Analyst Note
| Dan Romanoff |No-moat Five9 reported first-quarter results above our expectations on both the top and bottom lines, and slightly raised its outlook for fiscal 2023. Macro uncertainty resulted in elongated sales cycles for new logo bookings. The firm noted a large total addressable market expansion rooted in AI for contact-center-as-a-service providers as virtual agents can replace live agents, and be an upselling opportunity as AI works in tandem with live agents. We think one of the most obvious use cases for generative AI is in customer service and contact centers, so Five9 should benefit here. Despite the optically higher outlook, we are maintaining our $59 per share fair value estimate as we note guidance was raised by less than the amount of upside in the quarter. In other words, Five9 effectively lowered its outlook for the year. We view shares as slightly overvalued and prefer several of the wide-moat names within in our coverage.