8-K
Five9, Inc. (FIVN)
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): February 19, 2020
FIVE9, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 001-36383 | 94-3394123 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File No.) | (I.R.S. Employer<br>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:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
_______________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
|---|---|---|
| Common stock, par value $0.001 per share | FIVN | The NASDAQ Global Market |
| 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 | ☐ |
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 February 19, 2020, Five9, Inc. (the “Company”) announced its financial results for the fiscal quarter and year ended December 31, 2019. 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 8.01 Other Events.
The Company’s Board of Directors has determined that the Company’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”) will be held on May 18, 2020 virtually via the Internet beginning at 8:00 a.m. Pacific Daylight Time. Stockholders of record at the close of business on the record date, March 20, 2020, may vote at the Annual Meeting, including any adjournment or postponement thereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release issued by the Company on February 19, 2020 |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
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: February 19, 2020 | By: | /s/ Barry Zwarenstein |
| Barry Zwarenstein | ||
| Chief Financial Officer |
Document
Exhibit 99.1
Five9 Reports Fourth Quarter Revenue Growth of 28% to a Record $92.3 Million
34% Growth in LTM Enterprise Subscription Revenue
Fourth Quarter GAAP Net Income of $0.8 Million
Fourth Quarter Adjusted EBITDA of $19.6 Million, or 21.2% of Revenue
SAN RAMON, Calif. - February 19, 2020 - Five9, Inc. (NASDAQ:FIVN), a leading provider of cloud contact center software for the digital enterprise, today reported results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Financial Results
•Revenue for the fourth quarter of 2019 increased 28% to a record $92.3 million, compared to $72.3 million for the fourth quarter of 2018.
•GAAP gross margin was 58.9% for the fourth quarter of 2019, compared to 60.8% for the fourth quarter of 2018.
•Adjusted gross margin was 64.4% for the fourth quarter of 2019, compared to 65.1% for the fourth quarter of 2018.
•GAAP net income for the fourth quarter of 2019 was $0.8 million, or $0.01 per diluted share, compared to GAAP net income of $3.7 million, or $0.06 per diluted share, for the fourth quarter of 2018.
•Non-GAAP net income for the fourth quarter of 2019 was $17.0 million, or $0.27 per diluted share, compared to non-GAAP net income of $14.5 million, or $0.23 per diluted share, for the fourth quarter of 2018.
•Adjusted EBITDA for the fourth quarter of 2019 was $19.6 million, or 21.2% of revenue, compared to $16.4 million, or 22.7% of revenue, for the fourth quarter of 2018.
•GAAP operating cash flow for the fourth quarter of 2019 was $15.6 million, compared to GAAP operating cash flow of $15.5 million for the fourth quarter of 2018.
2019 Financial Results
•Total revenue for 2019 increased 27% to a record $328.0 million, compared to $257.7 million in 2018.
•GAAP gross margin was 59.0% for 2019, compared to 59.6% in 2018.
•Adjusted gross margin was 64.2% for 2019, compared to 63.9% in 2018.
•GAAP net loss for 2019 was $(4.6) million, or $(0.08) per basic share, compared to a GAAP net loss of $(0.2) million, or $(0.00) per basic share, in 2018.
•Non-GAAP net income for 2019 was $52.1 million, or $0.82 per diluted share, compared to a non-GAAP net income of $37.0 million, or $0.60 per diluted share, in 2018.
•Adjusted EBITDA for 2019 was $60.8 million, or a record 18.5% of revenue, compared to $46.4 million, or 18.0% of revenue, in 2018.
•GAAP operating cash flow for 2019 was $51.2 million, compared to GAAP operating cash flow of $38.6 million in 2018.
“We delivered very strong fourth quarter results, leading to a great close of the year. Fourth quarter revenue was $92.3 million, up 28% year-over-year, and was driven by our success in our Enterprise business. In 2019, we believe we set the foundation for our next decade of growth. We significantly strengthened the leadership team and expanded our product and platform to deliver the best-of-breed experiences for large enterprises. We made strides in further improving our bottom line and operating cash flow despite increased investments in R&D and go-to-market. We believe these investments position us well to continue to deliver sustained profitable growth as we execute in this massive, underpenetrated market that is being driven by two trends: the migration of premise to the cloud and the increasing focus on improving customer experience as part of overall digital transformation.”
- Rowan Trollope, CEO, Five9
Business Outlook
•For the full year 2020, Five9 expects to report:
•Revenue in the range of $380.5 to $383.5 million.
•GAAP net loss in the range of $(30.9) to $(27.9) million, or $(0.48) to $(0.43) per basic share.
•Non-GAAP net income in the range of $55.5 to $58.5 million, or $0.83 to $0.87 per diluted share.
•For the first quarter of 2020, Five9 expects to report:
•Revenue in the range of $89.0 to $90.0 million.
•GAAP net loss in the range of $(9.9) to $(8.9) million, or a loss of $(0.16) to $(0.14) per basic share.
•Non-GAAP net income in the range of $9.5 to $10.5 million, or $0.15 to $0.16 per diluted share.
Conference Call Details
Five9 will discuss its fourth quarter and full year 2019 results today, February 19, 2020, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 2305392), please dial: 800-263-0877 or 786-460-7199. An audio replay of the call will be available through March 4, 2020 by dialing 888-203-1112 or 719-457-0820 and entering access code 2305392. 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/.
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 and adjusted gross margin by adding back the following items to gross profit: depreciation, intangibles amortization and stock-based compensation. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation and amortization, stock-based compensation, interest expense, interest (income) and other, acquisition related transaction costs, non-recurring litigation settlement costs and related indemnification fees, and provision for income taxes. We calculate non-GAAP operating income as GAAP operating income excluding stock-based compensation, intangibles amortization, acquisition related transaction costs, and non-recurring litigation settlement costs and related indemnification fees. We calculate non-GAAP net income as GAAP net income (loss) excluding stock-based compensation, intangibles amortization, amortization of debt discount and issuance costs, amortization of discount and issuance costs on convertible senior notes, acquisition related transaction costs, non-recurring litigation settlement costs and related indemnification fees, and gain on sale of convertible note held for 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 expectations for future growth and profitability, market position, business momentum, product advantages and positioning, expected benefits from recent acquisitions and vision for the future, the Company’s long-term goals, and the first quarter and full year 2020 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, including as a result of the timing and success of new product and feature introductions by us, 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 retain and expand our sales force will impede our growth; (v) if we fail to manage
our technical operations infrastructure, our existing clients may experience service 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) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully maintain, grow and manage these relationships could harm our business; (vii) we have established, and are continuing to increase, our 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; (viii) adverse economic conditions may harm our business; (ix) security breaches and improper access to or disclosure of our data or our clients’ data, their customers’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and our business; (x) the markets in which we participate involve numerous competitors and are highly competitive, and if we do not compete effectively, our operating results could be harmed; (xi) 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; (xii) 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; (xiii) 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; (xiv) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software and any failure by these service providers to provide reliable services could cause us to lose clients and subject us to claims for credits or damages, among other things; (xv) we have a history of losses and we may be unable to achieve or sustain profitability; (xvi) the contact center software solutions market is subject to rapid technological change, and we must develop and sell incremental and new products in order to maintain and grow our business; (xvii) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xviii) we may acquire other companies or technologies or be the target of strategic transactions, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results; (xix) failure to comply with laws and regulations could harm our business and our reputation; (xx) we may not have sufficient cash to service our convertible senior notes and repay such notes, if required; and (xxi) 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 annual report on Form 10-K and 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 intelligent contact center space, bringing the power of cloud innovation to customers and facilitating more than six billion call minutes 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 Genius platform is reliable, secure, compliant and scalable; designed to create exceptional personalized customer experiences. For more information, visit www.five9.com.
FIVE9, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2019 | December 31, 2018 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 77,976 | $ | 81,912 |
| Marketable investments | 241,973 | 209,907 | ||
| Accounts receivable, net | 37,655 | 24,797 | ||
| Prepaid expenses and other current assets | 10,656 | 8,014 | ||
| Deferred contract acquisition costs | 13,014 | 9,372 | ||
| Total current assets | 381,274 | 334,002 | ||
| Property and equipment, net | 33,190 | 25,885 | ||
| Operating lease right-of-use assets | 8,746 | — | ||
| Intangible assets, net | 15,533 | 631 | ||
| Goodwill | 11,798 | 11,798 | ||
| Other assets | 1,184 | 836 | ||
| Deferred contract acquisition costs — less current portion | 30,655 | 21,514 | ||
| Total assets | $ | 482,380 | $ | 394,666 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 10,156 | $ | 7,010 |
| Accrued and other current liabilities | 18,385 | 13,771 | ||
| Operating lease liabilities | 5,064 | — | ||
| Accrued federal fees | 2,303 | 1,434 | ||
| Sales tax liabilities | 1,885 | 1,741 | ||
| Finance lease liabilities | 3,518 | 6,647 | ||
| Deferred revenue | 24,681 | 17,391 | ||
| Total current liabilities | 65,992 | 47,994 | ||
| Convertible senior notes | 209,604 | 196,763 | ||
| Sales tax liabilities — less current portion | 838 | 841 | ||
| Operating lease liabilities — less current portion | 4,329 | — | ||
| Finance lease liabilities — less current portion | 809 | 4,509 | ||
| Other long-term liabilities | 4,350 | 1,811 | ||
| Total liabilities | 285,922 | 251,918 | ||
| Stockholders’ equity: | ||||
| Common stock | 61 | 59 | ||
| Additional paid-in capital | 351,870 | 294,279 | ||
| Accumulated other comprehensive income (loss) | 576 | (93) | ||
| Accumulated deficit | (156,049) | (151,497) | ||
| Total stockholders’ equity | 196,458 | 142,748 | ||
| Total liabilities and stockholders’ equity | $ | 482,380 | $ | 394,666 |
FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||
| Revenue | $ | 92,263 | $ | 72,335 | $ | 328,006 | $ | 257,664 |
| Cost of revenue | 37,940 | 28,339 | 134,511 | 104,034 | ||||
| Gross profit | 54,323 | 43,996 | 193,495 | 153,630 | ||||
| Operating expenses: | ||||||||
| Research and development | 12,168 | 8,451 | 45,190 | 34,172 | ||||
| Sales and marketing | 25,627 | 18,793 | 95,592 | 72,001 | ||||
| General and administrative | 13,496 | 10,766 | 49,446 | 40,448 | ||||
| Total operating expenses | 51,291 | 38,010 | 190,228 | 146,621 | ||||
| Income from operations | 3,032 | 5,986 | 3,267 | 7,009 | ||||
| Other income (expense), net: | ||||||||
| Interest expense | (3,506) | (3,462) | (13,794) | (10,245) | ||||
| Interest income and other | 1,384 | 1,359 | 6,079 | 3,315 | ||||
| Total other income (expense), net | (2,122) | (2,103) | (7,715) | (6,930) | ||||
| Income (loss) before income taxes | 910 | 3,883 | (4,448) | 79 | ||||
| Provision for income taxes | 74 | 150 | 104 | 300 | ||||
| Net income (loss) | $ | 836 | $ | 3,733 | $ | (4,552) | $ | (221) |
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.01 | $ | 0.06 | $ | (0.08) | $ | — |
| Diluted | $ | 0.01 | $ | 0.06 | $ | (0.08) | $ | — |
| Shares used in computing net income (loss) per share: | ||||||||
| Basic | 61,253 | 58,926 | 60,371 | 58,076 | ||||
| Diluted | 65,962 | 62,071 | 60,371 | 58,076 |
FIVE9, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Twelve Months Ended | ||||
|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||
| Cash flows from operating activities: | ||||
| Net loss | $ | (4,552) | $ | (221) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 14,374 | 10,274 | ||
| Amortization of operating lease right-of-use assets | 4,735 | — | ||
| Amortization of premium on marketable investments | (1,108) | (670) | ||
| Provision for doubtful accounts | 90 | 90 | ||
| Stock-based compensation | 42,065 | 28,484 | ||
| Amortization of discount and issuance costs on convertible senior notes | 12,788 | 7,881 | ||
| Gain on sale of convertible note held for investment | (217) | (312) | ||
| Others | 448 | 160 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (12,935) | (5,829) | ||
| Prepaid expenses and other current assets | (2,671) | (2,806) | ||
| Deferred contract acquisition costs | (12,783) | (7,748) | ||
| Other assets | (348) | 193 | ||
| Accounts payable | 2,549 | 2,418 | ||
| Accrued and other current liabilities | (544) | 1,865 | ||
| Accrued federal fees and sales tax liability | 1,010 | 495 | ||
| Deferred revenue | 8,695 | 3,956 | ||
| Other liabilities | (375) | 392 | ||
| Net cash provided by operating activities | 51,221 | 38,622 | ||
| Cash flows from investing activities: | ||||
| Purchases of marketable investments | (360,958) | (220,704) | ||
| Proceeds from maturities of marketable investments | 330,228 | 11,293 | ||
| Purchases of property and equipment | (19,228) | (9,261) | ||
| Cash paid to acquire substantially all of the assets of Whendu, LLC | (13,890) | — | ||
| Proceeds from sale of convertible note held for investment | 217 | 1,923 | ||
| Net cash used in investing activities | (63,631) | (216,749) | ||
| Cash flows from financing activities: | ||||
| Proceeds from issuance of convertible senior notes, net of issuance costs paid of $8,039 | — | 250,711 | ||
| Payments for capped call transactions | — | (31,412) | ||
| Proceeds from exercise of common stock options | 7,705 | 7,779 | ||
| Proceeds from sale of common stock under ESPP | 7,823 | 5,730 | ||
| Payments of employee taxes related to vested common stock | — | (260) | ||
| Repayments on revolving line of credit | — | (32,594) | ||
| Payments of notes payable | — | (318) | ||
| Payments of finance leases | (7,054) | (8,544) | ||
| Net cash provided by financing activities | 8,474 | 191,092 | ||
| Net increase (decrease) in cash and cash equivalents | (3,936) | 12,965 | ||
| Cash and cash equivalents: | ||||
| Beginning of period | 81,912 | 68,947 | ||
| End of period | $ | 77,976 | $ | 81,912 |
FIVE9, INC.
RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
(In thousands, except percentages)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||
| GAAP gross profit | $ | 54,323 | $ | 43,996 | $ | 193,495 | $ | 153,630 | ||||
| GAAP gross margin | 58.9 | % | 60.8 | % | 59.0 | % | 59.6 | % | ||||
| Non-GAAP adjustments: | ||||||||||||
| Depreciation | 2,766 | 2,041 | 9,974 | 7,456 | ||||||||
| Intangibles amortization | 618 | 88 | 882 | 352 | ||||||||
| Stock-based compensation | 1,745 | 942 | 6,334 | 3,333 | ||||||||
| Adjusted gross profit | $ | 59,452 | $ | 47,067 | $ | 210,685 | $ | 164,771 | ||||
| Adjusted gross margin | 64.4 | % | 65.1 | % | 64.2 | % | 63.9 | % |
FIVE9, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
(In thousands, except percentages)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||
| GAAP net income (loss) | $ | 836 | $ | 3,733 | $ | (4,552) | $ | (221) | ||||
| Non-GAAP adjustments: | ||||||||||||
| Depreciation and amortization | 4,324 | 2,838 | 14,374 | 10,274 | ||||||||
| Stock-based compensation | 11,868 | 7,493 | 42,065 | 28,484 | ||||||||
| Interest expense | 3,506 | 3,462 | 13,794 | 10,245 | ||||||||
| Interest (income) and other | (1,384) | (1,359) | (6,079) | (3,315) | ||||||||
| Legal settlement | — | — | 420 | — | ||||||||
| Legal and indemnification fees related to settlement | — | 93 | 356 | 592 | ||||||||
| Acquisition related transaction costs | 338 | — | 338 | — | ||||||||
| Provision for income taxes | 74 | 150 | 104 | 300 | ||||||||
| Adjusted EBITDA | $ | 19,562 | $ | 16,410 | $ | 60,820 | $ | 46,359 | ||||
| Adjusted EBITDA as % of revenue | 21.2 | % | 22.7 | % | 18.5 | % | 18.0 | % |
FIVE9, INC.
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
(In thousands)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||
| GAAP operating income | $ | 3,032 | $ | 5,986 | $ | 3,267 | $ | 7,009 |
| Non-GAAP adjustments: | ||||||||
| Stock-based compensation | 11,868 | 7,493 | 42,065 | 28,484 | ||||
| Intangibles amortization | 618 | 93 | 882 | 442 | ||||
| Legal settlement | — | — | 420 | — | ||||
| Legal and indemnification fees related to settlement | — | 93 | 356 | 592 | ||||
| Acquisition related transaction costs | 338 | — | 338 | — | ||||
| Non-GAAP operating income | $ | 15,856 | $ | 13,665 | $ | 47,328 | $ | 36,527 |
FIVE9, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||
| GAAP net income (loss) | $ | 836 | $ | 3,733 | $ | (4,552) | $ | (221) |
| Non-GAAP adjustments: | ||||||||
| Stock-based compensation | 11,868 | 7,493 | 42,065 | 28,484 | ||||
| Intangibles amortization | 618 | 93 | 882 | 442 | ||||
| Amortization of debt discount and issuance costs | — | — | — | 129 | ||||
| Amortization of discount and issuance costs on convertible senior notes | 3,304 | 3,099 | 12,788 | 7,881 | ||||
| Legal settlement | — | — | 420 | — | ||||
| Legal and indemnification fees related to settlement | — | 93 | 356 | 592 | ||||
| Acquisition related transaction costs | 338 | — | 338 | — | ||||
| Non-cash adjustment on investment | — | — | (217) | (352) | ||||
| Non-GAAP net income | $ | 16,964 | $ | 14,511 | $ | 52,080 | $ | 36,955 |
| GAAP net income (loss) per share: | ||||||||
| Basic | $ | 0.01 | $ | 0.06 | $ | (0.08) | $ | — |
| Diluted | $ | 0.01 | $ | 0.06 | $ | (0.08) | $ | — |
| Non-GAAP net income per share: | ||||||||
| Basic | $ | 0.28 | $ | 0.25 | $ | 0.86 | $ | 0.64 |
| Diluted | $ | 0.27 | $ | 0.23 | $ | 0.82 | $ | 0.60 |
| Shares used in computing GAAP net income (loss) per share: | ||||||||
| Basic | 61,253 | 58,926 | 60,371 | 58,076 | ||||
| Diluted | 65,962 | 62,071 | 60,371 | 58,076 | ||||
| Shares used in computing non-GAAP net income per share: | ||||||||
| Basic | 61,253 | 58,926 | 60,371 | 58,076 | ||||
| Diluted | 63,853 | 62,071 | 63,245 | 61,428 |
FIVE9, INC.
SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND INTANGIBLES AMORTIZATION
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||||||||||
| Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||
| Cost of revenue | $ | 1,745 | $ | 2,766 | $ | 618 | $ | 942 | $ | 2,041 | $ | 88 |
| Research and development | 2,259 | 461 | — | 1,010 | 331 | — | ||||||
| Sales and marketing | 3,353 | 2 | — | 1,747 | 1 | 5 | ||||||
| General and administrative | 4,511 | 477 | — | 3,794 | 372 | — | ||||||
| Total | $ | 11,868 | $ | 3,706 | $ | 618 | $ | 7,493 | $ | 2,745 | $ | 93 |
| Twelve Months Ended | ||||||||||||
| December 31, 2019 | December 31, 2018 | |||||||||||
| Stock-Based Compensation | Depreciation | Intangibles Amortization | Stock-Based Compensation | Depreciation | Intangibles Amortization | |||||||
| Cost of revenue | $ | 6,334 | $ | 9,974 | $ | 882 | $ | 3,333 | $ | 7,456 | $ | 352 |
| Research and development | 7,658 | 1,801 | — | 5,303 | 1,036 | — | ||||||
| Sales and marketing | 11,368 | 6 | — | 6,307 | 5 | 90 | ||||||
| General and administrative | 16,705 | 1,711 | — | 13,541 | 1,335 | — | ||||||
| Total | $ | 42,065 | $ | 13,492 | $ | 882 | $ | 28,484 | $ | 9,832 | $ | 442 |
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 | |||||||
|---|---|---|---|---|---|---|---|---|
| March 31, 2020 | December 31, 2020 | |||||||
| Low | High | Low | High | |||||
| GAAP net loss | $ | (9,916) | $ | (8,916) | $ | (30,933) | $ | (27,933) |
| Non-GAAP adjustments: | ||||||||
| Stock-based compensation | 13,977 | 13,977 | 62,289 | 62,289 | ||||
| Intangibles amortization | 1,084 | 1,084 | 4,265 | 4,265 | ||||
| Amortization of discount and issuance costs on convertible senior notes | 3,238 | 3,238 | 13,338 | 13,338 | ||||
| One-time integration costs and expenses | 1,117 | 1,117 | 6,541 | 6,541 | ||||
| Income tax expense effects ^(1)^ | — | — | — | — | ||||
| Non-GAAP net income | $ | 9,500 | $ | 10,500 | $ | 55,500 | $ | 58,500 |
| GAAP net loss per share, basic and diluted | $ | (0.16) | $ | (0.14) | $ | (0.48) | $ | (0.43) |
| Non-GAAP net income per share: | ||||||||
| Basic | $ | 0.15 | $ | 0.17 | $ | 0.86 | $ | 0.91 |
| Diluted | $ | 0.15 | $ | 0.16 | $ | 0.83 | $ | 0.87 |
| Shares used in computing GAAP net loss per share and non-GAAP net income per share: | ||||||||
| Basic | 62,500 | 62,500 | 64,400 | 64,400 | ||||
| Diluted | 65,200 | 65,200 | 67,100 | 67,100 |
(1)Non-GAAP adjustments do not have an impact on our income tax provision due to past losses and valuation allowance.
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