Five9's AI Revenue Grew 91% as Q3 Margins Narrowed

What drove Five9's 13% Q3 revenue growth?

$323.3 million in revenue included $268.3 million of subscription sales, up 16%; AI revenue grew 91% to approximately $45 million, while core Contact Center as a Service (CCaaS) revenue increased 8%.

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Why did Five9's margins narrow despite higher revenue?

GAAP gross margin declined to 53.4% from 55.0%, while adjusted gross margin fell to 61.7% from 62.8%; CFO Bryan Lee attributed the adjusted-margin decline to timing-related costs with one of Five9's largest partners and said these costs should start reversing in Q4. Adjusted EBITDA margin nevertheless remained at 25.1%, although GAAP net income declined to $14.5 million from $18.0 million.

Why do Five9's Q3 results matter to its business?

Subscription revenue represented approximately 83% of total sales, while a 109% subscription dollar-based retention rate indicated net expansion within the existing customer base. Adjusted EBITDA increased 13% to $81.2 million, demonstrating that operating earnings grew even though adjusted EBITDA margin did not expand.

What did Five9's 2026 guidance change mean for FIVN shareholders?

Five9 raised its 2026 revenue guidance midpoint by $6 million to $1.272 billion but lowered its non-GAAP diluted EPS midpoint by $0.07 to $3.19, citing the timing of planned organizational changes and a higher diluted share count. The revision indicates stronger revenue expectations but lower anticipated per-share earnings.

What should investors watch in Q4 2026?

Five9 forecast fourth-quarter revenue of $328 million to $334 million and expects adjusted gross margin to move higher as partner-related timing costs begin reversing. Q4 results will show whether the anticipated margin improvement materializes and AI-driven subscription growth continues.