GET DAILY SIGNALSFive9 (FIVN) Posts +13% Revenue Growth with AI Momentum but Shares Drop -22% on Guidance
Key Takeaways
- Third quarter revenue rose 13% year over year (YoY) to $323.3 million, above the roughly $319 million consensus estimate.
- Non-GAAP (non-Generally Accepted Accounting Principles) earnings per share (EPS) came in at $0.82, beating the $0.80 consensus and up from $0.78 a year earlier.
- Subscription revenue grew 16% YoY, while AI revenue surged roughly 91% YoY to approximately $45 million, now about 17% of subscription revenue.
- Fourth-quarter adjusted EPS guidance of $0.88–$0.92 landed below consensus expectations near $0.99, weighing on the stock.
- Five9 announced a $325 million cash agreement to acquire Level AI, expected to close during the fourth quarter of 2026.
- Last-twelve-month (LTM) dollar-based subscription retention improved to 109%, up from 107% in the prior quarter.
Earnings Context and Why It Matters
Five9 is a leading cloud contact center software provider, and its quarterly results offer a real-time read on how enterprises are adopting AI across customer service. The company has leaned heavily into "agentic" AI—software that can handle customer interactions with less human involvement—making its AI revenue trajectory a key focus for investors. Coming into the report, Five9 had beaten EPS estimates in six of its prior eight quarters, and shares had climbed sharply in 2026. With the stock trading at a premium, this quarter was expected to show whether accelerating AI adoption could justify the valuation and whether spending momentum would hold into the year-end. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Reported Results
Five9 reported third quarter revenue of $323.3 million, up 13% YoY and above both the high end of its guidance and the consensus estimate of approximately $319 million. Non-GAAP diluted EPS was $0.82, compared with $0.78 a year ago and ahead of the $0.80 consensus.
Subscription revenue grew 16% YoY. Within that, CCaaS (Contact Center as a Service) revenue rose 8%, while AI revenue accelerated to roughly 91% YoY growth, reaching about $45 million, or 17% of subscription revenue. The company cited customers deploying AI earlier and at larger scale.
Adjusted gross margin was 62%, down from 63% a year ago on timing-related costs tied to a large partner. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) reached $81.2 million, or 25.1% of revenue. LTM dollar-based subscription retention rose to 109%. Operating cash flow was $58 million, and free cash flow was $43 million.
For the fourth quarter, Five9 guided to revenue of $328–$334 million and adjusted EPS of $0.88–$0.92, the latter below consensus near $0.99. Full-year 2026 guidance calls for revenue of $1.269–$1.275 billion and adjusted EPS of $3.17–$3.21. These figures exclude any contribution from the pending Level AI acquisition.
Market Reaction and Investor Sentiment
Despite the top- and bottom-line beat, Five9 shares fell sharply in after-hours trading, dropping roughly 22% following the report. The decline was driven primarily by fourth-quarter adjusted EPS guidance that came in well below consensus expectations, signaling near-term pressure on profitability even as AI revenue accelerates. Investors appeared to weigh the strong AI adoption against higher costs, timing-related gross margin headwinds, and the dilutive impact of the Level AI acquisition. The reaction underscores how sensitive the stock has become to forward guidance rather than reported results alone. From what I see, this kind of move often highlights the market’s focus on forward-looking metrics in high-growth names like FIVN.
Forward Outlook and Key Factors to Monitor
The most important item to watch next is the integration of Level AI, which brings AI-native applications for customer insights, agent assistance, and automation. Five9 expects the deal to dilute adjusted EBITDA margin by roughly one percentage point in 2027, with a plan to bring Level AI to EBITDA breakeven within about six months and to margin accretion by 2028.
Investors should also monitor AI revenue growth. Management raised its full-year 2026 AI revenue growth outlook to at least 75%, up from a prior target of at least 60%, but cautioned that strong early deployments will create difficult YoY comparisons in 2027.
Profitability metrics remain in focus. Adjusted gross margin is expected to begin recovering in the fourth quarter as timing-related partner costs reverse, and the company anticipates its dollar-based retention rate will hold flat to slightly higher. Finally, watch capital allocation, where Five9 completed a $90 million accelerated share repurchase and retains roughly $200 million under its authorization, alongside the Level AI cash outlay. I’m watching this closely as the acquisition details unfold.
Exploring AI-Powered Research Tools
In my view, tools like Tickeron’s AI Screener can help investors quickly surface comparable opportunities in the software sector and track momentum shifts around earnings events. I’ve found it useful for filtering by industry, technical patterns, and performance metrics when analyzing names like FIVN alongside broader market data.
Disclaimer
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
FIVN in +7.52% Uptrend, advancing for three consecutive days on October 26, 2026
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where FIVN advanced for three days, in 204 of 289 cases, the price rose further within the following month. The odds of a continued upward trend are 71%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 23, 2026. You may want to consider a long position or call options on FIVN as a result. In 56 of 80 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 70%.
FIVN moved above its 50-day moving average on October 20, 2026 date and that indicates a change from a downward trend to an upward trend.
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In 44 of 57 cases where FIVN's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are 77%.
The Moving Average Convergence Divergence Histogram (MACD) for FIVN turned negative on November 03, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 47 similar instances when the indicator turned negative. In 41 of the 47 cases the stock turned lower in the days that followed. This puts the odds of success at 87%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where FIVN declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 81%.
FIVN broke above its upper Bollinger Band on October 23, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for FIVN entered a downward trend on October 27, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Price Growth Rating for this company is 37 (best 1 - 100 worst), indicating steady price growth. FIVN’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of 67 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.461) is normal, around the industry mean (16.313). P/E Ratio (46.603) is within average values for comparable stocks, (57.744). Projected Growth (PEG Ratio) (0.261) is also within normal values, averaging (3.696). Dividend Yield (0.000) settles around the average of (0.312) among similar stocks. P/S Ratio (2.447) is also within normal values, averaging (104.492).
The Tickeron SMR rating for this company is 76 (best 1 - 100 worst), indicating slightly better than average sales and a considerably profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Seasonality Score of 85 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is 96 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. FIVN’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 91, placing this stock worse than average.
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
Advertisement
General Information
a provider of cloud contact center software solutions
Industry ComputerCommunications
Advertisement