results

  • Revenue for the second quarter of 2023 increased 18% to a record $222.9 million, compared to $189.4 million for the second quarter of 2022.
  • GAAP gross margin was 53.2% for the second quarter of 2023, compared to 53.4% for the second quarter of 2022.
  • Adjusted gross margin was 61.8% for the second quarter of 2023, compared to 60.7% for the second quarter of 2022.
  • GAAP net loss for the second quarter of 2023 was $(21.7) million, or $(0.30) per basic share, and (9.8)% of revenue, compared to GAAP net loss of $(23.7) million, or $(0.34) per basic share, and (12.5)% of revenue, for the second quarter of 2022.
  • Non-GAAP net income for the second quarter of 2023 was $37.4 million, or $0.52 per diluted share, and 16.8% of revenue, compared to non-GAAP net income of $24.3 million, or $0.34 per diluted share, and 12.8% of revenue, for the second quarter of 2022.
  • Adjusted EBITDA for the second quarter of 2023 was $41.5 million, or 18.6% of revenue, compared to $33.1 million, or 17.5% of revenue, for the second quarter of 2022.
  • GAAP operating cash flow for the second quarter of 2023 was $21.9 million, compared to GAAP operating cash flow of $(3.1) million for the second quarter of 2022.

“We are pleased to report strong second quarter results with revenue growing 18% year-over-year to a record $222.9 million. This growth continues to be driven by our Enterprise business where LTM subscription revenue grew 28% year-over-year. In the second quarter, we achieved another record for GAAP operating cash flow, as adjusted EBITDA margin reached 19%. We experienced a particularly strong quarter for new logo bookings, demonstrating our strong go-to-market execution. We have been a leader in AI and Automation and will continue to push this industry forward, as AI serves as a tailwind for our business and leads to TAM expansion. We remain strategically focused on enabling enterprises to reimagine their customer experience by providing our Intelligent CX Platform combined with our passionate experts.”

- 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 the ongoing macroeconomic conditions.

  • For the full year 2023, Five9 expects to report:
    • Revenue in the range of $908.0 to $910.0 million.
    • GAAP net loss per share in the range of $(1.48) to $(1.37), assuming basic shares outstanding of approximately 72.2 million.
    • Non-GAAP net income per share in the range of $1.79 to $1.83, assuming diluted shares outstanding of approximately 73.3 million.
  • For the third quarter of 2023, Five9 expects to report:
    • Revenue in the range of $223.5 to $224.5 million.
    • GAAP net loss per share in the range of $(0.40) to $(0.35), assuming basic shares outstanding of approximately 72.4 million.
    • Non-GAAP net income per share in the range of $0.42 to $0.44, assuming diluted shares outstanding of approximately 73.7 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 second quarter 2023 results today, August 7, 2023, 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-related transaction and one-time integration costs, 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-related transaction costs and one-time integration costs, contingent consideration expense, refund for prior year overpayment of USF fees 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-related transaction 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-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 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, including the statements in the quotes from our Chairman and Chief Executive Officer, including statements regarding Five9’s business strategies, market opportunity, and ability to capitalize on that opportunity, Five9's AI and automation initiatives, and the potential impact of these initiatives on Five9's business and total addressable market, and the third quarter and full year 2023 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 increased inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency rates, the impact of the Russia-Ukraine conflict, 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, 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) we have established, and are continuing to increase, our network of technology solution brokers and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (vi) 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, and may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (vii) our recent rapid 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; (viii) our recent Chief Executive Officer transition could disrupt our operations, result in additional executive and personnel transitions and make it more difficult for us to hire and retain employees; (ix) failure to adequately retain and expand our sales force will impede our growth; (x) 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; (xi) 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; (xii) the AI technology and features incorporated into our solution include new and evolving technologies that may present both legal and business risks; (xiii) the use of AI by our workforce may present risks to 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 are 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 other risks; (xvii) security breaches and improper access to 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 and our business; (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) 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; (xxiii) our stock price has been volatile, may continue to be volatile and may decline, including due to factors beyond our control; (xxiv) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xxv) failure to comply with laws and regulations could harm our business and our reputation; (xxvi) 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 (xxvii) 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 2,500 organizations worldwide. For more information, visit www.five9.com.

 

FIVE9, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

June 30, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

195,592

 

 

$

180,520

 

Marketable investments

 

 

464,244

 

 

 

433,743

 

Accounts receivable, net

 

 

88,461

 

 

 

87,494

 

Prepaid expenses and other current assets

 

 

38,476

 

 

 

29,711

 

Deferred contract acquisition costs, net

 

 

54,462

 

 

 

47,242

 

Total current assets

 

 

841,235

 

 

 

778,710

 

Property and equipment, net

 

 

98,879

 

 

 

101,221

 

Operating lease right-of-use assets

 

 

43,748

 

 

 

44,120

 

Finance lease right-of-use assets

 

 

2,167

 

 

 

 

Intangible assets, net

 

 

22,501

 

 

 

28,192

 

Goodwill

 

 

165,420

 

 

 

165,420

 

Marketable investments

 

 

85,110

 

 

 

885

 

Other assets

 

 

17,329

 

 

 

11,057

 

Deferred contract acquisition costs, net — less current portion

 

 

126,555

 

 

 

114,880

 

Total assets

 

$

1,402,944

 

 

$

1,244,485

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

23,286

 

 

$

23,629

 

Accrued and other current liabilities

 

 

58,860

 

 

 

53,092

 

Operating lease liabilities

 

 

11,931

 

 

 

10,626

 

Finance lease liabilities

 

 

704

 

 

 

 

Accrued federal fees

 

 

3,384

 

 

 

2,471

 

Sales tax liabilities

 

 

2,547

 

 

 

2,973

 

Deferred revenue

 

 

57,539

 

 

 

57,816

 

Convertible senior notes

 

 

 

 

 

169

 

Total current liabilities

 

 

158,251

 

 

 

150,776

 

Convertible senior notes - less current portion

 

 

740,215

 

 

 

738,376

 

Sales tax liabilities — less current portion

 

 

912

 

 

 

899

 

Operating lease liabilities — less current portion

 

 

39,973

 

 

 

41,389

 

Finance lease liabilities — less current portion

 

 

1,463

 

 

 

 

Other long-term liabilities

 

 

3,331

 

 

 

3,080

 

Total liabilities

 

 

944,145

 

 

 

934,520

 

Stockholders’ equity:

 

 

 

 

Common stock

 

 

72

 

 

 

71

 

Additional paid-in capital

 

 

832,197

 

 

 

635,668

 

Accumulated other comprehensive loss

 

 

(1,397

)

 

 

(2,688

)

Accumulated deficit

 

 

(372,073

)

 

 

(323,086

)

Total stockholders’ equity

 

 

458,799

 

 

 

309,965

 

Total liabilities and stockholders’ equity

 

$

1,402,944

 

 

$

1,244,485

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

Revenue

 

$

222,882

 

 

$

189,382

 

 

$

441,321

 

 

$

372,159

 

Cost of revenue

 

 

104,361

 

 

 

88,229

 

 

 

209,117

 

 

 

177,096

 

Gross profit

 

 

118,521

 

 

 

101,153

 

 

 

232,204

 

 

 

195,063

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

39,210

 

 

 

34,992

 

 

 

77,318

 

 

 

70,816

 

Sales and marketing

 

 

74,077

 

 

 

64,098

 

 

 

150,391

 

 

 

128,709

 

General and administrative

 

 

30,477

 

 

 

23,824

 

 

 

58,735

 

 

 

48,138

 

Total operating expenses

 

 

143,764

 

 

 

122,914

 

 

 

286,444

 

 

 

247,663

 

Loss from operations

 

 

(25,243

)

 

 

(21,761

)

 

 

(54,240

)

 

 

(52,600

)

Other (expense) income, net:

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,866

)

 

 

(1,857

)

 

 

(3,711

)

 

 

(3,727

)

Interest income and other

 

 

6,123

 

 

 

280

 

 

 

10,244

 

 

 

1,125

 

Total other income (expense), net

 

 

4,257

 

 

 

(1,577

)

 

 

6,533

 

 

 

(2,602

)

Loss before income taxes

 

 

(20,986

)

 

 

(23,338

)

 

 

(47,707

)

 

 

(55,202

)

Provision for income taxes

 

 

753

 

 

 

332

 

 

 

1,280

 

 

 

2,588

 

Net loss

 

$

(21,739

)

 

$

(23,670

)

 

$

(48,987

)

 

$

(57,790

)

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.30

)

 

$

(0.34

)

 

$

(0.69

)

 

$

(0.83

)

Shares used in computing net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

71,627

 

 

 

69,748

 

 

 

71,444

 

 

 

69,363

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(48,987

)

 

$

(57,790

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

23,071

 

 

 

22,435

 

Amortization of operating lease right-of-use assets

 

 

5,838

 

 

 

4,942

 

Amortization of deferred contract acquisition costs

 

 

25,710

 

 

 

18,653

 

(Accretion of discount) amortization of premium on marketable investments

 

 

(4,315

)

 

 

1,114

 

Provision for credit losses

 

 

528

 

 

 

505

 

Stock-based compensation

 

 

104,110

 

 

 

84,179

 

Amortization of discount and issuance costs on convertible senior notes

 

 

1,839

 

 

 

1,852

 

Deferred taxes

 

 

250

 

 

 

2,054

 

Change in fair of value of contingent consideration

 

 

 

 

 

260

 

Payment of contingent consideration liability in excess of acquisition-date fair value

 

 

 

 

 

(5,900

)

Other

 

 

622

 

 

 

172

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(1,494

)

 

 

310

 

Prepaid expenses and other current assets

 

 

(8,764

)

 

 

(8,092

)

Deferred contract acquisition costs

 

 

(44,606

)

 

 

(42,854

)

Other assets

 

 

(5,344

)

 

 

(92

)

Accounts payable

 

 

2,316

 

 

 

4,487

 

Accrued and other current liabilities

 

 

3,966

 

 

 

(4,107

)

Accrued federal fees and sales tax liability

 

 

500

 

 

 

(2,677

)

Deferred revenue

 

 

(680

)

 

 

7,571

 

Other liabilities

 

 

704

 

 

 

(1,423

)

Net cash provided by operating activities

 

 

55,264

 

 

 

25,599

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investments

 

 

(337,595

)

 

 

(151,712

)

Proceeds from sales of marketable investments

 

 

245

 

 

 

600

 

Proceeds from maturities of marketable investments

 

 

227,836

 

 

 

214,585

 

Purchases of property and equipment

 

 

(16,642

)

 

 

(34,474

)

Capitalization of software development costs

 

 

(3,565

)

 

 

(1,392

)

Cash paid for an equity investment in a privately-held company

 

 

 

 

 

(2,000

)

Net cash (used in) provided by investing activities

 

 

(129,721

)

 

 

25,607

 

Cash flows from financing activities:

 

 

 

 

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

 

 

 

 

Repurchase of a portion of 2023 convertible senior notes, net of costs

 

 

 

 

 

(34,034

)

Proceeds from exercise of common stock options

 

 

6,981

 

 

 

3,005

 

Proceeds from sale of common stock under ESPP

 

 

9,444

 

 

 

8,338

 

Payment of contingent consideration liability up to acquisition-date fair value

 

 

 

 

 

(18,100

)

Net cash provided by (used in) financing activities

 

 

90,709

 

 

 

(40,791

)

Net (decrease) increase in cash and cash equivalents

 

 

16,252

 

 

 

10,415

 

Cash, cash equivalents and restricted cash:

 

 

 

 

Beginning of period

 

 

180,987

 

 

 

91,391

 

End of period

 

$

197,239

 

 

$

101,806

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

118,521

 

 

$

101,153

 

 

$

232,204

 

 

$

195,063

 

GAAP gross margin

 

 

53.2

%

 

 

53.4

%

 

 

52.6

%

 

 

52.4

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation

 

 

6,424

 

 

 

5,812

 

 

 

12,485

 

 

 

11,365

 

Intangibles amortization

 

 

2,845

 

 

 

2,935

 

 

 

5,691

 

 

 

5,882

 

Stock-based compensation

 

 

9,888

 

 

 

8,538

 

 

 

19,221

 

 

 

16,330

 

Exit costs related to closure and relocation of Russian operations

 

 

51

 

 

 

3

 

 

 

75

 

 

 

383

 

Acquisition-related and one-time integration costs

 

 

 

 

 

80

 

 

 

34

 

 

 

128

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

(3,511

)

 

 

 

 

 

(3,511

)

Adjusted gross profit

 

$

137,729

 

 

$

115,010

 

 

$

269,710

 

 

$

225,640

 

Adjusted gross margin

 

 

61.8

%

 

 

60.7

%

 

 

61.1

%

 

 

60.6

%

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(In thousands, except percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(21,739

)

 

$

(23,670

)

 

$

(48,987

)

 

$

(57,790

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,724

 

 

 

11,640

 

 

 

23,071

 

 

 

22,435

 

Stock-based compensation

 

 

53,367

 

 

 

44,786

 

 

 

104,110

 

 

 

84,179

 

Interest expense

 

 

1,866

 

 

 

1,857

 

 

 

3,711

 

 

 

3,727

 

Interest (income) and other

 

 

(6,123

)

 

 

(280

)

 

 

(10,244

)

 

 

(1,125

)

Exit costs related to closure and relocation of Russian operations (1)

 

 

815

 

 

 

214

 

 

 

1,411

 

 

 

3,441

 

Acquisition-related transaction and one-time integration costs

 

 

877

 

 

 

1,714

 

 

 

2,332

 

 

 

3,352

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

(3,511

)

 

 

 

 

 

(3,511

)

Provision for income taxes

 

 

753

 

 

 

332

 

 

 

1,280

 

 

 

2,588

 

Adjusted EBITDA

 

$

41,540

 

 

$

33,082

 

 

$

76,684

 

 

$

57,556

 

Adjusted EBITDA as % of revenue

 

 

18.6

%

 

 

17.5

%

 

 

17.4

%

 

 

15.5

%

(1) Exit costs related to the closure and relocation of our Russian operations was $1.1 million and $1.8 million during the three and six months ended June 30, 2023. The $0.8 million and $1.4 million adjustments presented above were net of $0.3 million and $0.4 million included in “Interest (income) and other.” Exit costs related to the closure and relocation of our Russian operations was $1.1 million and $3.9 million during the three and six months ended June 30, 2022. The $0.2 million and $3.4 million adjustments presented above were net of $0.7 million and $0.8 million included in “Depreciation and amortization” and $0.2 million and $(0.3) million included in “Interest (income) and other.”

FIVE9, INC.

RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

Loss from operations

 

$

(25,243

)

 

$

(21,761

)

 

$

(54,240

)

 

$

(52,600

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

53,367

 

 

 

44,786

 

 

 

104,110

 

 

 

84,179

 

Intangibles amortization

 

 

2,845

 

 

 

2,935

 

 

 

5,691

 

 

 

5,882

 

Exit costs related to closure and relocation of Russian operations

 

 

815

 

 

 

883

 

 

 

1,411

 

 

 

4,215

 

Acquisition-related transaction and one-time integration costs

 

 

877

 

 

 

1,714

 

 

 

2,332

 

 

 

3,352

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

(3,511

)

 

 

 

 

 

(3,511

)

Non-GAAP operating income

 

$

32,661

 

 

$

25,046

 

 

$

59,304

 

 

$

41,777

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(21,739

)

 

$

(23,670

)

 

$

(48,987

)

 

$

(57,790

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

53,367

 

 

 

44,786

 

 

 

104,110

 

 

 

84,179

 

Intangibles amortization

 

 

2,845

 

 

 

2,935

 

 

 

5,691

 

 

 

5,882

 

Amortization of discount and issuance costs on convertible senior notes

 

 

931

 

 

 

922

 

 

 

1,839

 

 

 

1,852

 

Exit costs related to closure and relocation of Russian operations

 

 

1,110

 

 

 

1,125

 

 

 

1,851

 

 

 

3,874

 

Acquisition-related transaction and one-time integration costs

 

 

877

 

 

 

1,714

 

 

 

2,332

 

 

 

3,352

 

Contingent consideration expense

 

 

 

 

 

 

 

 

 

 

 

260

 

Refund for prior year overpayment of USF fees

 

 

 

 

 

(3,511

)

 

 

 

 

 

(3,511

)

Tax provision associated with acquired companies

 

 

 

 

 

 

 

 

 

 

 

1,830

 

Income tax expense effects (1)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

37,391

 

 

$

24,301

 

 

$

66,836

 

 

$

39,928

 

GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.30

)

 

$

(0.34

)

 

$

(0.69

)

 

$

(0.83

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.35

 

 

$

0.94

 

 

$

0.58

 

Diluted

 

$

0.52

 

 

$

0.34

 

 

$

0.92

 

 

$

0.56

 

Shares used in computing GAAP net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

71,627

 

 

 

69,748

 

 

 

71,444

 

 

 

69,363

 

Shares used in computing non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

71,627

 

 

 

69,748

 

 

 

71,444

 

 

 

69,363

 

Diluted

 

 

72,600

 

 

 

71,083

 

 

 

72,474

 

 

 

70,869

 

 

 

 

 

 

 

 

 

 

(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.

 

FIVE9, INC.

SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

9,888

 

$

6,424

 

$

2,845

 

$

8,538

 

$

5,812

 

$

2,935

Research and development

 

 

13,013

 

 

868

 

 

 

 

11,818

 

 

804

 

 

Sales and marketing

 

 

17,391

 

 

1

 

 

 

 

14,963

 

 

1

 

 

General and administrative

 

 

13,075

 

 

1,586

 

 

 

 

9,467

 

 

2,088

 

 

Total

 

$

53,367

 

$

8,879

 

$

2,845

 

$

44,786

 

$

8,705

 

$

2,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

Stock-Based

Compensation

 

Depreciation

 

Intangibles

Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

19,221

 

$

12,485

 

$

5,691

 

$

16,330

 

$

11,365

 

$

5,882

Research and development

 

 

25,395

 

 

1,740

 

 

 

 

21,963

 

 

1,629

 

 

Sales and marketing

 

 

34,436

 

 

2

 

 

 

 

28,387

 

 

2

 

 

General and administrative

 

 

25,058

 

 

3,153

 

 

 

 

17,499

 

 

3,557

 

 

Total

 

$

104,110

 

$

17,380

 

$

5,691

 

$

84,179

 

$

16,553

 

$

5,882

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

September 30, 2023

 

December 31, 2023

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(29,086

)

 

$

(25,512

)

 

$

(107,060

)

 

$

(99,128

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation(2)

 

 

55,016

 

 

 

53,016

 

 

 

210,914

 

 

 

206,914

 

Intangibles amortization

 

 

2,884

 

 

 

2,884

 

 

 

11,459

 

 

 

11,459

 

Amortization of discount and issuance costs on convertible senior notes

 

 

954

 

 

 

954

 

 

 

4,189

 

 

 

4,189

 

Exit costs related to closure and relocation of Russian operations

 

 

600

 

 

 

600

 

 

 

3,051

 

 

 

3,051

 

Acquisition-related transaction and one-time integration costs(3)

 

 

585

 

 

 

485

 

 

 

8,367

 

 

 

7,367

 

Income tax expense effects(4)

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

30,953

 

 

$

32,427

 

 

$

130,920

 

 

$

133,852

 

GAAP net loss per share, basic and diluted

 

$

(0.40

)

 

$

(0.35

)

 

$

(1.48

)

 

$

(1.37

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.43

 

 

$

0.45

 

 

$

1.81

 

 

$

1.85

 

Diluted

 

$

0.42

 

 

$

0.44

 

 

$

1.79

 

 

$

1.83

 

Shares used in computing GAAP net loss per share and non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

 

72,400

 

 

 

72,400

 

 

 

72,200

 

 

 

72,200

 

Diluted

 

 

73,700

 

 

 

73,700

 

 

 

73,300

 

 

 

73,300

 

 

 

 

 

 

 

 

 

 

(1)

Represents guidance discussed on August 7, 2023. Reader shall not construe presentation of this information after August 7, 2023 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-related transaction and one-time integration costs are based on a range of probable significance for pending acquisition.

(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.

 

Contacts

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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