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    FIVN
    Earnings call· Jun 2026(Q2 FY26)

    Five9 Q2 FY26 earnings call FIVN

    Aug 6, 2026 Source

    Executive summary

    Five9 Q2 FY26 — Strong AI Revenue Growth and Major Enterprise Win

    Five9 delivered a solid quarter, driven by accelerating AI revenue and a significant enterprise win, validating its strategic focus on a voice-led, AI-powered customer experience platform. The company is implementing operational improvements and leadership changes to enhance execution and capitalize on the growing demand for trusted cloud CX infrastructure. This quarter's results underscore the company's progress in integrating AI and human workflows to deliver advanced customer solutions.

    Highlights

    5

    • Q2 revenue was $312 million, above the high end of guidance.

    • Subscription revenue grew 14% year-on-year, marking a third consecutive quarter of acceleration.

    • AI revenue accelerated to 78% year-on-year growth, reaching $39 million in Q2.

    • Full year AI growth outlook increased from more than 40% to at least 60% year-on-year.

    • Secured a Fortune 100 financial services customer win, a 5-year contract with approximately $100 million total contract value.

    Concerns

    4

    • Adjusted gross margin was 61% in Q2, down from 63% in Q2 FY25, impacted by temporary expansion of professional services capacity.

    • Adjusted EBITDA was 22% of revenue in Q2, down from 24% in Q2 FY25, impacted by temporary expansion of professional services capacity.

    • Cash from operations was $42 million (13% of revenue) and free cash flow was $15 million (5% of revenue), impacted by seasonality, customer payment transition, and pull-forward of capital expenditures.

    • Organizational design initiatives are expected to generate higher temporary expenses in 2026.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full year AI revenue growth
    at least 60% year-on-year
    high materiality
    High
    Q3 total revenue
    $316 million to $322 million
    high materiality
    High
    Full year total revenue
    $1.26 billion to $1.272 billion
    high materiality
    High
    Q3 non-GAAP EPS
    $0.77 to $0.81 per diluted share
    medium materiality
    High
    Full year non-GAAP EPS
    $3.22 to $3.30 per diluted share
    high materiality
    High
    Annual adjusted EBITDA margin
    exceed 24%
    medium materiality
    High
    Annual free cash flow
    approximately $175 million
    medium materiality
    High
    Purchase of PP&E as % of revenue
    approximately 3.5%
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Total Revenue
    Above the high end of guidance.
    		$312M10%——
    CCaaS Revenue
    Grew a stable 7% year-over-year as expected, generally tracking sequential progression of total revenue growth.
    		—7%——
    Telecom Revenue
    Approximately 11% of total Q2 revenue.
    		~$34.32M———
    Professional Services Revenue
    Approximately 6% of total Q2 revenue.
    		~$18.72M———

    Operational metrics

    8
    Non-GAAP gross margin
    61%down from 63% in Q2 FY25
    Q2 FY26

    Expected to ramp through the second half of the year.

    Non-GAAP EBITDA
    $70Mup from $68M in Q2 FY25
    Q2 FY26

    Impacted by temporary expansion of professional services capacity.

    Cash, cash equivalents and short-term investments balance
    $654M
    Q2 FY26 end

    Balance at the end of the quarter.

    ASR initial share delivery
    3.1M shares
    Q2 FY26

    Initial delivery under the $90 million ASR program.

    New board authorization for share repurchase
    $200M
    Q2 FY26

    Available for opportunistic deployment.

    Subscription revenue per seat growth
    increasing in the single digits
    Q2 FY26

    Consistent with past trends.

    Concurrency count growth
    in line with CCaaS revenue growth
    Q2 FY26

    Growing at a healthy rate.

    Vendor discount impact on margin
    slightly more than 1 percentage point
    Q1 FY26

    Benefited Q1 FY26 and did not recur in Q2 FY26, affecting sequential comparison of gross and EBITDA margins.

    Industry KPIs

    9
    MetricValueDetails
    Capacity CAPEX3.5%% of revenue
    Revenue growth$312MUSD
    Arr net new arr$150MUSD
    Bookings billings$100MUSD
    Pricing model mix—
    Large deal new logo metrics1customer
    Operating FCF margin rule of 4022%%
    Ai product adoption monetization$39MUSD
    Net revenue net dollar retention107%%

    Orderbook & backlog

    1
    Total Contract Value (TCV)$100MQ2 FY26

    5-year agreement with a Fortune 100 financial services customer, expected to ramp to approximately $25M ARR when fully deployed. Negligible subscription revenue contribution in 2026, gradual ramp in 2027, and more meaningful increases thereafter.

    Product announcements

    1
    ProductTypeDetails
    NextGen Five9 Voice AI Agentslaunch

    Deals & partnerships

    2
    Fortune 100 financial services customerCore CX platform supporting broader cloud migration strategy$100M TCV5-year agreement

    Competitive process against enterprise-grade CX providers. Won on strength of proof of concept and delivery capabilities. Joint go-to-market motion with Google was a key driver. One of the first large deals transacted through the Google Cloud Marketplace.

    GoogleJoint go-to-market motion and platform integration

    Key driver in winning the Fortune 100 financial services deal, which was transacted through the Google Cloud Marketplace. Partnership involves hands-on collaboration for better integrations and solutions.

    Capital programs

    1
    Global data center refreshunderway

    Temporarily elevating purchase of PP&E to approximately 3.5% of revenue for 2026, which is about 1 percentage point above last year's rate.

    Risks & headwinds

    3
    Temporary expansion of professional services capacityQ2 FY26

    Adjusted gross margin 61% (down from 63% in Q2 FY25); Adjusted EBITDA margin 22% (down from 24% in Q2 FY25)

    Mitigation: Enabling earlier deployment of AI solutions to meet customer demand; expected adjusted gross margin to ramp through H2.

    Cash flow variabilityQ2 FY26

    Cash from operations $42M (13% of revenue); Free cash flow $15M (5% of revenue)

    Mitigation: Acknowledged as seasonally the lowest quarter, also impacted by transition to annual customer payments and pull-forward of capital expenditures.

    Higher temporary expenses from organizational design initiatives2026

    Expected to generate higher temporary expenses

    Mitigation: Expected to provide longer-term cost efficiencies, improved focus, speed, and effectiveness.

    What to watch in Q3 FY26

    5

    LTM subscription dollar-based retention rate (DBRR)

    Q3 FY26
    Current107%
    Targetincrease by 1 percentage point

    Why it matters

    Indicates the company's ability to retain and expand revenue from existing customers, a key driver of recurring revenue growth.

    LTM subscription dollar-based retention rate was 107% in Q2, in line with our expectations. We anticipate this key metric to increase in Q3 by approximately 1 percentage point, driven by existing backlog.

    Q&A highlights

    7

    As AI agents operate across various systems, which platform owns the orchestration layer, what does Five9 need to control directly, and where do partnerships make sense?

    Five9's heritage in voice and ownership of routing is a key differentiator. The platform can orchestrate human and AI agents, leveraging agent quality management to route complex calls to best-suited human agents, providing a comprehensive 'toolbox' for resolution and containment, unlike point solutions.

    “What a company like Five9 can do is because we have run agent quality management and all your agents, I've already identified which agents are best of breed to handle that question, which agents have a high empathy score. And now with my agentic routing, I can send that call specifically to that one agent that has high empathy and high ability to answer that question.”

    asked by David Hynes · answered by Amit Mathradas

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Priorities and Operating Discipline

    CEO Amit Mathradas reiterated the four key priorities for Five9: building a performance-driven culture, optimizing operations, strengthening the core business, and winning in AI-powered customer experience. The company is sharpening its focus on complex, regulated industries like financial services and healthcare, where its platform depth, reliability, governance, and human-in-the-loop workflows are critical. Resources are being allocated towards these high-opportunity areas, reflecting a more disciplined approach.

    02

    Organizational and Leadership Changes

    Five9 announced significant organizational changes and leadership appointments to mature its structure and enhance execution. Naranja Vijay Raghavan joined as Chief Technology Officer, unifying product engineering, product management, AI, automation, and architecture. Rob Hornish was appointed Chief Sales Officer to lead global sales, focusing on go-to-market execution. Sven Linzmeier joined as EVP Transformation and Strategy to drive high-priority initiatives and corporate development. These hires bring experience in modern enterprise platforms, AI, and go-to-market strategies.

    03

    AI as a Catalyst for CCaaS Growth

    The company views AI as a significant catalyst for CCaaS growth, transforming customer experience from a cost center to a lever for loyalty and growth. AI automates routine tasks, improves economics, and drives reallocation of contact center spend towards mission-critical software. Five9 emphasizes its voice-led platform's ability to orchestrate human agents, AI agents, data, compliance, and governance within a single production environment, differentiating it from point solutions.

    04

    NextGen Voice AI Agents Launch

    In June, Five9 released its NextGen Voice AI agents, a re-architecture of its voice AI capabilities built for the 'Humantic' world. These agents are designed to reason, act, and resolve customer requests with seamless handoffs to human agents when necessary. The native integration into Five9's carrier-grade telephony, sharing data, knowledge, and orchestration across the platform, is highlighted as a key differentiator for enterprise-grade reliability and control.

    05

    Major Enterprise Win and Google Partnership

    Five9 secured a significant win with a Fortune 100 financial services customer, a 5-year contract valued at approximately $100 million in total contract value, expected to ramp to $25 million in ARR when fully deployed. This competitive win, in partnership with Google and a global systems integrator, was transacted through the Google Cloud Marketplace, showcasing the strength of their joint platform and integration capabilities for large-scale cloud migrations.

    06

    Financial Performance and Backlog Conversion

    Q2 revenue of $312 million exceeded guidance, driven by 14% year-on-year subscription revenue growth and 78% year-on-year AI revenue acceleration. The acceleration in AI revenue was due to several customers ramping earlier than forecasted. The company's confidence in its second-half double-digit growth is primarily based on the visibility into its existing backlog, with minimal dependency on new business acquisition.

    07

    Capital Allocation and Share Repurchase

    The $90 million Accelerated Share Repurchase (ASR) program is well underway, with an initial delivery of 3.1 million shares, representing approximately 80% of the total expected. A new $200 million board authorization remains available for opportunistic deployment. The company is also undertaking a global data center refresh in 2026, temporarily elevating capital expenditures to approximately 3.5% of revenue.

    AI-generated summary of the company’s earnings call. Not investment advice.