Five9, Inc. (NASDAQ:FIVN): Are Analysts Optimistic?

Five9, Inc. (NASDAQ:FIVN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Five9, Inc., together with its subsidiaries, provides intelligent cloud software for contact centers in the United States and internationally. The US$5.2b market-cap company announced a latest loss of US$82m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Five9's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Five9

Consensus from 20 of the American Software analysts is that Five9 is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$29m in 2026. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 58%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

We're not going to go through company-specific developments for Five9 given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Five9 currently has a debt-to-equity ratio of 138%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Five9 to cover in one brief article, but the key fundamentals for the company can all be found in one place – Five9's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Five9 worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Five9 is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Five9’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.