Five9 Inc

Morgan Stanley said in a note Wednesday that the rise of consumer AI agents such as Meta's Muse could benefit communications and software vendors long seen as vulnerable to automation, rather than threaten them. Analyst Elizabeth Porter argued that agents like Muse and Instinct, personal assistants that complete tasks on users' behalf, could expand the volume of interactions businesses field, cushioning contact-center vendors whose seat-based models have been under pressure from AI. She wrote that consumer agents lower the effort required to engage a business while enterprise AI lowers the cost of responding, potentially expanding communications volumes and usage-based monetization. Porter believes Twilio offers the broadest exposure, benefiting from the messages and calls an agent initiates to complete a task, such as authentication texts, reservation confirmations and follow-ups, on top of its existing usage and software-attachment model. For contact-center names such as NICE, Five9 and RingCentral, she said higher volumes could slow the risk of seat reductions while automation priced by interaction expands, and among web-presence providers she sees Wix as better placed than GoDaddy, with Shopify the most direct beneficiary in e-commerce software. Porter cautioned this is a stronger medium-term bull case rather than a near-term catalyst, and said she is wary of extrapolating upside into third-quarter results.

Enterprise software and SaaS stocks surged in afternoon trading after quarterly earnings and upbeat commentary signaled that artificial intelligence is driving growth across the sector rather than threatening legacy business models. The rally, highlighted by a 20% jump in Salesforce, eased fears that AI would disrupt traditional platforms, with reports showing AI-powered offerings like Salesforce's Agentforce reaching $1.5 billion in annual recurring revenue and Slackbot surpassing 1 million active users within five months. CrowdStrike CEO George Kurtz attributed momentum to AI expanding the attack surface, while Okta's AI identity offerings drove about 30% of new bookings and increased contract values by roughly 40%. Among the gainers, Paylocity rose 4%, MongoDB jumped 9.7%, Datadog climbed 6.4%, Five9 advanced 6.4%, and monday.com gained 6.6%. MongoDB, trading near its 52-week high of $472.29, is up 12% year-to-date, though it recently dropped 4.6% on concerns over AI competition following reports that Anthropic's upcoming IPO could rival SpaceX's $75 billion debut.

Five9 shares jumped 17.7% after the cloud contact center provider reported second-quarter results that beat Wall Street expectations and raised its full-year revenue guidance. The company posted adjusted earnings of $0.70 per share on revenue of $312.4 million, with revenue growing 10.3% year-over-year. Management lifted its full-year revenue outlook to $1.27 billion at the midpoint and forecast next-quarter sales above consensus, while reiterating its full-year profit guidance. The stock closed at $33.98, up 19.8% from the previous close.

Five9 reported second-quarter revenue of $312 million, up 10% year-over-year and above the high end of guidance, while AI revenue accelerated to 78% growth, reaching approximately $39 million in the quarter and representing an annual run rate of over $150 million. The company raised its full-year 2026 AI growth outlook to at least 60%, up from a prior outlook of more than 40%, and secured a Fortune 100 financial services customer win with approximately $100 million in total contract value, expected to ramp to $25 million in subscription annual recurring revenue when fully deployed. Subscription revenue grew 14% year-over-year, marking a third consecutive quarter of acceleration, and the LTM subscription dollar-based retention rate remained steady at 107%. Adjusted gross margin declined to 61% from 63% a year ago, and adjusted EBITDA was $70 million, or 22% of revenue, compared to $68 million, or 24% of revenue, in the prior-year period. Full-year 2026 total revenue guidance was raised to a midpoint of $1.266 billion, while non-GAAP EPS guidance remained unchanged at a midpoint of $3.26 per diluted share.

Five9 will join the S&P SmallCap 600 index, replacing Two Harbors Investment effective prior to the opening of trading on Monday, August 3. The change follows CrossCountry Mortgage's pending acquisition of Two Harbors Investment, which is expected to close soon pending final conditions. Five9, trading under ticker FIVN, will be added to the Information Technology sector, while Two Harbors Investment, ticker TWO, will be removed from the Financials sector.

Five9 offers a more compelling growth opportunity than SoundHound AI in the customer AI market, according to a Zacks Investment Research analysis. SoundHound's first-quarter 2026 revenue rose 52% year over year, with its core Automotive and IoT AI business up 88% excluding acquisitions, and its pending LivePerson acquisition is expected to create a long-term revenue opportunity of roughly $500 million. Five9's first-quarter 2026 revenue increased 9% to $305 million, while adjusted EBITDA rose 41% and free cash flow climbed 42%, supported by a new $200 million share repurchase authorization. SoundHound trades at 10.49 times forward sales, well above the sector average of 6.18 times, while Five9 trades at just 1.33 times forward sales despite generating positive earnings and cash flows. Five9 shares have gained 15.3% year to date, outperforming SoundHound's 38.2% decline, and analysts expect Five9's 2026 earnings of $3.26 per share to grow 10.1%, while SoundHound is projected to post a loss of 15 cents per share.

Five9 holds a stronger value proposition than Zoom Communications based on earnings outlook and valuation metrics. Five9 carries a Zacks Rank of #1 (Strong Buy) while Zoom is ranked #3 (Hold), indicating a more positive earnings estimate trend for Five9. Five9 trades at a forward P/E of 6.54 compared to Zoom's 14.24, and its PEG ratio of 0.40 is significantly lower than Zoom's 3.21. Additionally, Five9's price-to-book ratio of 1.97 is below Zoom's 2.54, contributing to Five9's Value grade of A versus Zoom's C.

Five9 and StoneCo are showing signs of being undervalued according to several valuation metrics. Five9 holds a Zacks Rank #1 (Strong Buy) and a Value grade of A, with a forward P/E of 8.65 compared to its industry average of 25.50. Its PEG ratio is 0.65 versus the industry's 0.91, and its P/B ratio is 2.85 against an industry average of 4.39. StoneCo, rated Zacks Rank #2 (Buy) with a Value Score of A, trades at a forward P/E of 11.19 and a PEG of 0.37, while its industry averages are 25.50 and 0.91 respectively. Both companies also exhibit attractive P/S and P/CF ratios relative to their industry peers, reinforcing the view that they may be undervalued at current levels.

Nucleus Research has released its 2026 CCaaS Technology Value Matrix, naming Five9, Genesys, NiCE, RingCentral, and Talkdesk as Leaders for excelling in both functionality and usability. The report evaluates contact-center-as-a-service platforms on their ability to improve service outcomes, agent productivity, and operational efficiency across voice, digital, and self-service channels. Expert vendors with deep specialized functionality include Amazon Connect, Content Guru, and Twilio, while Accelerators focused on usability and quick deployment are 8x8, Zendesk, and Zoom. Core Providers offering essential reliable functionalities are Avaya, Cisco, Sprinklr, and Fi. The research highlights that organizations achieve the greatest value when automation and customer context are embedded directly into workflows, with AI investments accelerating in areas such as virtual agents, agent assistance, and automated quality scoring.

Five9 has launched a new release of Voice AI Agents, a next-generation agentic self-service solution built on a purpose-built architecture to move beyond scripted bots and legacy IVR systems. The new agents are designed to reason, take action, and resolve customer requests with human-like conversations, real-time responsiveness, and seamless AI-human collaboration on the Five9 Intelligent CX Platform. The release includes AI Agent Studio, a unified environment for building, testing, deploying, and monitoring the agents, and features such as low-latency streaming, multilingual support, secure tool calling for real-time actions, and enterprise-grade governance with built-in guardrails and LLM blinding. Early adopter PODS reported exceeding containment rate targets and reducing handle times, with expectations to handle more than 100,000 service calls this year. The announcement was made at Customer Contact Week in Las Vegas.