Call center software provider Five9 (NASDAQ: FIVN) announced better-than-expected revenue in Q2 CY2025, with sales up 12.4% year on year to $283.3 million. The company expects next quarter’s revenue to be around $284.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.76 per share was 17% above analysts’ consensus estimates.
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Five9 (FIVN) Q2 CY2025 Highlights:
- Revenue: $283.3 million vs analyst estimates of $275.2 million (12.4% year-on-year growth, 2.9% beat)
- Adjusted EPS: $0.76 vs analyst estimates of $0.65 (17% beat)
- Adjusted Operating Income: $54.45 million vs analyst estimates of $42.33 million (19.2% margin, 28.6% beat)
- The company slightly lifted its revenue guidance for the full year to $1.15 billion at the midpoint from $1.14 billion
- Management raised its full-year Adjusted EPS guidance to $2.88 at the midpoint, a 4.3% increase
- Operating Margin: -0.6%, up from -7.7% in the same quarter last year
- Annual Recurring Revenue: $1.09 billion vs analyst estimates of $1.07 billion (12.1% year-on-year growth, 1.4% beat)
- Billings: $276.5 million at quarter end, up 10.4% year on year
- Market Capitalization: $1.9 billion
StockStory’s Take
Five9’s second quarter results drew a negative market response despite surpassing Wall Street’s expectations for both revenue and non-GAAP profit. Management attributed the outperformance mainly to accelerated enterprise adoption of its AI solutions, which now drive a significant share of subscription revenue. CEO Mike Burkland also acknowledged that recent executive realignments and the ongoing focus on large enterprise customers were key contributors to improved profitability and sales execution. In addition, the company saw the highest quarterly total bookings in two years, supported by robust demand for AI-powered customer experience solutions across sectors such as healthcare and financial services.
Looking forward, Five9’s full-year outlook is shaped by the continued integration of advanced AI products and a cautious approach to macroeconomic uncertainty. Management highlighted that recently upsold and cross-sold software is expected to ramp into revenue later in the year, with CFO Bryan Lee noting, “We are prudently assuming minimal seasonality for the remainder of the year given ongoing macro uncertainty.” The company remains focused on expanding its Genius AI suite while maintaining disciplined investment in AI and go-to-market initiatives, with a renewed emphasis on large enterprise accounts and operational efficiency following leadership transitions.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to strong enterprise AI adoption, strategic realignment of its leadership team, and increased focus on high-margin subscription revenue from larger clients.
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CEO transition announced: CEO Mike Burkland revealed plans to retire, with a search for a successor underway. Burkland will remain Executive Chairman post-transition, aiming to ensure continuity during a period of strategic change.
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Enterprise AI revenue accelerates: Growth in enterprise AI solutions reached 42% year-over-year, with AI now accounting for 10% of enterprise subscription revenue. AI-related bookings made up over 20% of enterprise annual contract value (ACV) bookings, signaling a deepening integration of AI across the customer base.
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Strategic realignment and promotions: The company realigned its executive structure, naming Bryan Lee as CFO, Tiffany Meriweather as Chief Administrative and Legal Officer, and Matt Tuckness as Chief Revenue Officer. These changes were aimed at enhancing operational efficiency and aligning sales and marketing functions.
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AI product innovation: Five9 launched new Agentic AI Agents and the AI Trust & Governance suite, focusing on advanced self-service, context-aware handoffs, and tools for ethical AI deployment. The company emphasized that these innovations are driving tangible ROI for clients, such as reduced abandonment rates and improved customer satisfaction scores.
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Partner ecosystem momentum: Partnerships with Salesforce, Google Cloud, and ServiceNow gained traction, with notable increases in bookings and joint pipeline development. Integration with Epic’s healthcare CRM was highlighted as a key step in expanding sector-specific offerings.
Drivers of Future Performance
Five9’s guidance reflects ongoing investment in AI innovation, careful management of macroeconomic risks, and a focus on subscription-based enterprise growth.
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AI adoption fuels revenue mix: The company expects further growth in enterprise AI, with management noting that AI solutions are sold predominantly on consumption or capacity-based models. Continued adoption is anticipated to expand the share of high-margin subscription revenue and drive long-term growth.
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Operational discipline amid uncertainty: Management is cautiously optimistic, citing minimal expected seasonality and macroeconomic headwinds as reasons for a conservative approach to guidance. Upsell and cross-sell activity in Q2 is expected to layer into revenue in Q4 and beyond, but tough year-over-year comparisons and uncertainty among top seasonal customers remain risks.
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Leadership transitions and execution: The CEO transition and executive promotions are intended to position Five9 for scalable growth. Management believes the new structure enhances alignment and ownership, enabling the company to better capitalize on AI opportunities and maintain operational efficiency.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will closely monitor (1) the pace of enterprise adoption and monetization of Five9’s Agentic AI suite, (2) the impact of executive transitions on go-to-market strategy and operational alignment, and (3) the realization of revenue from large upsell and cross-sell deals closed in the second quarter. Additionally, we will watch for further traction in strategic partnerships with technology and industry vertical players.
Five9 currently trades at $24.44, down from $25.82 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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