Five9 Beats on Q3 Revenue and Agrees to Buy Level AI for $325 Million as Shares Fall on Outlook

Five9 Inc. reported third-quarter results that topped estimates and said it had agreed to buy conversational-intelligence company Level AI for $325.0 million in cash, but its shares fell sharply after the contact-center software company issued a weaker earnings outlook. Investing.com said Five9 tumbled 16.7% in premarket trading Friday to $28.44. StockAnalysis, citing S&P Global Market Intelligence, showed the stock closed on Friday, Nov. 6, at $28.12, down $6.02, or 17.63%, from Thursday’s close of $34.14, after trading between $25.12 and $28.66 on volume of about 6.55 million shares.

In a Nov. 5 press release, Five9 said revenue for the quarter ended Sept. 30 rose 13% to $323.3 million from $285.8 million a year earlier, and that subscription revenue grew 16%. GAAP net income was $14.5 million, or $0.19 per diluted share, compared with $18.0 million, or $0.21, in the third quarter of 2025. Non-GAAP net income was $63.7 million, or $0.82 per diluted share, compared with $60.6 million, or $0.78. Adjusted EBITDA was $81.2 million, or 25.1% of revenue, matching the year-earlier margin on a higher dollar total of $71.7 million. Investing.com said the $0.82 adjusted figure exceeded analyst expectations of $0.80 and that revenue also came in ahead of consensus.

AI growth and the Level AI deal

Chief Executive Amit Mathradas said the quarter featured “accelerating subscription revenue growth, with AI revenue growth stepping up significantly,” and that adding Level AI “strengthens our competitive position, expands the customers we can serve, and deepens the AI talent behind our continuous innovation.” The last-12-month subscription dollar-based retention rate was 109% as of Sept. 30, and the combined subscription and telecom retention rate was 107%, the company said.

Markets Daily, summarizing the earnings call, reported that Chief Financial Officer Bryan Lee said AI revenue reached about $45 million, or 17% of subscription revenue, up from 10% a year earlier, and that AI revenue grew 91% as some customers deployed products earlier and at larger scale than expected. The company now expects AI revenue growth of at least 75% for 2026, up from a previous outlook of at least 60%, Markets Daily said, while Lee cautioned that the strong ramps would create difficult year-over-year comparisons in 2027. Contact-center-as-a-service revenue rose 8%, according to the same account.

Five9 said it signed a definitive agreement to acquire Level AI for $325.0 million in cash. Guidance in the release “does not include any contribution from the pending acquisition of Level AI, which is expected to close in Q4 2026, subject to customary closing conditions.” Markets Daily reported that Level AI had about $20 million in standalone annual recurring revenue as of Oct. 31, up about 50% from a year earlier, and that Mathradas said the deal would let Five9 sell standalone AI products to businesses that use other contact-center platforms, including companies not yet ready to move from on-premises systems to the cloud. Five9 has partnered with Level AI since 2022, the report said.

Revenue guidance up, earnings forecast down

For the fourth quarter, Five9 said it expects revenue of $328.0 million to $334.0 million, GAAP net income of $0.28 to $0.36 a share, and non-GAAP net income of $0.88 to $0.92 a share, based on about 78.0 million diluted shares. For the full year 2026, it expects revenue of $1.269 billion to $1.275 billion, GAAP earnings of $0.75 to $0.83 a share, and non-GAAP earnings of $3.17 to $3.21 a share, based on about 77.1 million diluted shares.

Investing.com said the midpoint of the fourth-quarter adjusted earnings range, $0.90 a share, was below Wall Street expectations and that management attributed a downward revision to its full-year earnings forecast to changes in timing, planned organizational restructuring and a higher diluted share count. Markets Daily reported that Five9 raised the midpoint of its full-year revenue outlook by $6 million, to $1.272 billion, while lowering the midpoint of its annual non-GAAP earnings forecast to $3.19 a share from $3.26. Lee attributed the earnings reduction primarily to revised timing for planned organizational changes, now expected in the earlier part of 2027, and to a higher diluted share count after the share price ran above expectations, according to that report.

GAAP gross margin was 53.4%, compared with 55.0% a year earlier, and adjusted gross margin was 61.7%, compared with 62.8%. GAAP operating cash flow was $58.4 million in the quarter, compared with $59.2 million a year earlier. As of Sept. 30, Five9 reported cash and cash equivalents of $263.8 million and marketable investments of $433.8 million. The results and share move do not indicate how the stock will trade when markets reopen.

Sources: Five9, Third Quarter 2026 Financial Results, Nov. 5, 2026; Investing.com, Nov. 6, 2026; Markets Daily, Nov. 8, 2026; StockAnalysis historical prices (S&P Global Market Intelligence).