Five9, Inc. reported fourth‑quarter 2025 revenue of $300.3 million, an 8% year‑over‑year increase that exceeded analyst expectations of $297.7 million. The growth was driven by strong demand for the company’s AI‑powered subscription products, which continue to capture a larger share of the overall customer base.
Adjusted earnings per share reached $0.80, beating the consensus estimate of $0.79 by $0.01. The modest beat reflects disciplined cost management and the higher margin mix from AI‑enabled services, offsetting the slight compression in gross margin.
The company’s adjusted gross margin for Q4 2025 was 63.1%, a decline of 40 basis points from the 63.5% margin reported in Q4 2024. The compression is attributed to lower margins in telecom usage and professional services, while the AI subscription mix helped keep the overall margin near the 63% level.
Full‑year 2025 revenue totaled $1.15 billion, up 10% from $1.04 billion in 2024, and the company reiterated its guidance for 2026. Management projected a midpoint revenue of $1.254 billion and a midpoint adjusted EPS of $3.18 for the full year, signaling confidence in continued AI‑driven growth.
Management highlighted the record fourth‑quarter bookings and the acceleration of subscription growth, noting that AI ARR surpassed $100 million. The CFO emphasized that adjusted EBITDA margin rose to 26% in Q4, up 260 basis points from the prior year, and free cash flow more than doubled to $67 million, underscoring operational efficiency.
The company’s leadership transition, with new CEO Amit Mathradas taking the helm on February 2, 2026, was also noted. The transition is expected to reinforce the AI strategy and support the company’s long‑term growth trajectory.
Investors and analysts are watching the company’s ability to sustain the AI momentum while managing the headwinds from lower margin segments. The guidance and strong cash‑flow generation suggest that Five9 is positioned to navigate near‑term challenges while pursuing aggressive AI expansion.
The market reaction to the results was tempered by concerns over the slight gross‑margin compression, but the overall sentiment remained positive due to the robust revenue growth, AI traction, and improved profitability metrics.
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