10-K: Five9 Reports FY2024 Results: Revenue Climbs to $1.04 Billion Amidst Economic Headwinds

• Five9, Inc., a leading provider of cloud contact center software, reported its financial results for the year ended December 31, 2024.
• The company's revenue reached $1,041.9 million, a 14% increase compared to $910.5 million in 2023 and $778.8 million in 2022.
• Despite the revenue growth, Five9 incurred a net loss of $12.8 million in 2024, a significant improvement from the $81.8 million loss in 2023 and $94.7 million loss in 2022.
• The company's Annual Dollar-Based Retention Rate was 108% as of December 31, 2024.
• Five9's Intelligent CX Platform and AI-powered solutions are designed to improve customer service, sales, and marketing strategies for over 3,000 customers.
• The company's growth is driven by the increasing adoption of cloud-based solutions, digital transformation, and advancements in artificial intelligence.
• Five9 completed the acquisition of Acqueon Inc. in 2024 to enhance its revenue execution capabilities.
• In August 2024, Five9 implemented a reduction in force plan, affecting approximately 6% of its global workforce, resulting in $9.6 million in restructuring costs.
• The company's strategy includes expanding its international operations, which exposes it to various risks.
• Five9 is subject to various federal, state, and foreign regulations, including telecommunications and data privacy laws.
• The company's stock price has been volatile and may continue to be so, influenced by various factors including economic conditions and competition.

Score: 6

Explanation: The sentiment is neutral to slightly positive. While revenue growth is strong and losses are decreasing, the company faces significant challenges including economic headwinds, increasing competition, and the need to manage costs effectively. The reduction in force plan also indicates some level of concern about future performance.

• Significant revenue growth, reaching $1.04 billion in FY2024.
• Substantial reduction in net loss compared to previous years.
• High Annual Dollar-Based Retention Rate indicates strong customer loyalty.
• Strategic acquisition of Acqueon to expand capabilities.
• Focus on innovation and thought leadership in cloud contact center software.
• Large and diverse customer base across multiple industries.
• Extensive partner ecosystem enhances solution functionality and value.
• Commitment to environmental sustainability and corporate responsibility.
• Implementation of AI Blueprint program to assist customers with strategic planning and implementation of Genius AI suite.

• Incurred a net loss of $12.8 million despite revenue growth.
• Reduction in force plan implemented, affecting approximately 6% of the workforce.
• Installed base business continues to experience macroeconomic challenges.
• Reliance on third-party telecommunications and internet service providers poses risks.
• Exposure to potential liabilities related to USF matters.
• Competition from large legacy vendors and new market entrants in AI.
• Potential for decreased license revenues as AI solutions perform an increasing proportion of contact center interactions.

• Adverse economic conditions may harm the business.
• Inability to attract new customers or expand within the installed customer base.
• Customers terminating subscriptions or reducing usage.
• Failure to manage technical operations infrastructure.
• Inability to replace decreases in license revenue with revenue from AI solutions.
• Security breaches and cybersecurity incidents.
• Failure to comply with laws and regulations.
• Inability to secure additional financing on favorable terms.
• Volatility in stock price.
• Risks associated with international operations.
• Potential for third-party intellectual property infringement claims.
• Reliance on third-party telecommunications and internet service providers.

The company expects that macroeconomic challenges will continue to have an adverse impact on revenue in future periods. The company plans to continue to invest in future growth, including expending substantial financial and other resources on sales and marketing, research and development, technology infrastructure, international expansion, and selective acquisitions.

Five9 operates in the competitive cloud contact center software market, facing competition from legacy vendors, smaller service providers, and vendors offering unified communications and contact center solutions. The market is characterized by rapid technological changes, including the advent of Generative AI, which is prompting an acceleration in the adoption of AI solutions for customer self-service, agent assistance, and management of contact center operations.

• Five9 competes with large legacy vendors such as Avaya and Cisco, which are increasingly supplementing their on-premises systems with cloud offerings.
• The company also competes with cloud contact center software providers like Genesys and NICE, as well as unified communications vendors such as RingCentral and Zoom.
• Amazon, Twilio, and Microsoft have also entered the market with solutions aimed at companies who wish to build their own contact centers.
• CRM vendors like Salesforce and ServiceNow are increasingly offering features that compete with contact center providers.
• New market entrants in AI are also offering Generative AI solutions that compete as point products in the market.

• Shareholders: Potential for long-term growth and value creation, but also face risks related to stock price volatility and economic conditions.
• Employees: Impacted by the reduction in force plan, but also benefit from the company's commitment to talent development and total rewards philosophy.
• Customers: Benefit from the company's focus on innovation and customer experience, but also face potential disruptions from service outages and security breaches.
• Suppliers: May be impacted by changes in the company's operations and financial performance.
• Creditors: Face risks related to the company's ability to service its debt and repay its convertible senior notes.

• Continue to expand the base of larger customers.
• Grow revenue from existing customers.
• Innovate and expand internationally.
• Address risks and challenges, including the impact of continued macroeconomic challenges.
• Monitor and comply with evolving regulatory landscape.

• A purported holder of the company's securities filed a putative class action complaint against the company, its CEO, and its CFO in the United States District Court for the Northern District of California alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, based on alleged false and/or misleading statements or omissions regarding the company and its business and seeking unspecified damages on behalf of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired the company's securities, including call options, from June 4, 2024, through the close of trading on August 8, 2024.

• 2001: Five9 incorporated in Delaware.
• 2008-2012: Period for which Five9 made retroactive USF contributions.
• April 2013: Five9 registered with USAC and began remitting USF contributions.
• March 2014: Board and stockholders approved the 2014 Equity Incentive Plan.
• April 3, 2014: 2014 Equity Incentive Plan became effective.
• May/June 2020: Issued $747.5 million in 2025 convertible senior notes.
• August 2023: Acquired Aceyus, Inc.
• March 1, 2024: Issued $747.5 million in 2029 convertible senior notes and repurchased a portion of the 2025 convertible senior notes.
• August 2024: Implemented a reduction in force plan.
• August 27, 2024: Acquired Acqueon Inc.
• December 31, 2024: End of fiscal year 2024.
• June 1, 2025: Maturity date of the 2025 convertible senior notes.
• March 15, 2029: Maturity date of the 2029 convertible senior notes.