Five9 Stock Dives Amid Revenue Slowdown, but Analysts See AI Potential

Five9 Faces Revenue Slowdown, Yet Analysts See Profitability And AI Potential As Key Upsides - Five9 (NASDAQ:FIVN)

Analysts cite macro headwinds and slowed bookings for the cautious outlook, but AI is seen as a potential positive factor. Five9, Inc. FIVN shares are trading lower today. Several analysts lowered the price target on the stock following an annual guidance cut due to recent booking trends and economic uncertainty. Yesterday, the company reported revenue of $252.1 million, beating the consensus of $245.2 million, and adjusted EPS of $0.52, which surpassed the consensus of $0.44. For 2024, Five9 reduced revenue guidance to $1.013 billion - $1.017 billion ($1.053 billion - $1.057 billion) vs. $1.055 billion and raised adjusted EPS outlook to $2.25 to $2.29 (from $2.15 to $2.19 prior) vs. street view of $2.19. Roth MKM analyst Richard K. Baldry trimmed the price target to $67 (from $90) and maintained a Buy rating. Despite a history of conservative guidance, FIVN has unexpectedly shifted from a projected 25% growth in the second half FY24 to a flat 10% growth despite strong 2Q24 results, writes the analyst. Baldry says that slowed bookings late in the second quarter and macro headwinds are impacting second-half peak revenues. In the near term, the analyst projects management to tightly control spending, which should enable earnings growth to exceed muted revenue growth. Baldry raised the FY24 EPS forecast to $2.26 (from $2.19) due to strong performance in the second quarter and only slight reductions in the second half of FY24 estimates. However, the analyst modestly decreases 2025 EPS forecast to $2.41 (from $2.67). Truist Securities analyst Terry Tillman lowered the price target to $65 (from $100) and maintained the rating at Buy. The analyst writes that following a major enterprise software contract in the first quarter, FIVN's disappointing second-quarter bookings are not unexpected given the macro environment and mixed second-quarter software results. Tillman expects a rebound in bookings, sustained profitability, and cash flow improvement and says that if the company proves AI positively impacts revenue, valuation could rise significantly. Consequently, the analyst lowered the revenue estimates for FY24 and FY25 but raised the expectations for EBITDA and adjusted EPS. Piper Sandler analyst James E. Fish cut the price target to $47 from $58 and maintained an Overweight rating. The analyst writes that the guide cut eliminates Five9's usual seasonal uplift, reflecting lower-than-expected June performance and a desire for a decisive adjustment. The analyst adds that the focus will soon shift to the 2025 guidance and whether the cost structure remains too high relative to growth and they still see AI as a positive factor for CCaaS. Meanwhile, RBC Capital Markets analyst Rishi Jaluria maintained an Outperform rating with a price target of $80. Investors can gain exposure to the stock via ProShares Big Data Refiners ETF DAT. Price Action: FIVN shares are down 27% at $30.99 at the last check Friday. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Read Next: Five9 Set To Benefit From AI And Market Expansion: 'Headwinds Have Run Their Course' Market News and Data brought to you by Benzinga APIs

Why Is Software Company Five9 Stock Diving Premarket Friday? - Five9 (NASDAQ:FIVN)

Despite lowering revenue guidance, Five9 raised its adjusted EPS outlook for 2024 and exceeded Q2 earnings expectations. Five9, Inc. FIVN shares are trading lower after the company reported second-quarter 2024 results. Revenue was $252.1 million, beating the consensus of $245.2 million. Adjusted gross margin stood at 60.5%, down from 61.8% last year. Adjusted EBITDA rose to $41.8 million from $41.5 million a year ago. Operating cash flow came in at $19.9 million in the quarter. Adjusted EPS of $0.52 surpassed the consensus of $0.44. Mike Burkland, Chairman and CEO, said, "We are pleased to report strong second quarter results, achieving a key milestone with annual revenue run rate exceeding $1 billion, primarily driven by LTM enterprise subscription revenue growing 21% year-over-year." "As we look to the remainder of the year, we are reducing our annual revenue guidance by 3.8%, reflecting recent bookings trends and the uncertain economic conditions." Outlook: For 2024, Five9 reduced revenue guidance to $1.013 billion - $1.017 billion ($1.053 billion - $1.057 billion) vs. $1.055 billion and raised adjusted EPS outlook to $2.25 to $2.29 (from $2.15 to $2.19 prior) vs. street view of $2.19. For the third quarter, Five9 anticipates revenue of $254.5 million - $255.5 million (vs. estimate of $266.4 million) and adjusted EPS of $0.57 to $0.59 (vs. street view of $0.55). In a separate release, Five9 disclosed a definitive agreement to acquire Acqueon, a real-time revenue execution platform, for an undisclosed amount. Investors can gain exposure to the stock via ProShares Big Data Refiners ETF DAT. Price Action: FIVN shares are down 15.19% at $36.02 premarket at the last check Friday. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Read Next: Five9 Set To Benefit From AI And Market Expansion: 'Headwinds Have Run Their Course' Market News and Data brought to you by Benzinga APIs

Baird downgrades Five9 stock, slashes target amid weaker Q3 outlook By Investing.com

On Friday, Baird adjusted its stance on Five9, Inc (NASDAQ:FIVN) stock, downgrading it from Outperform to Neutral and significantly reducing the price target to $40 from the previous $90. The decision followed the company's recent earnings report, which, despite solid second-quarter results, included a weaker-than-anticipated guidance for the third quarter and a downward revision of its full-year forecast. Five9, a provider of cloud contact center software, mentioned weaker booking trends and an uncertain macroeconomic environment as the reasons for the adjustment in its outlook. This news has prompted Baird to reassess the stock's potential, leading to the lowered rating and price target. The firm noted that while the valuation might limit the downside potential for Five9 shares, the reduced visibility and ongoing competitive threats are expected to continue weighing on the stock. The channel survey work conducted by Baird had yielded mixed results, but an overall solid performance was anticipated prior to the latest earnings report. The downgrade reflects a more cautious outlook on the company's near-term prospects in light of the challenges it faces. Baird's revised price target of $40 represents a significant decrease from the earlier $90 target, indicating a recalibration of expectations for the stock's performance. In other recent news, Five9 has announced a definitive agreement to acquire Acqueon, a move aimed at enhancing AI-driven customer engagement. This acquisition is expected to close in the second half of 2024. Five9 plans to integrate Acqueon's capabilities to improve omnichannel customer engagement and increase revenue. In addition, Five9 reported a 20% year-over-year growth in subscription revenue and a 13% increase in overall revenue, reaching $247 million in the first quarter. The company projects a revenue of $244.5 million for the second quarter, and full-year 2024 revenue is expected to reach $1.055 billion. In other developments, BofA Securities upgraded Five9's stock, citing potential benefits from artificial intelligence and an attractive entry point for investors. Truist Securities maintained its Buy rating on Five9 amid reports of a push for sale by Anson Funds Management, who recently acquired a stake in the company. Analysts from Piper Sandler, Deutsche Bank (ETR:DBKGn), and Wells Fargo (NYSE:WFC) have revised their price targets for Five9, maintaining positive ratings despite concerns about the company's revenue growth. These are among the recent developments in Five9's business operations. In light of Baird's recent downgrade of Five9, Inc (NASDAQ:FIVN), prospective and current investors may find additional context in recent data and insights from InvestingPro. Notably, Five9's market cap stands at approximately $3.14 billion, reflecting its size and presence in the market. Despite the challenges highlighted by Baird, InvestingPro Tips suggest that Five9 is expected to see net income growth this year, and its liquid assets are currently sufficient to cover short-term obligations. Additionally, the company operates with a moderate level of debt, which could be a stabilizing factor in uncertain economic times. However, it's worth noting that Five9 has not been profitable over the last twelve months, and the stock has experienced a significant decline over the past six months, dropping by 46.21%. The Price/Book ratio is relatively high at 6.49, suggesting that the stock may be trading at a premium compared to its book value. On a more positive note, analysts are predicting that the company will become profitable within this year, and it has historically provided a high return over the last decade. It's important to keep in mind that Five9 does not pay a dividend, which could influence investment decisions for income-focused shareholders. For those seeking a deeper dive into Five9's performance and future outlook, InvestingPro offers additional tips and metrics. There are currently 8 more InvestingPro Tips available that could provide further insights into the company's financial health and stock valuation. These tips, along with real-time metrics, can be found at https://www.investing.com/pro/FIVN, offering a comprehensive view for those considering an investment in Five9.