Five9 — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue increased 13% year-over-year to $323.3 million, compared to $285.8 million in Q3 2025.
• GAAP gross margin was 53.4% in Q3 2026, down from 55.0% in Q3 2025.
• Adjusted gross margin was 61.7% in Q3 2026, down from 62.8% in Q3 2025.
• GAAP net income for Q3 2026 was $14.5 million ($0.19 per diluted share), compared to $18.0 million ($0.21 per diluted share) in Q3 2025.
• Non-GAAP net income for Q3 2026 was $63.7 million ($0.82 per diluted share), compared to $60.6 million ($0.78 per diluted share) in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $81.2 million (25.1% of revenue), matching the 25.1% margin of Q3 2025.
• GAAP operating cash flow for Q3 2026 was $58.4 million, compared to $59.2 million in Q3 2025.
• Deferred revenue increased to $86.1 million as of September 30, 2026, from $77.5 million as of December 31, 2025.
• Convertible senior notes stood at $738.2 million as of September 30, 2026, compared to $735.5 million as of December 31, 2025.
• Cash and cash equivalents were $263.8 million as of September 30, 2026, compared to $232.1 million as of December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 revenue is expected to be between $1.269 billion and $1.275 billion.
• Full-year 2026 GAAP net income per share is expected to be between $0.75 and $0.83.
• Full-year 2026 Non-GAAP net income per share is expected to be between $3.17 and $3.21.
• Q4 2026 revenue is expected to be between $328.0 million and $334.0 million.
• Q4 2026 GAAP net income per share is expected to be between $0.28 and $0.36.
• Q4 2026 Non-GAAP net income per share is expected to be between $0.88 and $0.92.
• Guidance assumes approximately 77.1 million diluted shares outstanding for the full year and 78.0 million for Q4.
• Guidance excludes any contribution from the pending Level AI acquisition, which is expected to close in Q4 2026.

Business Segments and Product Lines:

• Subscription revenue grew 16% year-over-year in Q3 2026.
• AI revenue growth accelerated significantly in Q3 2026.
• Long-term subscription dollar-based retention rate was 109% as of September 30, 2026.
• Long-term subscription and telecom dollar-based retention rate was 107% as of September 30, 2026.
• The company serves more than 4,000 enterprises across 140+ countries.

Market and Competitive Landscape:

• Named a Leader in the 2026 Gartner® Magic Quadrant™ for Contact Center as a Service.
• Recognized as a Leader in the 2026 IDC MarketScape: Worldwide Agentic Contact Center-as-a-Service Platforms.
• The contact center software solutions market is subject to rapid technological change.

Risks and Challenges:

• Risks include adverse economic conditions, macroeconomic challenges, global tariff changes, inflation, high interest rates, and currency fluctuations.
• Risks include the inability to attract new customers or sell additional services to existing customers.
• Risks include customer termination, subscription reductions, or failure to grow subscriptions at expected rates.
• Risks include service outages, deployment delays, and claims for credits or damages due to infrastructure management failures.
• Risks include the inability to attract and retain highly skilled leaders and employees.
• Risks include the failure of AI solutions to achieve market acceptance or compete effectively.
• Risks include legal and business risks associated with evolving AI technology.
• Risks include the failure to effectively manage the network of technology solution distributors and resellers.
• Risks include the impact of security breaches, cybersecurity incidents, and improper data access.
• Risks include the potential for stock price volatility and the inability to secure additional financing on favorable terms.
• Risks include the potential inability to service convertible senior notes or repay them if required.

Management Commentary and Tone:

• CEO Amit Mathradas described Q3 as a "solid quarter" highlighted by accelerating subscription revenue growth and significantly stepping up AI revenue growth.
• Management stated that results indicate the "Humantic CX strategy is working."
• Management believes adding Level AI strengthens the competitive position, expands the customer base, and deepens AI talent.

Other Key Points:

• Five9 signed a definitive agreement to acquire Level AI for $325.0 million in cash.
• The company was named to the 2026 Best Workplaces in Technology list by Fortune Media and Great Place To Work®.
• During the nine months ended September 30, 2026, the company repurchased common stock for $100.0 million.
• The company repaid outstanding 2025 convertible senior notes at maturity during the nine months ended September 30, 2025.
• Supplemental metric disclosures are available on the Investor Relations section of the company's website.