Since November 2025, Five9 has been in a holding pattern, posting a small return of 1% while floating around $20.67. The stock also fell short of the S&P 500’s 10% gain during that period.
Is now the time to buy Five9, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Five9 Will Underperform?
We don't have much confidence in Five9. Here are three reasons there are better opportunities than FIVN and a stock we'd rather own.
1. Weak Billings Point to Soft Demand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Five9’s billings came in at $311.1 million in Q1, and over the last four quarters, its year-on-year growth averaged 9.4%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Five9’s revenue to rise by 10.1%, a slight deceleration versus its 19.7% annualized growth for the past five years. This projection is underwhelming and implies its products and services will see some demand headwinds.
3. Low Gross Margin Reveals Weak Structural Profitability
For software companies like Five9, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.
Five9’s gross margin is substantially worse than most software businesses, signaling it has relatively high infrastructure costs compared to asset-lite businesses like ServiceNow. As you can see below, it averaged a 55.5% gross margin over the last year. Said differently, Five9 had to pay a chunky $44.53 to its service providers for every $100 in revenue.
The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. Five9 has seen gross margins improve by 2.6 percentage points over the last 2 year, which is very good in the software space.
Final Judgment
We see the value of companies addressing major business pain points, but in the case of Five9, we’re out. With its shares trailing the market in recent months, the stock trades at 1.4× forward price-to-sales (or $20.67 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better stocks to buy right now. We’d recommend looking at the most dominant software business in the world.
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