Five9 delivers q3 beat but cuts forecast on weak macro, analyst reactions mixed

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By Senad Karaahmetovic

Five9 (NASDAQ:FIVN) is trading more than 8% higher today despite the company slashing its full-year forecast to reflect a weak macroeconomic environment.

FIVN reported a Q3 EPS of $0.39, beating the average analyst estimate of $0.34. Revenue for the quarter came in at $198.3 million, again beating the consensus estimate of $194.43M. Margins were pressured as Five9 reported an adjusted gross margin of 61.4%, down 270 basis points from a year-ago period.

The fourth-quarter revenue is seen between $204M and $205M, below the $216M consensus. The adjusted EPS should come at $0.41 (the midpoint of the guidance), again easily below the $0.51 consensus.

Weaker-than-expected Q4 forecast forced the company to cut its full-year outlook. At the midpoint of the guidance, FIVN sees the adjusted EPS at $1.36, down from the prior $1.39, and below the estimate of $1.42. Revenue is seen at $775M, down from the $781.5M earlier, and again below the $783.5M consensus.

BofA analysts cut the price target to $61 from $75 as “weaker than expected macro” helped drive weaker growth. Five9’s growth story is breaking, noted the analysts as they reiterated an Underperform rating.

“With competitive intensity increasing, we see risk to long term revenue growth projections limiting near term multiple expansion,” they said in a client note.

Barclays analysts are much more positive on FIVN shares as 2023 guidance “could provide a buying opportunity.” The analysts also cut the price target as they moved to $80 per share, down from $100.

“Though investors could come out of FIVN’s results more disappointed regarding 4Q/FY23 rev. growth guides, we believe mgmt. conservatism and ramping deals/strong new enterprise logo growth could create a better setup into next year,” they wrote to clients.