Five9 Inc Was Already a Great Stock Before COVID-19, and Now…
We’ve been following Five9 Inc (NASDAQ:FIVN) for a while now. A provider of cloud-based call center software, the demand for Five9’s technology was growing by leaps and bounds well before the COVID-19 virus outbreak shut down the global economy and forced more and more people to work from home.
Case in point: since the start of 2018, Five9 Inc has reported record revenue growth every single quarter. Not surprisingly, that momentum carried over into 2020 with record first-quarter results. The continuing shift to employees working remotely should only help Five9’s bottom line in the following quarters.
We were bullish on Five9 Inc before COVID-19 brought 2020 to its knees. Back in August 2019, when Five9 stock was trading at around $62.80, we provided a 12-month forecast of $87.00, which represented upside of about 40%. That was quite aggressive, especially in light of the fact that Wall Street was projecting a 12-month stock price target of a measly $70.00.
Ten months later, FIVN stock hit a new all-time high of $108.92, a 74% increase since we last looked at the company. What do the next 12 months have in store for Five9 Inc? Of the 16 analysts covering Five9 stock, the median 12-month price forecast is $105.00, with a high estimate of $115.00.
Once again, it appears as though Wall Street is being typically conservative with their outlook. A 12-month stock forecast of $145.00 seems more in line with what the company has been doing, and represents an approximate 40% gain from the current level.
FIVN Stock Overview
Five9 Inc is a leading provider of cloud software for contact centers, with more than 2,000 global customers that handle more than five billion call minutes each year. The company helps its clients increase productivity, lower costs, and create a better customer experience. (Source: “Customers,” Five9 Inc, last accessed June 17, 2020.)
Five9’s 2,000+ global customers include Citrix Systems, Inc. (NASDAQ:CTXS), Doordash, and Lululemon Athletica Inc. (NASDAQ:LULU).
Chart courtesy of StockCharts.com
Again, even before 2020 was blindsided by COVID-19, Five9 stock was performing exceptionally well. That’s because more and more companies have been shifting their call center workforce toward working from home.
Since the start of 2016, FIVN stock has soared by an eye-watering 1105%. In 2020 alone, the company’s stock price has advanced 59%.
Despite these massive gains, Five9 stock continues to have great long-term growth potential. That’s thanks in large part to a long history of reporting record results and even more businesses allowing their call center employees to work remotely.
Another Quarter of Record Revenue Growth
In May, Five9 Inc announced that its revenue for the first quarter of 2020, ended March 31, jumped 28% year-over-year to a record $95.1 million. (Source: “Five9 Reports First Quarter Revenue Growth of 28% to a Record $95.1 Million,” Five9 Inc, May 4, 2020.)
The company reported a net loss of $7.4 million ($0.12 per share), versus a loss of $1.9 million ($0.03 per share) in the same prior-year period. Adjusted net income for the first quarter was $11.1 million ($0.17 per share), an 11% increase from the first quarter of 2019.
Rowan Trollope, CEO commented:
In recent weeks we’ve helped our customers transition tens of thousands of agents to work from home, and mobilized a rapid response team and toolset to give customers flexibility to scale up and scale down on the platform. Throughout this challenging time and when it mattered most, we delivered the highest uptime in the history of the company.
We believe the steady migration of premise to cloud only stands to accelerate given the crucial need for people to work from home, and, the increasing importance around customer service and retention. As we move through 2020, we will strive to continue to deliver the extraordinary service Five9 is known for and maintain our focus on disciplined and balanced growth.
Looking ahead to the second quarter, Five9 Inc expects to report revenue in the range of $90.5 to $91.5 million, a net loss in the range of $16.7 to $15.7 million, and adjusted net income in the range of $9.8 to $10.8 million.
For fiscal 2020, Five9 Inc expects to report:
- Revenue in the range of $380.5 to $383.5 million
- Net loss in the range of $45.4 m to $42.4 million, lower than previous guidance of $30.9 to $27.9 million
- Adjusted net income in the range of $48.3 to $51.3 million, lower than previous guidance of $55.5 to $58.5 million
FIVN stock could be the perfect tech stock during this troubled time.
Five9 Inc’s cloud call center software is in huge demand, and the company continues to report record revenue growth and provide record revenue guidance. This has helped Five9 deliver strong, consistent record growth with a 10-year (2009-2019) compound annual growth rate (CAGR) of 33%.
In 2020, the company expects to report another year of record revenue, which should help send the Five9 stock price to record levels.