10-Q: Five9 Reports Strong Q2 2026 Revenue Growth

Five9, Inc. announced its second quarter 2026 financial results, showcasing a 10% increase in revenue and a significant rise in net income compared to the prior year period.

Summary

• Five9, Inc. reported revenue of $312.4 million for the three months ended June 30, 2026, a 10% increase from $283.3 million in the same period of 2025.
• For the six months ended June 30, 2026, revenue was $617.8 million, up 10% from $563.0 million in the comparable period of 2025.
• Net income for the second quarter of 2026 was $3.4 million, a substantial increase from $1.2 million in the second quarter of 2025.
• Net income for the first six months of 2026 was $21.8 million, compared to $1.7 million for the same period in 2025.
• The company maintained a strong Annual Dollar-Based Retention Rate, at 106% for subscription plus telecom revenue and 107% for subscription revenue as of June 30, 2026.
• Adjusted EBITDA for the second quarter of 2026 was $70.1 million, a slight increase from $68.0 million in the prior year period.
• The company ended the quarter with $187.3 million in cash and cash equivalents and $466.8 million in marketable investments.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as cautiously optimistic, reflecting solid revenue growth and improved net income, though tempered by ongoing investments and macroeconomic uncertainties.

Positives

• Revenue increased by 10% year-over-year for both the three-month and six-month periods ended June 30, 2026.
• Net income saw a significant improvement, rising to $3.4 million in Q2 2026 from $1.2 million in Q2 2025, and to $21.8 million for the six months ended June 30, 2026, from $1.7 million in the prior year.
• Annual Dollar-Based Retention Rate remained strong at 106% (subscription plus telecom) and 107% (subscription only) as of June 30, 2026.
• Adjusted EBITDA increased to $70.1 million in Q2 2026 from $68.0 million in Q2 2025, indicating operational efficiency.
• The company has a healthy liquidity position with $187.3 million in cash and cash equivalents and $466.8 million in marketable investments as of June 30, 2026.
• The company is actively repurchasing shares, with $200 million remaining under the 2026 Repurchase Program.

Negatives

• Cost of revenue increased by 14% for the three months and 11% for the six months ended June 30, 2026, outpacing revenue growth in the quarter.
• General and administrative expenses increased by 18% for the three months ended June 30, 2026, largely due to an $8.4 million impairment charge related to corporate headquarters consolidation.
• Interest income and other decreased by 26% for the three months and 39% for the six months ended June 30, 2026, due to lower investable balances.
• The company faces ongoing macroeconomic challenges, including global tariff increases, potential global conflicts, inflation, and high interest rates, which could adversely impact future revenue.

Risks

• Adverse economic conditions, including global tariff increases, potential global conflicts, inflation, and high interest rates, may harm the business.
• Failure to attract new customers or sell additional services to existing customers will harm revenue and revenue growth.
• If existing customers terminate or reduce subscriptions, revenues and gross margins will be harmed.
• The company may be unable to replace decreases in subscription revenue from licenses with revenue from the sale of additional AI solutions.
• Further development of AI solutions may not be successful or achieve market acceptance.
• Security breaches, cybersecurity incidents, and other cyber-attacks could harm reputation, business, or financial results.
• The company is involved in legal proceedings, including a securities class action and related shareholder derivative actions, the outcome of which is uncertain and could materially affect financial results.

Future Outlook

The company expects to continue investing in sales and marketing, research and development, and infrastructure. While growth opportunities exist, they are accompanied by risks from macroeconomic challenges. The company believes its existing cash and marketable investments are sufficient for at least the next 12 months, with plans to finance future operations through sales, equity/debt financings, and lease facilities.

Management Comments

• Five9 is now evolving into an AI-native CX platform, empowering enterprises to scale seamlessly, innovate faster, and deliver enhanced customer experiences as our market opportunity continues to expand.
• We believe this is the structural advantage of our end-to-end AI-powered CX platform.
• We believe that continued investment in our solution is important for our future growth, and we expect our research and development expenses to increase in absolute dollars and fluctuate as a percentage of revenue in the near and longer term.
• We believe it is important to continue investing in sales and marketing to continue to generate revenue growth, and we expect sales and marketing expenses to increase in absolute dollars and fluctuate as a percentage of revenue in the near and longer term as we continue to support our growth initiatives.

Industry Context

StockSavvy.ai notes that Five9's transition towards an 'AI-native CX platform' aligns with broader industry trends focusing on leveraging artificial intelligence to enhance customer interactions and operational efficiency. The company's focus on Generative AI and agentic CX positions it within a competitive but rapidly growing segment of the contact center software market.

Comparison to Industry Standards

• Five9's Annual Dollar-Based Retention Rate of 106-107% is generally considered strong within the SaaS industry, indicating effective customer retention and expansion.
• The company's revenue growth of 10% for the period is solid, though it may be considered moderate compared to hyper-growth SaaS companies, but aligns with mature growth in the enterprise software sector.
• The reported net income and adjusted EBITDA figures, while showing improvement, reflect the ongoing investment in R&D and sales & marketing, a common strategy for growth-oriented technology companies aiming for long-term market share and profitability.

Legal Proceedings

• A securities class action complaint was filed on December 4, 2024, alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934. The court granted in part and denied in part the defendants' motion to dismiss.
• Related shareholder derivative actions were filed in March 2025 and February 2026, consolidated, and subsequently stayed pending resolution of the securities action.
• A separate shareholder derivative action was filed in Delaware in March 2026 and also stayed.

Stakeholder Impact

• Shareholders may benefit from improved net income, increased revenue, and ongoing share repurchase programs.
• Employees may be impacted by continued investment in R&D and sales, but also by past restructuring efforts.
• Customers benefit from the company's focus on AI-powered CX and platform enhancements.
• Creditors are impacted by the company's strong liquidity position and its outstanding convertible senior notes.

Next Steps

• Continue to prioritize investments in key strategic areas, including artificial intelligence.
• Drive profitable growth and support positive long-term outlook and increasing stockholder value.
• Continue to expand customer base, grow revenue from existing customers, and innovate.
• Expand internationally.
• Final settlement of the 2026 ASR Program is expected to occur in the third quarter of 2026.
• The company plans to continue financing operations through sales, equity/debt financings, and lease facilities.

Key Dates

Recommendation

Five9 demonstrates solid revenue growth and improved profitability, with a strong market position in AI-driven CX. However, the increased cost of revenue, rising G&A expenses due to consolidation, ongoing macroeconomic uncertainties, and significant legal proceedings warrant a cautious approach. The company's strategic investments in AI are positive, but the immediate impact on margins and the resolution of legal matters are key factors for a hold recommendation.

Keywords

cloud contact center, AI solutions, customer experience, SaaS, telephony, revenue growth, adjusted EBITDA, share repurchase