Five9 (NASDAQ:FIVN) shares soared in early market trading on Friday after the company’s Q4 2024 financial results exceeded expectations, showcasing substantial growth in its artificial intelligence (AI)-driven services.
AI Revenue Momentum Drives Five9’s Growth
CEO Mike Burkland highlighted the company’s enterprise AI revenue growth accelerating to 46% in Q4. AI now accounts for 9% of enterprise subscription revenue, and AI bookings for new enterprise clients surged nearly 50% year-over-year.
“AI has now grown to 9% of enterprise subscription revenue. We believe AI revenue momentum will continue, as AI bookings for enterprise new logos grew nearly 50% year-over-year in Q4,” Burkland stated during the earnings call.
The company’s AI technology is gaining traction with a 100% attach rate on $1 million-plus ARR deals, reflecting growing enterprise demand for AI-powered solutions.
Analyst Ratings and Price Target Increases
- Cantor Fitzgerald reiterated its Overweight rating on Five9 and raised its price target from $46 to $57, citing Five9’s expanding AI partnerships.
- Mizuho Securities reaffirmed its Outperform rating and maintained a price target of $55.
- Piper Sandler analysts described Five9’s trajectory as a “comeback story”, particularly in AI, free cash flow, and subscription growth stabilization.
Strategic Partnerships Fuel Expansion
Five9 is leveraging key partnerships with Salesforce (CRM), ServiceNow (NOW), Microsoft (MSFT), Verint (VRNT), and Google Cloud Marketplace (GOOG)(GOOGL) to drive growth. Analysts believe these partnerships will further expand in 2025, opening new revenue streams for the company.
“These channels have always been a key part of the Five9 model, but we believe, driven by AI, these opportunities should expand in C25,” Cantor analysts led by Thomas Blakey noted.
CFO Transition Announced
Five9 announced the upcoming retirement of Chief Financial Officer Barry Zwarenstein on March 31, 2025. Bryan Lee, the company’s EVP of Finance, has been named interim CFO starting April 1, 2025, as the firm conducts a formal search for a permanent CFO.
“We expect the CFO transition will be seamless, particularly if EVP Lee assumes the role full-time,” stated analysts at Piper Sandler.
Competitive Landscape: RingCentral Declines
While Five9 surged on its earnings results, competitor RingCentral (RNG) saw its stock drop 4% in early Friday trading following its Q4 earnings release, highlighting the competitive dynamics within the cloud-based contact center software industry.
Five9’s Expanding AI Offerings
The company continues to enhance its AI-driven cloud solutions for customer service, sales, and marketing, including:
- AI-powered virtual agents
- Agent assist tools
- Workflow automation
- AI-driven insights
With a strong Q4 performance, Five9’s AI-powered transformation positions it as a leader in the cloud contact center space, with investors and analysts optimistic about its future growth trajectory.
