What happened

Shares of Five9 (NASDAQ:FIVN) were moving higher this morning after the cloud software provider posted better-than-expected results in its third-quarter earnings report and lifted its full-year guidance. As a result the stock was up 14% as of 11:07 a.m. EST.

So what

Five9, which specializes in cloud software for customer-service centers, said revenue rose 28% in the quarter to $83.8 million, well ahead of estimates at $78.7 million. Over the last four quarters, enterprise subscription revenue has increased 36%, and the company just completed its 15th consecutive quarter with positive operating cash flow. 

An upward moving bar chart in the clouds

Image source: Getty Images.

On the bottom line, profit growth was slower as gross margin narrowed modestly and the company spent more aggressively on sales and marketing. Adjusted earnings per share increased from $0.18 to $0.20, which beat estimates at $0.15.

CEO Rowan Trollope said, "In the third quarter we maintained our strong momentum in strengthening the channel, and made excellent inroads expanding internationally. Overall, our balanced approach to growth is succeeding, and we believe the investments we have made in leadership and talent position Five9 for sustained long-term growth."

Now what

Management also hiked its guidance for the full year, calling for revenue of $321.7 million to $322.7 million, up from a previous range of $312.5 million to $314.5 million. It also now expects adjusted earnings per share of $0.77 to $0.78, compared to its earlier forecast of $0.70 to $0.73.

Like other cloud stocks, Five9 fell sharply on the sector sell-off in the beginning of September, losing about 15% of its value, but after today's gains the stock is back near its 52-week highs. Five9 is still losing money on generally accepted accounting principles (GAAP), but it is closer to a profit than many other cloud stocks, making it a safer bet for investors looking for some exposure to the fast-growing cloud computing industry.