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On Friday, Rosenblatt Securities adjusted its outlook on Five9, Inc (NASDAQ:FIVN), increasing the price target to $58 from the previous $50 while maintaining a Buy rating on the stock. The firm’s analyst cited strong fourth-quarter results as the key driver behind the improved price target, highlighting a 16.6% year-over-year revenue growth. According to InvestingPro data, Five9’s revenue growth remains robust at 14.4% over the last twelve months, with analysts expecting continued growth in 2025. This growth was attributed to better-than-expected performance in the healthcare and consumer verticals, as well as contributions from completing deployments for a major customer.
Five9’s emphasis on artificial intelligence (AI) has shown to be fruitful, with AI adoption now representing 9% of enterprise subscription revenue, marking a 46% increase year-over-year. The company has also achieved a 100% attach rate on new logo deals exceeding $1 million in annual recurring revenue (ARR). Additionally, a 50% rise in Enterprise AI installed base bookings indicates successful expansion within Five9’s existing customer base.
The company’s strong sales volume and healthy margins have led to an earnings beat by $0.09. In terms of executive movements, Five9 announced the retirement of CFO Barry Zwarenstein and the appointment of Bryan Lee as the interim CFO. Lee’s prior role as EVP of Finance positions him as a suitable successor. Moreover, Dan Burkland, EVP of Go-to-Market Strategy, will transition to a consulting role starting March 8, with his team set to report to the COO to ensure continuity.
Rosenblatt’s revised price target of $58 is based on a 4x enterprise value to calendar year 2025 estimated sales ratio, a change from the previous 3.4x ratio. The analyst notes that the stock is trading slightly below its peer group, despite the improved execution and growth outlook for Five9. InvestingPro analysis suggests the stock is currently undervalued, with additional ProTips and detailed valuation metrics available to subscribers. The company’s Financial Health Score stands at ’FAIR’, with particularly strong scores in Growth and Relative Value metrics.
In other recent news, Five9, Inc. reported impressive fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share of $0.79 and revenue of $278.7 million, both exceeding forecasts. The company achieved a 17% year-over-year revenue growth, driven by a 19% increase in subscription revenue and a record adjusted EBITDA margin of 23.1%. Five9’s AI segment contributed significantly, with AI revenue growing 46% year-over-year and accounting for a notable portion of new enterprise bookings. Analysts at Cantor Fitzgerald and Needham have expressed optimism about Five9’s prospects, with Cantor raising the stock price target to $57, highlighting the company’s strong AI-driven performance.
Five9’s strategic initiatives in AI have resulted in a 100% attach rate to deals with annual recurring revenue exceeding $1 million, and AI bookings have seen a 50% year-over-year increase. The company is expected to continue its momentum in 2025, with revenue guidance of $1.14 billion. In other corporate developments, Five9 announced the retirement of its long-time CFO Barry Zwarenstein, with Bryan Lee stepping in as interim CFO. These developments underscore Five9’s strong market position and its strategic focus on leveraging AI to enhance customer experiences.
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