Five9 Inc: FIVN Stock Hits 2019 Forecast on Record Q2 Results, Still Has Upside

Five9 Inc: FIVN Stock Hits 2019 Forecast on Record Q2 Results, Still Has Upside
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FIVN Stock: Up 50% in 2019, Soars on Record Q2 Results

Five9 Inc (NASDAQ:FIVN) is one of those under-the-radar tech stocks that has been quietly rewarding buy-and-hold investors. Thanks to record first- and second-quarter revenue growth and raised guidance, Five9 stock has advanced approximately 50% year-to-date.

Five9 is currently trading around $62.80, nearing the $65.00 high estimate that Wall Street analysts were forecasting—a forecast I thought was too conservative.

And Wall Street remains to be a little too conservative: analysts have a 12-month high target of $70.00, which represents a 10% gain from the current level.

Everyone knows that analysts like to play it safe, especially when it comes to tech stocks in this environment. Still, Five9 has considerable upside potential. A 12-month stock forecast of $87.00 seems more in line with what the company is doing. That price represents an approximate 40% gain from the current level.

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Five9 Inc Overview

The San Ramon, California-based Five9 Inc is the leading provider of cloud software for call centers, handling more than five billion call minutes annually.

The  company’s software allows businesses to better communicate with their customers through voice, chat, e-mail, social media, mobile channels, and Web. (Source: “Q2 2019 Investor Presentation” Five9 Inc, last accessed August 13, 2019.)

With an addressable global market of $24.0 billion, the market opportunity for cloud software for call centers is huge—and under-penetrated, at just 10% to 15%.

The company’s diverse list of 2,000+ global customers include Anthem Inc (NYSE:ANTM), Citrix Systems, Inc. (NASDAQ:CTXS), Expedia Group Inc (NASDAQ:EXPE), Lululemon Athletica Inc. (NASDAQ:LULU), and Sotheby’s International Realty, Inc.

No single customer accounts for more than five percent of the company’s revenues.

FIVN Stock Information
Market Cap $3.7 Billion
52-Week Change 47.3%
52-Week High $63.03
52-Week Low $34.66
Shares Outstanding: 59.7 Million
Float 59.4 Million
50-Day Moving Average: $52.17
200-Day Moving Average: $51.78

(Source: “Five9, Inc. (FIVN),” Yahoo! Finance, last accessed August 13, 2019.)

Five9 stock has actually been bullish since 2016, soaring by an eye-watering 640%. That momentum carried into 2019, with the stock benefiting from the prolonged “January Effect.” It traded in a relatively tight range from April to July but then broke out in late July after the company reported record second-quarter revenue growth and revised its guidance higher.

While the broader tech stock market has swooned over the simmering trade war between the U.S. and China, FIVN stock has managed to hold on to and build on its recent gains.

On August 13, the company’s share price hit a new 52-week high of $63.86, representing a year-to-date gain of approximately 50%. The S&P 500, meanwhile, was only up 18.5% and the Nasdaq only advanced 23.3%.

Five9 stock continues to look strong in the second half of 2019, while the tech sector as a whole looks a little uncertain.


Chart courtesy of StockCharts.com

On July 31, Five9 Inc announced that its second-quarter revenue, for the period ended June 30, 2019, increased 27% year-over-year to a record $77.4 million. (Source: “Five9 Reports Second Quarter Revenue Growth of 27% to a Record $77.4 Million,” Five9 Inc, July 31, 2019.)

The company reported a second-quarter 2019 net loss of $1.9 million ($0.03 per share), compared to a loss of $2.0 million ($0.04 per share) in the same prior-year period.

Its adjusted net income was $12.3 million, or $0.20 per share, a 78.2% increase from the $6.9 million, or $0.11 per share, in the same period last year.

Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for the second quarter of 2019 was $14.4 million, or 18.6% of revenue, compared to $9.7 million, or 15.8% of revenue, during the second quarter of 2018.

Looking ahead, for fiscal 2019, Five9 expects revenue in the range of $312.5 to $314.5 million, up from a previous guidance range of $304.0 to $307.0 million. At the midpoint, that represents year-over-year growth of 21.6%.

The company’s net loss is anticipated to be in the range of $12.0 to $10.0 million, an upgrade from the previous guidance range of $17.3 to $14.3 million. In 2018, Five9 reported a net loss of $0.02 million.

Adjusted net income of $44.7 to $46.7 million is expected. This would mark an improvement from the previous guidance range of $39.3 to $42.3 million. In 2018, Five9 reported adjusted net income of $37.0 million.

Analyst Take

Five9 stock continues to outpace the broader market because the company continues to report strong financial results and raise its guidance. Since the start of 2018, Five9 Inc has reported record revenue growth in every quarter.

Between 2009 and 2018, the company’s revenues soared 1,257%, from $19.0 to $258.0 million, for a compound annual growth rate of 33%.

This year, Five9 expects to report record full-year revenue, which should help propel FIVN stock considerably higher.