Is Five9 Stock Has The Potential To Sustain Momentum?

    Author Siraj SarwarPosted on Categories Application Software, TechTags , , , , , , , , , ,
    Five9 Stock

    Five9 Inc. (NASDAQ:FIVN) is among those small-cap growth stocks that had generated massive growth in stock price over the last couple of years. FIVN stock soared 60% in the last twelve months, up almost 500% in the last three years.  It provides cloud software for contact centers. FIVN’s stock has the 52-week trading range of $15.27-$27.81.

    At present, its stock is trading in the range of $25, just shy from the 52-week high of $27 a share. Five9 also appears in a strong financial position to support the share price momentum.

    In the third quarter of 2017, five9 generated revenue growth of 22% to $50 million, compared to the same period last year. The strong growth in its revenue was the outcome of 36% growth in LTM enterprise subscription revenue.

    On the back of improving sales and margins, it posted earnings of $0.9 million in Q3, relative to the loss of $0.07 per share in the past year quarter.

    Its CEO said:

    “Our revenue growth continues to be driven by our Enterprise business, which delivered 36% growth in LTM Enterprise subscription revenue. I am also pleased to report that our Enterprise bookings and sales pipeline reached all-time highs. Additionally, for the third consecutive year, Five9 has been recognized as a leader in the Gartner Magic Quadrant for Contact Center as a Service and positioned highest for an ability to execute.”

    The company expects to generate revenue in the range of $197 million in fiscal 2017, compared to the revenue of $162 million in 2016. Moreover, the company has also been generating positive free cash flows to invest in growth opportunities. In the latest quarter, it generated free cash flow of $7 million to invest in growth opportunities, while the company doesn’t offer any dividend to investors.

    Although its valuations appear significantly higher trading around 37 times to book and 7.4 times to book ratio, Five9’s potential to generate high double-digit revenue and earnings growth puts it in a position to support the stock price. Moreover, the company’s record booking will also enhance investor’s sentiments in the coming days.

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    Author Siraj Sarwar
    About the author: Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.