FIVN · Five9
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $34.14
Note written ·
Price against the kill line
20.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $34.14, on record since 11 November 2026. The shares are down 14.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $34.14, the 5 November 2026 close before the guidance cut, which would show the shares leading again. Fourth-quarter revenue above the $334 million top of guidance with adjusted EPS above $0.92 would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 323
- Revenue, change on a year (%)
- +13.1
- Gross margin (%)
- 53.4
- Operating margin (%)
- 4.4
- Free cash flow, four quarters ($M)
- 214
- Net cash, cash less debt ($M)
- −40.6
- Price to earnings (×)
- 36.7
- Enterprise value to sales (×)
- 1.7
All filed numbers
What Five9 reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 323 | +13.1 | 53.4 | 4.4 |
| first filed | 312 | +10.3 | 53.4 | 0.6 |
| first filed | 305 | +9.2 | 55.9 | 6.1 |
| first filed | 300 | +7.8 | 55.4 | 6.6 |
| first filed | 286 | +8.2 | 55.0 | 5.6 |
| first filed | 283 | +12.4 | 54.9 | −0.6 |
| Pre-tax income ($M) | 15.6 |
| Net income ($M) four quarters: 56.0 | 14.5 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −11.5 |
| Operating cash flow ($M) | 248 |
| Capital spending ($M) | 34.2 |
| Free cash flow ($M) | 214 |
| Cash and short-term investments ($M) | 698 |
| Debt ($M) convertible debt | 738 |
| Net cash, cash less debt ($M) | −40.6 |
| Deferred revenue ($M) +13.4% on a year | 86.8 |
| Backlog, orders not yet delivered ($M) +43.2% on a year | 1,606 |
| Receivables ($M) | 159 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 838 |
| Market value ($M) | 2,057 |
| Enterprise value, market value plus net debt ($M) | 2,098 |
| Enterprise value to sales (×) | 1.7 |
| Enterprise value to operating income (×) | 38.5 |
| Price to earnings (×) | 36.7 |
| Price to book value (×) | 2.5 |
| Free-cash-flow yield (%) | 10.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 14.4% of shares outstanding sold short, 5.8 days of average trading to cover, +6.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $2.8M |
| 12 monthsfrom | $0 | $6.9M |
The thesis
Five9's artificial intelligence (AI) revenue is growing about 91%, but a cut to full-year profit guidance and a $325 million cash purchase of Level AI make the shares more likely to lag the S&P 500 over the next three months. The fourth-quarter report, expected around February 2027, shows whether margins hold.
Five9 reported on 5 November 2026. Revenue was $323.3 million, up 13% from $285.8 million a year earlier, per the company's 8-K filing. Finviz reported AI revenue of about $45 million, up about 91%, and a full-year AI growth outlook raised to at least 75% from at least 60%.
Profit guidance went the other way. Full-year adjusted earnings per share (EPS) guidance fell to $3.17–$3.21 from the $3.22–$3.30 issued on 6 August 2026. Fourth-quarter adjusted EPS guidance of $0.88–$0.92 compares with a $0.99 estimate, per Benzinga on 5 November 2026. The shares closed at $34.14 on 5 November 2026 and $28.12 on 6 November 2026. The last close was $28.19 on 12 November 2026.
The market has already reset the price: the shares sit below their 50-day average and near Wells Fargo's post-report target of $28.
Bullish and bearish views on Five9, Inc.
The bull case on Five9, Inc. (FIVN), in brief: AI growth accelerated again. The bear case: profit guidance moved down.
Bull case
- AI growth accelerated again. AI revenue rose about 91% in the third quarter, against 78% in the second, per Finviz's summary of the 5 November 2026 call. AI is roughly 17% of subscription revenue, up from 13% in the first quarter.
- Revenue guidance rose again. Full-year 2026 revenue guidance is $1.269–$1.275 billion, per the 8-K. Fourth-quarter revenue guidance of $328–$334 million brackets the $330.78 million estimate, per Benzinga.
- Adjusted EPS beat. Third-quarter adjusted EPS was $0.82 against a $0.80 consensus, per Finviz. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $81.2 million, 25.1% of revenue.
- Cash covers the deal. Cash was $263.8 million and marketable investments $433.8 million at 30 September 2026, per the 8-K. Level AI had about $20 million of annual recurring revenue on 31 October 2026, up roughly 50% from a year earlier, per reports of the announcement.
- Industry standing and several positive brokers. Gartner named Five9 a Leader in its 2026 Magic Quadrant for Contact Center as a Service for the ninth time (reported 23 October 2026). After the report, Roth held a $40 target, Barclays $38, Truist $35 and KeyBanc $34, per Benzinga on 6 November 2026.
Bear case
- Profit guidance moved down. Full-year adjusted EPS guidance fell by $0.05 at the low end and $0.09 at the high end, per the 8-K and the 6 August 2026 guidance. Finviz noted that EBITDA margin and free cash flow targets were reaffirmed, not raised.
- Gross margin kept slipping. Adjusted gross margin was 61.7% against 62.8% a year earlier. Gross margin under generally accepted accounting principles (GAAP) was 53.4% against 55.0%, per the 8-K.
- GAAP profit is thin. Third-quarter GAAP EPS was $0.19 against $0.21 a year earlier, while adjusted EPS was $0.82.
- The acquisition absorbs cash and margin. The $325 million price equals about 47% of cash and marketable investments of $697.7 million at 30 September 2026, per FourWeekMBA. Management expects Level AI to dilute 2027 adjusted EBITDA margin by about one point, with accretion not before 2028, per reports of the call. Fiscal 2026 guidance excludes it.
- Brokers cut targets and one downgraded. On 6 November 2026 Evercore ISI moved to In Line with a $24 target, Wells Fargo cut to $28 and DA Davidson to $30, per Benzinga.
- Executives sold in September. SEC Form 4 filings show the chief financial officer sold 20,618 shares at an average $33.30 from 4 September to 8 September 2026, and the president sold 6,986 shares at $35.00 on 17 September 2026. Both sales ran under Rule 10b5-1 plans.
Price setup
The shares closed at $28.19 on 12 November 2026. The 52-week high is $40.00 (intraday, 23 September 2026), and the last close is 29.5% below it. The 52-week closing low is $13.61, set on 10 April 2026. The 3-month change is –14.6%, against a close of $33.00 on 14 August 2026.
Since the report the shares have traded in a narrow band: $28.12 on 6 November 2026, $28.87 on 9 November 2026, $27.75 on 10 November 2026, $28.07 on 11 November 2026. The 50-day average is $34.07, above the price. The 200-day average is $24.73, below it.
Targets published after the report run from Evercore ISI's $24 to Roth's $40. Wells Fargo's $28 sits at the current price. A refreshed consensus target is not published in a form that can be cited here.
Catalysts ahead
- ~31 December 2026 (est.): Expected closing of the $325 million Level AI acquisition (company guided to the fourth quarter of 2026). Adds about $20 million of annual recurring revenue and starts the roughly one-point dilution to 2027 adjusted EBITDA margin that management described.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. Tests the $0.88–$0.92 adjusted EPS range, the at-least-75% AI growth outlook and gross margin against the 61.7% third-quarter level.
What would change the view
A daily close above $34.14, the 5 November 2026 close before the guidance cut, which would show the shares leading again. Fourth-quarter revenue above the $334 million top of guidance with adjusted EPS above $0.92 would also show the shares leading.
What it trades with
Five9 trades with enterprise software and contact-center peers, and with small-cap software generally. It has been an S&P SmallCap 600 constituent since 3 August 2026, so passive small-cap flows affect it at index rebalances. The AI revenue growth ties it to the wider market for AI applications, yet the 6 November 2026 move came from company-specific guidance and the Level AI deal. Analyst commentary on the call from Rosenblatt and Mizuho centred on sales-force and product overlap with Level AI, per CMSWire.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $323.3 million, up 13% from $285.8 million; GAAP EPS $0.19 against $0.21; non-GAAP EPS $0.82 against $0.78; adjusted EBITDA $81.2 million, 25.1% of revenue. Five9 third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Adjusted gross margin was 61.7% against 62.8% a year earlier; GAAP gross margin 53.4% against 55.0%. Five9 third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Fiscal 2026 guidance: revenue $1.269–$1.275 billion, non-GAAP EPS $3.17–$3.21, GAAP EPS $0.75–$0.83; fourth-quarter revenue $328–$334 million and non-GAAP EPS $0.88–$0.92. Guidance excludes Level AI. Five9 third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- AI revenue was about $45 million, up about 91% from a year earlier, roughly 17% of subscription revenue; full-year AI growth outlook raised to at least 75% from at least 60%. Finviz summary of third-quarter 2026 results and call · as of
- Five9 agreed to acquire Level AI for $325.0 million in cash, expected to close in the fourth quarter of 2026; Level AI had about $20 million of annual recurring revenue, up about 50% from a year earlier. Five9 announcement via Business Wire/Morningstar, 5 November 2026 · as of
- Cash and equivalents $263.8 million, marketable investments $433.8 million, convertible senior notes $738.2 million carrying value at 30 September 2026. Five9 third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Evercore ISI downgraded to In Line with a $24 target; Wells Fargo cut its target to $28 and DA Davidson to $30; Barclays $38, Truist $35 and KeyBanc $34. Benzinga analyst-rating headlines · as of
- Chief financial officer Bryan Lee sold 20,618 shares at an average $33.30 from 4 September to 8 September 2026 under a Rule 10b5-1 plan; president Andy Dignan sold 6,986 shares at $35.00 on 17 September 2026. SEC Form 4 filings · as of
Sources
- SEC EDGAR
- Finviz
- Five9 to Acquire Level AI, Advancing AI-Powered CX Platform · morningstar.com ·
- Five9 to Buy Level AI for $325M, Near 47% of Its Cash Pile · fourweekmba.com
- cmswire.com
- MarketBeat ·
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