Five9 Reports First Quarter Revenue Growth of 27% to a Record $74.5 Million

Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center
software for the digital enterprise, today reported results for the
first quarter ended March 31, 2019.

First Quarter 2019 Financial Results

• Revenue for the first quarter of 2019 increased 27% to a record $74.5
  million, compared to $58.9 million for the first quarter of 2018.
• GAAP gross margin was 58.6% for the first quarter of 2019, compared to
  58.1% for the first quarter of 2018.
• Adjusted gross margin was 63.4% for the first quarter of 2019,
  compared to 62.3% for the first quarter of 2018.
• GAAP net loss for the first quarter of 2019 was $(1.9) million, or
  $(0.03) per basic share, compared to GAAP net loss of $(0.6) million,
  or $(0.01) per basic share, for the first quarter of 2018.
• Non-GAAP net income for the first quarter of 2019 was $10.0 million,
  or $0.16 per diluted share, compared to non-GAAP net income of $4.5
  million, or $0.08 per diluted share, for the first quarter of 2018.
• Adjusted EBITDA for the first quarter of 2019 was $11.8 million, or
  15.9% of revenue, compared to $7.5 million, or 12.7% of revenue, for
  the first quarter of 2018.
• GAAP operating cash flow for the first quarter of 2019 was $11.2
  million, compared to GAAP operating cash flow of $8.0 million for the
  first quarter of 2018.

“We started off 2019 with a strong first quarter. Revenue of $74.5
million grew 27% year-over-year, a Q1 record growth rate as a public
company, and continued to be driven by our Enterprise business, which
delivered 36% growth in LTM Enterprise subscription revenue. We also
enjoyed ongoing momentum on the technology front. Our Spring 2019
release provides new capabilities to even larger and more sophisticated
enterprises as they customize their contact center technology to meet
specific business requirements. With regards to AI, we continue to
establish our leadership and demonstrated what we believe is an
industry-first integration between Google and Salesforce at the Next
conference. As customer experience becomes an increasingly important
spend category for IT, we see our role as a trusted partner to larger
enterprises continuing to accelerate.”

– Rowan Trollope, CEO, Five9

Business Outlook

• For the full year 2019, Five9 expects to report:
  • Revenue in the range of $304.0 to $307.0 million, up from the
    prior guidance range of $298.5 to $301.5 million that was
    previously provided on February 19, 2019.
  • GAAP net loss in the range of $(17.3) to $(14.3) million or
    $(0.29) to $(0.24) per basic share, improved from the prior
    guidance range of $(22.1) to $(19.1) million, or $(0.36) to
    $(0.31) per basic share, that was previously provided on February
    19, 2019.
  • Non-GAAP net income in the range of $39.3 to $42.3 million or
    $0.61 to $0.66 per diluted share, improved from the prior guidance
    range of $36.8 to $39.8 million, or $0.58 to $0.62 per diluted
    share, that was previously provided on February 19, 2019.
• For the second quarter of 2019, Five9 expects to report:
  • Revenue in the range of $72.0 to $73.0 million.
  • GAAP net loss in the range of $(6.7) to $(5.7) million, or a loss
    of $(0.11) to $(0.09) per basic share.
  • Non-GAAP net income in the range of $7.0 to $8.0 million, or $0.11
    to $0.13 per diluted share.

Conference Call Details

Five9 will discuss its first quarter 2019 results today, May 1, 2019,
via teleconference at 4:30 p.m. Eastern Time. To access the call (ID
5680922), please dial: 888-204-4368 or 323-794-2423. An audio replay of
the call will be available through May 15, 2019 by dialing 888-203-1112
or 719-457-0820 and entering access code 5680922. 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 loss: depreciation,
amortization, stock-based compensation, interest expense, interest
(income) and other, non-recurring litigation settlement costs and
related indemnification fees, and provision for (benefit from) income
taxes. We calculate non-GAAP operating income as operating loss
excluding stock-based compensation, intangibles amortization, and
non-recurring litigation settlement costs and related indemnification
fees. We calculate non-GAAP net income as GAAP net 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, and gain on sale of convertible note
held for 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, value to and role
with enterprise customers, our vision for the future, our long-term
goals, and the second 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 annual report on Form 10-K and 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 five billion call minutes 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 transform customer experiences into customer love. For more
information, visit www.five9.com.

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