Five9 Earnings: New Enterprise Wins and Backlog Drive Top-Line Growth

No-moat Five9 reported solid first-quarter results that beat consensus revenue and profitability estimates. Resilient artificial intelligence demand within Five9’s pipeline more than offset headwinds from lengthening sales cycles and tighter enterprise budgets, resulting in robust top-line growth for the quarter. Management acknowledged the ongoing macroeconomic uncertainty and, as a result, issued cautious guidance for the second quarter. However, the company remains upbeat about a recovery in the second half of the year and raised parts of its full-year outlook. We are less optimistic about the longer-term and lowered our relatively aggressive growth estimates throughout our forecast. As a result, we are lowering our fair value estimate to $45 from $62 previously. We see upside to our new fair value, but prefer the moatier names within our coverage.