Analyst Note| Dan Romanoff, CPA |
Five9 reported strong second-quarter results, including both top- and bottom-line beats, and provided solid guidance for both the third quarter and full year. Five9’s metrics were solid but are trending down, including recurring revenue of 91% and dollar-based retention rate of 118%. On the flip side, enterprise sales expanded to 85% of revenue over the latest 12 months. The continued growth in enterprise revenue is particularly encouraging as larger customers tend to be stickier and provide more upselling opportunities, particularly in automation. Management did note that due to macroeconomic uncertainty, it will be slowing the rate of hiring in the second half of the fiscal year. When considering the encouraging release coupled with macro uncertainty, we are maintaining our fair value estimate of $130 per share and view shares as undervalued.