Five9’s third quarter was marked by solid execution, with the company meeting Wall Street’s revenue expectations and delivering non-GAAP profitability above consensus. Management attributed the performance to accelerating enterprise demand for AI-powered solutions, with CEO Mike Burkland noting that enterprise AI bookings grew over 80% year over year. Additionally, the ongoing shift toward high-margin subscription revenue, supported by transformation initiatives and operational improvements, contributed to margin expansion and record free cash flow. While some short-term headwinds emerged in the commercial segment, the company emphasized its ability to adjust sales strategies and resource allocation.
Is now the time to buy FIVN? Find out in our full research report (it’s free for active Edge members).
Five9 (FIVN) Q3 CY2025 Highlights:
- Revenue: $285.8 million vs analyst estimates of $285.2 million (8.2% year-on-year growth, in line)
- Adjusted EPS: $0.78 vs analyst estimates of $0.73 (6.5% beat)
- Adjusted Operating Income: $57.11 million vs analyst estimates of $52.72 million (20% margin, 8.3% beat)
- Revenue Guidance for Q4 CY2025 is $297.7 million at the midpoint, below analyst estimates of $300.2 million
- Management raised its full-year Adjusted EPS guidance to $2.94 at the midpoint, a 2.1% increase
- Operating Margin: 5.6%, up from -5.8% in the same quarter last year
- Annual Recurring Revenue: $1.11 billion vs analyst estimates of $1.11 billion (8.3% year-on-year growth, in line)
- Billings: $292.6 million at quarter end, up 4.9% year on year
- Market Capitalization: $1.64 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Five9’s Q3 Earnings Call
- David Hynes (Canaccord): Asked why Q3 results only matched the high end of guidance. CFO Bryan Lee explained that tough comparisons from a large customer and a steeper commercial decline limited upside, while operational adjustments are underway to restore commercial growth.
- Sitikantha Panigrahi (Mizuho): Questioned the lag between record installed base bookings and revenue. Lee detailed that AI and expansion deals require longer implementation, causing revenue conversion to stretch across multiple quarters but anticipated acceleration in 2026.
- Ryan MacWilliams (Wells Fargo): Inquired about AI bookings and seasonal dynamics. CEO Mike Burkland highlighted 80% year-over-year AI bookings growth and minimal seasonality, with a potential uptick in telecom usage if late-year demand materializes.
- Elizabeth Elliott (Morgan Stanley): Asked about changes in the competitive landscape with new AI-native entrants. President Andy Dignan said win rates remain strong in core cloud contact center business and that the integrated platform continues to differentiate Five9.
- Peter Levine (Evercore): Probed for pricing pressure at renewal and AI monetization models. Dignan reported stable pricing for core seats, with AI offerings sold on a capacity or consumption basis, often as committed blocks with overage charges.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the speed at which AI and enterprise backlog turns into recognized revenue, (2) stabilization and recovery in the commercial segment following resource reallocation, and (3) continued strength and expansion in strategic partnerships, particularly with ServiceNow and Salesforce. Progress on operational efficiency and new product launches will also be important indicators of future growth.
Five9 currently trades at $21.03, down from $21.54 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
The Best Stocks for High-Quality Investors
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
