UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 2018
FIVE9, INC.
(Exact name of Registrant as specified in its charter)
Delaware | 001-36383 | 94-3394123 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
Bishop Ranch 8 | ||
4000 Executive Parkway, Suite 400 | ||
San Ramon, California 94583 | ||
(Address of principal executive offices and Zip Code) | ||
Registrant’s telephone number, including area code: (925) 201-2000
Not Applicable
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
Emerging Growth Company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On November 6, 2018, Five9, Inc. (the “Company”) announced its financial results for the fiscal quarter ended September 30, 2018. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1 furnished herewith) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FIVE9, INC. | ||||||||
Date: November 6, 2018 | By: | /s/ Barry Zwarenstein | ||||||
Barry Zwarenstein | ||||||||
Chief Financial Officer | ||||||||
Exhibit 99.1
Five9 Reports Third Quarter Revenue Growth of 30% to a Record $65.3 Million
37% Growth in LTM Enterprise Subscription Revenue
Eleventh Consecutive Quarter of Positive Operating Cash Flow at $9.4 Million
Raised 2018 Guidance for Both Revenue and Bottom Line
SAN RAMON, Calif. - November 6, 2018 - Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software for the digital enterprise, today reported results1 for the third quarter ended September 30, 2018.
Third Quarter 2018 Financial Results
• | Revenue for the third quarter of 2018 increased 30% to a record $65.3 million, compared to $50.1 million for the third quarter of 2017. |
• | GAAP gross margin was 59.9% for the third quarter of 2018, compared to 59.1% for the third quarter of 2017. |
• | Adjusted gross margin was 64.3% for the third quarter of 2018, compared to 63.1% for the third quarter of 2017. |
• | GAAP net loss for the third quarter of 2018 was $(1.3) million, or $(0.02) per basic share, compared to GAAP net income of $0.9 million, or $0.02 per diluted share, for the third quarter of 2017. Included in the GAAP results for the third quarter of 2017 was a $2.1 million reversal of accrued disputed interest and penalties following a favorable ruling by the Universal Service Administration Company. |
• | Non-GAAP net income for the third quarter of 2018 was $11.1 million, or $0.18 per diluted share, compared to non-GAAP net income of $2.6 million, or $0.04 per diluted share, for the third quarter of 2017. |
• | Adjusted EBITDA for the third quarter of 2018 was $12.8 million, or a record 19.6% of revenue, compared to $5.2 million, or 10.3% of revenue, for the third quarter of 2017. |
• | GAAP operating cash flow for the third quarter of 2018 was $9.4 million, compared to GAAP operating cash flow of $8.0 million for the third quarter of 2017. |
1On January 1, 2018, Five9 adopted Accounting Standards Codification (ASC) 606 “Revenue from Contracts with Customers” using the modified retrospective transition method. While the financial results for the third quarter of 2018 are presented under ASC 606, financial results for the third quarter of 2017 are presented under ASC 605. A reconciliation of the financial results for the third quarter of 2018 under ASC 606 and ASC 605 is presented in the “Reconciliation of ASC 605 to ASC 606” table included in this release.
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“Our third quarter results significantly exceeded our expectations. Revenue was a record $65.3 million, up 30% year-over-year, representing our fastest growth rate since Five9 went public in 2014. In the third quarter, we continued to execute crisply in a strong market and made solid progress on our strategic priorities, including building our talent bench, investing in R&D, and advancing our long-term investments. We are driving toward our goal of creating the world’s best self-learning intelligent contact center delivered through the cloud and powered by AI. Enterprise customers are recognizing the value of our innovative platform and our compelling vision for the future. That recognition was reinforced by Five9 being named as a leader both in the first ever Forrester Wave: Cloud Contact Center, and, for the fourth consecutive year, in the Gartner Magic Quadrant for Contact Center as a Service.”
- Rowan Trollope, CEO, Five9
Business Outlook
The guidance below includes the expected impact of the adoption of ASC 606.
• | For the full year 2018, Five9 expects to report: |
• | Revenue in the range of $251.1 to $252.2 million, up from the prior guidance range of $244.5 to $246.5 million that was previously provided on August 6, 2018. |
• | GAAP net loss in the range of $(6.7) to $(5.7) million, or $(0.12) to $(0.10) per basic share, compared to the prior guidance range of $(14.0) to $(12.0) million, or $(0.24) to $(0.20) per basic share, that was previously provided on August 6, 2018. |
• | Non-GAAP net income in the range of $30.4 to $31.4 million, or $0.49 to $0.51 per diluted share, improved from the prior guidance range of $24.0 to $26.0 million, or $0.39 to $0.42 per diluted share, that was previously provided on August 6, 2018. |
• | For the fourth quarter of 2018, Five9 expects to report: |
• | Revenue in the range of $65.8 to $66.8 million. |
• | GAAP net loss in the range of $(2.7) to $(1.7) million, or a loss of $(0.05) to $(0.03) per basic share. |
• | Non-GAAP net income in the range of $8.0 to $9.0 million, or $0.13 to $0.14 per diluted share. |
Conference Call Details
Five9 will discuss its third quarter 2018 results today, November 6, 2018, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 7616920), please dial: 888-204-4368 or 323-794-2423. An audio replay of the call will be available through November 20, 2018 by dialing 888-203-1112 or 719-457-0820 and entering access code 7616920. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K, and will be posted to our web site, prior to the conference call.
A webcast of the call will be available on the Investor Relations section of the Company’s website at http://investors.five9.com/.
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Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. We calculate adjusted gross profit by adding back the following items to gross profit: depreciation, intangibles amortization and stock-based compensation expense. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation, amortization, interest expense, provision for income taxes, stock-based compensation expense, non-recurring litigation settlement costs, reversal of interest and penalties on accrued federal fees and interest income and other. We calculate non-GAAP operating income as operating income (loss) excluding stock-based compensation expense, intangibles amortization, reversal of interest and penalties on accrued federal fees and non-recurring litigation settlement costs. We calculate non-GAAP net income as GAAP net income (loss) excluding stock-based compensation expense, intangibles amortization, amortization of debt discount and issuance costs, amortization of discount and issuance costs on convertible senior notes, non-recurring litigation settlement costs, reversal of interest and penalties on accrued federal fees and non-cash adjustments on investment. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of factors that do not directly affect what we consider to be our core operating performance, as well as unusual events. The Company’s management uses these measures to (i) illustrate underlying trends in the Company’s business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the Company’s business and evaluating its performance. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented only as supplemental information for purposes of understanding the Company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures set forth herein and attached to this release.
Forward-Looking Statements
This news release contains certain forward-looking statements, including the statements in the quote from our Chief Executive Officer, including statements regarding Five9’s market position, business momentum, product positioning, enterprise customer views of the value of our products and vision for the future, the Company’s long-term goals, and the fourth quarter and full year 2018 financial projections set forth under the caption “Business Outlook,” that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (iii) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately expand our sales force could impede our growth; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service
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outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (vi) security breaches and improper access to or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and adversely affect our business; (vii) the markets in which we participate are highly competitive, and if we do not compete effectively, our operating results could be harmed; (viii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (ix) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully grow and manage these relationships could harm our business; (x) we are establishing a network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (xi) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results; (xii) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (xiii) any disruption, price increase or degradation in the third-party telecommunications and internet services used by our clients and their customers to connect to and use our cloud contact center software, could impair or reduce our clients’ use of our solution, cause us to lose clients and subject us to reputational harm as well as claims for credits or damages; (xiv) we have a history of losses and we may be unable to achieve or sustain profitability; (xv) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xvi) failure to comply with laws and regulations could harm our business and our reputation; and (xvii) the other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent quarterly report on Form 10-Q. Such forward-looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.
About Five9
Five9 is a leading provider of cloud contact center software for the digital enterprise, bringing the power of cloud innovation to customers and facilitating more than three billion customer interactions annually. Five9 provides end-to-end solutions with omnichannel routing, analytics, WFO, and AI to increase agent productivity and deliver tangible business results. The Five9 platform is reliable, secure, compliant, and scalable; designed to create exceptional personalized customer experiences. For more information, visit www.five9.com.
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FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 79,619 | $ | 68,947 | ||||
Marketable investments | 200,007 | — | ||||||
Accounts receivable, net | 23,903 | 19,048 | ||||||
Prepaid expenses and other current assets | 7,962 | 4,840 | ||||||
Deferred contract acquisition costs | 8,633 | — | ||||||
Total current assets | 320,124 | 92,835 | ||||||
Property and equipment, net | 22,909 | 19,888 | ||||||
Intangible assets, net | 724 | 1,073 | ||||||
Goodwill | 11,798 | 11,798 | ||||||
Other assets | 962 | 2,602 | ||||||
Deferred contract acquisition costs — less current portion | 19,599 | — | ||||||
Total assets | $ | 376,116 | $ | 128,196 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 4,528 | $ | 4,292 | ||||
Accrued and other current liabilities | 14,144 | 11,787 | ||||||
Accrued federal fees | 1,681 | 1,151 | ||||||
Sales tax liability | 1,322 | 1,326 | ||||||
Notes payable | — | 336 | ||||||
Capital leases | 6,909 | 6,651 | ||||||
Deferred revenue | 17,490 | 13,975 | ||||||
Total current liabilities | 46,074 | 39,518 | ||||||
Convertible senior notes | 193,664 | — | ||||||
Revolving line of credit | — | 32,594 | ||||||
Sales tax liability — less current portion | 884 | 1,044 | ||||||
Capital leases — less current portion | 6,250 | 7,161 | ||||||
Other long-term liabilities | 1,360 | 1,041 | ||||||
Total liabilities | 248,232 | 81,358 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 59 | 57 | ||||||
Additional paid-in capital | 283,055 | 222,202 | ||||||
Accumulated deficit | (155,230 | ) | (175,421 | ) | ||||
Total stockholders’ equity | 127,884 | 46,838 | ||||||
Total liabilities and stockholders’ equity | $ | 376,116 | $ | 128,196 | ||||
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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Revenue | $ | 65,304 | $ | 50,081 | $ | 185,329 | $ | 144,822 | ||||||||
Cost of revenue | 26,179 | 20,497 | 75,695 | 60,741 | ||||||||||||
Gross profit | 39,125 | 29,584 | 109,634 | 84,081 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 9,582 | 6,689 | 25,721 | 20,372 | ||||||||||||
Sales and marketing | 17,818 | 16,502 | 53,208 | 49,212 | ||||||||||||
General and administrative | 10,746 | 4,679 | 29,682 | 20,384 | ||||||||||||
Total operating expenses | 38,146 | 27,870 | 108,611 | 89,968 | ||||||||||||
Income (loss) from operations | 979 | 1,714 | 1,023 | (5,887 | ) | |||||||||||
Other income (expense), net: | ||||||||||||||||
Interest expense | (3,595 | ) | (865 | ) | (6,783 | ) | (2,635 | ) | ||||||||
Interest income and other | 1,352 | 118 | 1,956 | 326 | ||||||||||||
Total other income (expense), net | (2,243 | ) | (747 | ) | (4,827 | ) | (2,309 | ) | ||||||||
Income (loss) before income taxes | (1,264 | ) | 967 | (3,804 | ) | (8,196 | ) | |||||||||
Provision for income taxes | 41 | 43 | 150 | 142 | ||||||||||||
Net income (loss) | $ | (1,305 | ) | $ | 924 | $ | (3,954 | ) | $ | (8,338 | ) | |||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.02 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.15 | ) | |||||
Diluted | $ | (0.02 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.15 | ) | |||||
Shares used in computing net income (loss) per share: | ||||||||||||||||
Basic | 58,454 | 55,310 | 57,790 | 54,579 | ||||||||||||
Diluted | 58,454 | 59,441 | 57,790 | 54,579 | ||||||||||||
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FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended | ||||||||
September 30, 2018 | September 30, 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (3,954 | ) | $ | (8,338 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 7,436 | 6,246 | ||||||
Amortization of premium on marketable investments | (317 | ) | — | |||||
Provision for doubtful accounts | 81 | 66 | ||||||
Stock-based compensation | 20,991 | 10,703 | ||||||
Reversal of interest and penalties on accrued federal fees | — | (2,133 | ) | |||||
Gain on sale of convertible note held for investment | (312 | ) | — | |||||
Non-cash adjustment on investment | (40 | ) | (233 | ) | ||||
Amortization of debt discount and issuance costs | 129 | 60 | ||||||
Amortization of discount and issuance costs on convertible senior notes | 4,782 | — | ||||||
Accretion of interest | 44 | 16 | ||||||
Others | (59 | ) | (50 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (4,931 | ) | (3,406 | ) | ||||
Prepaid expenses and other current assets | (2,755 | ) | (1,861 | ) | ||||
Deferred contract acquisition costs | (5,094 | ) | — | |||||
Other assets | 68 | 71 | ||||||
Accounts payable | 307 | 1,409 | ||||||
Accrued and other current liabilities | 2,575 | 1,774 | ||||||
Accrued federal fees and sales tax liability | 366 | 95 | ||||||
Deferred revenue | 3,910 | 3,676 | ||||||
Other liabilities | (75 | ) | 131 | |||||
Net cash provided by operating activities | 23,152 | 8,226 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of marketable investments | (203,953 | ) | — | |||||
Proceeds from maturities of marketable investments | 4,047 | — | ||||||
Purchases of property and equipment | (4,503 | ) | (1,809 | ) | ||||
Proceeds from sale of convertible note held for investment | 1,923 | — | ||||||
Net cash used in investing activities | (202,486 | ) | (1,809 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,036 | 250,714 | — | ||||||
Payments for capped call transactions | (31,412 | ) | — | |||||
Proceeds from exercise of common stock options | 7,111 | 3,280 | ||||||
Proceeds from sale of common stock under ESPP | 2,884 | 1,800 | ||||||
Repayments on revolving line of credit | (32,594 | ) | — | |||||
Payments of notes payable | (318 | ) | (547 | ) | ||||
Payments of capital leases | (6,379 | ) | (5,708 | ) | ||||
Net cash provided by (used in) financing activities | 190,006 | (1,175 | ) | |||||
Net increase in cash and cash equivalents | 10,672 | 5,242 | ||||||
Cash and cash equivalents: | ||||||||
Beginning of period | 68,947 | 58,122 | ||||||
End of period | $ | 79,619 | $ | 63,364 | ||||
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FIVE9, INC.
RECONCILIATION OF ASC 605 TO ASC 606 P&L ITEMS - GAAP
(In thousands, except per share data and percentages)
(Unaudited)
Three Months Ended | ||||||||||||
September 30, 2018 | ||||||||||||
ASC 605 | Adjustments | ASC 606 | ||||||||||
Revenue | $ | 65,041 | $ | 263 | $ | 65,304 | ||||||
Cost of revenue | 26,040 | 139 | 26,179 | |||||||||
GAAP gross profit | 39,001 | 124 | 39,125 | |||||||||
GAAP gross margin | 60.0 | % | 59.9 | % | ||||||||
Operating expenses: | ||||||||||||
Research and development | 9,582 | — | 9,582 | |||||||||
Sales and marketing | 19,574 | (1,756 | ) | 17,818 | ||||||||
General and administrative | 10,746 | — | 10,746 | |||||||||
Total operating expenses | 39,902 | (1,756 | ) | 38,146 | ||||||||
GAAP income (loss) from operations | (901 | ) | 1,880 | 979 | ||||||||
GAAP Operating Margin | (1.4 | )% | 1.5 | % | ||||||||
Other income (expense), net | (2,243 | ) | — | (2,243 | ) | |||||||
Loss before income taxes | (3,144 | ) | 1,880 | (1,264 | ) | |||||||
Provision for income taxes | 41 | — | 41 | |||||||||
GAAP net loss | $ | (3,185 | ) | $ | 1,880 | $ | (1,305 | ) | ||||
Net loss per share: | ||||||||||||
Basic and diluted | $ | (0.05 | ) | $ | 0.03 | $ | (0.02 | ) | ||||
Shares used in computing net loss per share: | ||||||||||||
Basic and diluted | 58,454 | — | 58,454 | |||||||||
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FIVE9, INC.
RECONCILIATION OF ASC 605 TO ASC 606 P&L ITEMS - NON-GAAP
(In thousands, except per share data and percentages)
(Unaudited)
Three Months Ended | ||||||||||||
September 30, 2018 | ||||||||||||
ASC 605 | Adjustments | ASC 606 | ||||||||||
Revenue | $ | 65,041 | $ | 263 | $ | 65,304 | ||||||
Cost of revenue | 23,159 | 139 | 23,298 | |||||||||
Adjusted gross profit | 41,882 | 124 | 42,006 | |||||||||
Adjusted gross margin | 64.4 | % | 64.3 | % | ||||||||
Operating expenses: | ||||||||||||
Research and development | 6,952 | — | 6,952 | |||||||||
Sales and marketing | 17,931 | (1,756 | ) | 16,175 | ||||||||
General and administrative | 6,106 | — | 6,106 | |||||||||
Total operating expenses | 30,989 | (1,756 | ) | 29,233 | ||||||||
Adjusted EBITDA | 10,893 | 1,880 | 12,773 | |||||||||
Adjusted EBITDA margin | 16.7 | % | 19.6 | % | ||||||||
Depreciation | 2,550 | — | 2,550 | |||||||||
Non-GAAP operating income | 8,343 | 1,880 | 10,223 | |||||||||
Non-GAAP operating margin | 12.8 | % | 15.7 | % | ||||||||
Other income (expense), net | 895 | — | 895 | |||||||||
Income before income taxes | 9,238 | 1,880 | 11,118 | |||||||||
Provision for income taxes | 41 | — | 41 | |||||||||
Non-GAAP net income | $ | 9,197 | $ | 1,880 | $ | 11,077 | ||||||
Non-GAAP net income per share: | ||||||||||||
Basic | $ | 0.16 | $ | 0.03 | $ | 0.19 | ||||||
Diluted | $ | 0.15 | $ | 0.03 | $ | 0.18 | ||||||
Shares used in computing non-GAAP net income per share: | ||||||||||||
Basic | 58,454 | — | 58,454 | |||||||||
Diluted | 61,997 | — | 61,997 | |||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except percentages)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
GAAP gross profit | $ | 39,125 | $ | 29,584 | $ | 109,634 | $ | 84,081 | ||||||||
GAAP gross margin | 59.9 | % | 59.1 | % | 59.2 | % | 58.1 | % | ||||||||
Non-GAAP adjustments: | ||||||||||||||||
Depreciation | 1,933 | 1,310 | 5,415 | 4,426 | ||||||||||||
Intangibles amortization | 88 | 87 | 264 | 263 | ||||||||||||
Stock-based compensation | 860 | 599 | 2,391 | 1,608 | ||||||||||||
Adjusted gross profit | $ | 42,006 | $ | 31,580 | $ | 117,704 | $ | 90,378 | ||||||||
Adjusted gross margin | 64.3 | % | 63.1 | % | 63.5 | % | 62.4 | % | ||||||||
FIVE9, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
GAAP net income (loss) | $ | (1,305 | ) | $ | 924 | $ | (3,954 | ) | $ | (8,338 | ) | |||||
Non-GAAP adjustments: | ||||||||||||||||
Depreciation and amortization | 2,667 | 1,881 | 7,436 | 6,246 | ||||||||||||
Stock-based compensation | 8,869 | 3,720 | 20,991 | 10,703 | ||||||||||||
Interest expense | 3,595 | 865 | 6,783 | 2,635 | ||||||||||||
Interest income and other | (1,352 | ) | (118 | ) | (1,956 | ) | (326 | ) | ||||||||
Legal settlement | — | — | — | 1,700 | ||||||||||||
Legal and indemnification fees related to settlement | 258 | — | 499 | 135 | ||||||||||||
Reversal of interest and penalties on accrued federal fees (G&A) | — | (2,133 | ) | — | (2,133 | ) | ||||||||||
Provision for income taxes | 41 | 43 | 150 | 142 | ||||||||||||
Adjusted EBITDA | $ | 12,773 | $ | 5,182 | $ | 29,949 | $ | 10,764 | ||||||||
Adjusted EBITDA as % of revenue | 19.6 | % | 10.3 | % | 16.2 | % | 7.4 | % | ||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP OPERATING INCOME (LOSS) TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Income (loss) from operations | $ | 979 | $ | 1,714 | $ | 1,023 | $ | (5,887 | ) | |||||||
Non-GAAP adjustments: | ||||||||||||||||
Stock-based compensation | 8,869 | 3,720 | 20,991 | 10,703 | ||||||||||||
Intangibles amortization | 117 | 115 | 349 | 349 | ||||||||||||
Legal settlement | — | — | — | 1,700 | ||||||||||||
Legal and indemnification fees related to settlement | 258 | — | 499 | 135 | ||||||||||||
Reversal of interest and penalties on accrued federal fees (G&A) | — | (2,133 | ) | — | (2,133 | ) | ||||||||||
Non-GAAP operating income | $ | 10,223 | $ | 3,416 | $ | 22,862 | $ | 4,867 | ||||||||
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FIVE9, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
GAAP net income (loss) | $ | (1,305 | ) | $ | 924 | $ | (3,954 | ) | $ | (8,338 | ) | |||||
Non-GAAP adjustments: | ||||||||||||||||
Stock-based compensation | 8,869 | 3,720 | 20,991 | 10,703 | ||||||||||||
Intangibles amortization | 117 | 115 | 349 | 349 | ||||||||||||
Amortization of debt discount and issuance costs | 89 | 20 | 129 | 60 | ||||||||||||
Amortization of discount and issuance costs on convertible senior notes | 3,049 | — | 4,782 | — | ||||||||||||
Legal settlement | — | — | — | 1,700 | ||||||||||||
Legal and indemnification fees related to settlement | 258 | — | 499 | 135 | ||||||||||||
Reversal of interest and penalties on accrued federal fees (G&A) | — | (2,133 | ) | — | (2,133 | ) | ||||||||||
Non-cash adjustment on investment | — | (72 | ) | (352 | ) | (233 | ) | |||||||||
Non-GAAP net income | $ | 11,077 | $ | 2,574 | $ | 22,444 | $ | 2,243 | ||||||||
GAAP net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.02 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.15 | ) | |||||
Diluted | $ | (0.02 | ) | $ | 0.02 | $ | (0.07 | ) | $ | (0.15 | ) | |||||
Non-GAAP net income per share: | ||||||||||||||||
Basic | $ | 0.19 | $ | 0.05 | $ | 0.39 | $ | 0.04 | ||||||||
Diluted | $ | 0.18 | $ | 0.04 | $ | 0.37 | $ | 0.04 | ||||||||
Shares used in computing GAAP net income (loss) per share: | ||||||||||||||||
Basic | 58,454 | 55,310 | 57,790 | 54,579 | ||||||||||||
Diluted | 58,454 | 59,441 | 57,790 | 54,579 | ||||||||||||
Shares used in computing non-GAAP net income per share: | ||||||||||||||||
Basic | 58,454 | 55,310 | 57,790 | 54,579 | ||||||||||||
Diluted | 61,997 | 59,441 | 61,191 | 58,916 | ||||||||||||
12
FIVE9, INC.
SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
Three Months Ended | ||||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||||||||||||||
Cost of revenue | $ | 860 | $ | 1,933 | $ | 88 | $ | 599 | $ | 1,310 | $ | 87 | ||||||||||||
Research and development | 2,352 | 278 | — | 797 | 182 | — | ||||||||||||||||||
Sales and marketing | 1,613 | 1 | 29 | 1,084 | 2 | 28 | ||||||||||||||||||
General and administrative | 4,044 | 338 | — | 1,240 | 272 | — | ||||||||||||||||||
Total | $ | 8,869 | $ | 2,550 | $ | 117 | $ | 3,720 | $ | 1,766 | $ | 115 | ||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||||||||||||||
Cost of revenue | $ | 2,391 | $ | 5,415 | $ | 264 | $ | 1,608 | $ | 4,426 | $ | 263 | ||||||||||||
Research and development | 4,293 | 705 | — | 2,235 | 625 | — | ||||||||||||||||||
Sales and marketing | 4,560 | 4 | 85 | 3,236 | 4 | 86 | ||||||||||||||||||
General and administrative | 9,747 | 963 | — | 3,624 | 842 | — | ||||||||||||||||||
Total | $ | 20,991 | $ | 7,087 | $ | 349 | $ | 10,703 | $ | 5,897 | $ | 349 | ||||||||||||
13
FIVE9, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME – GUIDANCE
(In thousands, except per share data)
(Unaudited)
Three Months Ending | Year Ending | |||||||||||||||
December 31, 2018 | December 31, 2018 | |||||||||||||||
Low | High | Low | High | |||||||||||||
GAAP net loss | $ | (2,719 | ) | $ | (1,719 | ) | $ | (6,673 | ) | $ | (5,673 | ) | ||||
Non-GAAP adjustments: | ||||||||||||||||
Stock-based compensation | 7,527 | 7,527 | 28,518 | 28,518 | ||||||||||||
Intangibles amortization | 93 | 93 | 442 | 442 | ||||||||||||
Amortization of discount and issuance costs on convertible senior notes | 3,099 | 3,099 | 7,881 | 7,881 | ||||||||||||
Amortization of debt discount and issuance costs | — | — | 129 | 129 | ||||||||||||
Legal and indemnification fees related to settlement | — | — | 499 | 499 | ||||||||||||
Non-cash adjustment on investment | — | — | (352 | ) | (352 | ) | ||||||||||
Income tax expense effects (1) | — | — | — | — | ||||||||||||
Non-GAAP net income | $ | 8,000 | $ | 9,000 | $ | 30,444 | $ | 31,444 | ||||||||
GAAP net loss per share, basic and diluted | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.12 | ) | $ | (0.10 | ) | ||||
Non-GAAP net income per share: | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.15 | $ | 0.52 | $ | 0.54 | ||||||||
Diluted | $ | 0.13 | $ | 0.14 | $ | 0.49 | $ | 0.51 | ||||||||
Shares used in computing GAAP net loss per share and non-GAAP net income per share: | ||||||||||||||||
Basic | 59,500 | 59,500 | 58,000 | 58,000 | ||||||||||||
Diluted | 63,500 | 63,500 | 62,000 | 62,000 | ||||||||||||
(1) | Non-GAAP adjustments do not have an impact on our income tax provision due to past non-GAAP losses. |
14
Investor Relations Contacts:
Five9, Inc.
Barry Zwarenstein
Chief Financial Officer
925-201-2000 ext. 5959
IR@five9.com
The Blueshirt Group for Five9, Inc.
Lisa Laukkanen
415-217-4967
Lisa@blueshirtgroup.com
# # #
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