8-K: Five9 Reports Strong Q2 2025 Results, Driven by AI Growth

Five9, Inc. announced robust second-quarter 2025 financial results, showcasing significant revenue growth, record-high adjusted EBITDA margin, and strong AI adoption.

Summary

• Total Revenue grew 12% year-over-year.
• Subscription Revenue increased 16% year-over-year, representing 81% of total revenue.
• LTM Enterprise Subscription Revenue grew 20% year-over-year, with LTM Enterprise Revenue accounting for 90% of total revenue.
• Adjusted Gross Margin reached 63%.
• Adjusted EBITDA Margin hit an all-time high of 24%, with Adjusted EBITDA growing 63% year-over-year.
• Operating Cash Flow Margin was 12% and Free Cash Flow Margin was 8% for the LTM period.
• LTM Dollar-Based Retention Rate (DBRR) stood at 108%.
• Achieved the highest total quarterly ACV Bookings in two years, excluding a Q1 2024 Financial Services mega deal.
• Recorded all-time high Installed Base Bookings.
• Enterprise AI Revenue grew 42% year-over-year, comprising 10% of Enterprise Subscription Revenue.
• AI represented over 20% of Enterprise New Logo ACV Bookings, with virtually all $1M+ ARR new logo deals including AI attach.
• Enterprise AI Bookings grew over 3x year-over-year, with Enterprise AI New Logo Bookings up over 2x and Enterprise AI Installed Base Bookings up over 4x.
• Launched Agentic AI Agents and AI Trust & Governance solutions in Q2 2025.
• Ranked as having the Best AI Solutions by Channel Partners in a July 2025 Baird Survey.
• Q3 2025 Revenue guidance is set between $283.0M and $286.0M.
• Full-year 2025 Revenue guidance is projected between $1.1435B and $1.1495B.
• Q3 2025 Non-GAAP Net Income Per Diluted Share guidance is $0.72 $0.74.
• Full-year 2025 Non-GAAP Net Income Per Diluted Share guidance is $2.86 $2.90.
• The medium-term operating model (by 2027) targets 10%-15% YoY Revenue Growth, 66%-68%+ Adjusted Gross Margin, and 25%-30%+ Adjusted EBITDA Margin.

Sentiment

Score: 9

Explanation: The filing presents very strong Q2 2025 results, particularly in AI adoption and profitability, with an all-time high Adjusted EBITDA margin and robust bookings. The future outlook is positive, driven by continued AI innovation and market expansion.

Positives

• Achieved strong total revenue growth of 12% year-over-year and subscription revenue growth of 16% year-over-year.
• Reported an all-time high Adjusted EBITDA Margin of 24% and a significant 63% year-over-year growth in Adjusted EBITDA.
• Recorded the highest total quarterly ACV bookings in two years (excluding a Q1 2024 mega deal) and all-time high installed base bookings, indicating strong sales momentum and customer retention.
• Demonstrated exceptional growth in AI, with Enterprise AI Revenue up 42% year-over-year and Enterprise AI Bookings growing over 3x year-over-year.
• Successfully launched new AI capabilities, Agentic AI Agents and AI Trust & Governance, enhancing product offerings.
• Received industry recognition for AI solutions, being ranked as having the Best AI Solutions by Channel Partners.
• Customer examples highlight significant ROI from Five9's AI solutions, including an 80% reduction in abandonment rate and a 50%+ increase in containment rate for a healthcare company.
• Secured notable new customer wins and expansions, including a $2.8M anticipated ARR deal with a Fortune 50 financial services company and a $3.0M additional ARR expansion with a leading academic health system.
• Maintained a healthy LTM Dollar-Based Retention Rate (DBRR) of 108%.
• Showcased consistent revenue growth over several years and improved stock-based compensation expense as a percentage of revenue.
• Generated strong operating cash flow (12% margin) and free cash flow (8% margin) for the last twelve months.
• Identified a significant Total Addressable Market (TAM) expansion driven by AI, projecting a $234B opportunity.

Risks

• Impact of adverse economic conditions, including macroeconomic challenges, global tariff increases, continued inflation, uncertainty regarding consumer spending, high interest rates, and fluctuations in currency exchange rates.
• Impact of geopolitical conflicts, specifically the Russia-Ukraine conflict and conflicts in the Middle East.
• Potential for lower growth rates within the installed base of customers.
• Intense competition within the CX market.
• The effect of AI on the CX market, and the Company's AI platform's market position and expected impact on growth.
• Risks associated with the expansion of international operations.

Future Outlook

Five9 provides Q3 2025 revenue guidance of $283.0M $286.0M and full-year 2025 revenue guidance of $1.1435B $1.1495B. Non-GAAP diluted EPS is projected at $0.72 $0.74 for Q3 2025 and $2.86 $2.90 for the full year 2025. The medium-term operating model (by 2027) targets 10%-15% YoY revenue growth, 66%-68%+ adjusted gross margin, and 25%-30%+ adjusted EBITDA margin, assuming stable macroeconomic conditions and potential upside from AI.

Industry Context

The filing highlights the significant role of AI in driving growth and expanding the total addressable market (TAM) for cloud contact center software, projecting a TAM of $234B (Cloud Contact Center Software + Contact Center Labor Spend). This aligns with broader industry trends of digital transformation, cloud adoption, and the increasing integration of AI for enhanced customer experience (CX) and operational efficiency. Five9's focus on Agentic AI and AI Trust & Governance reflects the industry's move towards more sophisticated and responsible AI deployments.

Comparison to Industry Standards

• Ranked as having the Best AI Solutions by Channel Partners, according to a Semi-Annual Baird Survey from July 2025, indicating strong competitive positioning in AI.
• A healthcare company customer achieved an 80% reduction in abandonment rate, 50%+ increase in containment rate, and 60%+ improvement in post-interaction work time by expanding its AI portfolio with Five9, demonstrating superior ROI compared to traditional CX solutions.
• Another healthcare company customer saw a 19% improvement in self-service containment and improved CSAT metrics by adding new AI capabilities, showcasing effective AI integration for customer satisfaction.
• A pest control company customer achieved a 50% reduction in abandonment rate and approximately 50% reduction in hold time with Five9's AI solutions, illustrating significant operational efficiency gains.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, record profitability, robust bookings, and positive future outlook, potentially leading to increased share value.
• Customers: Positive impact through enhanced AI solutions leading to improved self-service, reduced abandonment rates, and better customer satisfaction.
• Employees: Continued investment in R&D and innovation suggests stability and growth opportunities, though cost discipline is also mentioned.

Next Steps

• Continue to use the Investor Presentation in meetings with investors, analysts, and other interested parties.
• Execute on Q3 2025 and full-year 2025 guidance.
• Continue strategic investments in go-to-market and innovation, including R&D and AI.
• Focus on subscription margin expansion and increasing subscription revenue mix.
• Maintain cost discipline and leverage economies of scale.

Key Dates

Recommendation

The company demonstrates exceptional performance with record-high Adjusted EBITDA margins and strong bookings, indicating robust operational efficiency and market demand. The significant growth in AI-driven revenue and bookings, coupled with positive customer outcomes from AI solutions, positions Five9 favorably in a rapidly expanding market. The positive future outlook and strategic focus on AI suggest continued growth and profitability, making it an attractive investment.

Keywords

Cloud Contact Center, AI, Customer Experience, SaaS, Enterprise Software, Contact Center Software, CCaaS, Five9, Financial Results, Investor Presentation