Contact-modal-phone-icon
1-800-553-8159
Contact-modal-map-icon
4000 Executive Parkway, Suite 400 San Ramon, CA 94583

News Release

Five9 Reports Fourth Quarter Revenue Growth of 31% to a Record $72.3 Million

36% Growth in LTM Enterprise Subscription Revenue

Fourth Quarter GAAP Net Income of $3.7 Million

Fourth Quarter Adjusted EBITDA of $16.4 Million, a Record 22.7% of Revenue

SAN RAMON, Calif. - February 19, 2019 - Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software for the digital enterprise, today reported results1 for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Financial Results

  • Revenue for the fourth quarter of 2018 increased 31% to a record $72.3 million, compared to $55.4 million for the fourth quarter of 2017.
  • GAAP gross margin was 60.8% for the fourth quarter of 2018, compared to 59.6% for the fourth quarter of 2017.
  • Adjusted gross margin was 65.1% for the fourth quarter of 2018, compared to 63.6% for the fourth quarter of 2017.
  • GAAP net income for the fourth quarter of 2018 was $3.7 million, or $0.06 per diluted share, compared to GAAP net loss of $(0.6) million, or $(0.01) per basic share, for the fourth quarter of 2017.
  • Non-GAAP net income for the fourth quarter of 2018 was $14.5 million, or $0.23 per diluted share, compared to non-GAAP net income of $4.0 million, or $0.07 per diluted share, for the fourth quarter of 2017.
  • Adjusted EBITDA for the fourth quarter of 2018 was $16.4 million, or a record 22.7% of revenue, compared to $6.9 million, or 12.4% of revenue, for the fourth quarter of 2017.
  • GAAP operating cash flow for the fourth quarter of 2018 was $15.5 million, compared to GAAP operating cash flow of $2.9 million for the fourth quarter of 2017.

2018 Financial Results

  • Total revenue for 2018 increased 29% to a record $257.7 million, compared to $200.2 million in 2017.
  • GAAP gross margin was 59.6% for 2018, compared to 58.5% in 2017.
  • Adjusted gross margin was 63.9% for 2018, compared to 62.7% in 2017.
  • GAAP net loss for 2018 was $(0.2) million, or $(0.00) per basic share, compared to a GAAP net loss of $(9.0) million, or $(0.16) per basic share, in 2017.
  • Non-GAAP net income for 2018 was $37.0 million, or $0.60 per diluted share, compared to a non-GAAP net income of $6.3 million, or $0.11 per diluted share, in 2017.
  • Adjusted EBITDA for 2018 was $46.4 million, or a record 18.0% of revenue, compared to $17.6 million, or 8.8% of revenue, in 2017.
  • GAAP operating cash flow for 2018 was $38.6 million, compared to GAAP operating cash flow of $11.1 million in 2017.

“We closed 2018 with our strongest quarter ever with fourth quarter revenue growth accelerating to 31%. This accelerating revenue growth, combined with our strong execution and expense discipline, allowed us to deliver 22.7% adjusted EBITDA margin. These stand-out results are representative of the large market opportunity we are addressing and continued momentum in our Enterprise business. As customer experience becomes a strategic priority and the market shifts towards the cloud, we believe Five9 is extremely well positioned to capitalize on this opportunity. Our customers view Five9 as a trusted strategic partner who can help them at every stage of the customer experience journey. We believe that we are at the nexus of a transformative opportunity, and that this will enable us to continue to deliver sustained growth and advance our goal of creating the world’s best intelligent contact center delivered through the cloud and powered by AI.” - Rowan Trollope, CEO, Five9

 

Business Outlook

For the full year 2019, Five9 expects to report

  • Revenue in the range of $298.5 to $301.5 million.
  • GAAP net loss in the range of $(22.1) to $(19.1) million, or $(0.36) to $(0.31) per basic share.
  • Non-GAAP net income in the range of $36.8 to $39.8 million, or $0.58 to $0.62 per diluted share. 
For the first quarter of 2019, Five9 expects to report
  • Revenue in the range of $70.0 to $71.0 million.
  • GAAP net loss in the range of $(5.7) to $(4.7) million, or a loss of $(0.10) to $(0.08) per basic share.
  • Non-GAAP net income in the range of $7.1 to $8.1 million, or $0.11 to $0.13 per diluted share.

1On January 1, 2018, Five9 adopted Accounting Standards Codification (ASC) 606 “Revenue from Contracts with Customers” using the modified retrospective transition method. While the financial results for the fourth quarter and full year 2018 are presented under ASC 606, financial results for the fourth quarter and full year 2017 are presented under ASC 605. A reconciliation of the financial results for the fourth quarter and full year 2018 under ASC 606 and ASC 605 is presented in the “Reconciliation of ASC 605 to ASC 606 P&L items” table included in this release.

 

Conference Call Details

Five9 will discuss its fourth quarter and full year 2018 results today, February 19, 2019, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 2920436), please dial: 800-458-4121 or 323-794-2093. An audio replay of the call will be available through March 5, 2019 by dialing 888-203-1112 or 719-457-0820 and entering access code 2920436. 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. We calculate adjusted gross profit by adding back the following items to gross profit: depreciation, intangibles amortization and stock-based compensation. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation, amortization, stock-based compensation, interest expense, interest (income) and other, non-recurring litigation settlement costs and related indemnification fees, reversal of interest and penalties on accrued federal fees, and provision for income taxes. We calculate non-GAAP operating income as operating income (loss) excluding stock-based compensation, intangibles amortization, non-recurring litigation settlement costs and related indemnification fees, and reversal of interest and penalties on accrued federal fees. We calculate non-GAAP net income as GAAP net income (loss) excluding stock-based compensation, intangibles amortization, amortization of debt discount and issuance costs, amortization of discount and issuance costs on convertible senior notes, non-recurring litigation settlement costs and related indemnification fees, reversal of interest and penalties on accrued federal fees and non-cash adjustment on investment. 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 factors that do not directly affect what we consider to be our core operating performance, as well as unusual events. 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 only as supplemental information for purposes of 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 set forth herein and 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, including statements regarding Five9’s market position, business momentum, expectations for future growth, product positioning, enterprise customer views of the value of our products and vision for the future, the Company’s long-term goals, and the first quarter and full year 2019 financial projections 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, including as a result of the timing and success of new product and feature introductions by us, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (iii) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately expand our sales force could impede our growth; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (vi) security breaches and improper access to or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and adversely affect our business; (vii) the markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed; (viii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (ix) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully grow and manage these relationships could harm our business; (x) we have established, and are continuing to increase, our network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (xi) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results; (xii) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (xiii) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could cause us to lose clients and subject us to claims for credits or damages, among other things; (xiv) we have a history of losses and we may be unable to achieve or sustain profitability; (xv) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new products in order to maintain and grow our business; (xvi) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xvii) failure to comply with laws and regulations could harm our business and our reputation; (xviii) we may not have sufficient cash to service our convertible senior notes and repay such notes, if required; and (xix) 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 for the digital enterprise, bringing the power of cloud innovation to customers and facilitating more than three billion customer interactions annually. Five9 provides end-to-end solutions with omnichannel routing, analytics, WFO, and AI to increase agent productivity and deliver tangible business results. The Five9 platform is reliable, secure, compliant, and scalable; designed to create exceptional personalized customer experiences. For more information, visit www.five9.com.

FIVE9, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

December 31, 2018

December 31, 2017

209,907

24,797

19,048

8,014

4,840

9,372

334,002

92,835

25,885

19,888

631

1,073

11,798

11,798

836

2,602

21,514

13,771

11,787

1,434

1,151

1,741

1,326

336

6,647

6,651

17,391

13,975

47,994

39,518

196,763

32,594

841

1,044

4,509

7,161

1,811

1,041

251,918

81,358

59

57

294,279

222,202

(93

(151,497

(175,421

142,748

46,838

 

 

December 31, 2018

 

December 31, 2017

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

81,912

 

 

$

68,947

 

Marketable investments

 

209,907

 

 

 

Accounts receivable, net

 

24,797

 

 

19,048

 

Prepaid expenses and other current assets

 

8,014

 

 

4,840

 

Deferred contract acquisition costs

 

9,372

 

 

 

Total current assets

 

334,002

 

 

92,835

 

Property and equipment, net

 

25,885

 

 

19,888

 

Intangible assets, net

 

631

 

 

1,073

 

Goodwill

 

11,798

 

 

11,798

 

Other assets

 

836

 

 

2,602

 

Deferred contract acquisition costs — less current portion

 

21,514

 

 

 

Total assets

 

$

394,666

 

 

$

128,196

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

7,010

 

 

$

4,292

 

Accrued and other current liabilities

 

13,771

 

 

11,787

 

Accrued federal fees

 

1,434

 

 

1,151

 

Sales tax liability

 

1,741

 

 

1,326

 

Notes payable

 

 

 

336

 

Capital leases

 

6,647

 

 

6,651

 

Deferred revenue

 

17,391

 

 

13,975

 

Total current liabilities

 

47,994

 

 

39,518

 

Convertible senior notes

 

196,763

 

 

 

Revolving line of credit

 

 

 

32,594

 

Sales tax liability — less current portion

 

841

 

 

1,044

 

Capital leases — less current portion

 

4,509

 

 

7,161

 

Other long-term liabilities

 

1,811

 

 

1,041

 

Total liabilities

 

251,918

 

 

81,358

 

Stockholders’ equity:

 

 

 

 

Common stock

 

59

 

 

57

 

Additional paid-in capital

 

294,279

 

 

222,202

 

Accumulated other comprehensive loss

 

(93

)

 

 

Accumulated deficit

 

(151,497

)

 

(175,421

)

Total stockholders’ equity

 

142,748

 

 

46,838

 

Total liabilities and stockholders’ equity

 

$

394,666

 

 

$

128,196

 

 

 

 

 

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

28,339

22,363

104,034

83,104

43,996

33,040

153,630

117,121

8,451

6,748

34,172

27,120

18,793

17,358

72,001

66,570

10,766

8,767

40,448

29,151

38,010

32,873

146,621

122,841

5,986

167

7,009

(5,720

(3,462

(836

(10,245

(3,471

1,359

164

3,315

490

(2,103

(672

(6,930

(2,981

3,883

(505

79

(8,701

150

126

300

268

58,926

56,034

58,076

54,946

62,071

56,034

58,076

54,946

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

Revenue

 

$

72,335

 

 

$

55,403

 

 

$

257,664

 

 

$

200,225

 

Cost of revenue

 

28,339

 

 

22,363

 

 

104,034

 

 

83,104

 

Gross profit

 

43,996

 

 

33,040

 

 

153,630

 

 

117,121

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

8,451

 

 

6,748

 

 

34,172

 

 

27,120

 

Sales and marketing

 

18,793

 

 

17,358

 

 

72,001

 

 

66,570

 

General and administrative

 

10,766

 

 

8,767

 

 

40,448

 

 

29,151

 

Total operating expenses

 

38,010

 

 

32,873

 

 

146,621

 

 

122,841

 

Income (loss) from operations

 

5,986

 

 

167

 

 

7,009

 

 

(5,720

)

Other income (expense), net:

 

 

 

 

 

 

 

 

Interest expense

 

(3,462

)

 

(836

)

 

(10,245

)

 

(3,471

)

Interest income and other

 

1,359

 

 

164

 

 

3,315

 

 

490

 

Total other income (expense), net

 

(2,103

)

 

(672

)

 

(6,930

)

 

(2,981

)

Income (loss) before income taxes

 

3,883

 

 

(505

)

 

79

 

 

(8,701

)

Provision for income taxes

 

150

 

 

126

 

 

300

 

 

268

 

Net income (loss)

 

$

3,733

 

 

$

(631

)

 

$

(221

)

 

$

(8,969

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.01

)

 

$

 

 

$

(0.16

)

Diluted

 

$

0.06

 

 

$

(0.01

)

 

$

 

 

$

(0.16

)

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

58,926

 

 

56,034

 

 

58,076

 

 

54,946

 

Diluted

 

62,071

 

 

56,034

 

 

58,076

 

 

54,946

 

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Twelve Months Ended

December 31, 2018

December 31, 2017

10,274

8,314

(670

90

95

28,484

15,343

129

80

7,881

(2,133

(312

(40

(366

44

21

27

(48

(5,829

(5,163

(2,806

(1,912

(7,748

193

(33

2,418

813

1,865

1,061

495

90

3,956

3,882

392

31

38,622

11,106

(220,704

11,293

(9,261

(2,650

1,923

(216,749

(2,650

250,711

(31,412

7,779

6,035

5,730

4,101

(260

(32,594

(318

(699

(8,544

(7,068

191,092

2,369

12,965

10,825

68,947

58,122

 

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(221

)

 

$

(8,969

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

10,274

 

 

8,314

 

Amortization of premium on marketable investments

 

(670

)

 

 

Provision for doubtful accounts

 

90

 

 

95

 

Stock-based compensation

 

28,484

 

 

15,343

 

Amortization of debt discount and issuance costs

 

129

 

 

80

 

Amortization of discount and issuance costs on convertible senior notes

 

7,881

 

 

 

Reversal of interest and penalties on accrued federal fees

 

 

 

(2,133

)

Gain on sale of convertible note held for investment

 

(312

)

 

 

Non-cash adjustment on investment

 

(40

)

 

(366

)

Accretion of interest

 

44

 

 

21

 

Others

 

27

 

 

(48

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(5,829

)

 

(5,163

)

Prepaid expenses and other current assets

 

(2,806

)

 

(1,912

)

Deferred contract acquisition costs

 

(7,748

)

 

 

Other assets

 

193

 

 

(33

)

Accounts payable

 

2,418

 

 

813

 

Accrued and other current liabilities

 

1,865

 

 

1,061

 

Accrued federal fees and sales tax liability

 

495

 

 

90

 

Deferred revenue

 

3,956

 

 

3,882

 

Other liabilities

 

392

 

 

31

 

Net cash provided by operating activities

 

38,622

 

 

11,106

 

Cash flows from investing activities:

 

 

 

 

Purchases of marketable investments

 

(220,704

)

 

 

Proceeds from maturities of marketable investments

 

11,293

 

 

 

Purchases of property and equipment

 

(9,261

)

 

(2,650

)

Proceeds from sale of convertible note held for investment

 

1,923

 

 

 

Net cash (used in) investing activities

 

(216,749

)

 

(2,650

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,039

 

250,711

 

 

 

Payments for capped call transactions

 

(31,412

)

 

 

Proceeds from exercise of common stock options

 

7,779

 

 

6,035

 

Proceeds from sale of common stock under ESPP

 

5,730

 

 

4,101

 

Payments of employee taxes related to vested common stock

 

(260

)

 

 

Repayments on revolving line of credit

 

(32,594

)

 

 

Payments of notes payable

 

(318

)

 

(699

)

Payments of capital leases

 

(8,544

)

 

(7,068

)

Net cash provided by financing activities

 

191,092

 

 

2,369

 

Net increase in cash and cash equivalents

 

12,965

 

 

10,825

 

Cash and cash equivalents:

 

 

 

 

Beginning of period

 

68,947

 

 

58,122

 

End of period

 

$

81,912

 

 

$

68,947

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF ASC 605 TO ASC 606 P&L ITEMS - GAAP

(In thousands, except per share data and percentages)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2018

ASC 605

Adjustments

ASC 606

ASC 605

Adjustments

ASC 606

28,360

(21

28,339

103,525

509

104,034

44,223

(227

43,996

153,023

607

153,630

60.9

60.8

59.6

59.6

8,451

8,451

34,172

34,172

21,447

(2,654

18,793

79,749

(7,748

72,001

10,766

10,766

40,448

40,448

40,664

(2,654

38,010

154,369

(7,748

146,621

3,559

2,427

5,986

(1,346

8,355

7,009

4.9

8.3

(0.5

2.7

(2,103

(2,103

(6,930

(6,930

1,456

2,427

3,883

(8,276

8,355

79

150

150

300

300

58,926

58,926

58,076

58,076

62,071

62,071

58,076

58,076

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2018

 

 

ASC 605

 

Adjustments

 

ASC 606

 

ASC 605

 

Adjustments

 

ASC 606

Revenue

 

$

72,583

 

 

$

(248

)

 

$

72,335

 

 

$

256,548

 

 

$

1,116

 

 

$

257,664

 

Cost of revenue

 

28,360

 

 

(21

)

 

28,339

 

 

103,525

 

 

509

 

 

104,034

 

GAAP gross profit

 

44,223

 

 

(227

)

 

43,996

 

 

153,023

 

 

607

 

 

153,630

 

GAAP gross margin

 

60.9

%

 

 

 

60.8

%

 

59.6

%

 

 

 

59.6

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

8,451

 

 

 

 

8,451

 

 

34,172

 

 

 

 

34,172

 

Sales and marketing

 

21,447

 

 

(2,654

)

 

18,793

 

 

79,749

 

 

(7,748

)

 

72,001

 

General and administrative

 

10,766

 

 

 

 

10,766

 

 

40,448

 

 

 

 

40,448

 

Total operating expenses

 

40,664

 

 

(2,654

)

 

38,010

 

 

154,369

 

 

(7,748

)

 

146,621

 

GAAP income (loss) from operations

 

3,559

 

 

2,427

 

 

5,986

 

 

(1,346

)

 

8,355

 

 

7,009

 

GAAP Operating Margin

 

4.9

%

 

 

 

8.3

%

 

(0.5

)%

 

 

 

2.7

%

Other income (expense), net

 

(2,103

)

 

 

 

(2,103

)

 

(6,930

)

 

 

 

(6,930

)

Income (loss) before income taxes

 

1,456

 

 

2,427

 

 

3,883

 

 

(8,276

)

 

8,355

 

 

79

 

Provision for income taxes

 

150

 

 

 

 

150

 

 

300

 

 

 

 

300

 

GAAP net income (loss)

 

$

1,306

 

 

$

2,427

 

 

$

3,733

 

 

$

(8,576

)

 

$

8,355

 

 

$

(221

)

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.04

 

 

$

0.06

 

 

$

(0.15

)

 

$

0.15

 

 

$

 

Diluted

 

$

0.02

 

 

$

0.04

 

 

$

0.06

 

 

$

(0.15

)

 

$

0.15

 

 

$

 

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

58,926

 

 

 

 

58,926

 

 

58,076

 

 

 

 

58,076

 

Diluted

 

62,071

 

 

 

 

62,071

 

 

58,076

 

 

 

 

58,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF ASC 605 TO ASC 606 P&L ITEMS - NON-GAAP

(In thousands, except per share data and percentages)

(Unaudited)

 

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2018

ASC 605

Adjustments

ASC 606

ASC 605

Adjustments

ASC 606

25,289

(21

25,268

92,384

509

92,893

47,294

(227

47,067

164,164

607

164,771

65.2

65.1

64.0

63.9

7,110

7,110

27,833

27,833

19,694

(2,654

17,040

73,347

(7,748

65,599

6,507

6,507

24,980

24,980

33,311

(2,654

30,657

126,160

(7,748

118,412

13,983

2,427

16,410

38,004

8,355

46,359

19.3

22.7

14.8

18.0

2,745

2,745

9,832

9,832

11,238

2,427

13,665

28,172

8,355

36,527

15.5

18.9

11.0

14.2

996

996

728

728

12,234

2,427

14,661

28,900

8,355

37,255

150

150

300

300

58,926

58,926

58,076

58,076

62,071

62,071

61,428

61,428

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2018

 

 

ASC 605

 

Adjustments

 

ASC 606

 

ASC 605

 

Adjustments

 

ASC 606

Revenue

 

$

72,583

 

 

$

(248

)

 

$

72,335

 

 

$

256,548

 

 

$

1,116

 

 

$

257,664

 

Cost of revenue

 

25,289

 

 

(21

)

 

25,268

 

 

92,384

 

 

509

 

 

92,893

 

Adjusted gross profit

 

47,294

 

 

(227

)

 

47,067

 

 

164,164

 

 

607

 

 

164,771

 

Adjusted gross margin

 

65.2

%

 

 

 

65.1

%

 

64.0

%

 

 

 

63.9

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

7,110

 

 

 

 

7,110

 

 

27,833

 

 

 

 

27,833

 

Sales and marketing

 

19,694

 

 

(2,654

)

 

17,040

 

 

73,347

 

 

(7,748

)

 

65,599

 

General and administrative

 

6,507

 

 

 

 

6,507

 

 

24,980

 

 

 

 

24,980

 

Total operating expenses

 

33,311

 

 

(2,654

)

 

30,657

 

 

126,160

 

 

(7,748

)

 

118,412

 

Adjusted EBITDA

 

13,983

 

 

2,427

 

 

16,410

 

 

38,004

 

 

8,355

 

 

46,359

 

Adjusted EBITDA margin

 

19.3

%

 

 

 

22.7

%

 

14.8

%

 

 

 

18.0

%

Depreciation

 

2,745

 

 

 

 

2,745

 

 

9,832

 

 

 

 

9,832

 

Non-GAAP operating income

 

11,238

 

 

2,427

 

 

13,665

 

 

28,172

 

 

8,355

 

 

36,527

 

Non-GAAP operating margin

 

15.5

%

 

 

 

18.9

%

 

11.0

%

 

 

 

14.2

%

Other income (expense), net

 

996

 

 

 

 

996

 

 

728

 

 

 

 

728

 

Income before income taxes

 

12,234

 

 

2,427

 

 

14,661

 

 

28,900

 

 

8,355

 

 

37,255

 

Provision for income taxes

 

150

 

 

 

 

150

 

 

300

 

 

 

 

300

 

Non-GAAP net income

 

$

12,084

 

 

$

2,427

 

 

$

14,511

 

 

$

28,600

 

 

$

8,355

 

 

$

36,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.04

 

 

$

0.25

 

 

$

0.49

 

 

$

0.15

 

 

$

0.64

 

Diluted

 

$

0.19

 

 

$

0.04

 

 

$

0.23

 

 

$

0.47

 

 

$

0.13

 

 

$

0.60

 

Shares used in computing non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

58,926

 

 

 

 

58,926

 

 

58,076

 

 

 

 

58,076

 

Diluted

 

62,071

 

 

 

 

62,071

 

 

61,428

 

 

 

 

61,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT

(In thousands, except percentages)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

60.8

59.6

59.6

58.5

2,041

1,523

7,456

5,949

88

88

352

351

942

594

3,333

2,202

65.1

63.6

63.9

62.7

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

43,996

 

 

$

33,040

 

 

$

153,630

 

 

$

117,121

 

GAAP gross margin

 

60.8

%

 

59.6

%

 

59.6

%

 

58.5

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation

 

2,041

 

 

1,523

 

 

7,456

 

 

5,949

 

Intangibles amortization

 

88

 

 

88

 

 

352

 

 

351

 

Stock-based compensation

 

942

 

 

594

 

 

3,333

 

 

2,202

 

Adjusted gross profit

 

$

47,067

 

 

$

35,245

 

 

$

164,771

 

 

$

125,623

 

Adjusted gross margin

 

65.1

%

 

63.6

%

 

63.9

%

 

62.7

%

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

2,838

2,068

10,274

8,314

7,493

4,640

28,484

15,343

3,462

836

10,245

3,471

(1,359

(164

(3,315

(490

1,700

93

592

135

(2,133

150

126

300

268

22.7

12.4

18.0

8.8

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

3,733

 

 

$

(631

)

 

$

(221

)

 

$

(8,969

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

2,838

 

 

2,068

 

 

10,274

 

 

8,314

 

Stock-based compensation

 

7,493

 

 

4,640

 

 

28,484

 

 

15,343

 

Interest expense

 

3,462

 

 

836

 

 

10,245

 

 

3,471

 

Interest (income) and other

 

(1,359

)

 

(164

)

 

(3,315

)

 

(490

)

Legal settlement

 

 

 

 

 

 

 

1,700

 

Legal and indemnification fees related to settlement

 

93

 

 

 

 

592

 

 

135

 

Reversal of interest and penalties on accrued federal fees (G&A)

 

 

 

 

 

 

 

(2,133

)

Provision for income taxes

 

150

 

 

126

 

 

300

 

 

268

 

Adjusted EBITDA

 

$

16,410

 

 

$

6,875

 

 

$

46,359

 

 

$

17,639

 

Adjusted EBITDA as % of revenue

 

22.7

%

 

12.4

%

 

18.0

%

 

8.8

%

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP OPERATING INCOME (LOSS) TO NON-GAAP OPERATING INCOME

(In thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

7,493

4,640

28,484

15,343

93

116

442

465

1,700

93

592

135

(2,133

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

$

5,986

 

 

$

167

 

 

$

7,009

 

 

$

(5,720

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

7,493

 

 

4,640

 

 

28,484

 

 

15,343

 

Intangibles amortization

 

93

 

 

116

 

 

442

 

 

465

 

Legal settlement

 

 

 

 

 

 

 

1,700

 

Legal and indemnification fees related to settlement

 

93

 

 

 

 

592

 

 

135

 

Reversal of interest and penalties on accrued federal fees (G&A)

 

 

 

 

 

 

 

(2,133

)

Non-GAAP operating income

 

$

13,665

 

 

$

4,923

 

 

$

36,527

 

 

$

9,790

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

7,493

4,640

28,484

15,343

93

116

442

465

20

129

80

3,099

7,881

1,700

93

592

135

(2,133

(133

(352

(366

58,926

56,034

58,076

54,946

62,071

56,034

58,076

54,946

58,926

56,034

58,076

54,946

62,071

59,905

61,428

59,073

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

3,733

 

 

$

(631

)

 

$

(221

)

 

$

(8,969

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

7,493

 

 

4,640

 

 

28,484

 

 

15,343

 

Intangibles amortization

 

93

 

 

116

 

 

442

 

 

465

 

Amortization of debt discount and issuance costs

 

 

 

20

 

 

129

 

 

80

 

Amortization of discount and issuance costs on convertible senior notes

 

3,099

 

 

 

 

7,881

 

 

 

Legal settlement

 

 

 

 

 

 

 

1,700

 

Legal and indemnification fees related to settlement

 

93

 

 

 

 

592

 

 

135

 

Reversal of interest and penalties on accrued federal fees (G&A)

 

 

 

 

 

 

 

(2,133

)

Non-cash adjustment on investment

 

 

 

(133

)

 

(352

)

 

(366

)

Non-GAAP net income

 

$

14,511

 

 

$

4,012

 

 

$

36,955

 

 

$

6,255

 

GAAP net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.01

)

 

$

 

 

$

(0.16

)

Diluted

 

$

0.06

 

 

$

(0.01

)

 

$

 

 

$

(0.16

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.25

 

 

$

0.07

 

 

$

0.64

 

 

$

0.11

 

Diluted

 

$

0.23

 

 

$

0.07

 

 

$

0.60

 

 

$

0.11

 

Shares used in computing GAAP net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

58,926

 

 

56,034

 

 

58,076

 

 

54,946

 

Diluted

 

62,071

 

 

56,034

 

 

58,076

 

 

54,946

 

Shares used in computing non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

58,926

 

 

56,034

 

 

58,076

 

 

54,946

 

Diluted

 

62,071

 

 

59,905

 

 

61,428

 

 

59,073

 

 

 

 

 

 

 

 

 

 

 

FIVE9, INC.

SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION

(In thousands)

(Unaudited)

Three Months Ended

December 31, 2018

December 31, 2017

Stock-Based Compensation

Depreciation

Intangibles Amortization

Stock-Based Compensation

Depreciation

Intangibles Amortization

 

 

Three Months Ended

 

 

December 31, 2018

 

December 31, 2017

 

 

Stock-Based Compensation

 

Depreciation

 

Intangibles Amortization

 

Stock-Based Compensation

 

Depreciation

 

Intangibles Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

1,010

331

807

170

1,747

1

5

1,128

2

28

3,794

372

2,111

257

Twelve Months Ended

Cost of revenue

 

$

942

 

 

$

2,041

 

 

$

88

 

 

$

594

 

 

$

1,523

 

 

$

88

 

Research and development

 

1,010

 

 

331

 

 

 

 

807

 

 

170

 

 

 

Sales and marketing

 

1,747

 

 

1

 

 

5

 

 

1,128

 

 

2

 

 

28

 

General and administrative

 

3,794

 

 

372

 

 

 

 

2,111

 

 

257

 

 

 

Total

 

$

7,493

 

 

$

2,745

 

 

$

93

 

 

$

4,640

 

 

$

1,952

 

 

$

116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

December 31, 2018

December 31, 2017

Stock-Based Compensation

Depreciation

Intangibles Amortization

Stock-Based Compensation

Depreciation

Intangibles Amortization

5,303

1,036

3,042

795

6,307

5

90

4,364

6

114

13,541

1,335

5,735

1,099

 

 

December 31, 2018

 

December 31, 2017

 

 

Stock-Based Compensation

 

Depreciation

 

Intangibles Amortization

 

Stock-Based Compensation

 

Depreciation

 

Intangibles Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

3,333

 

 

$

7,456

 

 

$

352

 

 

$

2,202

 

 

$

5,949

 

 

$

351

 

Research and development

 

5,303

 

 

1,036

 

 

 

 

3,042

 

 

795

 

 

 

Sales and marketing

 

6,307

 

 

5

 

 

90

 

 

4,364

 

 

6

 

 

114

 

General and administrative

 

13,541

 

 

1,335

 

 

 

 

5,735

 

 

1,099

 

 

 

Total

 

$

28,484

 

 

$

9,832

 

 

$

442

 

 

$

15,343

 

 

$

7,849

 

 

$

465

 

 

 

FIVE9, INC.

RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME – GUIDANCE

(In thousands, except per share data)

(Unaudited)

Three Months Ending

Year Ending

March 31, 2019

December 31, 2019

Low

High

Low

High

9,658

9,658

45,723

45,723

88

88

351

351

3,079

3,079

12,801

12,801

60,000

60,000

61,000

61,000

63,000

63,000

64,000

64,000

 

 

Three Months Ending

 

Year Ending

 

 

March 31, 2019

 

December 31, 2019

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(5,725

)

 

$

(4,725

)

 

$

(22,075

)

 

$

(19,075

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

9,658

 

 

9,658

 

 

45,723

 

 

45,723

 

Intangibles amortization

 

88

 

 

88

 

 

351

 

 

351

 

Amortization of discount and issuance costs on convertible senior notes

 

3,079

 

 

3,079

 

 

12,801

 

 

12,801

 

Income tax expense effects (1)

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

7,100

 

 

$

8,100

 

 

$

36,800

 

 

$

39,800

 

GAAP net loss per share, basic and diluted

 

$

(0.10

)

 

$

(0.08

)

 

$

(0.36

)

 

$

(0.31

)

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

0.14

 

 

$

0.60

 

 

$

0.65

 

Diluted

 

$

0.11

 

 

$

0.13

 

 

$

0.58

 

 

$

0.62

 

Shares used in computing GAAP net loss per share and non-GAAP net income per share:

 

 

 

 

 

 

 

 

Basic

 

60,000

 

 

60,000

 

 

61,000

 

 

61,000

 

Diluted

 

63,000

 

 

63,000

 

 

64,000

 

 

64,000

 

 

 

 

 

 

 

 

 

 

 

  1. Non-GAAP adjustments do not have an impact on our income tax provision due to past non-GAAP losses.

 

 

 

 

Investor Relations Contacts:

 

Five9, Inc.

Barry Zwarenstein

Chief Financial Officer

925-201-2000 ext. 5959

IR@five9.com

 

The Blueshirt Group for Five9, Inc.

Lisa Laukkanen

415-217-4967

Lisa@blueshirtgroup.com