Five9, Inc.

Five9, Inc. is a leading provider of an intelligent customer experience platform for enterprise contact centers, evolving from a cloud-native solution into an AI-native CX platform powered by its Five9 Genius AI suite. The company operates in the cloud contact center software market, which is driven by two key industry trends: the increasing adoption of cloud-based solutions replacing legacy on-premises systems, and advancements in artificial intelligence, including Generative AI and Large Language Models, that enable new capabilities in contact centers. Five9 has more than 3,000 customers ¹ and believes its end-to-end, AI-powered CX platform creates a significant advantage by orchestrating interactions across all channels throughout the customer journey.

Five9 competes with large legacy vendors offering on-premises contact center systems such as Avaya Inc. and Cisco Systems, Inc., vendors that expanded to offer cloud contact center software such as Genesys Telecommunications Laboratories, Inc. and NICE Ltd., smaller contact center service providers such as Content Guru and Talkdesk, unified communications and contact center vendors such as RingCentral and Zoom, and platform companies such as Amazon.com, Inc., Twilio Inc., and Microsoft that offer solutions for companies to build their own contact centers. CRM vendors are increasingly offering features and functionality, including AI contact center solutions, that compete with contact center providers. The company believes its competitive strengths include its global cloud-based, AI-infused, enterprise-grade platform and end-to-end application suite, customer success with a consultative approach, a reliable, secure, compliant and scalable platform, a proven and scalable go-to-market model, an established market presence with a large, diverse customer base of over 3,000 organizations ², an extensive partner ecosystem, enabling network and telecommunications services, and a focus on innovation and thought leadership.

Five9 generates revenue through a software-as-a-service business model, consisting of subscription revenue from its Intelligent CX Platform and usage-based telephony revenue. Customers are charged monthly subscription fees primarily based on the number of licenses, and AI solutions are sold on a consumption or capacity basis. For the years ended December 31, 2025, 2024 and 2023, subscription and related usage fees accounted for 93% ³, 92% ⁴ and 92% ⁵ of revenue, respectively, with the remainder comprised of professional services revenue. The company offers monthly, annual and multiple-year contracts, generally with 30 days' notice required for limited reductions in the number of licenses or the level of consumption or capacity. Five9 operates in a single reportable segment.

Five9's solution is a comprehensive, end-to-end cloud software platform for contact centers designed to enable customers to increase operational efficiency, revenue opportunities, and business agility, and to provide insights into workforce and customer behaviors. The platform includes key capabilities such as interaction routing and prioritization across channels, automation and integration of back and front-end systems, and the ability to leverage AI through self-service, agent assistance, and management insights. The solution also empowers agents and supervisors through Workforce Engagement Management (WEM) and includes revenue execution capabilities, including outbound campaigns, compliance and out-reach solutions. The platform is built on a modern SaaS architecture leveraging global data centers and public cloud deployments, and is based on a micro services-based open enterprise architecture with open APIs and SDKs. The company's Genius AI suite is a comprehensive portfolio of AI solutions that uses Generative AI to power agentic CX, including AI Agents, Agent Assist, Workflow Automation (WFA), AI Insights, AI Summaries, and AI Knowledge.

In August 2024, Five9 announced a reduction in force plan (the 2024 Plan) that reduced global full-time employees by approximately 6% ⁶, incurring total restructuring costs of $9.6 million ⁷ for the year ended December 31, 2024. On March 31, 2025, the Board of Directors approved a reduction in force plan (the 2025 Plan) that reduced global full-time employees by approximately 4% ⁸, incurring total restructuring costs of $7.9 million ⁹ for the year ended December 31, 2025, plus an additional $2.1 million ¹⁰ in stock-based compensation costs related to the 2025 Plan. In October 2025, the Board of Directors authorized a share repurchase program (the 2025 Repurchase Program) for the repurchase of shares of common stock in an aggregate amount up to $150.0 million ¹¹, which expires on December 31, 2027. As part of this program, in November 2025, the company entered into an accelerated share repurchase (ASR) program under which it repurchased $50.0 million ¹² of its common stock, receiving an initial delivery of 1,926,782 ¹³ shares on November 12, 2025. The ASR program was completed on February 2, 2026, resulting in delivery of 701,517 ¹⁴ additional shares. As of December 31, 2025, $100.0 million ¹⁵ remained available under the 2025 Repurchase Program. In March 2024, the company issued $747.5 million ¹⁶ aggregate principal amount of 1.00% ¹⁷ convertible senior notes due 2029 (the 2029 convertible senior notes) in a private offering, using part of the net proceeds to repurchase approximately $313.1 million ¹⁸ aggregate principal amount of its then outstanding 2025 convertible senior notes for aggregate cash consideration of approximately $304.9 million ¹⁹, resulting in an extinguishment gain of approximately $6.6 million ²⁰. The 2025 convertible senior notes matured on June 1, 2025, and the company settled its obligations with a cash payment of $434.4 million ²¹. In August 2024, the company acquired Acqueon, Inc. for cash consideration of $167.2 million ²² (as reflected in cash paid to acquire Acqueon Inc. of $167,151 thousand). In August 2023, the company acquired Aceyus, Inc. for cash consideration of $80.6 million ²³ (as reflected in cash settlement to acquire Aceyus, Inc. of $80,588 thousand).

For the year ended December 31, 2025, total revenue was $1,149.1 million ²⁴, compared to $1,041.9 million ²⁵ for 2024 and $910.5 million ²⁶ for 2023, representing year-over-year growth of 10% ²⁷ and 14% ²⁸, respectively. Net income (loss) was $39.4 million ²⁹ for 2025, compared to $(12.8) million ³⁰ for 2024 and $(81.8) million ³¹ for 2023. Gross profit was $632.9 million ³² for 2025, compared to $564.4 million ³³ for 2024, with gross margin improving to 55% ³⁴ from 54% ³⁵. The company shifted to a net income position in 2025 primarily as a result of disciplined expense management, including stock-based compensation costs. As of December 31, 2025, total assets were $1,790.1 million ³⁶, compared to $2,051.2 million ³⁷ as of December 31, 2024. The Annual Dollar-Based Retention Rate was 105% ³⁸ as of December 31, 2025, compared to 108% ³⁹ as of December 31, 2024.

Management expects net income to continue to be positive in 2026 ⁴⁰. The company expects the dollar amount of its costs and expenses to increase in the future as revenue increases, although at a slower rate than the expected growth in revenue ⁴¹. The company expects to continue to make further investments for the foreseeable future as it continues to expand its business ⁴².

A key growth vector is the increasing adoption of cloud-based solutions within companies around the world, which is creating strong demand for integrated cloud contact center software solutions, as organizations periodically refresh their on-premises contact center systems, providing an opportunity for cloud solutions to replace legacy systems ⁴³. AI technologies generally require cloud deployment and provide additional incentives for customers to migrate away from legacy on-premises solutions ⁴⁴. Another major growth vector is advancements in artificial intelligence, particularly Generative AI and Large Language Models, which enable new capabilities in contact centers that were not previously possible ⁴⁵. The company's Genius AI suite is a comprehensive portfolio of AI solutions that uses Generative AI to power agentic CX, including agentic AI Agents, AI Summaries, natural language voice and chat-bots, and AI Insights ⁴⁶. The company plans to continue to further develop and enhance its AI-powered features, including continued further integration of Generative AI technologies ⁴⁷. The company also plans to add new customers that are government entities and has made, and plans to continue to make, investments to support future customer opportunities in the government sector, including undergoing processes and procedures to obtain FedRAMP authorization ⁴⁸. The company continues to expand its international operations, including through the acquisition of companies with operations outside the U.S. and formation of new legal entities ⁴⁹. The company has increased and is continuing to increase its sales, marketing and support personnel in both the U.K. and the European Union, and has enlarged its data centers in the U.K. and Amsterdam and is increasing its use of public cloud solutions in the European Union ⁵⁰.

The company expects gross margin to increase in the long-term with long-term revenue growth outpacing continued investments in professional services, public cloud, cloud operations, customer support and network infrastructure ⁵¹. The company expects the dollar amount of its costs and expenses to increase in the future as revenue increases, although at a slower rate than the expected growth in revenue ⁵². The company expects to continue to make further investments for the foreseeable future as it continues to expand its business, which may cause it to experience losses in the future ⁵³.

The company plans to continue to invest in future growth, including expending substantial financial and other resources on its sales and marketing and professional services organizations, its technology infrastructure including systems architecture, management tools, scalability, availability, performance and security as well as disaster recovery measures, solution development including investments in the solution development team and the development of new solutions and in the acquisition of companies and technologies, international expansion, selective acquisitions, and general administration including legal, regulatory compliance and accounting expenses ⁵⁴. The company anticipates that it will continue to expand its operations over the longer term ⁵⁵. The company expects to continue to invest in professional services, public cloud, cloud operations, customer support and network infrastructure to maintain high quality and availability of services ⁵⁶. The company expects research and development expenses to increase in absolute dollars and fluctuate as a percentage of revenue in the near and longer term ⁵⁷. The company expects sales and marketing expenses to increase in absolute dollars and fluctuate as a percentage of revenue in the near and longer term as it continues to support its growth initiatives ⁵⁸. The company expects that general and administrative expenses will fluctuate in absolute dollars and as a percentage of revenue in the near term, but to increase in absolute dollars and decline as a percentage of revenue in the longer term ⁵⁹.

Research and development expenses totaled $152.3 million ⁶⁰ for the year ended December 31, 2025, compared to $166.2 million ⁶¹ for 2024 and $156.6 million ⁶² for 2023. Capitalized software development costs were $39.1 million ⁶³ for the year ended December 31, 2025. Capital expenditures were $25.0 million ⁶⁴ for the year ended December 31, 2025. As of December 31, 2025, $100.0 million ⁶⁵ remained available under the 2025 Repurchase Program, which authorizes the repurchase of up to $150.0 million ⁶⁶ of common stock through December 31, 2027. The company has never declared or paid any cash dividends on its common stock and does not expect to pay any dividends in the foreseeable future ⁶⁷.

The company expects that adverse economic conditions, including the impact of macroeconomic challenges, global tariff increases and potential future increases and announcements regarding same, continued inflation, uncertainty regarding consumer spending, high interest rates, fluctuations in currency rates, and the impact of current and potential global conflicts, will continue to have an adverse impact on its revenue in future periods ⁶⁸. The company's installed base business, which contributes a significant portion of its annual revenue growth, continues to experience macroeconomic challenges ⁶⁹. As AI solutions will likely perform an increasing proportion of contact center interactions, particularly for customer self-service, this will result in a decrease in license revenues from the installed base, as well as a decrease in license revenue opportunities from new customers, that may not be offset by additional revenue from AI solutions ⁷⁰. The contact center industry is in the early stages of this transition to AI, making it very difficult to forecast customer behavior or the impact on revenue or results of operations in the near- and longer-term ⁷¹.

The company faces material risks from adverse economic conditions, including macroeconomic challenges, global tariff increases, continued inflation, high interest rates, and global conflicts, which have and are expected to continue to adversely impact revenue, particularly in the installed base business that contributes a significant portion of annual revenue growth ⁷². As AI solutions perform an increasing proportion of contact center interactions, the company may experience a decrease in license revenues that may not be offset by additional AI solution revenue, and the early stage of this transition makes forecasting customer behavior and revenue impact very difficult ⁷³. The company has a substantial amount of debt, with $747.5 million ⁷⁴ in principal outstanding under the 2029 convertible senior notes, and may not have sufficient cash flow to service this debt or to repurchase the notes upon a fundamental change, which could result in a default ⁷⁵. The company relies on third-party data centers and public cloud providers, and any failure or downtime in these facilities could affect a significant percentage of customers, causing service interruptions and potential loss of customers ⁷⁶. The company is subject to extensive federal, state, and foreign regulations, including FCC rules on telecommunications services, and noncompliance could result in substantial fines, penalties, or restrictions on operations; for example, the company has an unresolved dispute with the FCC regarding potential liability for USF contributions for the period from 2003 through 2007, with $0.1 million ⁷⁷ accrued in interest as of December 31, 2025 ⁷⁸.

Management's message emphasizes Five9's evolution from a cloud-native solution to an AI-native CX platform, with the belief that the company's end-to-end, AI-powered CX platform creates a significant advantage through a continuous learning loop that compounds over time, creating a powerful data flywheel ⁷⁹. Key strategic priorities for the period ahead include: driving profitable growth through disciplined expense management, as evidenced by the shift to a net income position of $39.4 million ⁸⁰ in 2025; prioritizing investments in key strategic areas, including AI, as demonstrated by the 2025 Plan which reduced global full-time employees by approximately 4% ⁸¹ to reallocate resources; and continuing to expand the customer base, particularly among larger enterprises and government entities, while investing in international expansion and the partner ecosystem. Management expects net income to continue to be positive in 2026 ⁸².