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Five9, Inc. (FIVN)·Q3 2025 Earnings Summary

Executive Summary

  • Five9 delivered a solid Q3 with revenue of $285.8M (+8% YoY) and non-GAAP EPS of $0.78, modestly above S&P Global consensus; adjusted EBITDA margin reached a record 25.1% as mix shifted toward higher-margin subscription and AI revenue . Q3 consensus vs. actual: revenue $285.1M* vs. $285.8M and EPS $0.733* vs. $0.78. The company guided Q4 revenue to $294.7–$300.7M and non-GAAP EPS to $0.76–$0.80, broadly in line with consensus* .
  • Enterprise AI revenue grew 41% YoY and enterprise AI bookings grew >80% YoY; subscription revenue rose 10% YoY and represented 81% of total revenue, supporting operating leverage and record operating cash flow of $59.2M .
  • Management announced a $150M share repurchase (including a $50M ASR in November) and raised FY25 non-GAAP EPS guidance to $2.92–$2.96 (from $2.86–$2.90) while maintaining FY25 revenue at $1.1435–$1.1495B; FY25 adjusted EBITDA margin outlook lifted to ~23% (prior 22%) .
  • Near-term growth is tempered by a tough compare (largest customer ramp in 2024) and minimal seasonality; commercial segment declined in the teens YoY, but management is reallocating demand gen and rebuilding sales capacity. Management expects an inflection in 2H26 and is “comfortable” with 2026 Street revenue of $1.254B and to exceed the $3.14 non-GAAP EPS consensus .
  • Stock reaction catalysts: buyback authorization (signal of confidence), profit guidance raise (EPS, EBITDA margin), and continued AI momentum (bookings +80% YoY, 41% AI revenue growth) .

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability and cash generation: adjusted EBITDA margin 25.1% and operating cash flow $59.2M; “profitability increasing with adjusted EBITDA margin reaching a record 25%” .
    • AI traction: Enterprise AI revenue +41% YoY; enterprise AI bookings +80% YoY; CEO: “We are in the early innings of an industry shift in CX… enterprises seek unified platforms where AI is natively embedded” .
    • Strategic capital return and partner momentum: $150M repurchase (including $50M ASR); CFO: “reflects a deep conviction in our long-term growth opportunity” . ServiceNow “Five9 Fusion” launch and ecosystem acceleration (ServiceNow ACV bookings quadrupled YTD; Salesforce bookings +60% YTD) .

  • What Went Wrong

    • Growth deceleration vs. Q2: Q3 revenue +8% YoY vs. Q2 +12% YoY; management cited ~5ppt headwind from a tough compare (largest customer ramp in 2024) and minimal seasonality; commercial revenue declined in the teens YoY .
    • Commercial sales capacity/demand-gen misallocation: underallocated spend to commercial and promoted more commercial reps to enterprise than normal; remedy underway, expecting normalization over the next couple quarters .
    • DBRR modestly lower: LTM dollar-based retention rate at 107%, down from 108% in Q2; range-bound expected near term .

Financial Results

Headline P&L, Margins, and Cash Flow (USD)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$279.7 $283.3 $285.8
YoY Revenue Growth (%)13% 12% 8%
GAAP Diluted EPS ($)$0.01 $0.01 $0.21
Non-GAAP Diluted EPS ($)$0.62 $0.76 $0.78
GAAP Gross Margin (%)55.0% 54.9% 55.0%
Adjusted Gross Margin (%)62.4% 63.0% 62.8%
Adjusted EBITDA ($M)$52.7 $67.95 $71.72
Adjusted EBITDA Margin (%)18.8% 24.0% 25.1%
Operating Cash Flow ($M)$48.4 $35.1 $59.2

Q3 2025 Revenue Mix

Mix ComponentQ3 2025
Subscription Revenue (% of total)81%
Telecom Usage (% of total)12%
Professional Services (% of total)7%

KPIs (Q3 2025)

KPIQ3 2025
Enterprise AI Revenue Growth (YoY)41%
Enterprise AI Bookings Growth (YoY)80%+
LTM Dollar-Based Retention Rate (DBRR)107%
Enterprise revenue (% of LTM total)~91%
Commercial revenue (% of LTM total)~9% (declined in teens YoY)

Results vs. Estimates and Q4 Outlook

MetricQ3 2025 Consensus*Q3 2025 ActualQ4 2025 Consensus*Q4 2025 Guidance (Mid)
Revenue ($M)285.13*285.83 298.21*297.70
Non-GAAP Diluted EPS ($)0.733*0.78 0.784*0.78

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

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025$1.1435–$1.1495B $1.1435–$1.1495B Maintained
GAAP EPS (diluted)FY 2025$0.23–$0.30 $0.36–$0.43 Raised
Non-GAAP EPS (diluted)FY 2025$2.86–$2.90 $2.92–$2.96 Raised
Adjusted EBITDA Margin (%)FY 2025~22% (prior outlook) ~23% Raised
Revenue ($M)Q4 2025—$294.7–$300.7 New quarter guide
Non-GAAP EPS ($)Q4 2025—$0.76–$0.80 New quarter guide
Diluted Shares (GAAP)Q4 2025—~87.3M (assumes ASR) Share count lower from ASR
Diluted Shares (Non-GAAP)Q4 2025—~77.8M (assumes ASR) Share count lower from ASR

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q1 2025)Current Period (Q3 2025)Trend
AI/technology initiativesQ2: Enterprise AI revenue +42% YoY; AI bookings >3x; launches of Agentic AI Agents and AI Trust & Governance . Q1: Strong AI-for-CX momentum with Genius AI suite .AI revenue +41% YoY; AI bookings +80% YoY; platform-first AI narrative, AI-based routing and human/AI collaboration (agent sidebar, barge-in) .Strengthening
Macro/seasonalityQ1/Q2 growth healthy (rev +13%/+12% YoY) .Minimal seasonality; tough compare (largest customer ramp) trimmed subscription growth by ~5ppt; DBRR 107% vs. 108% in Q2 .Mixed near term
Partnerships/ecosystemEcosystem a focus; growing alliances .ServiceNow “Fusion” launch; ServiceNow YTD ACV bookings 4x; Salesforce YTD bookings +60%; Google Marketplace pipeline tripled .Improving
Competitive landscape—Wins vs. AI point solutions; mid-market Zoom presence noted, hyperscaler seen selectively; voice strength differentiation .Stable/constructive
Go-to-market (commercial vs. enterprise)Enterprise emphasis rising; Q1/Q2 strong execution .Commercial declined in teens YoY; reallocating demand gen and backfilling capacity; enterprise remains ~91% of LTM revenue .Rebalancing
2026 trajectory—Expect flat sequential Q1’26, building through year; return to double-digit YoY growth in 2H26; comfortable with $1.254B revenue and to exceed $3.14 EPS for 2026 .Constructive

Management Commentary

  • “We’re pleased with our third quarter results with Enterprise AI revenue growing 41% YoY and profitability increasing with adjusted EBITDA margin reaching a record 25%... We are in the early innings of an industry shift in CX... enterprises seek unified platforms where AI is natively embedded.” — Mike Burkland, CEO .
  • “Our inaugural $150 million share repurchase program... reflects a deep conviction in our long-term growth opportunity… The structure includes $50 million through an accelerated repurchase program...” — Bryan Lee, CFO .
  • “We’re increasingly winning against AI point solutions as enterprises recognize the value of our unified platform where AI is natively embedded across the entire customer journey.” — Andy Dignan, President .
  • “We are comfortable with the current Street consensus revenue of $1.254 billion for 2026... and expect to exceed the current Street consensus non-GAAP EPS of $3.14... Adjusted EBITDA margin to expand by at least 100 bps to 24%+ in 2026.” — Bryan Lee, CFO .

Q&A Highlights

  • Subscription growth dynamics and “small beat”: subscription growth slowed to 10% YoY vs. 16% in Q2 due to ~5ppt tough compare and minimal seasonality; commercial underperformance also contributed; management is recalibrating demand gen and restoring commercial capacity .
  • Bookings-to-revenue lag: Record install-base bookings (two quarters in a row) and AI expansions have longer implementation cycles; sequential growth expected to build into 2026; Q4 sequential rev +~4% guided from backlog conversion .
  • Seasonality and usage: Minimal subscription seasonality; slight uptick in telecom usage among surveyed consumer customers could present small upside if it persists into late Q4 .
  • Competition and pricing: Five9 winning against AI point solutions; mid-market Zoom appears but win rates remain strong; no pricing pressure at renewal for core seats; AI priced on capacity/consumption with commitments plus overages .
  • Guidance guardrails: Wider Q4 revenue range reflects prudence given commercial recovery in progress; confidence to outline 2026 stems from strong backlog and ramp profile of AI and enterprise deployments .

Estimates Context

  • Q3 2025 results vs. S&P Global consensus: Revenue $285.8M vs. $285.1M* and non-GAAP EPS $0.78 vs. $0.733* — modest beat on both .
  • Q4 2025 setup: Guidance midpoint revenue $297.7M vs. consensus $298.2M*, and non-GAAP EPS $0.78 vs. $0.784* — roughly in line; management raised FY25 non-GAAP EPS and EBITDA margin outlook .
    Values with asterisks (*) retrieved from S&P Global.

Additional Press Releases in the Quarter

  • Afiniti partnership: Afiniti’s AI Pairing integrated into the Five9 Intelligent CX Platform and Five9 Marketplace to improve conversion, agent performance, and outcomes — further enriches partner ecosystem and embedded AI capabilities .

Key Takeaways for Investors

  • Profitability inflecting: Five9 delivered a fifth consecutive quarter of YoY margin expansion; adjusted EBITDA margin reached 25.1% with record operating cash flow — evidence of durable operating leverage .
  • AI is the growth vector: Enterprise AI revenue +41% YoY and AI bookings +80% YoY support a multi-year platform-led AI cycle; expect revenue realization to layer in through 2026 as deployments ramp .
  • Guidance quality: FY25 revenue held while EPS and EBITDA margin raised; Q4 guide implies sequential growth from backlog conversion; FY25 adj. EBITDA margin lifted to ~23% .
  • Capital allocation: New $150M repurchase (with $50M ASR) should lower share count and support EPS; signals management/Board confidence in intrinsic value .
  • Watch near-term headwinds: Tough compare and minimal seasonality weighed on growth; commercial softness (teens decline) is being addressed but bears monitoring in Q4–Q1 .
  • 2026 narrative: Management comfortable with Street revenue ($1.254B) and to exceed EPS ($3.14) for 2026, with at least +100 bps adjusted EBITDA margin expansion and ~$(175)M FCF target — suggests an improving growth/profit mix into 2H26 .
  • Competitive positioning: Platform-first approach (voice + digital + AI) and ecosystem momentum (ServiceNow, Salesforce) differentiate against point solutions and hyperscalers, supporting sustained enterprise wins .