According to a recent Research and Markets report, the global cloud-based contact center market is estimated to grow at 25% CAGR to $49.12 billion by 2025 from $13.17 billion in 2019. Five9 (Nasdaq: FIVN), a leading provider of cloud software for contact centers, recently announced its fourth quarter results that surpassed market expectations.
For the fourth quarter, Five9’s revenues grew 28% to $92.3 million, ahead of the market’s forecast of $86.53 million. GAAP net income was $0.8 million, compared with a net income of $3.7 million last year. On an adjusted basis, net income was $0.27 per share, compared with net income of $0.23 per share a year ago, and ahead of the market’s forecast of $0.22 per share.
Five9 ended the year with revenues growing 27% over the year to $328 million. It reported a net loss of $4.6 million for the year compared with a net loss of $0.2 million reported a year ago. On an adjusted basis, net income was $0.82 per share compared with $0.60 reported last year.
For the first quarter, Five9 expects revenues of $89-$90 million with an EPS of $0.15-$0.16. It expects to end the current year with revenues of $380.5-$383.5 million and an EPS of $0.83-$0.87. The market was looking for revenues of $86.93 for the quarter with an EPS of $0.15 and revenues of $371.61 million for the year with an EPS of $0.85.
Five9 has been making strategic acquisitions to drive its growth. In November last year, it announced the acquisition of Whendu’s iPaaS platform for an undisclosed sum. Whendu’s platform has been built for the contact center industry. It accelerates the migration of contact center to the cloud by simplifying the process of integration of existing environment to the cloud. It is a no-code, visual application workflow tool with more than 50 out-of-the box application connectors that are ready to use for the contact centers. These integrations create real-time streams of data, which can be aggregated to build real-time automatic and responsive workflows.
More recently, Five9 announced the acquisition of Virtual Observer, a native cloud SaaS provider of workforce optimization. Formerly known as CSI, Virtual Observer has been a long-term partner for Five9 offering its Workforce Optimization (WFO) solutions. WFO solutions help improve contact center operational efficiency while driving improved customer experiences. Five9 plans to leverage the acquisition to expand its offerings to now include a cloud-based and integrated WFO offering. Prior to the acquisition, Virtual Observer was privately held. It did not disclose its financial details or the acquisition price.
Five9’s PaaS Strategy
Five9 has been focusing on improving its platform capabilities. The recent addition of Whendu will add to its iPaaS capabilities. Additionally, the company has also been leveraging its product and engineering teams to continue to add to the platform. Over the course of the previous year, it has strengthened its CRM and partner integrations and made the platform increasingly open through enhanced APIs and SDKs. It also launched an App Marketplace late last year where it showcases its partner integrations. The App Marketplace covers over 10 categories, providing customers with access to services ranging from AI-support, CRM, unified communications, workforce optimization, and messaging. Five9 realizes that the Marketplace helps its ISV partners to seamlessly integrate into Five9 and in turn builds valuable extensions to its own platform.
Five9’s stock is currently trading at $73.21 with a market capitalization of $4.5 billion. It touched a year high of $80.58 earlier last month. It has recovered from the year low of $46.08 that it had fallen to in July last year.
This segment is a part in the series : Cloud Stocks