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Five9, Inc.$42.34$1.603.93%

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 Five9 Reports Record Annual Revenue of $200 Million, Up 24% Year-Over-Year
   Wednesday, February 21, 2018 4:05:15 PM ET

--Record Annual Operating Cash Flow of $11.1 Million

--Fourth Quarter Record Revenue of $55.4 Million, Up 25% Year-Over-Year

Five9, Inc. (FIVN ), a leading provider of cloud software for the enterprise contact center market, today reported results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial Results

-- Revenue for the fourth quarter of 2017 increased 25% to $55.4 million, compared to $44.2 million for the fourth quarter of 2016.

-- GAAP gross margin was 59.6% for the fourth quarter of 2017, compared to 64.3% for the fourth quarter of 2016. Included in the GAAP results for the fourth quarter of 2016 was a $3.1 million non-recurring item, which increased GAAP gross margin in the fourth quarter of 2016 by 7.0 percentage points from 57.3%.

-- Adjusted gross margin was 63.6% for the fourth quarter of 2017, compared to 61.9% for the fourth quarter of 2016.

-- GAAP net loss for the fourth quarter of 2017 was $(0.6) million, or $(0.01) per basic share, compared to GAAP net income of $0.4 million, or $0.01 per diluted share, for the fourth quarter of 2016. GAAP net loss for the fourth quarter of 2016 was $(2.7) million, or $(0.05) per basic share, excluding the $3.1 million non-recurring item.

-- Non-GAAP net income for the fourth quarter of 2017 was $4.0 million, or $0.07 per diluted share, compared to non-GAAP net income of $0.1 million, or $0.00 per diluted share, for the fourth quarter of 2016.

-- Adjusted EBITDA for the fourth quarter of 2017 was a record $6.9 million, or 12.4% of revenue, compared to $2.9 million, or 6.6% of revenue, for the fourth quarter of 2016.

-- GAAP operating cash flow for the fourth quarter of 2017 was $2.9 million, compared to GAAP operating cash flow of $2.8 million for the fourth quarter of 2016.

2017 Financial Results

-- Total revenue for 2017 increased 24% to a record $200.2 million, compared to $162.1 million in 2016.

-- GAAP gross margin was 58.5% for 2017, compared to 58.7% in 2016. Included in the GAAP results for 2016 was a $3.1 million non-recurring item, which increased GAAP gross margin in 2016 by 1.9 percentage points from 56.8%.

-- Adjusted gross margin was 62.7% for 2017, compared to 61.7% in 2016.

-- GAAP net loss for 2017 was $(9.0) million, or $(0.16) per basic share, compared to a GAAP net loss of $(11.9) million, or $(0.23) per basic share, in 2016. Included in the GAAP results for 2017 were two non-recurring items resulting in a net $0.3 million favorability while 2016 GAAP results included two non-recurring items resulting in a net $2.1 million favorability.

-- Non-GAAP net income for 2017 was $6.3 million, or $0.11 per diluted share, compared to a non-GAAP net loss of $(3.6) million, or $(0.07) per basic share, in 2016.

-- Adjusted EBITDA for 2017 was a record $17.6 million, or 8.8% of revenue, compared to $8.4 million, or 5.2% of revenue, in 2016.

-- GAAP operating cash flow for 2017 was $11.1 million, compared to GAAP operating cash flow of $6.8 million in 2016.

"We had a strong finish to the year with better than expected fourth quarter results capping off a record year for Five9. For the year, we grew revenue by 24% to a record $200 million. Our revenue growth continues to be driven by our Enterprise business, which delivered 37% growth in LTM Enterprise subscription revenue. Our strong enterprise growth and the operating leverage in our business model drove strong improvements to our bottom line, including operating cash flow of $11.1 million for the year. Additionally, we set an all-time record for Enterprise bookings in the fourth quarter and full year. We believe that our continued execution combined with our powerful, differentiated cloud contact center software positions Five9 extremely well in the customer experience market that is still in the early days of a massive shift to the cloud." - Barry Zwarenstein, Interim CEO and Chief Financial Officer, Five9

Business Outlook

On January 1, 2018, Five9 adopted Accounting Standards Codification (ASC) 606 "Revenue from Contracts with Customers" using the modified retrospective transition method. The guidance below includes the expected impact of the adoption of this new revenue standard, which replaced ASC 605. For the full year and first quarter of 2018, we expect no material difference in revenue between ASC 606 and ASC 605. Under ASC 606, we expect to add approximately $5 million to $7 million to GAAP and non-GAAP net income for the full year 2018 and approximately $0.5 million to $1.5 million to GAAP and non-GAAP net income for the first quarter of 2018.

-- For the full year 2018, Five9 expects to report: -- Revenue in the range of $231 to $234 million.

-- GAAP net loss in the range of $(13.4) to $(10.4) million, or $(0.23) to $(0.18) per basic share.

-- Non-GAAP net income in the range of $12.6 to $15.6 million, or $0.20 to $0.25 per diluted share.

-- For the first quarter of 2018, Five9 expects to report: -- Revenue in the range of $54.5 to $55.5 million.

-- GAAP net loss in the range of $(4.5) to $(3.5) million, or a loss of $(0.08) to $(0.06) per basic share.

-- Non-GAAP net income in the range of $1.3 to $2.3 million, or $0.02 to $0.04 per diluted share.

Conference Call Details

Five9 will discuss its fourth quarter and full year 2017 results today, February 21, 2018, via teleconference at 4:30 p.m. Eastern Time. To access the call (ID 6886112), please dial: 888-427-9411 or 719-325-4940. An audio replay of the call will be available through March 7, 2018 by dialing 888-203-1112 or 719-457-0820 and entering access code 6886112. A copy of this press release will be furnished to the Securities and Exchange Commission on a Current Report on Form 8-K, and will be posted to our website, prior to the conference call.

A webcast of the call will be available on the Investor Relations section of the Company’s website at http://investors.five9.com/ .

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. We calculate adjusted gross profit by adding back or removing the following items to gross profit: depreciation, amortization, stock-based compensation expense, and the reversal of accrued federal fees. We calculate adjusted EBITDA by adding back or removing the following items to or from GAAP net income (loss): depreciation, amortization, interest expense, income tax expense (benefit), stock-based compensation expense, extinguishment of debt, non-recurring litigation settlement costs, the reversal of interest and penalties on accrued federal fees, and interest income and other, which consists primarily of a non-cash adjustment on investment, interest income and foreign exchange gains and losses. We calculate non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, intangibles amortization, non-recurring litigation settlement costs, and the reversal of interest and penalties on accrued federal fees. We calculate non-GAAP net income (loss) as GAAP net income (loss) excluding stock-based compensation expense, intangibles amortization, amortization of debt discount and issuance costs, extinguishment of debt, non-recurring litigation settlement costs, the reversal of interest and penalties on accrued federal fees, and non-cash adjustments on investment. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Five9 considers these non-GAAP financial measures to be important because they provide useful measures of the operating performance of the Company, exclusive of factors that do not directly affect what we consider to be our core operating performance, as well as unusual events. The Company’s management uses these measures to (i) illustrate underlying trends in the Company’s business that could otherwise be masked by the effect of income or expenses that are excluded from non-GAAP measures, and (ii) establish budgets and operational goals for managing the Company’s business and evaluating its performance. In addition, investors often use similar measures to evaluate the operating performance of a company. Non-GAAP financial measures are presented only as supplemental information for purposes of understanding the Company’s operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures set forth herein and attached to this release.

Forward-Looking Statements

This news release contains certain forward-looking statements, including the statements in the quote from our Interim Chief Executive Officer and Chief Financial Officer, including statements regarding Five9’s market position, business momentum, product positioning, the state of the cloud customer experience market, and the first quarter 2018 and full year 2018 financial projections, including the expected impact of ASC 606, set forth under the caption "Business Outlook," that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) our quarterly and annual results may fluctuate significantly, may not fully reflect the underlying performance of our business and may result in decreases in the price of our common stock; (ii) if we are unable to attract new clients or sell additional services and functionality to our existing clients, our revenue and revenue growth will be harmed; (iii) our recent rapid growth may not be indicative of our future growth, and even if we continue to grow rapidly, we may fail to manage our growth effectively; (iv) failure to adequately expand our sales force could impede our growth; (v) if we fail to manage our technical operations infrastructure, our existing clients may experience service outages, our new clients may experience delays in the deployment of our solution and we could be subject to, among other things, claims for credits or damages; (vi) security breaches and improper access to or disclosure of our data or our clients’ data, or other cyber attacks on our systems, could result in litigation and regulatory risk, harm our reputation and adversely affect our business; (vii) the markets in which we participate are highly competitive, and if we do not compete effectively, our operating results could be harmed; (viii) if our existing clients terminate their subscriptions or reduce their subscriptions and related usage, our revenues and gross margins will be harmed and we will be required to spend more money to grow our client base; (ix) our growth depends in part on the success of our strategic relationships with third parties and our failure to successfully grow and manage these relationships could harm our business; (x) we are establishing a network of master agents and resellers to sell our solution; our failure to effectively develop, manage, and maintain this network could materially harm our revenues; (xi) we sell our solution to larger organizations that require longer sales and implementation cycles and often demand more configuration and integration services or customized features and functions that we may not offer, any of which could delay or prevent these sales and harm our growth rates, business and operating results; (xii) because a significant percentage of our revenue is derived from existing clients, downturns or upturns in new sales will not be immediately reflected in our operating results and may be difficult to discern; (xiii) we rely on third-party telecommunications and internet service providers to provide our clients and their customers with telecommunication services and connectivity to our cloud contact center software, any increase in the cost thereof, reduction in efficacy or any failure by these service providers to provide reliable services could cause us to lose customers, increase our customers’ cost of using our solution and subject us to, among other things, claims for credits or damages; (xiv) we have a history of losses and we may be unable to achieve or sustain profitability; (xv) we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs; (xvi) failure to comply with laws and regulations could harm our business and our reputation; and (xvii) the other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent quarterly report on Form 10-Q. Such forward-looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.

About Five9

Five9 is a leading provider of cloud software for the enterprise contact center market, bringing the power of the cloud to thousands of customers and facilitating more than three billion customer interactions annually. Since 2001, Five9 has led the cloud revolution in contact centers, helping organizations transition from legacy premise-based solutions to the cloud. Five9 provides businesses with cloud contact center software that is reliable, secure, compliant and scalable which is designed to create exceptional customer experiences, increase agent productivity and deliver tangible business results. For more information, visit www.five9.com.

                                                                                                              
                                                                                       FIVE9, INC.
                                                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                     (In thousands)
                                                                                       (Unaudited)
                                                                                                                                                      
                                                                                                     December 31, 2017                                         December 31, 2016
                                                                                           ----------------------------------                        ---------------------------------
ASSETS
Current assets:
   Cash and cash equivalents                                                                     $  68,947                                                $  58,122
   Accounts receivable, net                                                                         19,048                                                   13,881
   Prepaid expenses and other current assets                                                         4,840                                 3,008  
                                                                                           ------------------------------------                      -----------------------------------
Total current assets                                                                                92,835                                                   75,011
Property and equipment, net                                                                         19,888                                                   14,688
Intangible assets, net                                                                               1,073                                                    1,539
Goodwill                                                                                            11,798                                                   11,798
Other assets                                                                                         2,602                                 2,203  
                                                                                           ------------------------------------                      -----------------------------------
Total assets                                                                                     $ 128,196                             $ 105,239  
                                                                                           ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                      
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
   Accounts payable                                                                              $   4,292                                                $   3,366
   Accrued and other current liabilities                                                            11,787                                                    9,604
   Accrued federal fees                                                                              1,151                                                    2,742
   Sales tax liability                                                                               1,326                                                    1,347
   Notes payable                                                                                       336                                                      742
   Capital leases                                                                                    6,651                                                    6,230
   Deferred revenue                                                                                 13,975                                10,047  
                                                                                           ------------------------------------                      -----------------------------------
Total current liabilities                                                                           39,518                                                   34,078
Revolving line of credit -- less current portion                                        32,594                                                   32,594
Sales tax liability -- less current portion                                              1,044                                                    1,476
Notes payable -- less current portion                                           --                                                      318
Capital leases -- less current portion                                                   7,161                                                    5,915
Other long-term liabilities                                                                          1,041                                   530  
                                                                                           ------------------------------------                      -----------------------------------
Total liabilities                                                                                   81,358                                74,911  
                                                                                           ------------------------------------                      -----------------------------------
Stockholders’ equity:
Common stock                                                                                            57                                                       53
Additional paid-in capital                                                                         222,202                                                  196,555
Accumulated deficit                                                                               (175,421 )                                               (166,280 )
                                                                                           ------------------------------------                      -----------------------------------
Total stockholders’ equity                                               46,838                                30,328  
                                                                                           ------------------------------------                      -----------------------------------
Total liabilities and stockholders’ equity                            $ 128,196                             $ 105,239  
                                                                                           ======= ======= ====================                      ====== ======= ====================
                                                                                                                                                                     
                                                                                                                                                        
                                                                                                                                        FIVE9, INC.
                                                                                                                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                           (In thousands, except per share data)
                                                                                                                                        (Unaudited)
                                                                                                                                                                                                
                                                                                                                 Three Months Ended                                                                                                 Twelve Months Ended
                                                                           -----------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------
                                                                                       December 31,                           December 31,                                              December 31,                          December 31,
                                                                                           2017                                                      2016                                                      2017                                                     2016
                                                                           ----------------------------------                        ----------------------------------                        ----------------------------------                        -------------------------------
Revenue                                                                          $  55,403                                                 $  44,207                                                 $ 200,225                                              $ 162,090
Cost of revenue                                                                     22,363                                 15,770                                 83,104                              66,934  
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Gross profit                                                                        33,040                                                    28,437                                                   117,121                                                 95,156
Operating expenses:
   Research and development                                                          6,748                                                     6,236                                                    27,120                                                 23,878
   Sales and marketing                                                              17,358                                                    14,480                                                    66,570                                                 52,748
   General and administrative                                                        8,767                                  6,511                                 29,151                              25,072  
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total operating expenses                                                            32,873                                 27,227                                122,841                             101,698  
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Income (loss) from operations                                                          167                                                     1,210                                                    (5,720 )                                               (6,542 )
Other income (expense), net:
   Extinguishment of debt                                                   --                                            --                                            --                                                 (1,026 )
   Interest expense                                                                   (836 )                                                    (869 )                                                  (3,471 )                                               (4,226 )
   Interest income and other                                                           164                                     54                                    490                                 (12 )
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Total other income (expense), net                                                     (672 )                                                    (815 )                                                  (2,981 )                                               (5,264 )
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Income (loss) before income taxes                                                     (505 )                                                     395                                                    (8,701 )                                              (11,806 )
Provision for (benefit from) income taxes                                              126                                    (14 )                                                     268                                  54  
                                                                           ------------------------------------                      ------------------------------------                      ------------------------------------                      ---------------------------------
Net income (loss)                                                                $    (631 )                                               $     409                              $  (8,969 )                                            $ (11,860 )
                                                                           ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================
Net income (loss) per share:
   Basic                                                                         $   (0.01 )                                               $    0.01                              $   (0.16 )                                            $   (0.23 )
                                                                           ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================
   Diluted                                                                       $   (0.01 )                                               $    0.01                              $   (0.16 )                                            $   (0.23 )
                                                                           ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================
Shares used in computing net income (loss) per share:
   Basic                                                                            56,034                                 53,126                                 54,946                              52,342  
                                                                           ====================================                      ====================================                      ====================================                      =================================
   Diluted                                                                          56,034                                 56,633                                 54,946                              52,342  
                                                                           ====================================                      ====================================                      ====================================                      =================================
                                                                                                                                                                                                                                                                       
                                                                 
                                                                                     FIVE9, INC.
                                                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                   (In thousands)
                                                                                     (Unaudited)
                                                                                      
                                                                                                                           Twelve Months Ended
                                                                                     -----------------------------------------------------------------------------------------------
                                                                                               December 31, 2017                      December 31, 2016
                                                                                     -------------------------------------                     -------------------------------------
Cash flows from operating activities:
Net loss                                                                                   $  (8,969 )                                               $ (11,860 )
Adjustments to reconcile net loss to net cash used in operating
activities:
   Depreciation and amortization                                                               8,314                                                     8,390
   Provision for doubtful accounts                                                                95                                                        75
   Stock-based compensation                                                                   15,343                                                     9,643
   Amortization of debt discount and issuance costs                                               80                                                       241
   Loss on extinguishment of debt                                                     --                                                     1,026
   Reversal of interest and penalties on accrued federal fees                                 (2,133 )                                          --
   Reversal of accrued federal fees                                                   --                                                    (3,114 )
   Non-cash adjustment on investment                                                            (366 )                                          --
   Accretion of interest                                                                          21                                                        20
   Others                                                                                        (48 )                                                     (10 )
Changes in operating assets and liabilities:
   Accounts receivable                                                                        (5,163 )                                                  (3,389 )
   Prepaid expenses and other current assets                                                  (1,912 )                                                    (859 )
   Other assets                                                                                  (33 )                                                     203
   Accounts payable                                                                              813                                                       811
   Accrued and other current liabilities                                                       1,061                                                     2,262
   Accrued federal fees and sales tax liability                                                   90                                                      (182 )
   Deferred revenue                                                                            3,882                                                     3,680
   Other liabilities                                                                              31                                    (99 )
                                                                                     ------------------------------------                      ------------------------------------
Net cash provided by operating activities                                                     11,106                                  6,838  
                                                                                     ------------------------------------                      ------------------------------------
Cash flows from investing activities:
Purchases of property and equipment                                                           (2,650 )                                                  (1,131 )
Purchases of privately-held company securities                                        --                                                    (1,206 )
Decrease (increase) in restricted cash                                                --                                    (60 )
                                                                                     ------------------------------------                      ------------------------------------
Net cash used in investing activities                                                         (2,650 )                                                  (2,397 )
                                                                                     ------------------------------------                      ------------------------------------
Cash flows from financing activities:
Proceeds from exercise of common stock options and warrants                                    6,035                                                     4,286
Proceeds from sale of common stock under ESPP                                                  4,101                                                     1,979
Proceeds from revolving line of credit                                                --                                                    32,594
Repayments on revolving line of credit                                                --                                                   (12,500 )
Repayments of notes payable                                                                     (699 )                                                 (24,351 )
Payments of capital leases                                                                    (7,068 )                                                  (6,237 )
Payment of prepayment penalty and related fees                                        --                                                      (368 )
Payments for debt issuance costs                                                      --                                   (206 )
                                                                                     ------------------------------------                      ------------------------------------
Net cash provided by (used in) financing activities                                            2,369                                 (4,803 )
                                                                                     ------------------------------------                      ------------------------------------
Net increase (decrease) in cash and cash equivalents                                          10,825                                                      (362 )
Cash and cash equivalents:
   Beginning of period                                                                        58,122                                 58,484  
                                                                                     ------------------------------------                      ------------------------------------
   End of period                                                                           $  68,947                              $  58,122  
                                                                                     ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                
                                                                                                                                                                              
                                                                                                                                                          FIVE9, INC.
                                                                                                                                 RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT
                                                                                                                                                        (In thousands)
                                                                                                                                                          (Unaudited)
                                                                                                                                                                                                                      
                                                                                                                                   Three Months Ended                                                                                                            Twelve Months Ended
                                                                                         -------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------
                                                                                                     December 31,                               December 31,                                                        December 31,                                December 31,
                                                                                                         2017                                                          2016                                                                2017                                                           2016
                                                                                         ----------------------------------                        -----------------------------------------                         --------------------------------------------                         ----------------------------------
                                                                                                                                                                                                                                                                                           
GAAP gross profit                                                                              $  33,040                                              $  28,437                                                            $ 117,121                                                            $  95,156
GAAP gross margin                                                                                   59.6                    %                              64.3                               %                                 58.5                               %                                 58.7                    %
Non-GAAP adjustments:
   Depreciation                                                                                    1,523                                                  1,521                                                                5,949                                                                6,221
   Intangibles amortization                                                                           88                                                     87                                                                  351                                                                  352
   Stock-based compensation                                                                          594                                                    424                                                                2,202                                                                1,375
   Reversal of accrued federal fees                                                       --                              (3,114 )                                                     --                                            (3,114 )
                                                                                         ------------------------------------                      ---------------------------------------------                     ------------------------------------------------                     ------------------------------------
Adjusted gross profit                                                                          $  35,245                           $  27,355                                         $ 125,623                                         $  99,990  
                                                                                         ======= ======= ====================                      ==== ======= ================================                     ======= ======= ================================                     ======= ======= ====================
Adjusted gross margin                                                                               63.6                    %                              61.9                               %                                 62.7                               %                                 61.7                    %
 
 
                                                                                                                                  RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
                                                                                                                                                        (In thousands)
                                                                                                                                                          (Unaudited)
 
                                                                                                                                   Three Months Ended                                                                                                            Twelve Months Ended
                                                                                         -------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------
                                                                                                     December 31,                                                  December 31,                                                        December 31,                                                   December 31,
                                                                                                         2017                                                          2016                                                                2017                                                           2016
                                                                                         ----------------------------------                        -----------------------------------------                         --------------------------------------------                         ----------------------------------
                                                                                                                                                                                                                                                                                           
GAAP net income (loss)                                                                         $    (631 )                                            $                409                                                 $             (8,969 )                                               $ (11,860 )
Non-GAAP adjustments:
   Depreciation and amortization                                                                   2,068                                                             2,086                                                                8,314                                                     8,390
   Stock-based compensation                                                                        4,640                                                             2,716                                                               15,343                                                     9,643
   Extinguishment of debt                                                                 --                                                    --                                                       --                                                     1,026
   Interest expense                                                                                  836                                                               869                                                                3,471                                                     4,226
   Interest (income) and other                                                                      (164 )                                                             (54 )                                                               (490 )                                                      13
   Legal settlement                                                                       --                                                    --                                                                1,700                                            --
   Legal and indemnification fees related to settlement                                   --                                                    --                                                                  135                                            --
   Reversal of interest and penalties on accrued federal fees (G&A)                       --                                                    --                                                               (2,133 )                                          --
   Reversal of accrued federal fees (COR)                                                 --                                                            (3,114 )                                                     --                                                    (3,114 )
   Provision for (benefit from) income taxes                                                         126                                            (14 )                                                                268                                     54  
                                                                                         ------------------------------------                      --------------------------------------------                      -----------------------------------------------                      ------------------------------------
Adjusted EBITDA                                                                                $   6,875                           $              2,898                              $             17,639                              $   8,378  
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
 
 
                                                                                                                                                          FIVE9, INC.
                                                                                                                                  RECONCILIATION OF GAAP OPERATING INCOME (LOSS) TO NON-GAAP
                                                                                                                                                       OPERATING INCOME
                                                                                                                                             (In thousands, except per share data)
                                                                                                                                                          (Unaudited)
 
                                                                                                                                   Three Months Ended                                                                                                            Twelve Months Ended
                                                                                         -------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------
                                                                                                     December 31,                                                  December 31,                                                        December 31,                                                   December 31,
                                                                                                         2017                                                          2016                                                                2017                                                           2016
                                                                                         ----------------------------------                        -----------------------------------------                         --------------------------------------------                         ----------------------------------
                                                                                                                                                                                                                                                                                           
GAAP operating income (loss)                                                                   $     167                                              $              1,210                                                 $             (5,720 )                                               $  (6,542 )
Non-GAAP adjustments:
   Stock-based compensation                                                                        4,640                                                             2,716                                                               15,343                                                     9,643
   Intangibles amortization                                                                          116                                                               117                                                                  465                                                       503
   Legal settlement                                                                       --                                                    --                                                                1,700                                            --
   Legal and indemnification fees related to settlement                                   --                                                    --                                                                  135                                            --
   Reversal of interest and penalties on accrued federal fees (G&A)                       --                                                    --                                                               (2,133 )                                          --
   Reversal of accrued federal fees (COR)                                                 --                                         (3,114 )                                                     --                                 (3,114 )
                                                                                         ------------------------------------                      --------------------------------------------                      -----------------------------------------------                      ------------------------------------
Non-GAAP operating income                                                                      $   4,923                           $                929                              $              9,790                              $     490  
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
 
 
                                                                                                                                                          FIVE9, INC.
                                                                                                                                RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME
                                                                                                                                                            (LOSS)
                                                                                                                                             (In thousands, except per share data)
                                                                                                                                                          (Unaudited)
 
                                                                                                                                   Three Months Ended                                                                                                            Twelve Months Ended
                                                                                         -------------------------------------------------------------------------------------------------------                     ----------------------------------------------------------------------------------------------------------
                                                                                                     December 31,                                                  December 31,                                                        December 31,                                                   December 31,
                                                                                                         2017                                                          2016                                                                2017                                                           2016
                                                                                         ----------------------------------                        -----------------------------------------                         --------------------------------------------                         ----------------------------------
                                                                                                                                                                                                                                                                                           
GAAP net income (loss)                                                                         $    (631 )                                            $                409                                                 $             (8,969 )                                               $ (11,860 )
Non-GAAP adjustments:
   Stock-based compensation                                                                        4,640                                                             2,716                                                               15,343                                                     9,643
   Intangibles amortization                                                                          116                                                               117                                                                  465                                                       503
   Amortization of debt discount and issuance costs                                                   20                                                                20                                                                   80                                                       241
   Extinguishment of debt                                                                 --                                                    --                                                       --                                                     1,026
   Legal settlement                                                                       --                                                    --                                                                1,700                                            --
   Legal and indemnification fees related to settlement                                   --                                                    --                                                                  135                                            --
   Reversal of interest and penalties on accrued federal fees (G&A)                       --                                                    --                                                               (2,133 )                                          --
   Reversal of accrued federal fees (COR)                                                 --                                                            (3,114 )                                                     --                                                    (3,114 )
   Non-cash adjustment on investment                                                                (133 )                                                  --                                              (366 )                                          --  
                                                                                         ------------------------------------                      --------------------------------------------                      -----------------------------------------------                      ------------------------------------
Non-GAAP net income (loss)                                                                     $   4,012                           $                148                              $              6,255                              $  (3,561 )
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
GAAP net income (loss) per share:
   Basic                                                                                       $   (0.01 )                                            $               0.01                              $              (0.16 )                                               $   (0.23 )
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
   Diluted                                                                                     $   (0.01 )                                            $               0.01                              $              (0.16 )                                               $   (0.23 )
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
Non-GAAP net income (loss) per share:
   Basic                                                                                       $    0.07                           $     --                              $               0.11                              $   (0.07 )
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
   Diluted                                                                                     $    0.07                           $     --                              $               0.11                              $   (0.07 )
                                                                                         ======= ======= ====================                      ==== =======================================                      ======= =======================================                      ======= ======= ====================
Shares used in computing GAAP net income (loss) per share:
   Basic                                                                                          56,034                                         53,126                                            54,946                                 52,342  
                                                                                         ====================================                      ============================================                      ===============================================                      ====================================
   Diluted                                                                                        56,034                                         56,633                                            54,946                                 52,342  
                                                                                         ====================================                      ============================================                      ===============================================                      ====================================
                                                                                                                                                                                                                                                                                           
Shares used in computing non-GAAP net income (loss) per share:
   Basic                                                                                          56,034                                         53,126                                            54,946                                 52,342  
                                                                                         ====================================                      ============================================                      ===============================================                      ====================================
   Diluted                                                                                        59,905                                         56,633                                            59,073                                 52,342  
                                                                                         ====================================                      ============================================                      ===============================================                      ====================================
                                                                                                                                                                                                                                                                                                           
                            
                                                                                                                                                                          FIVE9, INC.
                                                                                                                                                     SUMMARY OF STOCK-BASED COMPENSATION, DEPRECIATION AND
                                                                                                                                                                   INTANGIBLES AMORTIZATION
                                                                                                                                                                        (In thousands)
                                                                                                                                                                          (Unaudited)
                                                 
                                                                                                                                                                                              Three Months Ended
                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                December 31, 2017                                                                                                                              December 31, 2016
                                                ------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------
                                                           Stock-Based                       Depreciation                         Intangibles                                             Stock-Based                      Depreciation                       Intangibles
                                                          Compensation                                                                                                 Amortization                                            Compensation                                                                                              Amortization
                                                ------------------------------                        -----------------------------                        ----------------------------------                        -----------------------------                        -----------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                
Cost of revenue                                    $    594                                              $ 1,523                                                 $      88                                              $   424                                              $ 1,521                                                    $                   87
Research and development                                807                                                  170                                            --                                                  549                                                  224                                                            --
Sales and marketing                                   1,128                                                    2                                                        28                                                  759                                                   29                                                                        29
General and administrative                            2,111                               257                         --                               984                               195                                                      1
                                                --------------------------------                      -------------------------------                      ------------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
   Total                                           $  4,640                           $ 1,952                              $     116                           $ 2,716                           $ 1,969                                 $                  117
                                                ==== ====== ====================                      ==== ===== ====================                      ======= ======= ====================                      ==== ===== ====================                      ==== ===== ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                              Twelve Months Ended
                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                December 31, 2017                                                                                                                                                 December 31, 2016
                                                ------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------
                                                           Stock-Based                                          Depreciation                                            Intangibles                                             Stock-Based                                         Depreciation                                          Intangibles
                                                          Compensation                                                                                                 Amortization                                            Compensation                                                                                              Amortization
                                                ------------------------------                        -----------------------------                        ----------------------------------                        -----------------------------                        -----------------------------                        ------------------------------
                                                                                                                                                                                                                                                                                                                                
Cost of revenue                                    $  2,202                                              $ 5,949                                                 $     351                                              $ 1,375                                              $ 6,221                                                    $                  352
Research and development                              3,042                                                  795                                            --                                                2,059                                                  737                                                            --
Sales and marketing                                   4,364                                                    6                                                       114                                                2,363                                                  107                                                                       114
General and administrative                            5,735                             1,099                         --                             3,846                               822                                                     37
                                                --------------------------------                      -------------------------------                      ------------------------------------                      -------------------------------                      -------------------------------                      --------------------------------
   Total                                           $ 15,343                           $ 7,849                              $     465                           $ 9,643                           $ 7,887                                 $                  503
                                                ==== ====== ====================                      ==== ===== ====================                      ======= ======= ====================                      ==== ===== ====================                      ==== ===== ====================                      ========== ====================
                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                    
                                                                                                                                                FIVE9, INC.
                                                                                                                   RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME -
                                                                                                                                                 GUIDANCE
                                                                                                                                   (In thousands, except per share data)
                                                                                                                                                (Unaudited)
                                                                                                                                                                                                            
                                                                                                                             Three Months Ending                                                                                                     Year Ending
                                                                                                                               March 31, 2018                                                                                                     December 31, 2018
                                                                                       -----------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------
                                                                                                        Low                                   High                                                       Low                                   High
                                                                                       -------------------------------------                     -------------------------------------                     -------------------------------------                     -------------------------------------
                                                                                                                                                                                                                                                                      
GAAP net loss                                                                                $  (4,476 )                                               $  (3,476 )                                               $ (13,398 )                                               $ (10,398 )
Non-GAAP adjustments:
   Stock-based compensation                                                                      5,640                                                     5,640                                                    25,452                                                    25,452
   Intangibles amortization                                                                        116                                                       116                                                       465                                                       465
   Amortization of debt issuance costs                                                              20                                                        20                                                        81                                                        81
   Income tax expense effects (1)                                                       --                         --                         --                         --  
                                                                                       ------------------------------------                      ------------------------------------                      ------------------------------------                      ------------------------------------
Non-GAAP net income                                                                          $   1,300                              $   2,300                              $  12,600                              $  15,600  
                                                                                       ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
GAAP net loss per share, basic and diluted                                                   $   (0.08 )                                               $   (0.06 )                                               $   (0.23 )                                               $   (0.18 )
                                                                                       ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Non-GAAP net income per share:
   Basic                                                                                     $    0.02                              $    0.04                              $    0.22                              $    0.27  
                                                                                       ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
   Diluted                                                                                   $    0.02                              $    0.04                              $    0.20                              $    0.25  
                                                                                       ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================                      ======= ======= ====================
Shares used in computing GAAP net loss per share and non-GAAP net
income per share:
   Basic                                                                                        57,000                                 57,000                                 58,500                                 58,500  
                                                                                       ====================================                      ====================================                      ====================================                      ====================================
   Diluted                                                                                      61,500                                 61,500                                 63,000                                 63,000  
                                                                                       ====================================                      ====================================                      ====================================                      ====================================
                                                                                                                                                                                                                                                                                      
(1) Non-GAAP adjustments do not have an impact on our income tax
provision due to past non-GAAP losses.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180221006185r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180221006185/en/

SOURCE: Five9, Inc.

Five9, Inc. 
Barry Zwarenstein, 925-201-2000 ext. 5959 
Interim CEO and Chief Financial Officer 
IR@five9.com 
or 
The Blueshirt Group for Five9, Inc. 
Lisa Laukkanen, 415-217-4967 
Lisa@blueshirtgroup.com


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