Benefiting From Work From Home Trend, Five9 Posts Positive Start to 2020; Maintain FVE

Stay at home orders have not slowed down narrow-moat Five9 with the company reporting revenue and bottom-line beats in the first quarter of 2020 and largely maintaining guidance for the rest of 2020--a rarity in recent weeks--due to the ability to fully implement its cloud contract center software remotely. It is not a shock that Five9 showed resilience in these trying times as it has been one of the best performing stocks of 2020 (up roughly 28% year to date). While the short-term results are positive, we are unsure if 2020 is benefiting from a several weeks-long, coronavirus-induced pull forward of future years’ growth or if this pandemic will steepen the adoption curve for the underpenetrated cloud contact center market. With that in mind, we are maintaining our fair value estimate for Five9 at $49, though the recently announced exclusive reselling partnership with AT&T could enable Five9 to capture a larger market share in the long term.