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On Monday, Needham reaffirmed its positive stance on Five9, Inc (NASDAQ:FIVN), maintaining a Buy rating and a price target of $52.00. Currently trading at $29.48, the stock appears undervalued according to InvestingPro analysis, with analyst targets ranging from $45 to $67. The endorsement follows recent discussions with Five9’s outgoing Chief Financial Officer Barry Zwarenstein and incoming interim CFO Bryan Lee. The conversations left analysts with an increased confidence in the company’s fiscal year 2025 business trajectory, supported by 8 analysts recently revising their earnings estimates upward.
The dialogue with Five9’s management centered on the firm’s demand dynamics and pipeline activities, which appear to be stabilizing after what was referred to as the "AI Fog" in the second quarter of 2024. The discussions also delved into the demand for AI-specific solutions, Five9’s competitive edge as a platform vendor in the AI landscape, and the potential benefits from their recent inclusion in the Google (NASDAQ:GOOGL) Cloud Platform (GCP) marketplace. The company has demonstrated solid growth fundamentals, with revenue increasing by 14.4% over the last twelve months to $1.04 billion.
Five9’s management expressed high expectations for the new GCP marketplace inclusion, anticipating it could contribute to the company’s performance in the second half of 2025. Despite the optimistic outlook, initial guidance for fiscal year 2025 has been set with caution, reflecting a conservative approach due to current macroeconomic conditions that could affect seasonal trends in the latter half of the year. For deeper insights into Five9’s financial health and growth prospects, including detailed valuation metrics and expert analysis, check out the comprehensive research report available on InvestingPro.
The company also outlined significant profitability initiatives aimed at achieving a milestone. According to management, these initiatives are expected to lead to Five9’s first GAAP profitable year, with analysts forecasting EPS of $2.66 for fiscal year 2025. This development is seen as a testament to the company’s strategic planning and operational efficiency, positioning Five9 for a potentially strong performance in the upcoming fiscal period. The company maintains a healthy financial position with a current ratio of 1.95, indicating strong liquidity to meet short-term obligations.
In other recent news, Five9, Inc. reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.79, compared to the forecast of $0.70. The company achieved a revenue of $278.7 million, exceeding the expected $267.67 million, and marking a 17% year-over-year growth. Five9’s subscription revenue increased by 19%, contributing significantly to this growth. The company also announced the retirement of CFO Barry Zwarenstein, with Bryan Lee stepping in as the interim CFO. Analyst firms Rosenblatt Securities and Cantor Fitzgerald have responded positively to Five9’s performance, with Rosenblatt raising its price target to $58 and Cantor Fitzgerald increasing it to $57, citing strong AI-driven growth and strategic partnerships. Five9’s AI segment has shown significant progress, with AI adoption now representing 9% of enterprise subscription revenue and a 46% increase year-over-year. Additionally, Five9 appointed Andy Dignan as its new President, reflecting its strategic focus on leadership and growth.
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