Sign in
FI

Five9, Inc. (FIVN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered accelerating top-line and record profitability/cash flow: revenue grew 17% YoY to $278.7M, adjusted EBITDA margin reached a record 23.1%, GAAP EPS was $0.13 and non-GAAP EPS was $0.79 .
  • Mix and execution were strong: subscription revenue grew 19% YoY; enterprise AI revenue grew 46% YoY and now represents 9% of enterprise subscription revenue; LTM DBRR remained 108% .
  • FY 2025 guidance was introduced and effectively raised vs prior high-level outlook (company said midpoint revenue of $1.14B is $11.5M above last quarter’s outlook; non-GAAP EPS midpoint $2.60 is $0.08 higher), and Q1 2025 guidance implies typical seasonal downtick with margin progression through the year .
  • Stock-relevant catalysts: expanded AI monetization (voice/transcript stream), deepening ecosystem (Salesforce, ServiceNow, Microsoft, Verint) and global availability via Google Cloud Marketplace; CFO transition to interim CFO Bryan Lee announced on results day .

What Went Well and What Went Wrong

What Went Well

  • Record profitability/cash generation: adjusted EBITDA margin 23.1% (+290bps YoY) and record quarterly operating cash flow $49.8M; non-GAAP EPS up $0.18 YoY to $0.79 .
  • AI momentum and monetization: enterprise AI revenue +46% YoY; 100% attach on $1M+ ARR deals; monetization pathway via voice/transcript stream (~$40–$50/month per AI agent) highlighted as moat from contextual/interaction data and channels .
  • Bookings strength and large-deal focus: highest number of $1M+ ARR new logos in any quarter of 2024; installed-base bookings highest in 8 quarters; pipeline robust, aided by Acqueon pipeline +4x sequentially .

What Went Wrong

  • Seasonality and prudence temper near-term outlook: Q1 2025 revenue guided to $271.5–$272.5M (−~2% QoQ) and non-GAAP EPS $0.47–$0.49, reflecting typical seasonal pattern and macro uncertainty (consumer, tariffs, geopolitics) .
  • Seat count metric discontinued: management emphasized subscription revenue as the meaningful metric; average seat count disclosed at 432,818 in Q4 but will not be provided going forward, reducing a legacy KPI for trend watchers .
  • Legal overhang headlines in Q4 timeframe: multiple third‑party law firm “investor alert” press releases around class actions (Dec 2024), creating noise despite no new company disclosures; focus remains on operational execution (press-release listings).

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$252.086 $264.182 $278.660
GAAP Diluted EPS ($)$(0.17) $(0.06) $0.13
Non-GAAP Diluted EPS ($)$0.52 $0.67 $0.79
GAAP Gross Margin (%)53.0% 53.8% 56.0%
Adjusted Gross Margin (%)60.5% 61.8% 63.5%
Adjusted EBITDA Margin (%)16.6% 19.8% 23.1%
Operating Income (Loss) ($USD Millions)$(19.365) $(15.423) $4.180

Key YoY notes: Q4 revenue +17% YoY; GAAP gross margin +310bps to 56.0%; adjusted EBITDA +33% YoY to $64.3M (23.1% margin) .

Segment/Mix (Q4 2024)

SegmentQ4 2024 Mix
Subscription Revenue (%)79%
Usage Revenue (%)14%
Professional Services (%)7%
LTM Enterprise vs Commercial Mix (%)Enterprise 89%, Commercial 11%

KPIs

Quarterly cash generation and efficiency:

KPIQ2 2024Q3 2024Q4 2024
Operating Cash Flow ($USD Millions)$19.9 $41.1 $49.8
Adjusted EBITDA ($USD Millions)$41.781 $52.360 $64.256
LTM Operating Cash Flow ($USD Millions)——$143.2
LTM Free Cash Flow ($USD Millions)—$79.0 (LTM) $79.0 (LTM)
Average Seat Count (Q4 only)——432,818
DSO (days, Q4 only)——34
LTM Dollar-Based Retention Rate (%)—108% (unchg) 108%

Guidance Changes

MetricPeriodPrevious Guidance/OutlookCurrent GuidanceChange
Revenue ($USD Billions)FY 2025Company comfortable with consensus ~$1.13B (Nov-2024) $1.140–$1.144B Raised (~+$0.0115B vs prior outlook)
Non-GAAP EPS (Diluted)FY 2025Not formally provided; company states current midpoint is $0.08 higher than last quarter’s outlook $2.58–$2.62 Raised (midpoint +$0.08 vs prior outlook)
Revenue ($USD Millions)Q1 2025—$271.5–$272.5 New
GAAP EPSQ1 2025—$(0.15)–$(0.09) (basic) New
Non-GAAP EPS (Diluted)Q1 2025—$0.47–$0.49 New
Revenue ($USD Millions)Q4 2024$267.0–$268.0 (guided on Nov-7) $278.660 actual Beat vs guidance
Non-GAAP EPS (Diluted)Q4 2024$0.69–$0.71 (guided on Nov-7) $0.79 actual Beat vs guidance

Management added that FY 2025 adjusted gross and EBITDA margins are expected to improve YoY, and plan is to retire remaining 2025 convertible notes in June using cash .

Earnings Call Themes & Trends

TopicQ2 2024 (Aug-8)Q3 2024 (Nov-7)Q4 2024 (Feb-20)Trend
AI/Technology initiativesSurpassed $1B run rate; announced Acqueon acquisition; launched GenAI Studio & AI Knowledge; reaffirmed AI leadership narrative “CX at an inflection point”; momentum in AI driving durable growth; raised 2024 guidance Engine-agnostic AI; focus on accurate/personalized AI agents; enterprise AI +46% YoY; 9% of enterprise subs revenue Strengthening and monetizing AI
Partner ecosystem—Ongoing ecosystem; record OCF; implied partner traction Deepened with Salesforce, ServiceNow, Microsoft Teams, Verint; global availability via Google Cloud Marketplace Broadening routes to market
Macro/seasonalityReduced 2024 annual revenue guidance by 3.8% citing bookings & macro uncertainty Raised 2024 guidance; seasonality normalizing Q4 consumer & healthcare stronger; Q1 guide prudent amid uncertainty (tariffs, wars); seasonality embedded Cautious but improving execution
Product performance & mixRevenue +13% YoY; adjusted GM 60.5% Revenue +15% YoY; adjusted GM 61.8% Subscription +19% YoY; usage 14% of rev; PS 7%; adjusted GM 63.5% Mix and margins improving
Regulatory/legal headlines——Multiple class-action “investor alert” press releases in Dec-2024 (third-party law firms) External noise; no new company-specific disclosure

Management Commentary

  • “AI agents will only be used by consumers if they are accurate and personalized… CCaaS platforms like Five9 are uniquely positioned… This is our moat.” — Mike Burkland, CEO .
  • “We monetize third‑party AI… through voice stream and transcript stream… charging on a per minute basis… ~$40–$50 per month per AI agent.” — Mike Burkland .
  • “Subscription revenue… our $1M+ ARR customers made up 56% of subscription revenue, growing 26% YoY… adjusted EBITDA margins increased ~290bps YoY to 23.1%… GAAP net income of $11.6M.” — Barry Zwarenstein, CFO .
  • “FY 2025 annual revenue midpoint $1.14B is $11.5M higher than the high-level outlook we provided last quarter… non-GAAP EPS midpoint $2.60, $0.08 higher…” — Bryan Lee, Interim CFO .

Q&A Highlights

  • AI monetization and data control point: Five9’s platform monetizes access to contextual and interaction data via voice/transcript stream APIs, creating recurring revenue per AI agent; engine‑agnostic approach resonates in RFPs .
  • Seasonality and prudence: Q4 usage uptick in consumer/healthcare; Q1 guided to −2% QoQ with back‑half seasonality layered prudently given macro uncertainties (retail sales, tariffs, deportations, wars) .
  • Bookings trajectory and cycles: “AI fog” peaked in Q2; improved in Q3 and Q4; large‑deal focus and ROI-led AI blueprint shortening cycles; highest number of $1M+ ARR new logos in 2024 quarter .
  • Competitive migrations: Watching Avaya changes; Five9 well‑positioned with mature migration processes, especially >200 seats .
  • KPI framework shifting: Seat count disclosed at 432,818 (including Acqueon) but discontinued as pricing shifts to consumption; emphasis on subscription revenue .

Estimates Context

  • S&P Global consensus data was unavailable at the time of this report due to data access constraints; therefore, explicit Wall Street consensus comparisons are not included. Values retrieved from S&P Global were unavailable.
  • As a proxy, Q4 actuals exceeded company’s own Q4 guidance (issued Nov-7): revenue $278.660M vs $267.0–$268.0M; non‑GAAP EPS $0.79 vs $0.69–$0.71, reflecting stronger mix, margin expansion and usage uplift .

Key Takeaways for Investors

  • Five9’s AI strategy is translating into monetization and mix shift: enterprise AI +46% YoY, attach on $1M+ deals, and API monetization creates durable, usage‑linked revenue streams; this underpins medium‑term margin expansion and growth visibility .
  • Execution improved through 2H: sequential bookings strength, record profitability/cash flow, and subscription growth +19% YoY in Q4 support near‑term resilience; traders can lean into beats vs internal guidance .
  • FY25 setup is prudently positive: revenue midpoint $1.14B and non‑GAAP EPS midpoint $2.60 raised vs prior outlook; management expects adjusted margins to improve and plans to retire 2025 converts in June with cash, de‑risking balance sheet optics .
  • Ecosystem leverage adds GTM velocity: Salesforce/ServiceNow/Microsoft/Verint integrations and Google Cloud Marketplace global availability should lower friction and broaden demand, a potential catalyst for bookings/usage in 2025 .
  • Watch macro and seasonality: Q1 guide implies a typical downtick; back‑half assumptions are prudent amid uncertainties; position sizing should account for potential intra‑year estimate revisions as macro data evolves .
  • KPI evolution: Seat count discontinued; focus shifts to subscription revenue, AI consumption metrics, DBRR, DSO; expect investor conversation to migrate to AI attach, API consumption and enterprise mix .
  • Leadership transition: CFO retirement with interim CFO Bryan Lee (11‑year tenure) suggests continuity while a formal search proceeds; monitor timing of Analyst Day reschedule and any framework updates .