Five9 Inc Closes Out 2020 With 200% Stock Gains; More to Come?

fivn stock2021 Looks Bullish for Five9 Stock

Five9 Inc (NASDAQ:FIVN) certainly had a good year. FIVN stock soared 178% year-over-year and was up 200% in 2020. Since the coronavirus-fueled sell-off in March, Five9 stock rallied 258%. And since the November election, it gained 22.5%.

While COVID-19 and the stay-at-home economy helped juice the share price of the provider of call-center software in 2020, the fact is, FIVN stock had already been providing investors with spectacular gains for years.

Between 2016 and 2019, Five9 stock climbed 660%, for a compound annual growth rate (CAGR) of 66%. Since the start of 2016, FIVN stock has jumped by more than 2,000%.

Why the long-term bullish sentiment?

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Five9 Inc has a long history of reporting record earnings growth. From 2009 to 2019, the company’s annual revenue expanded at a CAGR of 33%.

Chart courtesy of StockCharts.com

FIVN Stock Overview

Five9 provides cloud-based software for contact centers, also known as call centers. The San Ramon, CA-based company has more than 2,000 customers around the world. (Source: “Q3 2020 Investor Presentation,” Five9 Inc, last accessed January 6, 2021.)

Five9’s infrastructure technology allows users to manage and optimize customer interactions across voice, chat, e-mail, Internet, social media, and mobile channels—either directly or through an application programming interface.

Five9’s customers include major companies like Expedia Group Inc (NASDAQ:EXPE), Fitbit Inc (NYSE:FIT), and Lululemon Athletica Inc. (NASDAQ:LULU).

Q3 Revenue Jumps to Record Level

In late October, Five9 announced that its revenue for the third quarter, which ended September 30, advanced 34% year-over-year to a record $112.1 million. (Source: “Five9 Reports Third Quarter Revenue Growth of 34% to a Record $112.1 Million,” Five9 Inc, October 29, 2020.)

The company reported a third-quarter net loss of $11.4 million ($0.17 per share), compared to a third-quarter 2019 net loss of $1.6 million ($0.03 per share).

Five9’s adjusted net income was $18.5 million ($0.27 per share), compared to $12.8 million ($0.20 per share) in the same period of the previous year.

The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $24.1 million, or 21.5% of its revenue, compared to $15.0 million, or 18.0% of its revenue, in the third quarter of 2019.

Five9 reported 2020 third-quarter operating cash flow of $22.8 million, up from $17.7 million in the third quarter of 2019.

Business Outlook

For the fourth quarter of 2020, Five9 Inc expects to report:

  • Revenue in the range of $114.5 to $115.5 million, compared to $92.3 million in Q4 2019
  • A net loss in the range of $13.5 to $14.5 million (loss of $0.20 to $0.21 per basic share), versus net income of $800,000 ($0.01 per share) in the same prior-year period
  • Adjusted net income in the range of $16.0 to $17.0 million ($0.22 to $0.24 per diluted share), compared to $17.0 million ($0.27 per diluted share) in the fourth quarter of 2019

For fiscal 2020, Five9 Inc expects to report:

  • Revenue in the range of $421.5 to $422.5 million, higher than the guidance range of $399.0 to $401.0 million, and higher than the $328.0 million reported for fiscal 2019
  • A net loss in the range of $48.4 to $49.4 million ($0.75 to $0.76 per basic share), an improvement from the previous guidance of a net loss in the range of $54.4 to $56.4 million ($0.85 to $0.88 per basic share)
  • Adjusted net income in the range of $59.7 to $60.7 million ($0.87 to $0.88 per diluted share), up from previous guidance in the range of $52.7 to $54.7 million ($0.77 to $0.80 per diluted share)

Analyst Take

Five9 stock is an excellent cloud stock that continues to trounce the broader market and top its own aggressive guidance. FIVN stock has made stellar gains over the last four years, and there’s every reason to believe that this will continue.

The economy’s transition to cloud and digital technology is expected to accelerate the demand for artificial intelligence (AI)-driven automation, putting Five9 Inc at the forefront of a massive opportunity.