Five9 (FIVN) Q3 2026 Earnings Report

The call was strongly positive overall. Five9 exceeded Q3 revenue guidance, delivered accelerating subscription and AI growth, raised its full-year AI outlook, expanded customer retention, generated positive cash flow and announced a strategically aligned Level AI acquisition. The main challenges were the adjusted gross margin decline, reduced 2026 EPS guidance, delayed organizational changes, expected 2027 EBITDA margin dilution from the acquisition, muted Q4 seasonality and difficult 2027 AI comparisons. These lowlights were outweighed by the company's reported growth, backlog, pipeline and AI momentum.

Five9’s Q4 2026 guidance, excluding Level AI, calls for total revenue at a midpoint of $331 million with a range of $328 million to $334 million, including a sequential step-up in subscription revenue, flat telecom revenue and a sequential decline in professional services; non-GAAP EPS is guided to a midpoint of $0.90 per diluted share with a range of $0.88 to $0.92 per diluted share, with adjusted EBITDA margin expected to show a sequential expansion. Full year 2026 guidance calls for total revenue at a midpoint of $1.272 billion with a range of $1.269 billion to $1.275, non-GAAP EPS of $3.19 per diluted share at the midpoint with a range of $3.17 to $3.21 per diluted share, adjusted EBITDA margin of at least 24% and annual cash flow of approximately $175 million; AI revenue growth is expected to be at least 75%, purchase of PP&E approximately 3.1% of revenue, and LTM subscription dollar-based retention is anticipated to remain flat to 1 point up in Q4. For 2027, the company said $1.39 billion of organic revenue is a reasonable starting point, Q1 is relatively flat sequentially from the midpoint of Q4 guidance, Q2 will step up slightly and more so in the second half, and organic EBITDA margin is expected to be at least 24% in '26 and gradually expanding throughout '27.