Financial Analysis

Commitments and Contingencies Commitments The Companys principal commitments consist of future payment obligations under its convertible senior notes, finance leases to finance data centers and other computer and networking equipment, operating leases for office facilities, cloud services and software and maintenance agreements, and agreements with third parties to provide co-location hosting and telecommunication services. These commitments as of December 31, 2025 are disclosed in the Companys Annual Report on Form 10-K for the year ended December 31, 2025, and material updates to these commitments during the three months ended March 31, 2026 are disclosed herein, including in this Note 10 and in Note 12. As of March 31, 2026, the Companys commitments under various co-location hosting and telecommunication usage service agreements totaled $13.1 million for terms ranging up to approximately five years. These agreements require the Company to make payments over the service term in exchange for certain network services. As of March 31, 2026, the Company had outstanding cloud services and software and maintenance agreement commitments totaling $149.0 million, of which $37.1 million is expected to be purchased in 2026, $56.2 million is expected to be purchased in 2027, $52.3 million is expected to be purchased in 2028, and the remaining $3.4 million is expected to be purchased in 2029. During the first quarter of 2026, the Company executed a reseller agreement with a total commit …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Debt 2029 Convertible Senior Notes and Related Capped Call Transactions In March 2024, the Company issued $747.5 million aggregate principal amount of 2029 convertible senior notes in a private offering, which aggregate principal amount included the exercise in full of the initial purchasers option to purchase up to an additional $97.5 million principal amount of the 2029 convertible senior notes. The 2029 convertible senior notes mature on March 15, 2029 and bear interest at a fixed rate of 1.00% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. The total net proceeds from the issuance of the 2029 convertible senior notes, after deducting initial purchasers' discounts and commissions and estimated debt issuance costs, were approximately $728.8 million. Each $1,000 principal amount of the 2029 convertible senior notes is initially convertible into 12.5918 shares of the Companys common stock (the 2029 Conversion Option), which is equivalent to an initial conversion price of approximately $79.42 per share of common stock, subject to adjustment upon the occurrence of specified events. The initial conversion price represents a premium of approximately 30% to the $61.09 per share closing price of the Companys common stock on The Nasdaq Global Market on February 27, 2024. There have been no changes to the initial conversion price of the 2029 convertible senior notes since issuance. The 2029 convertible senior not …

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Goodwill and Intangible Assets The following table summarizes the activity in the Company's goodwill and intangible asset balances during the three months ended March 31, 2026 (in thousands): Goodwill Intangible Assets Beginning of the period, December 31, 2025 $ 366,253 $ 51,166 Amortization (3,410) End of the period, March 31, 2026 $ 366,253 $ 47,756 The components of intangible assets were as follows (in thousands): March 31, 2026 December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization period (Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Amortization period (Years) Developed technology $ 105,714 $ (65,532) $ 40,182 5.7 $ 105,714 $ (62,794) $ 42,920 5.8 Acquired workforce 470 (470) 0.0 470 (470) 0.0 Customer relationships 12,850 (5,713) 7,137 3.2 12,850 (5,150) 7,700 3.5 Trademarks 1,300 (863) 437 1.3 1,300 (754) 546 1.5 Total $ 120,334 $ (72,578) $ 47,756 5.2 $ 120,334 $ (69,168) $ 51,166 5.4 Amortization expense related to intangible assets was $3.4 million and $4.1 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the expected future amortization expense for intangible assets was as follows (in thousands): Period Expected Future Amortization Expense Remaining 2026 $ 9,599 2027 8,612 2028 8,246 2029 7,328 2030 6,188 Thereafter 7,783 Total $ 47,756 …

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Income Taxes The provision for income taxes for the three months ended March 31, 2026 and 2025 was approximately $2.2 million and $0.2 million, respectively. The provision for income taxes for the three months ended March 31, 2026 consisted primarily of U.S. state tax expense incurred as a result of increased federal taxable income flowing to the states due to an increase in projected profit before tax, state tax attribute utilization limitations, and exhaustion of tax attributes in certain state jurisdictions. The provision for income taxes for the three months ended March 31, 2025 consisted primarily of year-to-date withholding taxes incurred as a result of the Company's activity in foreign jurisdictions. For the three months ended March 31, 2026, the provision for income taxes differed from the statutory amount primarily due to non-deductible stock based compensation, accelerated capitalized R&D deductions, state and foreign income taxes, net operating loss and research and development credit utilization, and the Company maintaining a full valuation allowance against its U.S. net deferred tax assets. For the three months ended March 31, 2025, the provision for income taxes differed from the statutory amount primarily due to non-deductible stock based compensation, IRC Section 174 research and experimental capitalization requirements, state and foreign income taxes, research and development credits and the Company maintaining a full valuation allowance against its U.S. …

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Leases The Company has leases for offices, data centers and computer and networking equipment that expire at various dates through 2031. The Companys leases have remaining terms of one to seven years, some of the leases include a Company option to extend the leases for up to one to five years, and some of the leases include the option to terminate the leases upon 30-days' notice. The Company does not separate lease and non-lease components for real estate operating leases. As the Companys leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Companys incremental borrowing rate. Operating leases with a duration of 12 months or less are excluded from right-of-use assets and operating lease liabilities, and related lease payments are generally recognized on a straight-line basis over the lease term and variable lease payments are recognized as incurred. The components of lease expenses were as follows (in thousands): Three Months Ended March 31, 2026 March 31, 2025 Operating lease cost $ 3,627 $ 3,171 Finance lease cost: Amortization of right-of-use assets $ 2,282 $ 2,008 Interest on finance lease liabilities 187 261 Total finance lease cost $ 2,469 $ 2,269 Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended March 31, 2026 March 31, 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash used in operating leases $ (3,253) $ (2,94 …

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Recently Adopted Accounting Pronouncements In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for reporting periods beginning after December 15, 2025, with early adoption permitted. The Company's adoption of ASU 2025-05 electing the practical expedient method did not have a material impact on its financial position and results of operations. In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20) , which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The ASU is effective for annual and interim reporting periods beginning after December 15, 2025. Early adoption is permitted for entities that have implemented ASU 2020-06, with the option to apply the guidance prospectively or retrospectively. The Company's adoption of ASU 2024-04 on a prospective basis did not have an impact on its financial position and results of operations. Recent Accounting Pronouncements Not Yet Effective In November 2024, th …

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Restructuring On March 31, 2025, the Board of Directors of the Company approved a reduction in force plan (the 2025 Plan) as part of its broader efforts to prioritize investments in key strategic areas, including artificial intelligence, as well as to drive profitable growth and support its positive, long-term outlook and increasing stockholder value. On April 3, 2025, the Company commenced execution of the 2025 Plan, which resulted in the reduction of the Companys global full-time employees by approximately 4%. During the year ended December 31, 2025, the Company incurred a total of $7.9 million in cash restructuring costs under the 2025 Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which are cash expenditures, of which $1.6 million was recorded in cost of revenue, $1.9 million was recorded in research and development expenses, $3.4 million was recorded in sales and marketing expenses, and $1.0 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). As of December 31, 2025, $7.9 million in total restructuring costs under the 2025 Plan had been paid. During the year ended December 31, 2025, the Company also incurred an additional $2.1 million in stock-based compensation costs related to the 2025 Plan due to additional vesting of share-based awards, of which $0.3 million was recorded in cost of revenue, $0.5 million was recor …

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Revenue Contract Balances The following table provides information about accounts receivable, net, deferred contract acquisition costs, net, contract assets and contract liabilities from contracts with customers (in thousands): March 31, 2026 December 31, 2025 Accounts receivable, net $ 136,541 $ 130,984 Deferred contract acquisition costs, net: Current $ 90,241 $ 88,714 Non-current 177,379 176,976 Total deferred contract acquisition costs, net $ 267,620 $ 265,690 Contract assets and contract liabilities: Contract assets (included in prepaid expenses and other current assets) $ 5,806 $ 4,101 Contract liabilities (deferred revenue) (83,334) (77,515) Noncurrent contract liabilities (deferred revenue) (included in other long-term liabilities) (1,333) (1,545) Net contract liabilities $ (78,861) $ (74,959) The Company receives payments from customers based upon billing cycles. Invoice payment terms are usually 30 days or less. Accounts receivable are recorded when the right to consideration becomes unconditional. Deferred contract acquisition costs are recorded when incurred and are amortized over an estimated customer benefit period of five years. The Companys contract assets consist of unbilled amounts typically resulting from professional services where revenue is recognized in excess of total amounts billed to the customer. The Companys contract liabilities consist of advance payments and billings in excess of revenue recognized. In the three months ended March 31, 2026, the C …

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Segment and Geographical Information The Company has a single operating and reportable segment and manages its business activities on a consolidated basis. The Companys single segment provides its solution through a SaaS business model. The Company generates subscription revenue from its Intelligent CX Platform, and also generates usage-based telephony revenue. The Company charges its customers monthly subscription fees for access to its solution, primarily based on the number of licenses. The Companys AI solutions are sold to its customers on a consumption basis. The Companys reliable, secure, and scalable Intelligent CX Platform, powered by Five9 Genius AI, delivers a comprehensive suite of easy-to-use applications that enable the breadth of customer service, sales, and marketing related functions. The Companys chief operating decision maker (CODM) is its chief executive officer. The Companys CODM reviews financial information presented on a consolidated basis for purposes of assessing financial performance and making operating decisions on how to allocate resources based on net income that is also reported on its consolidated statements of operations and comprehensive income (loss) as consolidated net income (loss). The measure of segment assets is reported on its consolidated balance sheets as total consolidated assets. Revenue by Geographic Areas The following table summarizes revenues by geographic region based on customer billing address (in thousands): Three Months En …

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"Subsequent Events 2025 Repurchase Program On April 30, 2026, the Company announced its intent to enter into an ASR program (the 2026 ASR Program) of $90 million with JPM to repurchase the remaining authorized amount under the 2025 Repurchase Program. The Company intends to enter into the new 2026 ASR Program in May 2026 with a completion date by September 30, 2026. 2026 Repurchase Program On April 30, 2026, the Company also announced that its Board of Directors approved of a new share repurchase program (the 2026 Repurchase Program), which authorized the repurchase of up to an additional $200.0 million of the Companys common stock and has no expiration date. Repurchases under the 2026 Share Repurchase Program will be made pursuant to open market purchases, solicited or unsolicited privately negotiated transactions, accelerated share repurchase transactions, including pursuant to 10b5-1 plans, and in compliance with applicable securities laws and other requirements. The 2026 Share Repurchase Program will be funded using the Company's cash on hand and future cash flow generation. The timing, manner, price, and amount of repurchases under the 2026 Share Repurchase Program is subject to the discretion of the Companys management. The Company is not obligated to acquire a specified number of shares under the 2026 Share Repurchase Program, which may be suspended, modified, or terminated at any time, without prior notice. The shares received will be immediately retired and recorded …

SubsequentEventsTextBlock · excerpt; the full note is in the filing