Some tech stocks benefiting from a recent surge in work-from-home trends have seen tons of attention in the media. Video-conferencing company Zoom Video, workplace direct-messaging platform Slack Technologies, and interactive fitness-product company Peloton have seemingly become Wall Street darlings overnight.
But there’s another smaller and fast-growing tech stock that’s getting overlooked in mainstream media that’s similarly benefiting from stay-at-home orders and companies’ accelerating digital transformations: Five9 (NASDAQ:FIVN), a provider of a cloud-based contact-center platform.
Following the company’s strong first-quarter results earlier this week, The Motley Fool interviewed Five9 CEO Rowan Trollope and discussed how COVID-19 is impacting demand, what to expect from the tech company‘s performance after the virus fades into the rearview mirror, and more.
Stellar first-quarter results
On Monday, Five9 said its revenue jumped 28% year over year to $95.1 million. Non-GAAP (adjusted) earnings per share (EPS) for the period was $0.17, up from $0.16 in the year-ago quarter. Both Five9’s top and bottom lines beat analysts’ average forecasts for revenue and non-GAAP EPS of $89.6 million and $0.15, respectively.
These strong results were driven by a 33% year-over-year increase in trailing-12-month enterprise subscription revenue.
A work-from-home boom
While Five9’s first-quarter results were impressive, the company saw particularly strong momentum in April. Five9 said it helped its customers transition “tens of thousands” of agents to work from home in the weeks leading up to its May 4 earnings report.
“Five9 has experienced a surge in demand to deliver work-from-home models,” Rowan told The Motley Fool. He continued:
Customers now recognize the critical nature of the contact center and the role it plays in business continuity. Since much of the world has shifted to remote work where possible, there is dramatically increased appreciation for the fact that cloud solutions can address organizations’ needs far better than on-premise solutions.
More importantly, Trollope said he thinks its customers’ growing appreciation for a cloud solution during this time won’t be a temporary boon for the company, but rather, a lasting catalyst. “I believe that as companies have gone through this experience, cloud adoption will accelerate even post-COVID, as more companies seriously consider shifting to a more flexible model, allowing agents to work from home,” said Trollope.
The CEO pointed out that Five9 recently launched a FastTrack Program to help quickly onboard customers during this spike in demand amid COVID-19. The program helps transition agents to the cloud with a 48-hour turnaround, but Trollope noted that some emergency-response hotlines were launched in as little as three hours.
“Through this program, we’re also offering affordable monthly pricing and flexible contracts to accommodate current uncertain business conditions,” Rowan said.
With a market cap of $6.5 billion, Five9 is much smaller than Zoom ($43 billion) and Slack ($17.5 billion). Nevertheless, Five9 is positioned just as well as Zoom and Slack to benefit from work-from-home trends and organizations’ accelerating digital transformations.