Please ensure Javascript is enabled for purposes of website accessibility

Why Five9 Stock Jumped Today

By Jeremy Bowman - Nov 6, 2019 at 12:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the cloud computing company popped on a strong third-quarter earnings report.

What happened

Shares of Five9 (FIVN -0.82%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Five9, Inc. Stock Quote
Five9, Inc.
FIVN
$97.14 (-0.82%) $0.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.