Buy Mid-Cap AI Stock FIVN on Solid Q2 Earnings, Outlook & Valuation

Contact center software solutions provider Five9 Inc. FIVN reported second-quarter 2025 adjusted earnings of $0.76 per share, which beat the Zacks Consensus Estimate by 16.9% and jumped 46.2% year over year. Quarterly revenues came in at a record-high of $283.27 million, up 12.4% year over year, beating the Zacks Consensus Estimate by 3%. 

FIVN’s strong performance was driven by a rise in subscription revenues, which grew 16% year over year, supported by traction in Enterprise artificial intelligence (AI) revenues, which climbed 42% year over year. The company provides intelligent cloud software for contact centers in the United States, India and internationally.

Extensive AI Adoptions

FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions. 

FIVN’s platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows the management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.

FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. On Feb. 19, Five9 introduced its Intelligent CX Platform powered by Five9 Genius AI on the Google Cloud space. FIVN also released new Five9 AI agents tailor-made for Google Cloud.  

Powerful Strategic Partnerships

Strategic partnerships contributed significantly to Five9’s second-quarter growth. Ties with big names like Salesforce Inc. CRM, Microsoft Corp. MSFT, ServiceNow Inc. NOW, Verint Systems Inc. VRNT and Alphabet Inc. GOOGL helped the company build more tailored AI tools and improve its integration across platforms. This is anticipated to have helped FIVN win new clients and hold on to the existing ones.

FIVN ended 2025 on a solid financial footing. It posted a strong 24% adjusted EBITDA margin and $21.6 million in free cash flow in the second quarter. This operational efficiency gives it a cushion to invest further in product innovation and customer acquisition — two key drivers that are likely to contribute significantly to FIVN’s growth in the future.

Impressive Guidance

For the third quarter, Five9 forecasts revenues between $283.0 million and $286.0 million. The Zacks Consensus Estimate is currently pegged at $285.96 million, indicating year-over-year growth of 8.2%. 

Adjusted earnings per share (EPS) are projected between $0.72 and $0.74. The Zacks Consensus Estimate for adjusted EPS is currently pegged at $0.70, indicating year-over-year growth of 4.5%. The Zacks Consensus Estimate for third-quarter earnings remained the same over the last 90 days.

For fiscal 2025, FIVN forecasts revenues between $1.1435 billion and $1.1495 billion. The Zacks Consensus Estimate is currently pegged at $1.14 billion, indicating year-over-year growth of 9.8%. 

Full-year 2025 adjusted EPS is projected between $2.86 and $2.90. The Zacks Consensus Estimate for adjusted EPS is currently pegged at $2.78, indicating year-over-year growth of 12.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.

Moreover for 2026, Five9 has an expected revenue and earnings growth rate of 9.7% and 11.9%, respectively. The Zacks Consensus Estimate for 2026 earnings has improved 1.3% over the last 60 days.

At present, FIVN has a projected long-term (3-5 years) EPS growth rate of 15.7%. The broad-market index, the S&P 500, has a growth rate of 12.6%.

Lucrative Valuation

Five9 is currently trading at an attractive valuation compared to its peers. The stock has a forward price/earnings (P/E) of 8.73X, below the industry’s P/E of 27.50X and the S&P 500’s P/E of 19.29X. It has a price/sale (P/S) of 1.67X, compared with the industry’s P/S of 4.10X and the S&P 500’s P/S of 2.99X. Moreover, FIVN has a price/book (P/B) of 2.58X, lower than the industry’s P/B of 3.45X and the S&P 500’s P/B of 3.43X. 

Huge Short-Term Price Upside Potential

Five9 has been a major laggard year to date as the stock price declined 40.3%. However, the average short-term price target of brokerage firms represents an increase of 51.2% from the last closing price of $24.28. The brokerage target price is currently in the range of $23-$65. This indicates a maximum upside of 167.7% and a minimum downside of 5.3%. 

This means the risk-reward ratio is currently highly favorable for the stock. FIVN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The AI infrastructure space remains rock solid supported by an extremely bullish demand scenario. FIVN is currently one of our top picks in the mid-cap AI infrastructure space. 

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This article originally published on Zacks Investment Research (zacks.com).

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