Five9 Delivers Yet Another Earnings Beat- But Can Its 46% YTD Rally Continue?

Five9 (FIVN) has extended its impressive string of earnings beats, exceeding consensus 1Q20 revenue and earnings estimates as subscription revenue grew (+33% year-over-year).

“We believe customers are seeing first-hand the need for a cloud based system in times when agents’ normal work location are compromised” explains Needham analyst Scott Berg.

Specifically, revenue of $95.1M surged by 27.7% year-over-year, and beat by $5.52 million. Similarly, Q1 Non-GAAP EPS of $0.17 beat the Street forecast by $0.02, while GAAP EPS of -$0.12 beat by $0.02.

“We delivered strong first quarter results, with revenue of $95.1 million, up 28% year-over-year, driven by our continued success in our Enterprise business. I am extremely proud of the ways in which we’ve delivered exceptional service to our customers during the COVID-19 pandemic” commented CEO Rowan Trollope.

Looking ahead, the cloud contact center software provider offered solid Q2 guidance. The company now expects revenue of $91.0M, above consensus estimates of $89.5M, and 2Q20 EPS of $0.15 in-line with consensus estimates.

Meanwhile FIVN management reaffirmed their FY20 revenue guidance of $382M (+16% year-ovver-year), but decreased their FY20 EPS guidance from $.85 to $.74.

Following the earnings release, Rosenblatt analyst Ryan Koontz reiterated his Five9 buy rating and $114 price target. Shares have now surged 46% year-to-date- but Koontz sees a further 19% upside potential ahead.

“We remain highly enthused by FIVN execution and demonstrated success in mid-market and enterprise” he cheered. “We are pleased to see the company sustain its emphasis on channel strategy to support global SIs, service scale, Fortune 500 enterprise capacity, and international reach.”

Management also announced a major new channel relationship with AT&T (T), notes Koontz, whereby FIVN will become the exclusive CCaaS supplier to AT&T.

He writes: “We view this relationship as significant as AT&T has historically been a major channel partner to major on-prem contact center providers such as Cisco and Genesis.”

Overall, the stock scores a cautiously optimistic Moderate Buy consensus from the Street. But with such an extensive rally over the last few months, the average analyst price target of $85 now indicates downside potential of 11%. (See Five9 Stock Analysis on TipRanks).

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