Five9 stock slumps on weak guidance despite earnings beat; Baird downgrades

NEW YORK – Five9, Inc. (NASDAQ:) reported better-than-expected second quarter earnings and revenue, but shares plunged more than 13% in premarket trading Friday due to weak guidance for the upcoming quarter and full year.

The intelligent CX platform provider posted adjusted earnings per share of $0.52, surpassing analyst estimates of $0.44. Revenue climbed 13% YoY to $252.1 million, exceeding the consensus forecast of $245.24 million.

However, Five9’s outlook fell short of expectations. For the third quarter, the company projects revenue of $254.5-255.5 million, below the $266.4 million analyst consensus. Full-year 2024 revenue guidance was lowered to $1.013-1.017 billion, compared to the previous $1.06 billion estimate.

“We are reducing our annual revenue guidance by 3.8%, reflecting recent bookings trends and the uncertain economic conditions,” said Mike Burkland, Chairman and CEO of Five9. “We remain confident in our massive market opportunity and are committed to driving balanced growth and profitability.”

Analysts at Baird cut their rating on FVIN shares to Neutral following the outlook cut and Q3 guidance miss.

“Our recent channel survey work was mixed but we still expected solid results overall,” analysts wrote.

“While downside could be somewhat limited by valuation, we expect reduced visibility and ongoing competitive threats to be significant overhangs.”

Jefferies analysts shared similar remarks.

“While we believe investors expected a cut, the magnitude was surprising. Until growth stabilizes, we expect shares to remain under pressure,” they noted.

Despite the guidance cut, Five9 highlighted its achievement of surpassing a $1 billion annual revenue run rate. The company also announced plans to acquire Acqueon to advance its AI-powered CX platform.

Five9’s adjusted EBITDA margin reached 16.6% in Q2, down from 18.6% a year ago. The company generated $19.9 million in operating cash flow, compared to $21.9 million in the prior-year period.

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