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Five9 (FIVN) to Report Q1 Earnings: What's In the Cards?

Zacks Equity Research

Five9, Inc. FIVN is scheduled to report first-quarter 2019 results on May 1.

In the last reported quarter, the company came up with a positive surprise of 64.29%.  Notably, the company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 126.49%.

Moreover, revenues of $72.3 million surged 31.3% from the year-ago quarter and also surpassed the Zacks Consensus Estimate of $67 million in the fourth quarter.

What to Expect in Q1

For first-quarter 2019, Five9 expects revenues in the range of $70-$71 million. The Zacks Consensus Estimate is pegged at $70.68 million, indicating nearly 20% increase from the year-ago reported figure.

Non-GAAP earnings are anticipated in the range of 11-$13 cents per share. The Zacks Consensus Estimate for the same stands at 13 cents.

Let’s see how things are shaping up for the upcoming announcement.

Five9, Inc. Price and EPS Surprise

Five9, Inc. Price and EPS Surprise | Five9, Inc. Quote

Factors to Consider

Five9’s top-line performance in the upcoming quarterly result is likely to be driven by its enterprise segment.  Growth in enterprise subscription business is the company’s key driver.

Its cloud contact-center software has been witnessing accelerated growth over the last several quarters due to the ongoing digital transformation as organizations are increasingly looking for ways to minimize costs and improve customer support. We believe, Five9’s ongoing execution has placed it well to capitalize on this opportunity in the first quarter as well.

The company’s focus on strengthening its existing customer relationships is also a positive. Increasing customer satisfaction is eventually driving the retention rate, which is an upside for the company.

Additionally, Five9’s focus on its commercial business and improvement of its execution levels are its pluses.

However, a strong seasonal tailwind in the last reported quarter is likely to be an overhang on the sequential results this quarter to be reported.

Moreover, an increase in R&D expenses for product development and AI expansion coupled with higher S&M expenses for go-to-market activities will keep margins under pressure.

What Our Model Says

The proven Zacks model clearly shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has significantly higher chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Five9 has an Earnings ESP of 0.00% and a Zacks Rank #2, which increases the predictive power of ESP. However, a 0.00% ESP in the combination makes surprise prediction difficult for the stock this earnings season.

Stocks That Warrant a Look

Here are a few stocks worth considering as per our model, these have the right mix of elements to beat on earnings this reporting cycle:

Paycom Software, Inc. PAYC has an Earnings ESP of +3.17% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +5.50% and is a Zacks #2 Ranked player.

Acacia Communications, Inc. ACIA has an Earnings ESP of +5.73% and is a #2 Ranked player.

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