Five9 Inc (FIVN) Reports Record Revenue Growth in Full Year 2023
Revenue Growth: Full year 2023 revenue increased by 17% to a record $910.5 million.
Enterprise Subscription Revenue: Grew by 25% in 2023, driving the overall revenue surge.
GAAP Operating Cash Flow: Reached a record $36.5 million in Q4 and $128.8 million for the full year.
GAAP Net Loss: Decreased to $(81.8) million in 2023 from $(94.7) million in 2022.
Non-GAAP Net Income: Improved to $149.9 million, or $2.05 per diluted share in 2023, up from $106.7 million, or $1.50 per diluted share in 2022.
Adjusted EBITDA: Increased to $166.3 million in 2023, representing 18.3% of revenue.
On February 21, 2024, Five9 Inc (NASDAQ:FIVN) released its 8-K filing, revealing a significant uptick in its financial performance for the full year ended December 31, 2023. The company, a leading provider of cloud-native contact center software, reported a 17% increase in total revenue, reaching a record $910.5 million. This growth was largely fueled by a 25% rise in enterprise subscription revenue, underscoring the company's success in capturing a larger share of the enterprise market.
Five9's Virtual Contact Center platform, which combines telephony, omnichannel engagement, and various modules into a unified CCaaS platform, has been central to this growth. The platform's modules, including digital self-service, agent assist technology, workflow automation, and workforce optimization solutions, have optimized call center efficiency and managed interaction quality and agent performance.
Financial Highlights and Challenges
The company's financial achievements are particularly noteworthy in the context of the software industry, where recurring revenue models and cash flow generation are critical indicators of stability and growth potential. Five9's record GAAP operating cash flow of $37 million in Q4 and $128.8 million for the full year reflects strong operational efficiency and a healthy conversion of profits into cash, which is vital for sustaining investment in innovation and market expansion.
Despite these achievements, Five9 reported a GAAP net loss of $(81.8) million for the full year 2023, an improvement from the $(94.7) million net loss in 2022. The company's GAAP gross margin also saw a slight decrease from 52.8% in 2022 to 52.5% in 2023. These challenges highlight the competitive nature of the software industry and the ongoing investments required to maintain and enhance technological leadership, particularly in AI and automation.
Income Statement and Balance Sheet Analysis
Key details from the income statement show that while revenue has grown, the cost of revenue also increased to $432.7 million in 2023 from $367.5 million in 2022, affecting the gross profit margin. On the balance sheet, cash and cash equivalents decreased from $180.5 million at the end of 2022 to $143.2 million at the end of 2023. However, marketable investments increased significantly, from $433.7 million to $587.1 million, indicating a strategic allocation of resources.
Important metrics such as adjusted EBITDA, which increased to $166.3 million in 2023, and non-GAAP net income, which improved to $149.9 million, are important as they exclude non-recurring expenses and provide a clearer picture of the company's operational performance.
"We are pleased to report strong revenue growth of 17% for full year 2023. This growth continues to be driven by our Enterprise business where subscription revenue grew 25% in 2023. In the fourth quarter, revenue grew 15% year-over-year, and we achieved adjusted EBITDA margin of 20%, which drove a fourth quarter record for GAAP operating cash flow. We continue to strengthen our AI leadership in CX, gaining meaningful traction with our offerings and significantly enhancing our platform throughout 2023. In addition, we are experiencing strong momentum up-market, evidenced by our fourth quarter record in Enterprise bookings, an acceleration in top-of-funnel growth, and pipeline reaching another all-time high. The market remains massive and underpenetrated, and we believe we are well positioned to capitalize on this durable, multi-year opportunity as we focus on further strengthening our platform, marching up-market and expanding internationally." - Mike Burkland, Chairman and CEO, Five9
Outlook and Analysis
Looking ahead, Five9 provides guidance for the full year 2024 with expected revenue in the range of $1.053 to $1.057 billion, and a GAAP net loss per share in the range of $(0.61) to $(0.53). Non-GAAP net income per share is projected to be between $2.14 to $2.18. These projections reflect the company's confidence in its growth trajectory and its ability to continue capturing market share in the expanding CCaaS sector.
Overall, Five9's performance in 2023 demonstrates its ability to grow revenue and manage cash flow effectively, despite a challenging economic environment. The company's focus on enterprise subscription growth, AI leadership, and international expansion positions it well for future success.
For more detailed financial information and future updates, investors and interested parties are encouraged to visit the Investor Relations section of the Companys website at http://investors.five9.com/.
Explore the complete 8-K earnings release (here) from Five9 Inc for further details.
This article first appeared on GuruFocus.
