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Five9 Q3 Earnings: Is NasdaqGM:FIVN Expensive at 36.3x Price/Book?

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Five9, Inc. (NasdaqGM:FIVN) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $0.18/share on revenue of $101.1 million. The consensus earnings per share (EPS) of $0.18/share is based on a poll of 20 analysts and represents a decline in eps of −10.9% over the same quarter last year, when the company reported earnings of $0.20/share.

The revenue forecast of $101.1 million based on a poll of 18 analysts implies a year-over-year (YoY) growth in revenue of 20.7%. Last year the company reported $83.769 million in revenue for the quarter.

Expected to report EPS contraction of −10.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $101.11 $83.77 20.7%
EPS $0.18 $0.20 −10.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Five9, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.15 $0.21 37.8% Beat
Q1, 2020 $0.15 $0.17 10.4% Beat
Q4, 2019 $0.22 $0.27 22.5% Beat
Q3, 2019 $0.15 $0.20 35.6% Beat
Q2, 2019 $0.12 $0.20 65.2% Beat
Q1, 2019 $0.12 $0.17 36.3% Beat
Q4, 2018 $0.14 $0.23 68.3% Beat
Q3, 2018 $0.09 $0.18 92.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 7.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $120.82 $129.27 7.0% Increase
May 4, 2020 $91.83 $96.02 4.6% Increase
February 19, 2020 $76.94 $75.12 −2.4% Decline
November 5, 2019 $55.46 $60.36 8.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.15, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.15 implies a 1.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

Five9, Inc. is currently trading at $141.30/share, down −0.7% for the day. The company is trading at approximately 94.9% of its 52-week high of $148.96/share. The company’s stock price is up 9.3% since the last earnings report and down −2.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 62.79 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGM:FIVN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −380.59 and a forward P/E multiple of 175.38.

Five9, Inc.’s current share price also implies a price-to-book (P/B) multiple of 36.29. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $141.30
P/E Ratio −380.6x
P/E Ratio (Fwd) 175.4x
PEG Ratio 0.2
Total Debt / Total Capital 6.6%
Levered Free Cash Flow $18.619 million
EV / EBITDA 891.2x

Finbox

Five9, Inc. is a mid-cap stock with a market capitalization of $9.232 billion and a total enterprise value of $9.201 billion. The company operates in the Information Technology sector and the Software industry.

Five9, Inc., together with its subsidiaries, provides cloud software for contact centers in the United States and internationally. The company offers virtual contact center cloud platform that delivers a suite of applications, which enables the breadth of contact center-related customer service, sales, and marketing functions; and acts as a hub for digital engagement channels between the clients and their customers, which enables them to manage the end-to-end customer experience in a single unified architecture. Its solution enables its clients to manage these customer interactions across various channels, including voice, chat, email, Web, social media, and mobile, as well as connects them to an appropriate agent. The company also provides a set of management applications, such as workforce management, reporting, quality management, and supervisor tools. It serves customers in various industries comprising banking and financial services, business process outsourcers, consumer, healthcare, and technology. Five9, Inc. was founded in 2001 and is headquartered in San Ramon, California.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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