Five9, Inc. Net Debt / EBITDA jumped on 12.3x from 5.3x to 17.6x in 2020 and Debt jumped on 192%
02/22/2021 • About Five9, Inc. (
$FIVN) • By InTwits
Five9, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Five9, Inc. is a fast growth stock: 2020 revenue growth was 32.6%, 5 year revenue CAGR was 27.5% at 2020 ROIC -1.8%
- EBITDA Margin is quite volatile: 5.7% in 2020, 8.4% in 2019, 6.7% in 2018, 1.3% in 2017, 1.1% in 2016
- Five9, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 is 3.9%. Average EBITDA Margin for the same period was 5.3%
- Five9, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $30m in 2020, $19m in 2019, $9m in 2018, $3m in 2017, $1m in 2016
- The company has unprofitable business model: ROIC is -1.8%
- It operates with high leverage: Net Debt/EBITDA is 17.6x while industry average is 18.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 32.6%. Revenue growth showed acceleration in 20Q4 - it increased 38.6% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.7 pp from 8.4% to 5.7% in 2020. During 2016-2020 EBITDA Margin topped in 2019 at 8.4%.
Gross Margin showed almost no change in 2020. SG&A as a % of Revenue increased slightly on 1.2 pp from 43.7% to 44.9% in 2020. During 2016-2020 SG&A as a % of Revenue bottomed in 2018 at 43.1% and was growing since that time.
Net Income margin decreased on 8.3 pp from -1.4% to -9.7% in 2020. During 2016-2020 Net Income margin topped in 2018 at -0.086% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In 2020 Five9, Inc. had CAPEX/Revenue of 7.0%. The company's CAPEX/Revenue increased on 5.7 pp from 1.3% in 2017 to 7.0% in 2020. Average CAPEX/Revenue for the last three years was 5.5%. To fuel its fast growth Five9, Inc. made large investments to CAPEX (124% of EBITDA). CAPEX as a % of Revenue grew at 1.7 pp per annum in 2016-2020.
Return on investment
The company operates at negative ROIC (-1.8%) and ROE (-17.7%). ROIC decreased on 2.7 pp from 0.96% to -1.8% in 2020. ROE dropped on 15.0 pp from -2.7% to -17.7% in 2020. During 2016-2020 ROIC topped in 2018 at 3.2% and was declining since that time. During the last 5 years ROE topped in 2018 at -0.23% and was declining since that time.
Leverage (Debt)
Debt level is 17.6x Net Debt / EBITDA and 26.5x Debt / EBITDA. Net Debt / EBITDA jumped on 12.3x from 5.3x to 17.6x in 2020. Debt surged on 192% while cash jumped on 183%. Net Debt/EBITDA followed a growing trend at 6.2x per annum in the last 5 years.
Five9, Inc. has no short term refinancing risk: cash is higher than short term debt (4,871.2%).
Management team
The company's CEO is Rowan M Trollope. Rowan M Trollope has 2 years tenure with the company. Barry Zwarenstein is a the company's CFO. Barry Zwarenstein has spent 9 years at the company.
Financial and operational results
FY ended 12/31/2020
Five9, Inc. ($FIVN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 162.1 | 200.2 | 257.7 | 328.0 | 434.9 | 32.6% |
| Gross Profit | 95.2 | 117.1 | 153.6 | 193.5 | 254.6 | 31.6% |
| SG&A | 77.8 | 95.7 | 111.0 | 143.3 | 195.2 | 36.2% |
| EBITDA | 1.8 | 2.6 | 17.3 | 27.5 | 24.6 | -10.6% |
| EBIT | -6.5 | -5.7 | 7.0 | | | |
| Interest expence | 4.2 | 3.5 | 10.2 | | | |
| Tax | 0.1 | 0.3 | 0.3 | | | |
| Net Income | -11.9 | -9.0 | -0.2 | -4.6 | -42.1 | |
| Stock Based Compensation | 9.6 | 15.3 | 28.5 | | | |
Balance Sheet
|
|---|
| Cash | 58.1 | 68.9 | 81.9 | 78.0 | 220.4 | 182.6% |
| Accounts Receivable | 13.9 | 19.0 | 24.8 | | | |
| Accounts Payable | 3.4 | 4.3 | 7.0 | | | |
| Short Term Debt | 7.0 | 7.0 | 6.6 | 8.6 | 4.5 | -47.3% |
| Long Term Debt | 38.8 | 39.8 | 201.3 | 214.7 | 648.7 | 202.1% |
Cash flow
|
|---|
| Capex | 1.1 | 2.7 | 9.3 | 19.2 | 30.4 | 58.2% |
Ratios
|
|---|
| Revenue growth | 25.8% | 23.5% | 28.7% | 27.3% | 32.6% | |
| EBITDA growth | -113.4% | 40.4% | 566.3% | 59.3% | -10.6% | |
|
|---|
| Gross Margin | 58.7% | 58.5% | 59.6% | 59.0% | 58.5% | -0.4% |
| EBITDA Margin | 1.1% | 1.3% | 6.7% | 8.4% | 5.7% | -2.7% |
| EBIT Margin | -4.0% | -2.9% | 2.7% | | |
| SG&A, % of revenue | 48.0% | 47.8% | 43.1% | 43.7% | 44.9% | 1.2% |
| SBC, % of revenue | 5.9% | 7.7% | 11.1% | | |
| Net Income Margin | -7.3% | -4.5% | -0.1% | -1.4% | -9.7% | -8.3% |
| CAPEX, % of revenue | 0.7% | 1.3% | 3.6% | 5.9% | 7.0% | 1.1% |
|
|---|
| ROIC | -8.7% | -6.7% | 3.2% | 1.0% | -1.8% | -2.7% |
| ROE | -41.9% | -23.2% | -0.2% | -2.7% | -17.7% | -15.0% |
| Net Debt/EBITDA | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x | 12.3x |
| Interest coverage ratio (ICR) | | | 0.7x | | |
| Interest expence / Average debt | 9.2% | 7.5% | 8.0% | | | |
People
|
|---|
| Insider ownership | 3.0% | 3.0% | 3.0% | | | |
| Employees | 780 | 860 | 983 | | | |
| Revenue/Employee, th. $ | 208 | 233 | 262 | | | |
Five9, Inc. ($FIVN) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 95 | 100 | 112 | 128 | | 27.6% | 28.9% | 33.9% | 38.6% |
| EBITDA | 2 | -0 | 11 | 13 | | -61.5% | -106.9% | 96.4% | 14.6% |
| Net Income | -7 | -16 | -11 | -7 | | - | - | - | -962.4% |
Balance Sheet
|
|---|
| Cash | 156 | 233 | 302 | 220 | | 66.7% | 111.1% | 150.3% | 182.6% |
| Short Term Debt | 9 | 7 | 6 | 5 | | -15.5% | -31.8% | -40.8% | -47.3% |
| Long Term Debt | 219 | 648 | 651 | 649 | | 6.1% | 206.7% | 206.7% | 202.1% |
Ratios
|
|---|
| Gross Margin | 57.9% | 57.5% | 58.5% | 59.9% | | -0.7% | -2.2% | -0.4% | 1.1% |
| EBITDA Margin | 1.6% | -0.5% | 9.4% | 10.2% | | -3.7% | -9.3% | 3.0% | -2.1% |
| Net Income Margin | -7.8% | -16.1% | -10.2% | -5.6% | | -5.2% | -13.7% | -8.3% | -6.5% |
Peers in Application Software
Below you can find Five9, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| Five9, Inc. ($FIVN) | - | 23.5% | 28.7% | 27.3% | 32.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 64.2% | 64.6% | 66.0% | 68.4% | 70.6% |
|---|
| Five9, Inc. ($FIVN) | 58.7% | 58.5% | 59.6% | 59.0% | 58.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 7.7% |
|---|
| Five9, Inc. ($FIVN) | 1.1% | 1.3% | 6.7% | 8.4% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Five9, Inc. ($FIVN) | 0.7% | 1.3% | 3.6% | 5.9% | 7.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| Five9, Inc. ($FIVN) | -8.7% | -6.7% | 3.2% | 1.0% | -1.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| Cornerstone OnDemand, Inc. ($CSOD) | - | - | 5.5x | 2.3x | 10.9x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.0x |
|---|
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
