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Five9, Inc. (FIVN)·Q1 2025 Earnings Summary

Executive Summary

  • Five9 delivered a solid Q1 2025: revenue rose 13% year-over-year to $279.7M and non-GAAP EPS was $0.62, both beating Wall Street consensus; adjusted EBITDA margin expanded to 18.8% and operating cash flow reached a Q1 record of $48.4M .
  • Strength was driven by subscription revenue growth of 14%, strong installed-base bookings, and 32% YoY growth in enterprise AI revenue; headwinds included a stronger seasonal downtick in consumer/healthcare and tougher comps from last year’s largest customer ramp .
  • Guidance: FY 2025 revenue unchanged at $1.140–$1.144B; FY non-GAAP EPS raised to $2.74–$2.78 (vs prior $2.58–$2.62), and Q2 2025 guided to $274.5–$275.5M revenue and $0.64–$0.66 non-GAAP EPS; management expects sequential EPS growth throughout 2025 and at least a 2ppt improvement in adjusted EBITDA margin for the year .
  • Catalysts: visible AI momentum (AI attached to nearly all $1M+ logos; AI >20% of enterprise new logo ACV), expanded partnerships (Salesforce Fusion, ServiceNow, Google Cloud Marketplace, IBM WatsonX), and transformation initiatives (4% RIF) aimed at Rule of 40 by 2027 on EBITDA basis and approaching Rule of 40 on FCF basis .

What Went Well and What Went Wrong

What Went Well

  • Subscription strength and AI momentum: Subscription revenue grew 14% YoY with enterprise AI revenue up 32% YoY; adjusted EBITDA margin reached 18.8% and operating cash flow hit a Q1 record $48.4M .
  • AI-driven wins and attach: “Virtually all of our $1 million-plus ARR new logos [are] continuing to attach AI and AI making up more than 20% of enterprise new logo ACV bookings” — Mike Burkland .
  • Raised FY EPS guidance: Management lifted FY 2025 non-GAAP EPS midpoint by $0.16 to $2.76 and signaled positive sequential EPS in Q2 and through 2H, reflecting RIF savings and disciplined expense control .

What Went Wrong

  • Seasonal and macro headwinds: A stronger seasonal downtick in consumer/healthcare and elongated sales cycles on larger enterprise deals; growing resistance among some international customers to U.S. vendors, with a portion of deals slipping to the next quarter .
  • Mix and comps: Largest customer’s multiyear ramp completed in 2024, creating tougher comparisons and modestly pressuring LTM DBRR (107% vs 108% in Q4) .
  • Caution embedded in guidance: Despite Q1 beat, management maintained FY revenue guidance and layered prudence into Q2 and 2H outlook given heightened macro uncertainty .

Financial Results

Income Statement and Margins (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$264.2 $278.7 $279.7
GAAP Gross Margin (%)53.8% 56.0% 55.0%
Adjusted Gross Margin (%)61.8% 63.5% 62.4%
Adjusted EBITDA ($USD Millions)$52.4 $64.3 $52.7
Adjusted EBITDA Margin (%)19.8% 23.1% 18.8%
GAAP EPS ($)$(0.06) $0.13 $0.01
Non-GAAP EPS ($)$0.67 $0.79 $0.62

Year-over-Year Comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$247.0 $279.7
GAAP Gross Margin (%)53.6% 55.0%
Adjusted Gross Margin (%)60.8% 62.4%
Adjusted EBITDA ($USD Millions)$37.6 $52.7
Adjusted EBITDA Margin (%)15.2% 18.8%
GAAP EPS ($)$(0.10) $0.01
Non-GAAP EPS ($)$0.48 $0.62

Revenue Mix and KPIs (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Subscription % of RevenueN/A79% 80%
Usage % of RevenueN/A14% 13%
Professional Services %N/A7% 7%
LTM DBRR (%)N/A108% 107%
Operating Cash Flow ($USD Millions)$41.1 $49.8 $48.4
Free Cash Flow ($USD Millions)N/A$33.0 $34.9
DSO (Days)N/A34 33

Estimates vs Actuals (S&P Global consensus)

MetricConsensusActual
Q1 2025 Revenue ($USD Millions)$272.4*$279.7
Q1 2025 Primary EPS ($)$0.48*$0.62

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$1.140–$1.144 $1.140–$1.144 Maintained
GAAP EPS ($)FY 2025$0.09–$0.16 (diluted sh ~90.0M) $0.14–$0.24 (diluted sh ~85.6M) Raised
Non-GAAP EPS ($)FY 2025$2.58–$2.62 (diluted sh ~77.3M) $2.74–$2.78 (diluted sh ~77.3M) Raised
Revenue ($USD Millions)Q2 2025N/A$274.5–$275.5 New
GAAP EPS ($)Q2 2025N/A$(0.15)–$(0.06) (basic sh ~76.6M) New
Non-GAAP EPS ($)Q2 2025N/A$0.64–$0.66 (diluted sh ~76.7M) New
One-time RIF CostsFY/Q2 2025N/ACash $7–$9M; non-cash $1–$1.5M (excluded from non-GAAP) New
Adjusted EBITDA Margin (Company target)FY 2025From 2024 baseline 18.8% At least +200bps improvement vs 2024 Raised ambition

Earnings Call Themes & Trends

TopicQ3 2024 (Prev Mentions)Q4 2024 (Prev Mentions)Q1 2025 (Current)Trend
AI adoption/attachAI bookings strong; IVA/WEM integrations; marketplace push Enterprise AI revenue +46% YoY; AI 20%+ of new logo ACV; 100% attach on $1M+ Enterprise AI revenue +32% YoY; AI >20% of enterprise new logo ACV; 9% of enterprise subscription revenue Sustained growth
Partnerships (Salesforce, ServiceNow, Google)Announced marketplace; deeper integrations Global availability on Google Cloud Marketplace; deeper Salesforce/ServiceNow Salesforce Fusion launch; transcript/voice stream monetization; pipeline +$35M ACV last 2 months; IBM WatsonX option Expanding
Macro/elongated sales cyclesElevated RFPs; pipeline robust Cautious FY 2025 guide; muted seasonality assumed Longer cycles in large enterprise; international resistance to U.S. vendors; prudence in guide Mixed/pressure
Transformation/Rule of 40Margin expansion in Q3 Record margins/cash flow; CFO transition 4% RIF; +200bps FY EBITDA margin target; Rule of 40 by 2027 (EBITDA) and approach on FCF Accelerating profitability focus
Mix/DBRRSubscription +20%; usage increases Subscription +19%; LTM DBRR 108% LTM DBRR 107%; enterprise 90% LTM revenue; stronger seasonal downtick Slightly softer DBRR
Product innovationEnd-to-end AI suite; Acqueon Engine-agnostic AI, self-service agents Spotlight for AI Insights; Agentic CX trust/governance (post-Q1) Ongoing innovation

Management Commentary

  • “We are very pleased to report strong first quarter results, exceeding expectations across key metrics… Subscription revenue grew 14%… adjusted EBITDA margin of 19%… Q1 record for operating cash flow of $48 million… continued momentum in AI for CX” — Mike Burkland, Chairman & CEO .
  • Rule of 40 aspiration: “In 2027, we are targeting to be above the rule of 40 on an adjusted EBITDA basis and be approaching the rule of 40 on a free cash flow basis” — Mike Burkland .
  • Medium-term model: “Revenue growth 10% to 15%… EBITDA margin 25% to 30%… gross margin 66% to 68% driven by subscription gross margin deep into the 70s… mix shift from usage/PS” — Bryan Lee, Interim CFO .
  • Capital allocation: “We’re planning to retire the remaining $434 million principal balance of our 2025 convertible notes in cash when it matures in June… expect FCF generation to improve meaningfully, putting us on a path to being net cash positive” — Bryan Lee .

Q&A Highlights

  • Subscription trend and prudence: Management embedded conservatism into Q2 and FY outlook given heightened macro uncertainty, despite not seeing material business changes through April; Q1 seasonal downtick was stronger as expected .
  • Rule of 40 components: Medium-term model assumes 10–15% revenue growth and 25–30% EBITDA margin, with gross margin uplift from subscription mix and operating leverage from transformation initiatives .
  • Sales cycles and international dynamics: Longer cycles on large enterprise deals; some resistance to U.S. vendors internationally. Several deals slipped to next quarter, but teams remain engaged; installed-base momentum strong .
  • Salesforce Fusion/“bring your own telephony”: Adoption has doubled in 2025; Five9 monetizes transcript/voice stream APIs as a control point for contextual data needed by third-party AI (e.g., Einstein), aligning go-to-market between sellers and simplifying customer value proposition .
  • Guidance derisked and revenue visibility: Of ~$62M recurring incremental revenue implied for remaining 2025, ~$52M is expected from existing base (DBRR 107%), with ~$10M from new logos largely in backlog .

Estimates Context

  • Q1 2025 beat: Revenue $279.7M vs S&P Global consensus $272.4M*; non-GAAP EPS $0.62 vs consensus $0.48* — both significant beats driven by strong backlog contributions, installed-base bookings, and AI revenue growth .
  • Q2 2025 guide vs consensus: Guidance midpoint ~$275.0M revenue and $0.65 EPS vs S&P consensus ~$275.2M* and ~$0.65* — broadly in line; management expects sequential EPS growth in Q2 and through 2H .
  • FY 2025: Company kept revenue guidance at $1.140–$1.144B and raised non-GAAP EPS to $2.74–$2.78; S&P Global FY EPS consensus ~$2.93* and revenue ~$1.147B* at time of writing.

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 execution and broad-based beat: Five9 outperformed on revenue and EPS with margin expansion and record operating cash flow; AI continues to be a structural growth driver .
  • Profitability trajectory: Raised FY EPS guidance and targeting at least +200bps adjusted EBITDA margin improvement in 2025; Rule-of-40 ambition by 2027 underpinned by transformation and AI mix shift .
  • AI as monetization lever and moat: Five9’s platform is a control point for contextual interaction data, enabling monetization via voice/transcript APIs even when third-party AI is used; AI attach rates remain high .
  • Partnerships as distribution: Deeper Salesforce, ServiceNow, Google Cloud Marketplace, and IBM WatsonX integrations expand reach and accelerate time-to-value, supporting sustained enterprise momentum .
  • Watch macro/international risks: Longer enterprise cycles and pockets of international resistance to U.S. vendors remain headwinds; prudence is embedded in guide .
  • Mix and DBRR: Enterprise comprises ~90% of LTM revenue; DBRR at 107% reflecting seasonal/mix pressures, but million-dollar customers have higher DBRR; installed-base bookings are strong .
  • Near-term trading: Potential positive catalysts include continued AI disclosures, Q2 sequential EPS growth, and updates on transformation savings; monitor any changes in demand cadence and international exposure .

Additional Source Documents Reviewed

  • Q1 2025 press release and 8-K: core financials, guidance and reconciliations .
  • Q1 2025 earnings call transcript: detailed commentary on AI, partnerships, macro, guidance, transformation –.
  • Q4 2024 8-K: prior quarter results, initial FY 2025 guidance baselines –.
  • Q3 2024 press release: trend context –.
  • Spotlight for AI Insights press release (Mar 17, 2025) for product innovation context .
  • CFO retirement press release (Feb 20, 2025) for leadership transition context .