Five9 Earnings: Subscription Sales Momentum Drives Guidance Upside

No-moat Five9 reported strong third-quarter results, exceeding our revenue and profitability expectations, while providing guidance that also came in better than anticipated. Management is bullish on a healthy subscription pipeline and increasing demand for artificial intelligence-driven solutions. Based on these results and updated guidance, we have slightly lifted our near-term estimates but are awaiting 2025 guidance before making any meaningful model changes; we are therefore maintaining our $58 fair value estimate target. We acknowledge the market view around potential pressure on seat licenses from virtual agents, but we think over the next five years Five9’s seat count continues to grow and that the firm will be able to capitalize on its own AI investments. Still, we prefer the moatier names within our software coverage.