Executive Summary

Five9 delivered record Q2 2025 revenue of $283.3M (+12% YoY), non-GAAP EPS of $0.76, adjusted EBITDA margin of 24%, and operating cash flow of $35.1M; subscription revenue accelerated to +16% YoY, and Enterprise AI revenue grew +42% YoY .
Results materially beat Street: revenue $283.3M vs $275.2M consensus and non-GAAP EPS $0.76 vs $0.65 consensus; management raised FY revenue midpoint by ~$5M and lifted FY non-GAAP EPS midpoint to $2.88, and increased FY adjusted EBITDA margin target to at least 22% .
(Consensus values marked with * are from S&P Global.)
Guidance: Q3 revenue $283–$286M, non-GAAP EPS $0.72–$0.74; FY 2025 revenue $1.1435–$1.1495B, GAAP EPS $0.23–$0.30, non-GAAP EPS $2.86–$2.90 .
Catalysts: momentum in Enterprise AI (AI bookings >3x YoY, AI now 10% of enterprise subscription revenue), margin expansion, and leadership changes (CEO retirement process; Bryan Lee appointed CFO) could shape narrative and estimate revisions .

What Went Well and What Went Wrong

What Went Well

Record profitability and cash generation: adjusted EBITDA margin reached 24%, operating cash flow hit $35.1M (Q2 record), and free cash flow was $21.6M; mix shift toward subscription supported margin gains .
AI momentum: Enterprise AI revenue +42% YoY and AI represents 10% of enterprise subscription revenue; Enterprise AI bookings more than tripled YoY with >20% AI attach to million‑dollar ARR new logos .
Guidance raised: FY revenue midpoint increased to $1.1465B, FY non-GAAP EPS midpoint to $2.88, and adjusted EBITDA margin target raised to ≥22% .
“Adjusted EBITDA margin increased to 24%, reaching an all-time record and helping drive a Q2 record for both operating and free cash flow.” — Mike Burkland .

What Went Wrong

GAAP profitability remains slim: GAAP diluted EPS was $0.01 and loss from operations was $(1.6)M despite strong non-GAAP results, reflecting stock-based comp and other adjustments .
Seasonality and macro caution: management assumes “minimal seasonality” in 2H due to customer feedback and macro uncertainty, holding back ~$3M of upside in annual guide .
De‑emphasis of usage and professional services will undergrow total revenue; commercial segment (10% of LTM revenue) declined single digits on LTM basis by design .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$252.1	$279.705	$283.269
GAAP Diluted EPS ($)	$(0.17)	$0.01	$0.01
Non-GAAP Diluted EPS ($)	$0.52	$0.62	$0.76
GAAP Gross Margin (%)	53.0%	55.0%	54.9%
Adjusted Gross Margin (%)	60.5%	62.4%	63.0%
Adjusted EBITDA ($USD Millions)	$41.8	$52.7	$67.95
Adjusted EBITDA Margin (%)	16.6%	18.8%	24.0%
Operating Cash Flow ($USD Millions)	$19.9	$48.4	$35.1

Segment/Mix (Q2 2025):

Metric	Q2 2025
Revenue Mix: Subscription	81%
Revenue Mix: Usage	12%
Revenue Mix: Professional Services	7%
LTM Revenue Mix: Enterprise vs Commercial	90% vs 10%
LTM Dollar-Based Retention Rate	108%

KPIs (Q2 2025):

KPI	Q2 2025
Enterprise AI Revenue Growth YoY	42%
AI as % of Enterprise Subscription Revenue	10%
Enterprise AI Bookings Growth YoY	>3x
Free Cash Flow ($USD Millions)	$21.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2025	$1.140–$1.144	$1.1435–$1.1495	Raised
GAAP Diluted EPS ($)	FY 2025	$0.14–$0.24	$0.23–$0.30	Raised
Non-GAAP Diluted EPS ($)	FY 2025	$2.74–$2.78	$2.86–$2.90	Raised
Adjusted EBITDA Margin (%)	FY 2025	~21% (prior expectation)	≥22%	Raised
Revenue ($USD Millions)	Q3 2025	N/A	$283–$286	New
GAAP Diluted EPS ($)	Q3 2025	N/A	$0.06–$0.12	New
Non-GAAP Diluted EPS ($)	Q3 2025	N/A	$0.72–$0.74	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Enterprise AI rev +46% YoY; “engine‑agnostic” strategy; voice/transcript stream monetization	Subscription revenue growth +14%; adjusted gross margin 62.4%; continued AI for CX momentum	Agentic AI Agents launch; AI Trust & Governance; Enterprise AI rev +42% YoY; AI 10% of enterprise subscription	Strengthening
Partners/ecosystem	Salesforce, ServiceNow, Microsoft, Verint, Google Cloud Marketplace traction	—	Pipeline doubled via Google Cloud Marketplace; stronger Salesforce, ServiceNow alignment; Epic showroom listing	Improving
Macro/seasonality	Better seasonal uptick in Q4; prudent 2025 approach	Guide assumes small sequential growth in Q2 and larger 2H increases	Assume minimal 2H seasonality; held back ~$3M from annual guide	Cautious
Pricing/monetization	IVA ~3x uplift vs seat; $40–$50/month per AI agent via streams	—	AI pricing: capacity/consumption based; advanced AI agent ~25% price premium	Evolving/positive ARPU
Seat count narrative	Seat count less relevant; subscription dollars more meaningful	—	Customers aim to deflect 5–10% of voice to AI; non-AI business still growing	Gradual automation
Organizational changes	CFO retirement (Barry); interim CFO Bryan Lee	—	Bryan Lee appointed CFO; CEO retirement process initiated; CRO and org alignment	Transition with continuity

Management Commentary

“Subscription revenue accelerated to 16% year-over-year growth, primarily driven by Enterprise AI revenue accelerating to 42% year-over-year growth and now representing 10% of Enterprise subscription revenue… Adjusted EBITDA margin increased to 24%… helping drive a Q2 record for both operating and free cash flow.” — Mike Burkland .
“We are prudently assuming minimal seasonality for the remainder of the year starting in Q3… we are raising our full year 2025 adjusted EBITDA margin expectations to now be at least 22%.” — Bryan Lee .
“With Salesforce… we saw a significant increase in bookings and a meaningful increase in the pipeline… With Google Cloud Marketplace, pipeline once again doubled this quarter and we closed multiple $1M+ ARR deals.” — Mike Burkland .
“Agentic AI agents… reason, decide and take action… Five9 AI Trust & Governance… granular guardrails, proactive monitoring and hallucination detection.” — Mike Burkland .

Q&A Highlights

AI sustainability: Enterprise AI bookings doubled (new logos) and quadrupled (installed base); management “bullish on keeping that momentum” .
Seasonality and guide construct: Q2 beat added ~$5M to FY guide; ~$3M held back due to minimal seasonality and longer ramps on upsell/cross-sell software .
Seat count impact: Customers target 5–10% deflection of voice to AI; non‑AI business continues to grow; AI spend offsets seat reductions concerns .
Pricing: AI sold via capacity/consumption; advanced AI agent priced ~25% above core; outcome-based models not a focus for large enterprises .
Verticals and commercial: Strength in financial services, healthcare, retail; commercial down low-single digits LTM and de-emphasized strategically .
Professional services and channels: Growing third‑party implementations, faster AI deployments reduce PS growth vs subscriptions .

Estimates Context

Metric	Period	Consensus*	Actual/Guidance
Revenue ($USD Millions)	Q2 2025	275.182*	283.269
Non-GAAP EPS ($)	Q2 2025	0.650*	0.76
Revenue ($USD Millions)	Q3 2025	285.128*	283–286 (guidance)
Non-GAAP EPS ($)	Q3 2025	0.733*	0.72–0.74 (guidance)
Revenue ($USD Billions)	FY 2025	1.1470*	1.1435–1.1495 (guidance)
Non-GAAP EPS ($)	FY 2025	2.933*	2.86–2.90 (guidance)

Values marked with * retrieved from S&P Global.

Implications: Q2 was a clean beat on both revenue and EPS vs consensus; Q3 and FY guidance align closely to consensus on revenue while tempering EPS by reinvestment and lower interest income post note repayment .

Key Takeaways for Investors

Mix-driven margin expansion is durable: subscription now 81% of revenue; adjusted gross margin 63% and adjusted EBITDA margin 24% signal operating leverage and pricing power .
AI is becoming a meaningful revenue driver: Enterprise AI at 10% of enterprise subscription revenue and +42% YoY growth with >3x bookings suggests continued mix shift and potential ARPU uplift (~25% for advanced agents) .
Guidance conservative on seasonality; upside exists if macro stabilizes and installed-base upsells ramp faster into Q4/2026 .
Leadership transition is orderly: CFO appointment and CEO retirement process are framed to preserve execution; watch for new CEO profile (AI and operational excellence) as a sentiment driver .
Partner routes to market (Salesforce, ServiceNow, Google Cloud Marketplace, Epic) expanding pipeline and accelerating million‑dollar deals; continue to track joint wins as catalysts .
Tactical positioning: Near-term, focus on estimate revisions for FY EPS/margins; medium-term thesis centers on AI monetization, subscription mix, and Rule of 40 trajectory to 2027 .
Risk watch: macro uncertainty and customer seasonality assumptions, de‑emphasis of usage/PS, and GAAP vs non‑GAAP gap due to stock-based compensation and adjustments .

Earnings Call Themes & Trends Table (Extended)

Topic	Q-2 (Q4 2024)	Q-1 (Q1 2025)	Current (Q2 2025)	Trend
Monetization streams	Voice/transcript stream $40–$50/month per AI agent	—	Continued consumption/capacity pricing; advanced AI agent +25% price	Building
Data readiness & Agent Ops	Emphasis on contextual/historical data; engine‑agnostic approach	—	AI Trust & Governance, guardrails, observability; Agent Ops practices	Strengthening
Cash & balance sheet	Record OCF/FCF; strong LTM cash metrics	Q1 record OCF $48.4M	Repaid $434M 2025 converts; near-term net cash positive path	Improving
Commercial vs enterprise	Enterprise strength; commercial modest growth	—	Enterprise 90% LTM; commercial 10% LTM, down single digits	Enterprise overweight

Additional Relevant Press Releases (Q2 timeframe)

Agentic CX launch (June 10): AI Agents and AI Trust & Governance introduced; highlights enterprise‑ready guardrails and deployment speed .
CEO retirement announcement (July 31): search initiated; CEO to become Executive Chairman upon successor appointment .
Opus Research recognition (Aug 26): affirmed leadership in “Pragmatic AI,” trust & governance, orchestration .

Five9, Inc. (FIVN)·Q2 2025 Earnings Summary