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News Release

Five9 Reports Second Quarter 2014 Results


Revenue Increased 22% Year-Over-Year

SAN RAMON, CALIF. - August 4, 2014 - Five9, Inc. (NASDAQ: FIVN), a leading provider of cloud contact center software, today reported results for the second quarter ended June 30, 2014.

“Our second quarter results demonstrated the ongoing strong demand for our integrated cloud-based software solutions.  We experienced solid traction across our key drivers with continued success in adding new customers.  Our momentum in customer wins continued to be fueled by strong cloud adoption in contact centers as increasingly more companies are drawn to the benefits of the cloud.  The response to the Five9 Summer Release 2014 has been extremely positive.  We believe that the combination of our huge market opportunity and compelling secular trends, coupled with our innovative multichannel cloud contact center software, position Five9 very well for long-term growth.”

- Mike Burkland, President and CEO, Five9

Second Quarter 2014 Financial Results

• Total revenue for the second quarter of 2014 increased 22% to $24.7 million compared to $20.3 million for the second quarter of 2013.

• Annual dollar-based retention rate for the period ended June 30, 2014 was 98%.

• GAAP gross margin was 45.4% in the second quarter of 2014 compared to 39.8% for the same period in 2013.

• Adjusted gross margin was 51.5% for the second quarter of 2014 compared to 43.7% for the same period in 2013.

• Adjusted EBITDA for the second quarter of 2014 was a loss of $(6.9) million, compared to a loss of $(6.1) million for the second quarter of 2013.

• GAAP net loss for the second quarter of 2014 was $(8.7) million, or $(0.18) per share, compared to a GAAP net loss of $(8.3) million, or $(2.25) per share, for the second quarter of 2013.  Included in the GAAP results for the second quarter of 2014 was a reversal of contingent sales tax liability of $2.8 million following a favorable ruling from a state revenue authority.  The $2.8 million was accrued progressively in general and administrative expense on a quarterly basis from 2011 through the first quarter of 2014.  This release of liability reduced the Company's GAAP net loss per basic and diluted share by $0.06 for the three months ended June 30, 2014 and $0.10 for the six months ended June 30, 2014.

• Non-GAAP net loss for the second quarter of 2014 was $(9.5) million, or $(0.20) per share, compared to a Non-GAAP net loss of $(7.2) million, or $(1.95) per share, for the second quarter of 2013.

A reconciliation of the non-GAAP financial measures to their related GAAP financial measures is set forth below.

Recent Business Highlights

• Introduced the latest version of our cloud contact center software.  The Five9 Summer Release 2014 includes new native multichannel applications that support social, mobile, chat and email interactions.   The new multichannel capabilities are powered by Five9 Connect, a unique intelligent technology layer that helps contact centers evaluate, prioritize and route requests.  Additional major enhancements provide more mobility for supervisors and customized dashboards for better monitoring and reporting.

• Continued momentum in adding new customers, with key enterprise wins in industries such as Financial Services, Healthcare and Education.

• Enhanced cloud infrastructure to deliver reliable and scalable contact center software to clients.  To complement our state-of-the-art data centers, Five9 upgraded its network framework for both advanced storage and carrier infrastructure, made further improvements in network security and updated the 24x7 Five9 Network Operations Centers (NOC) to provide even more visibility into application performance.

• Named one of the fastest growing companies on Deloitte’s Technology Fast 500TM.  Deloitte ranked Five9 number 242 on the list of the 500 fastest growing technology companies in North America, based on strong year over year revenue growth.

Business Outlook

• For the third quarter of 2014, Five9 expects to report:

◦ Revenue in the range of $24.0 to $25.0 million

◦ GAAP net loss in the range of $(11.2) to $(12.2) million

◦ Non-GAAP net loss in the range of $(9.2) to $(10.2) million

• For the full year 2014, Five9 expects to report:

◦ Revenue in the range of $99.0 to $101.0 million

◦ GAAP net loss of $(38.9) to $(40.5) million

◦ Non-GAAP net loss in the range of $(36.2) to $(37.8) million

Conference Call Details

Five9 will discuss its second quarter 2014 results today, August 4, 2014, via teleconference at 4:30 p.m. Eastern Time.  To access the call (ID 2036796), please dial: 888-427-9414 or 719-325-2493.  An audio replay of the call will be available through August 18, 2014 by dialing 888-203-1112 or 719-457-0820 and entering access code 2036796.  A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K, and will be posted to our web site, prior to the conference call.

A webcast of the call will be available on the Investor Relations section of the Company’s website at http://investors.five9.com/.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures.  Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies.  Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the company, exclusive of unusual events, as well as factors that do not directly affect what we consider to be our core operating performance.  The company’s management uses these measures to (i) illustrate underlying trends in the company’s business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the company’s business and evaluating its performance.  In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented for supplemental informational purposes only for understanding the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.

Forward Looking Statements

This news release contains certain forward-looking statements, including the statements in the quote from our Chief Executive Officer and statements set forth under the caption “Business Outlook,” that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock;  (ii) we may be unable to attract new clients or sell additional services and functionality to our existing clients;  (iii) our recent rapid growth may not be indicative of our future growth and we may fail to manage our growth effectively;  (iv) the markets in which we participate are highly competitive and we may be unable to compete effectively;  (v) we may be unable to manage our technical operations infrastructure, which could cause our existing clients to experience service outages, cause our new clients to experience delays in the deployment of our solution and subject us to, among other things, claims for credits or damages;  (vi) a decline in our dollar-based retention rate could cause our revenues and gross margins to decrease and our net loss to increase and we may be required to spend more money to grow our client base to maintain our revenues; (vii) sales of our solutions to larger organizations may require longer sales and implementation cycles and we may be unable to offer the configuration and integration services or customized features and functions required by larger organizations, which could delay or prevent sales of our solution to them;  (viii) downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern;  (ix) third-party telecommunications and internet service providers on which we rely may fail to provide our clients and their customers with reliable telecommunication services and connectivity to our cloud contact center software;  (x) we may be unable to achieve or sustain profitability; (xi) we may be unable to secure additional financing on favorable terms, or at all, to meet our future capital needs; and (xii) the other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent quarterly report on Form 10-Q. Such forward looking statements speak only as of the date hereof and readers should not unduly rely on such statements.  We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.

About Five9

Five9 is a leading provider of cloud contact center software, bringing the power of the cloud to thousands of customers and facilitating more than three billion customer interactions annually. Since 2001, Five9 has led the cloud revolution in contact centers, delivering software to help organizations of every size transition from premise-based software to the cloud. With its extensive expertise, technology, and ecosystem of partners, Five9 delivers secure, reliable, scalable cloud contact center software to help businesses create exceptional customer experiences, increase agent productivity and deliver tangible results. For more information visit www.five9.com.

Investor Relations Contact:

Barry Zwarenstein

Chief Financial Officer

Five9, Inc.

925-201-2000 ext. 5959

IR@five9.com

Lisa Laukkanen

The Blueshirt Group for Five9, Inc.

415-217-4967

Lisa@blueshirtgroup.com

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