Last Update 10 Jan 26

Fair value Decreased 0.70%

FIVN: AI Execution And Share Repurchases Will Support Future Upside Potential

Narrative Update

The analyst price target for Five9 has been reduced by about US$6. This reflects updated models that factor in recent Q3 results, where positive AI traction is balanced against deceleration concerns and potential competitive pressure in commercial accounts.

Analyst Commentary

Recent Street research around Five9 reflects a mixed view, with updated models after Q3 pulling price targets lower while still recognizing areas of strength in the business. Here is how bullish and bearish analysts are framing the stock right now.

Bullish Takeaways

Bullish analysts retain positive overall ratings even with reduced price targets. This signals that they still see upside potential relative to current trading levels.
Positive AI traction in Q3 is viewed as a key execution point, with the AI portfolio seen as an important driver for future deal wins and potential long term growth.
Some analysts frame the reset in price targets, from US$30 to US$24 and from US$31 to US$26, as a recalibration of expectations rather than a shift to a negative stance on the business model.
Ongoing coverage with positive ratings suggests that, despite near term issues, analysts see the company as capable of improving execution over time.

Bearish Takeaways

Bearish analysts focus on Q3 deceleration as a key overhang. They view slower trends as a headwind for both growth expectations and valuation multiples.
Reports of a weaker than normal quarterly print are taken as a signal that prior checks pointing to softness are still playing through the numbers.
Concerns about rising competition within commercial accounts are flagged as a risk to future deal flow, pricing power, and overall growth durability.
The step down in price targets into the mid US$20s reflects a more cautious stance on how quickly Five9 can re accelerate growth and address competitive pressure.

What's in the News

Five9 appointed Amit Mathradas as Chief Executive Officer, effective February 2, 2026. He brings experience from Nintex, Avalara, PayPal, Web.com, and Dell, and holds academic credentials from Northwestern University’s Kellogg School of Management and Wittenberg University (Key Developments).
Five9 introduced a suite of AI powered updates to its Genius AI offering at Five9 CX Summit 2025. The updates include Agentic Quality Management, Genius Routing, OneVUE analytics, Adaptive Digital Engagement, and a new partnership with Meta that features native WhatsApp integration and AI agents (Key Developments).
Five9 issued guidance for Q4 2025, outlining expected revenue of US$294.7m to US$300.7m and GAAP net income of US$11,986,000 to US$18,098,000. For full year 2025, the company expects revenue of US$1.1435b to US$1.1495b with GAAP net income of US$31,681,000 to US$37,769,000 (Key Developments).
The Board of Directors authorized a share repurchase program under which Five9 plans to buy back up to US$150m of its shares. The plan was approved on November 6, 2025 (Key Developments).
Afiniti announced a partnership with Five9 to bring Afiniti’s AI Pairing technology into the Five9 Intelligent Cloud Contact Center and the Five9 Marketplace. The initiative is aimed at matching customers with agents using behavioral and contextual data (Key Developments).

Valuation Changes

Fair Value: edged down slightly from US$34.05 to US$33.81 per share.
Discount Rate: moved marginally higher from 9.89% to 9.90%.
Revenue Growth: shifted slightly higher from 8.94% to 8.95%.
Net Profit Margin: eased modestly from 8.53% to 8.43%.
Future P/E: ticked up slightly from 30.89x to 31.02x.

Accelerated AI adoption, deepening partnerships, and strong enterprise demand are driving recurring revenue growth, operational efficiency, and international expansion.
Upsell, cross-sell momentum, and bundled solutions support sequential revenue growth and higher average contract values.
Competitive pressures, leadership changes, economic headwinds, evolving technology, and stricter regulations threaten Five9's market position, growth stability, and profitability.

Catalysts

About Five9

Provides intelligent cloud software for contact centers in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Five9's accelerated adoption of AI-driven solutions-highlighted by 42% Enterprise AI revenue growth and a surge in AI bookings (representing over 20% of Enterprise new ACV)-positions the company to benefit from increasing enterprise investment in AI and automation for customer experience, supporting higher recurring revenues and expanded net margins as AI products command premium pricing.
Ongoing large customer wins and multi-year contract expansions that emphasize Five9 as a single, comprehensive CX platform for both core and AI solutions demonstrate sustained demand for scalable, cloud-native contact center offerings, supporting continued enterprise revenue growth and improved dollar-based net retention rates.
Strategic deepening of partnerships with leading technology companies (e.g., Salesforce, Google Cloud, ServiceNow, Epic) enhances Five9's go-to-market reach and integration opportunities, accelerating international expansion, client diversification, and potential channel-driven revenue lift.
Internal operational restructuring-including executive promotions and consolidation of marketing and sales under a Chief Revenue Officer-signals renewed focus on operational efficiency and alignment, which is driving record adjusted EBITDA margin expansion and positive free cash flow trends, providing room to reinvest in future growth.
Increasing upsell and cross-sell momentum within the installed enterprise base (highest-ever installed base bookings in Q2), combined with a shift toward AI-augmented and bundled product offerings, is laying the foundation for sequential revenue growth and higher average contract values as these bookings layer into revenue over coming quarters and into 2026.

Five9 Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Five9's revenue will grow by 9.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 0.8% today to 6.8% in 3 years time.
Analysts expect earnings to reach $98.5 million (and earnings per share of $1.23) by about September 2028, up from $8.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $124.9 million in earnings, and the most bearish expecting $70.4 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 40.3x on those 2028 earnings, down from 231.8x today. This future PE is greater than the current PE for the US Software industry at 36.6x.
Analysts expect the number of shares outstanding to grow by 2.73% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.58%, as per the Simply Wall St company report.

Five9 Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competition from larger, better-capitalized vendors and industry consolidation could erode Five9's market share or force increased spending on sales and R&D, pressuring future revenue growth and net margins.
Ongoing executive transition-including the pending CEO change and recent executive team realignment-creates leadership uncertainty, which could disrupt strategic focus and operational execution, potentially impacting earnings stability and long-term financial performance.
Macroeconomic uncertainty, high interest rates, fluctuations in currency exchange rates, and customer caution around technology spending may drive deal elongation and minimal seasonality, creating revenue volatility and slowing ARR growth.
The rapid evolution of AI and automation in contact center software raises the risk that core product offerings become commoditized, resulting in pricing pressure and margin compression for SaaS providers like Five9, negatively affecting net margins.
Increasing data privacy and global compliance requirements, including GDPR and CCPA, may elevate compliance costs, limit data-driven innovation, and introduce regulatory risks, ultimately eroding operating margins and increasing operational complexity.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $36.381 for Five9 based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $59.0, and the most bearish reporting a price target of just $28.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $98.5 million, and it would be trading on a PE ratio of 40.3x, assuming you use a discount rate of 9.6%.
Given the current share price of $26.48, the analyst price target of $36.38 is 27.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

AI And Automation Will Transform Global Contact Centers