Strong earnings and revenue beat fires up Five9’s stock

Shares of the call center software company Five9 Inc. shot up in extended trading after it delivered a solid earnings and revenue beat in its latest financial report, showing strong momentum across its core business.

The company reported earnings before certain costs such as stock compensation of 78 cents per share, while revenue for the period rose 17%, to $278.7 million. The results were much better than expected, with analysts having pegged the company to report earnings of just 70 cents on sales of $267.5 million.

The strong results had a real impact on Five9’s bottom line. The company reported a net profit of $11.57 million in the quarter, reversing a loss of $12.39 million a year ago. Investors liked what they saw, as Five9’s stock rose more than 12% in extended trading.

Five9 has emerged as a leading player in the cloud contact center software industry, selling tools and services that enterprises use to manage their customer service interactions. Its software spans traditional phone calls, video calls, emails, messaging, social media and other channels.

The software is entirely web-based, which means that customers can either purchase the company’s own telephone hardware and phone lines, which are optimized for its platform, or use their own gear. The advantage of using Five9’s equipment is that customers can simply add it to their software subscription, so there’s no need for a big upfront investment to acquire the hardware they need to scale their call centers.

In recent years, Five9 has invested heavily into artificial intelligence in an effort to enhance its product suite and optimize call center operations for its customers. The Genius AI suite was announced last August, and it includes virtual agents that leverage generative AI and natural language processing to mimic the conversational abilities of humans.

With Genius AI, Five9’s customers can fine-tune these AI agents using their own data, tailoring them to handle various customer problems and queries. In cases where the customer’s issue cannot be resolved, the AI bots will hand off to a human call center agent.

Its AI tools also use predictive analytics to try and guess why a customer is calling, so it can match them with the most appropriate AI or human agent ahead of time. In addition, it also offers AI tools for call center managers to summarize customer interactions, so they can try to work out how to improve their customer service.

Five9 Chairman and Chief Executive Mike Burkland (pictured) pointed out that its annual revenue topped $1 billion for the first time. “Our record results and strong traction in our AI business continue to demonstrate the power of our platform in enabling brands to elevate their customer service, as evidenced by our Enterprise AI revenue growing 46% YoY in the fourth quarter,” he said.

The company capped things off with solid guidance for the current quarter, saying it expects earnings of 47 to 49 cents on revenue of between $271.5 million to $272.5 million. Those numbers are more or less in line with Wall Street’s target of 48 cents per share in earnings and $272.2 million in revenue.

For the full year, Five9 is looking for a profit of $2.58 to $2.62 per share on total sales of $1.14 billion. The Street is modeling a slightly lower profit of $2.54 per share on the same revenue.

Photo: Five9