Five9 Q2 Earnings Call Highlights
Key Points
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- Five9 exceeded Q2 expectations with revenue of $312 million, up 10% year over year, driven by 14% subscription growth and a 78% increase in AI revenue to approximately $39 million.
- The company raised its full-year AI revenue growth outlook to at least 60% and signed a five-year, approximately $100 million contract with a Fortune 100 financial-services customer, though meaningful revenue contributions are expected mainly from 2027 onward.
- Five9 increased its 2026 revenue guidance midpoint to $1.266 billion while maintaining its adjusted EPS midpoint of $3.26; margins declined year over year due partly to temporary investments supporting faster AI deployments.
Five9 (NASDAQ:FIVN) reported second-quarter 2026 revenue of $312 million, up 10% from a year earlier and above the high end of its guidance range, as accelerating artificial intelligence revenue helped drive subscription growth.
Subscription revenue rose 14% year over year, marking a third consecutive quarter of acceleration, while AI revenue increased 78%. Chief Executive Officer Amit Mathradas said the company’s results reflected progress in its efforts to strengthen execution, focus resources on complex enterprise customers and expand its AI-powered customer-experience platform.
“Five9 is sharpening its position around the opportunity we are built to lead,” Mathradas said, describing the company as a voice-led enterprise platform for customer experience. He said the company is focusing on regulated and complex sectors including financial services, healthcare and insurance, where customers require compliance, integrations, governance and human-in-the-loop workflows.
AI Revenue Reaches $39 Million
Chief Financial Officer Bryan Lee said AI revenue totaled approximately $39 million in the quarter, representing an annual revenue run rate above $150 million. AI revenue accounted for about 15% of subscription revenue, compared with roughly 9% a year earlier.
Lee attributed the acceleration partly to several customers deploying AI solutions faster than previously forecast. The earlier deployments pulled revenue forward rather than reflecting larger deal sizes, he said. Excluding those faster ramps, AI revenue growth would have been near the 68% growth rate reported in the first quarter, according to Lee.
The company raised its full-year 2026 AI revenue growth outlook to at least 60% year over year, from its prior forecast of more than 40%. Its CCaaS, or contact center as a service, revenue grew 7% year over year, while concurrent seat count rose at a rate generally in line with CCaaS revenue growth.
Five9’s last-12-month subscription dollar-based retention rate was 107% in the second quarter. Lee said the company expects that measure to rise by about one percentage point in the third quarter, driven by existing backlog.
Fortune 100 Financial Services Win
Five9 also disclosed a five-year agreement with a Fortune 100 financial services company carrying approximately $100 million in total contract value, including subscription and professional-services revenue. The company expects the customer to reach about $25 million in subscription annual recurring revenue once fully deployed.
Mathradas said Five9 won the business in a competitive process involving a select group of enterprise customer-experience providers. The deal was supported by Five9’s proof of concept and delivery capabilities, as well as its work with Google and a global systems integrator.
The transaction was among the first large deals completed through the Google Cloud Marketplace, Mathradas said. The customer selected Five9 as a core customer-experience platform as part of a broader cloud migration effort.
Lee said the new customer is in the planning phase and is expected to make a negligible subscription revenue contribution in 2026. Revenue is expected to ramp gradually in 2027, with more meaningful growth in later years.
During the question-and-answer session, Mathradas said cloud migration can become more important for enterprises seeking to deploy voice AI, because on-premises architectures may not be designed to run agentic voice technologies at their best performance. He also said Five9’s ownership of telephony and call-routing capabilities differentiates it from point-solution providers.
Margins, Cash Flow and Capital Allocation
Five9 reported an adjusted gross margin of 61%, down from 63% in the year-earlier period. Adjusted EBITDA was $70 million, or 22% of revenue, compared with $68 million, or 24% of revenue, a year earlier.
Lee said both profitability measures were affected by a temporary expansion in professional-services capacity to meet customer demand for earlier AI deployments. Second-quarter margins also faced a difficult sequential comparison because the first quarter benefited from a previously disclosed one-time vendor discount worth slightly more than one percentage point of margin.
Cash from operations totaled $42 million, or 13% of revenue, and free cash flow was $15 million, or 5% of revenue. The company ended the quarter with approximately $654 million in cash equivalents and short-term investments.
Five9 said its $90 million accelerated share repurchase program is underway and that it received an initial delivery of 3.1 million shares, representing about 80% of the expected shares under the program. The remainder is expected before Sept. 30. A separate $200 million board authorization remains available for opportunistic use.
Updated 2026 Outlook
For the third quarter, Five9 forecast revenue of $316 million to $322 million, with a midpoint of $319 million. It guided for non-GAAP earnings per diluted share of $0.77 to $0.81, with a midpoint of $0.79.
For full-year 2026, the company raised its revenue outlook to a range of $1.26 billion to $1.272 billion, with a midpoint of $1.266 billion, up from the prior midpoint of $1.26 billion. Five9 maintained its full-year non-GAAP EPS outlook of $3.22 to $3.30, with a midpoint of $3.26.
Lee said the company continues to expect adjusted EBITDA margin above 24% for the year and approximately $175 million in free cash flow. Revenue guidance for the remainder of the year is primarily supported by expected conversion of backlog to revenue, with “essentially no dependency” on new business wins, he said.
About Five9 (NASDAQ:FIVN)
Five9, Inc (NASDAQ: FIVN) is a leading provider of cloud-based contact center software designed to help organizations manage customer interactions across voice, email, chat, social media and other digital channels. Its platform offers features such as intelligent routing, analytics, workforce optimization and integrated customer relationship management (CRM) connectors. The company emphasizes AI-driven capabilities, including virtual agents and predictive dialing, to enhance both agent productivity and customer experience.
Founded in 2001 and headquartered in San Ramon, California, Five9 completed its initial public offering in February 2014.
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