Five9 Stock Tanks: What’s Behind Friday’s Freefall?

Another brutal day for Five9 shareholders—Wall Street’s latest whipping boy took another beating. Here’s why the cloud contact center darling got dumped.

Growth stocks? More like 'no-growth' stocks.

When macro winds shift, overvalued SaaS plays crumble first. Five9’s 15% single-day plunge smells like hedge funds bailing before earnings—classic 'sell the rumor' behavior.

Institutional investors aren’t paid to hold bags.

With Fed rate hikes looming, the smart money’s rotating into hard assets. Five9’s premium valuation? Poof—gone faster than a crypto influencer’s credibility.

One cynical truth: In today’s market, 'disruptive tech' just means 'disposable stock.'

Double-digit improvements

For its second quarter, Five9 posted a record-high revenue figure of over $283 million, which was 12% higher year over year. Artificial intelligence (AI) played a significant role in this, as the company's enterprise AI revenue advanced by 42% during the period.

Image source: Getty Images.

As for profitability, it also ROSE at a double-digit rate. Non-GAAP (adjusted) net income came in at over $58 million ($0.76 per share), well up from the nearly $39 million in the year-ago period.

Analysts tracking the stock were expecting an adjusted net income figure of $0.62, on revenue of slightly more than $275.

Five9 also proffered guidance for both its current (third) quarter and the entirety of 2025. For the latter period, it's modeling slightly over $1.14 billion to almost $1.15 billion for revenue, and adjusted net income ranging from $2.86 to $2.90 per share. The consensus analyst projections for the two metrics are a bit more than $1.14 billion and $0.70, respectively.

Successful CEO is stepping down

That double beat was good news, but this was obscured by the company's announcement that CEO Mike Burkland is retiring. He will stay in the job until a replacement is found. Burkland served as Five9's leader from 2008 to 2017, until he was diagnosed with cancer. He returned to the position in 2022.

In its announcement of his departure, Five9 said that Buckland was at the helm of the company as it achieved notable milestones, and it credited him for growing it from $10 million to more than $1 billion in annual revenue. It's little wonder investors were displeased to hear of his looming departure.