Five9 Inc

We see the current growth headwinds as minor execution issues rather than sure signs of structural obsolescence. Competition in the CCaaS space is no doubt intense, but FIVN, in our analysis, is currently priced for negative growth indefinitely despite leading the shift to AI-enabled contact centers and acting as a software platform toll road. The stock now trades at just 1x 2027 revenue (~1.5x gross profit) and 5x Adjusted EBITDA, a massive discount to software peers trading at ~13x EBITDA. The current valuation provides a significant margin of uncertainty and is further buttressed by a new $150 million share repurchase program, coupled with call options on the AI cycle and potential renewed M&A interest in a consolidating sector.

We see the current growth headwinds as minor execution issues rather than sure signs of structural obsolescence. Competition in the CCaaS space is no doubt intense, but FIVN, in our analysis, is currently priced for negative growth indefinitely despite leading the shift to AI-enabled contact centers and acting as a software platform toll road. The stock now trades at just 1x 2027 revenue and 5x Adjusted EBITDA, a massive discount to software peers trading at ~13x EBITDA. The current valuation provides a significant margin of uncertainty and is further buttressed by a new $150 million share repurchase program, coupled with call options on the AI cycle and potential renewed M&A interest in a consolidating sector.

Five9 is a leading provider of cloud-based contact center software, enabling enterprises to modernize customer engagement through omnichannel solutions and increasingly AI-driven automation. With ~60% of its $24 billion core CCaaS addressable market still on-premise and migrating rapidly to cloud, and with AI adoption driving both growth and margin expansion, we see potential for Voss Sauce. In the most recent quarter, Five9 reaccelerated subscription revenue growth to 16%, significantly expanded both gross margins and operating margins, reported a tripling of AI bookings that will show up in future quarters, and raised guidance across the board. Our base case price target uses 9x 2026 EBITDA and gives the shares ~70% upside.