Five9
Five9 runs the cloud software big companies use to answer customer calls and chats, and now sells AI agents that answer some of them itself.
The scores
Growth3/4 ↑
Revenue grew 10-14% a year, slowed to 8% in 2025 and recovered to 10%; roughly the market's pace, not beating it.
Business quality3/4 →
Retention of 107% shows switching costs, but NICE, Genesys and CRM vendors sell the same AI agents and the attack is untested.
Financial position3/4 →
$654M of cash nearly covers $747.5M of notes due 2029, and free cash flow near $175M services them.
Execution record3/4 →
Beat eight straight quarters and raised the 2026 guide twice, but reset guidance in 2024 and changed chief executive.
Per share capture2/4 →
Share pay takes about three-quarters of free cash flow; $150M of buybacks only held the share count.
Potential2/4 →
AI growth is expected, not contracted: AI revenue is unfiled, and whether AI agents add more than they take from seats is unproven.
Risk profile3/4 →
No customer above 10%, but 89% of revenue is American and a securities class action continues.
Valuation2/4 →
About 62 times free cash flow after share pay: the price needs growth near 10% and share pay falling.
Evidence quality3/4 →
Statements and retention are filed and the labour base is BLS's, but AI revenue and seat counts are management's word.
If it works 1.3× · if it fails you keep about 75%.
The Verdict
We rate Five9 Neutral. It is a solid business: growth recovered to 10% as its AI agents took off while the older seat business kept growing. The price is full. It looks cheap against the cash the business makes, but paying staff in shares eats about three-quarters of that cash, so owners are paying a lot for what is left. As a bet on the AI line it is safe but offers little: if AI keeps growing fast the shares gain modestly, and if it stalls most of today's value remains. The view hinges on whether AI agents add more than they take from seats.
The long caseAs customer service moves from people to AI agents, the platform already carrying the calls can sell the agents too.
The evidence under this - 6 claims
- Neither the CCaaS nor the AI growth rate is filed; both come only from the calls.
- The CFO tied the acceleration to backlog customers ramping early, which pulls growth forward rather than adding it.
- The 10-K's own risk factor says AI will likely cut the licence revenue from the installed base (C09).
- No seat count is filed, and a revenue commitment hides the mix the customer moves to.
Capital spending is guided up to about 3.5% of revenue for a data-centre refresh, which holds 2026 free cash flow near 2025's.
- Buybacks retire some of the shares share pay issues, so counting all of share pay as a cost overstates dilution in a year the company buys back stock.
- Trailing operating income carries an $8.4M impairment; without it the multiple is about 42.
The company
When you call your bank or airline, the call often lands on Five9's software. It routes each call, chat or text to a person or an AI agent, shows who the customer is, and records what was said.
Its buyers are large companies' customer-service departments, over 3,000 of them. Before the cloud they ran their own call-centre systems from Avaya or Cisco in their own buildings. Five9 runs the phone network and software for them instead, and since June 2026 also sells voice AI agents that answer callers directly.
The evidence under this - 4 claims
No adoption or revenue figure has been given for the new agents.
How it makes money
About 83 cents of each revenue dollar is subscription: mostly a monthly fee for each human agent using the software, plus AI sold by how much it is used. About 11 cents is per-minute charges for calls on Five9's network, and 6 cents is setup work.
Most of it comes from big customers: 228 pay over $1M a year and make up 59% of subscription revenue. AI is now about 15% of subscription and growing far faster than the rest.
The evidence under this - 4 claims
The Q1 2026 figure added commercial customers to what had been an enterprise-only series, so the two run rates are not on one definition.
Neither the count nor the share is filed.
Where the money comes from, stream by stream
| Stream | Share of sales (Q2 2026) | How it earns it |
|---|---|---|
| Subscription | 83% | Contact-centre seat licences and AI agents, sold on monthly, annual or multi-year contracts, mostly to large enterprises; growing 14%, with AI about 15% of it. |
| Telecom usage | 11% | Per-minute charges for calls carried over Five9's own voice network and carrier connections. |
| Professional services | 6% | Deploying and configuring the platform and AI agents for new and expanding customers, sold near cost. |
Who runs it
Amit Mathradas became chief executive in February 2026, after running Nintex, a workflow software company, and helping lead Avalara. He has since replaced most of the senior team, including a new technology chief and sales chief.
Directors and executives own about 1.2% of the shares; the new chief executive owned none before his grants. Pay rewards revenue and cash flow each year, and from 2026 long-term awards pay mostly on subscription growth and partly on the share price against other software companies.
The evidence under this - 3 claims
Why it wins, and who could beat it
Why customers come back
Moving a contact centre is painful: phone numbers must be moved, call routing and links to the customer database rebuilt, and thousands of agents retrained. So customers who sign tend to stay and grow.
The proof is retention: existing customers spend $1.07 a year later for each dollar before. That is still growth, but less than the $1.13 of early 2024. The stakes for buyers are large, since a US customer-service worker costs a median $21.53 an hour.
The evidence under this - 4 claims
The threat
The fight is over who sells the AI agents. NICE, the largest rival and twice Five9's size in cloud revenue, bought an AI agent company in 2025. Salesforce sells agents inside the customer database companies already use, Amazon sells building blocks for a do-it-yourself contact centre, and start-ups such as Sierra sell agents that sit on top of anyone's system.
The evidence under this - 3 claims
The rivals: NICE, AMZN, CRM, RNG, ZM, CSCO, TWLO, MSFT, and 2 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| NICE | NICE CXone with Cognigy's AI agentsPriced against it: Same product | Contact-centre platform | On sale | Same product |
| Private | Genesys CloudPriced against it: Private | Contact-centre platform | On sale | Private |
| AMZN | Amazon ConnectPriced against it: One segment only | Contact-centre platform | On sale | One segment only |
| CRM | Salesforce's AI agents inside its CRMPriced against it: One segment only | Five9 AI | On sale | One segment only |
| Private | Sierra and other AI agent start-upsPriced against it: Private | Five9 AI | On sale | Private |
| RNG | RingCentralPriced against it: One segment only | - | On sale | One segment only |
| ZM | Zoom CommunicationsPriced against it: One segment only | - | On sale | One segment only |
| CSCO | Cisco SystemsPriced against it: One segment only | - | On sale | One segment only |
| TWLO | TwilioPriced against it: One segment only | - | On sale | One segment only |
| MSFT | MicrosoftPriced against it: One segment only | - | On sale | One segment only |
How big it could get
How big this could get
The US alone has about 2.7 million customer-service jobs, at a median $21.53 an hour: a labour bill around $120B a year that software and AI agents compete to shrink. The government expects those jobs to fall 5% by 2035.
Management quotes Gartner, a research firm, putting cloud contact-centre and AI customer-service spending at $48B a year by 2029. That figure is the company quoting a paid report, so treat it as their number.
The evidence under this - 2 claims
Gartner's report is paywalled; the figures are the seller quoting it.
Who has signed
Customers have signed contracts worth $1,448M not yet delivered, about three-quarters due within two years. The largest new one, an unnamed Fortune 100 bank, is about $100M over five years and starts adding revenue in 2027.
The evidence under this - 2 claims
- The customer is not named and the contract is not filed.
- Management said the customer bought the contact centre, not AI, for now.
Where the growth is coming from, business by business
Where the growth is coming from
| Business | Share of revenue | Growth: last quarter | Last half-year | Last year | Share in 3 years at its half-year rate |
|---|---|---|---|---|---|
| Reportable Segment | 100% | +10.3% | +9.7% | - | 100% |
| Whole company | 100% | +10.3% | +9.7% | - | 100% |
On the filed split through 2026-06-30, if each business keeps its last half-year's growth, the company grows about 10% next year and 10% in year 3, against 8.9% over the last twelve months. A scenario, not a forecast: no business holds its rate.
The results
The numbers
Sales grew 8.9% over the twelve months to Jun 2026, about the same pace as the 10% in the year to Dec 2025.
Operating margin is 4.7%, up from −11% in the year to Dec 2023.
Running costs take 50¢ of each sales dollar, down from 65¢ in the year to Dec 2021.
Each dollar put into the business earns 6.7% a year after tax, about where it was (3.6%) in the year to Dec 2025.
It turned 17% of sales into free cash, $209M over the last twelve months.
Yearly sales growth has ranged from +10% to +40% over the last 5 years.
The share count rose 27% in 4.5 years, and pay in shares costs 11% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-16. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Jun 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $610M | $779M | $910M | $1.04B | $1.15B | $1.20B |
| Sales growth | +40% | +28% | +17% | +14% | +10% | +8.9% |
| Profit | ||||||
| Gross margin | 56% | 53% | 52% | 54% | 55% | 55% |
| Operating margin | −9.2% | −11% | −11% | −4.9% | 2.5% | 4.7% |
| Net margin | −8.7% | −12% | −9.0% | −1.2% | 3.4% | 4.9% |
| What growth costs, per sales dollar | ||||||
| Research and development | 18% | 18% | 17% | 16% | 13% | 13% |
| Sales and marketing | 32% | 34% | 33% | 30% | 27% | 26% |
| General and admin | 15% | 12% | 14% | 13% | 12% | 12% |
| Pay in shares | 18% | 22% | 23% | 16% | 13% | 11% |
| Capital spending | 6.9% | 6.7% | 3.4% | 4.1% | 2.2% | 3.3% |
| Cash | ||||||
| Cash from operations | $29.0M | $88.9M | $129M | $143M | $226M | $249M |
| Free cash flow | −$13.2M | $36.6M | $97.6M | $101M | $201M | $209M |
| Balance sheet | ||||||
| Cash and short-term investments | $470M | $614M | $730M | $1.01B | $697M | $654M |
| Returns and shares | ||||||
| Return on capital | - | - | - | - | 3.6% | 6.7% |
| Shares (diluted) | 67.5M | 69.9M | 72.0M | 74.5M | 88.0M | 85.5M |
What growth costs
Growth has got cheaper. Since 2023 Five9 went from losing 11 cents on each dollar of sales to making about 5 cents, mostly because it pays staff far less in shares, down from 23% of revenue to 11%. What each sale earns before running costs has stayed flat, near 55 cents.
The evidence under this - 4 claims
The last report (6 Aug)
Quarter ended June 2026, filed figures.
In the quarter to June 2026, revenue grew 10% to $312.4M and subscription revenue 14%, the third quarter in a row of faster growth. AI revenue grew 78%, and the older seat business 7%. Management raised its outlook for the year and now expects AI to grow at least 60%.
Two things were weaker. The share of each sale kept as gross profit slipped, which management put down to extra setup staff, and cash flow in the quarter was only $15M, which it blamed on timing.
What it did to the thesisThe report answered the fear that AI would shrink the seat business, for now: seats grew with the core while AI accelerated. It did not settle the question, because the AI and seat figures are management's alone, and retention still sits below where it was.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $0.70 against $0.68 expected; $0.04 as filed, the gap being what the company adds back.
The evidence under this - 6 claims
- Neither the CCaaS nor the AI growth rate is filed; both come only from the calls.
- The CFO tied the acceleration to backlog customers ramping early, which pulls growth forward rather than adding it.
Capital spending is guided up to about 3.5% of revenue for a data-centre refresh, which holds 2026 free cash flow near 2025's.
The explanation is management's; the 10-Q shows the quarter's cash flow but not the timing effects.
What management did with the money
Five9 spent $150M buying back its own shares, the last $90M in May 2026, and approved $200M more. That roughly matched the shares it hands staff as pay, so the share count held rather than shrank.
Insiders in 2026Q3: 2 purchases and 18 sales, from their Form 4 filings.
The evidence under this - 2 claims
The price, and where we disagree
In short. Full. The price looks cheap against free cash flow, but share pay takes most of that cash, so it already pays for a recovery that must keep going.
The price has moved a long way fast. The shares rose 29% the day after the May report and 20% after the August one, 164% in all from April's low.
The next test is the September-quarter report on 9 November. Management says growth should keep rising as signed contracts start, and promises a longer-term plan at an investor day later in 2026.
The evidence under this - 5 claims
- Neither the CCaaS nor the AI growth rate is filed; both come only from the calls.
- The CFO tied the acceleration to backlog customers ramping early, which pulls growth forward rather than adding it.
Capital spending is guided up to about 3.5% of revenue for a data-centre refresh, which holds 2026 free cash flow near 2025's.
- The customer is not named and the contract is not filed.
- Management said the customer bought the contact centre, not AI, for now.
How we read the multiple
Buyers pay about $2.62B for Five9, whose debt roughly matches its cash. Step by step:
1. Free cash flow, the cash left after running the business and investing, is expected near $175M this year: about 15 times, which looks cheap. 2. But about $130M a year of pay goes to staff in new shares, which dilutes owners. 3. Take that out and about $45M is left for owners: about 62 times. 4. So owners' cash must roughly double within three years, through growth and less share pay.
Against its own history. Below its own normal on cash flow, because the shares spent two years falling while cash flow rose; the question is whether that normal was ever right.
The evidence under this - 5 claims
- Buybacks retire some of the shares share pay issues, so counting all of share pay as a cost overstates dilution in a year the company buys back stock.
- Trailing operating income carries an $8.4M impairment; without it the multiple is about 42.
Capital spending is guided up to about 3.5% of revenue for a data-centre refresh, which holds 2026 free cash flow near 2025's.
Priced against its rivals
Only NICE sells the same thing to the same buyers as a large part of what it does. A price comparison needs at least two, so the price is judged against its own history instead.
Private or foreign rivals that cannot be priced: Genesys, Talkdesk, Avaya, Content Guru.
The bet: what it pays if it works
The bet is on Five9's AI agents, which the company does not report on their own. The rest of the business is counted apart, at a modest price for slow growth with heavy share pay.
If AI keeps growing fast for three years, the shares gain only a modest amount from here, because the price already allows for much of it. If AI only replaces seats, shareholders keep most of today's value. Safe, but little upside.
| Five9 AI revenue in two to three years | Customers spending $500,000 a year on Five9 AI needed | At the stated multiple |
|---|---|---|
| $400.00M (the big win) | about 800 at 100% kept | 1.3× |
| $600.00M | about 1.2K at 100% kept | 1.6× |
To pay 2× (a Fair bet) it would need about $880.92M of Five9 AI revenue (about 1.8K customers spending $500,000 a year on Five9 AI); to pay 5× (a Cheap bet), about $2.99B of Five9 AI revenue (about 6.0K customers spending $500,000 a year on Five9 AI), at the same multiple.
Each row is Five9 AI alone, plus the rest of the company (The contact-centre platform, with the cash less the notes) counted at about $2.10B.
The steps it has to take
- Done Enterprise AI passes a $100M run rate
- Done Voice AI Agents launched
- In progress AI revenue grows at least 60% in 2026 due 2027-02
- Not started The Fortune 100 contract ramps toward $25M a year due 2028-12
- Not started AI revenue reaches about $400M a year due 2029-01
The detail behind the label
The evidence under this - 5 claims
- Neither the CCaaS nor the AI growth rate is filed; both come only from the calls.
- The CFO tied the acceleration to backlog customers ramping early, which pulls growth forward rather than adding it.
Both percentages are rounded by management, so the figure could be $35M to $42M.
Capital spending is guided up to about 3.5% of revenue for a data-centre refresh, which holds 2026 free cash flow near 2025's.
Where we disagree with the market
AI is helping Five9 rather than hurting it, so the shares deserve to be worth more after two strong reports.
The recovery is real, but at about 15 times free cash flow the price counts share pay as free.
Most analysts rate it a buy, and their price targets rose after the summer. Most of the past year's rise came from buyers paying more for each dollar of sales, not from the sales themselves.
Where we could be wrong: if share pay falls below 8% of revenue while subscription growth reaches 15%, the cash left for owners grows fast enough that today's price is fair to cheap.
What analysts say, and the evidence
The evidence under this - 5 claims
- Buybacks retire some of the shares share pay issues, so counting all of share pay as a cost overstates dilution in a year the company buys back stock.
- Trailing operating income carries an $8.4M impairment; without it the multiple is about 42.
What could go wrong, and how we would know
The risks
- AI may shrink seats. Five9's own annual report warns AI could cut seat revenue by more than its AI products add.
- Retention has slipped. Existing customers now add 7 cents a year per dollar, against 13 cents in early 2024.
- Rivals sell the same agents. NICE, Salesforce and start-ups all sell AI agents to the same big contact centres.
- Share pay eats the cash. About $130M a year of pay in shares takes most of the free cash flow.
- A new team. A new chief executive replaced most senior leaders this year, mid-way through a product shift.
- Debt due in 2029. $747.5M of bonds come due in March 2029 and will need cash, since the shares sit far below the conversion price.
The evidence under this - 6 claims
What we still do not know
- How much AI revenue Five9 earns in dollars, and whether AI agents are replacing its own seats at existing customers. Neither is filed.
- Whether the 10% to 15% growth plan for 2027 still stands; management did not repeat it in May.
- How the 2029 bonds will be repaid or refinanced.
The evidence under this - 3 claims
- Neither the CCaaS nor the AI growth rate is filed; both come only from the calls.
- The CFO tied the acceleration to backlog customers ramping early, which pulls growth forward rather than adding it.
- The 10-K's own risk factor says AI will likely cut the licence revenue from the installed base (C09).
- No seat count is filed, and a revenue commitment hides the mix the customer moves to.
What would change our view
- Neutral→AttractiveA cheaper price on an unchanged business
It needs all of:
- ○The shares fall to about 30 times the cash left for owners after share pay.about ≈$15.62 today, 58% below the last close
- ○Subscription revenue keeps growing 12% a year or more.checked at the next results, due by 9 Nov
- Neutral→AttractiveOwner cash catches up with free cash flow
It needs all of:
- ○Share pay falls to 8% of revenue or less over a year.checked at the next results, due by 9 Nov
- ○Subscription revenue grows 15% or more.checked at the next results, due by 9 Nov
- Neutral→UnattractiveAI starts shrinking the seat business
It needs any of:
- ○The older seat business grows 4% a year or less.checked at the next results, due by 9 Nov
- ○Existing customers spend $1.04 or less a year later for each dollar before.checked at the next results, due by 9 Nov
We would also be wrong if
- AI revenue grows less than 40% in 2026, well under the 60% management expects.
- Share pay rises back above 13% of revenue for a full year.
What is coming
- 9 November 2026 Q3 2026 results: Whether subscription growth holds at 13% or more with CCaaS near 7%, and whether retention rises the promised point to 108%.
Every dated event ahead
- 9 November 2026 Q3 2026 results: Whether subscription growth holds at 13% or more with CCaaS near 7%, and whether retention rises the promised point to 108%.
- December 2026 Investor Day: Whether management gives a multi-year growth and margin framework, and any figure for AI revenue or seats.
- February 2027 Q4 2026 results and the 2027 guide: Whether 2027 growth is guided inside the 10-15% framework and whether share pay keeps falling.
Since we wrote this
- 29 OctBet moveBet re-struck: Safe, little upside to Priced for successRe-priced at the 28 October close.
- 28 OctBet moveBet re-struck: Priced for success to Safe, little upsideRe-priced at the 27 October close.
- 26 OctBet moveBet re-struck: Safe, little upside to Priced for successRe-priced at the 23 October close.
- 16 OctThesis writtenNeutral, medium convictionThe AI seat fear has not shown up in the numbers, but after a 164% rise the price already pays for the recovery once share pay is counted.
Sources 14
Sources - 14
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-20Item 1 business, pricing, customers and named competitors; risk factors including the AI seat risk; statements, share pay, retention, headcount, geographybacksC01C02C09C12C15C26C33C38
- S02primarycompany filing2026-08-06statements, remaining performance obligations, convertible notes, buybacks and share count, legal proceedings, revenue by region, headquarters impairment, 2026 performance share termsbacksC03C12C13C14C16C18C19C33C36C37C38
- S03primarycompany filing2026-08-06revenue and subscription growth, the $100M new-customer win, executive appointments, Voice AI Agents launch, raised 2026 guidancebacksC03C10C11C17C34C39C40
- S04primarycompany filing2026-08-06quarterly revenue, growth, revenue mix and dollar-based retention from Q1 2024 to Q2 2026backsC04C10
- S05primarytranscript2026-08-06CCaaS and AI growth, AI share of subscription, seat count and revenue per seat, the revenue commitment model, the Fortune 100 win's terms, Q2 cash flow and margin explanations; FMP holds no transcript for this call
AI revenue now makes up approximately 15% of total subscription revenue, up from approximately 9% a year ago
backsC03C05C06C08C10C11C13C17C39C40 - S06primarytranscript2026-04-30Q1 2026 earnings call transcript (FMP)data/cache/transcripts/FIVN-2026Q1.jsonAI growth of 68% and a run rate over $125M, the AI share of subscription by quarter, the chief executive's view of seats and AI
as AI replaces seats, those dollars are not leaving the contact center
backsC05C06C31 - S07primarytranscript2026-02-19Q4 2025 earnings call transcript (FMP)data/cache/transcripts/FIVN-2025Q4.jsonenterprise AI run rate past $100M, customers above $1M, the enterprise share of revenue, the Gartner figures management cites, 2025 free cash flow
our enterprise AI annual run rate revenue surpassed $100 million in the fourth quarter
backsC06C16C30C32 - S08primarycompany filing2026-02-192025 revenue and cash flow statement, the first 2026 guidancebacksC02C16C17
- S09secondaryvendor data2026-10-16FIVN research pack (FMP market tier, headcount, filed statements), frozen 2026-10-16content/FIVN/research-pack.jsonclose of $35.10 on 2026-10-15, daily bars, analyst split and its history, price targets, earnings beats, headcount from 10-K filings, the numbers cardbacksC13C14C15C21C22C23C38C41
- S10primaryregulator2026-09-30short interest and days to cover
10,203,638 shares short at the 2026-09-30 settlement, 3.54 days to cover
backsC24 - S11primarycompany filing2026-09-1756 open-market sales and no purchases; the Rule 10b5-1 flag on eachbacksC25
- S12primarycompany filing2026-02-26names Five9 as a CCaaS competitor; cloud revenue and growth; the Cognigy purchase; its agentic AI competitorsbacksC27C28
- S13primarygovernment data2026-10-16US Bureau of Labor Statistics, Occupational Outlook Handbook: Customer Service Representatives US Bureau of Labor Statisticsjobs in 2025, the 2025-2035 projection and the median wage
Employment of customer service representatives is projected to decline 5 percent from 2025 to 2035.
backsC29 - S14primarycompany filing2026-04-07beneficial ownership, director and officer biographies, the 2025 bonus and share-award terms, the chief executive's offerbacksC34C35C36