Five9 (FIVN) Stock Forecast & Price Target

Five9 has demonstrated a robust financial performance, with subscription revenue comprising 79% of total revenue and growing 19% year-over-year, underscoring the company's successful transition towards a subscription-based model. The operating cash flow increased to $49.8 million, reflecting a margin of 17.9%, while profitability metrics improved significantly, with adjusted gross margin reaching 63.5% and adjusted EBITDA hitting an all-time high of 23.1%. Additionally, total revenue rose by 16.6% year-over-year, supported by strong bookings within the install base and improved execution in the upmarket segment, suggesting a solid demand for the company’s cloud-native contact center solutions.

Five9's outlook appears negative due to a combination of factors, including a cautious forecast for the second half of the year, with management indicating a muted increase in customer service agents and acknowledging weak trends in consumer and healthcare sectors. The company's inability to penetrate international markets, compounded by a potential decline in usage revenue below 10% of annual revenues by FY26, poses additional risks to its growth trajectory. Furthermore, operating expenses exceeded expectations by $5.4 million, driven by higher general and administrative as well as research and development costs, which could further strain profitability amidst volatile SaaS valuations.