Five9 tanks 20% as shareholders punish dovish guidance

Shares of Five9 Inc (NASDAQ: FIVN) tanked nearly 20% after-hours on Wednesday after the software company gave dovish guidance for Q1. Its financial results for the fourth quarter, however, topped Wall Street expectations.

Q4 results

• Lost $3.6 million in Q4, much narrower than $7.2 million in the same quarter last year.
• Per-share loss stood at 5 cents a share versus the year-ago figure of 11 cents a share.
• On an adjusted basis, Five9 earned 42 cents a share, as per the earnings press release.
• Revenue jumped from last year’s $127.9 million to $173.6 million in the fourth quarter.
• FactSet consensus was for 36 cents of adjusted EPS on $165.4 million in revenue.

Future outlook

For Q1, Five9 forecasts per-share earnings between 12 cents and 14 cents – significantly below 22 cents that analysts had expected. Its outlook for revenue of $170 million to $171 million, however, is in line with experts’ call.

The California-based company expects $754.5 million to $757.5 million in revenue this year – ahead of the FactSet consensus. Its full-year guidance for EPS of $1.12 to $1.16 matches what analysts had anticipated.

CEO Trollope’s remarks

CEO Rowan Trollope attributed the strong results partially to the strength of Enterprise business with a 51% YoY growth in LTM subscription revenue. In the earnings press release, he said:

Our results were driven by the growing market adoption of our AI and Automation offerings, in addition to the success we have made in our march up market. We continue to build out our leadership position while delivering on a massive and barely penetrated opportunity, and we plan to continue investing in key strategic initiatives around AI, product innovation, traction with larger enterprises and global expansion to drive growth in the year ahead.

Earlier in February, Calixto Global Investors’ Eduardo Costa said Five9 was a great buy after a massive hit over the past six months.