Deja Vu As Five9 Reports Solid Quarter, Weaker Outlook on Macroeconomic Concerns; FVE Cut to $52

Five9 reported third-quarter results slightly above our expectations, including both top- and bottom-line beats, but provided a disappointing outlook for both the fourth quarter and fiscal year 2023. The company is returning to its midteens preliminary growth outlook for 2023, consistent with prepandemic initial guidance levels. This is well short of our model, and likely the rest of Wall Street as well, as key vertical segments are slowing their expansion and midmarket customers struggle. This is returning CEO Michael Burkland’s first earnings call in five years after serving as chairman of the board for the last five. When considering the weak outlook and decelerating growth metrics, we sharply lowered our estimates for both growth and profitability over the next several years, and therefore lower our fair value estimate for the no-moat name to $52 per share from $130 per share. While we see upside to the stock from here, we prefer several of our wide-moat companies during this period of distress.