Five9 Faces Revenue Slowdown, Yet Analysts See Profitability And AI Potential As Key Upsides

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.

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