second quarter of 2026
Filed Aug 6, 2026Q2 Revenue Grew 10% year-over-year; Q2 Subscription Revenue Grew 14% year-over-year; Announces Approximately $100 Million Total Contract Value New Customer Win
Revenue and subscription revenue growth accelerated, GAAP net income and operating cash flow increased, but GAAP and adjusted gross margins declined and non-GAAP net income and adjusted EBITDA margins were lower than the prior-year quarter.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $312.4 million | – | 10% |
| Subscription revenue growthother | 14% | – | 14% |
| GAAP gross marginGAAP | 53.4% | – | – |
| Adjusted gross marginnon-GAAP | 61.4% | – | – |
| GAAP net incomeGAAP | $3.4 million | – | – |
| GAAP diluted net income per shareGAAP | $0.04 per diluted share | – | – |
| GAAP net income marginGAAP | 1.1% of revenue | – | – |
| Non-GAAP net incomenon-GAAP | $53.5 million | – | – |
| Non-GAAP diluted net income per sharenon-GAAP | $0.70 per diluted share | – | – |
| Non-GAAP net income marginnon-GAAP | 17.1% of revenue | – | – |
| Adjusted EBITDAnon-GAAP | $70.1 million | – | – |
| Adjusted EBITDA marginnon-GAAP | 22.4% of revenue | – | – |
| GAAP operating cash flowGAAP | $42.1 million | – | – |
| LTM subscription dollar-based retention rateother | 107% | – | – |
| LTM subscription and telecom dollar-based retention rateother | 106% | – | – |
full year 2026 and third quarter of 2026 outlook
- RevenueFull year 2026: $1.260 to $1.272 billion; third quarter of 2026: $316.0 to $322.0 million
- NoteFull year 2026 GAAP net income per share: $0.71 to $0.82, assuming diluted shares outstanding of approximately 85.8 million.
- NoteFull year 2026 non-GAAP net income per share: $3.22 to $3.30, assuming diluted shares outstanding of approximately 76.3 million.
- NoteThird quarter of 2026 GAAP net income per share: $0.09 to $0.16, assuming diluted shares outstanding of approximately 85.4 million.
- NoteThird quarter of 2026 non-GAAP net income per share: $0.77 to $0.81, assuming diluted shares outstanding of approximately 76.0 million.
What drove it
- Q2 subscription revenue grew 14% year-over-year.
- The company reported its third consecutive quarter of accelerating subscription revenue growth, with AI revenue accelerating even faster.
- Five9 announced an approximately $100 Million Total Contract Value new customer win through the Google Marketplace.
- Five9 launched Five9 Voice AI Agents with human-like conversations, real-time responsiveness, enterprise-grade governance, and seamless AI + Human collaboration.
- LTM subscription dollar-based retention rate was 107% as of June 30, 2026, and LTM subscription and telecom dollar-based retention rate was 106% as of June 30, 2026.
Concerns
- GAAP gross margin was 53.4%, compared to 54.9% for the second quarter of 2025.
- Adjusted gross margin was 61.4%, compared to 63.0% for the second quarter of 2025.
- Non-GAAP net income was $53.5 million, compared to $58.3 million for the second quarter of 2025.
- Adjusted EBITDA was 22.4% of revenue, compared to 24.0% of revenue for the second quarter of 2025.
- The company identified risks from macroeconomic challenges, global tariff increases, inflation, consumer-spending uncertainty, high interest rates, currency-rate fluctuations, and global conflicts.
- The company stated that it must replace potential decreases in subscription revenue from licenses with revenue from additional AI solutions as AI solutions perform an increasing proportion of contact center interactions.
What to watch
- Execution against third quarter of 2026 revenue guidance of $316.0 to $322.0 million.
- Execution against full year 2026 revenue guidance of $1.260 to $1.272 billion.
- Whether subscription revenue growth and AI revenue acceleration continue.
- GAAP and adjusted gross-margin trends following the second-quarter declines.
- Conversion of the approximately $100 Million Total Contract Value new customer win and the Five9 Voice AI Agents launch into revenue growth.
- Subscription retention trends from the reported 107% LTM subscription dollar-based retention rate and 106% LTM subscription and telecom dollar-based retention rate.
Balance sheet and cash flow
- GAAP operating cash flow for the second quarter of 2026 was $42.1 million, compared to GAAP operating cash flow of $35.1 million for the second quarter of 2025.
Analysis
Five9 reported second-quarter revenue of $312.4 million, up 10% from $283.3 million in the second quarter of 2025. The company also reported 14% year-over-year subscription revenue growth and described this as its third consecutive quarter of accelerating subscription revenue growth. Retention remained above 100%, with an LTM subscription dollar-based retention rate of 107% and an LTM subscription and telecom dollar-based retention rate of 106% as of June 30, 2026.
Profitability showed a split outcome. GAAP net income increased to $3.4 million, or $0.04 per diluted share, from $1.2 million, or $0.01 per diluted share. However, non-GAAP net income declined to $53.5 million, or $0.70 per diluted share, from $58.3 million, or $0.76 per diluted share. GAAP gross margin declined to 53.4% from 54.9%, while adjusted gross margin declined to 61.4% from 63.0%.
Adjusted EBITDA increased to $70.1 million from $67.9 million, but its margin declined to 22.4% of revenue from 24.0% of revenue. GAAP operating cash flow rose to $42.1 million from $35.1 million. The release did not report free cash flow, cash, debt, repurchases, or dividends.
Commercial and product activity centered on AI and enterprise distribution. Five9 announced an approximately $100 Million Total Contract Value new customer win through the Google Marketplace and launched Five9 Voice AI Agents. The company also appointed a Chief Technology Officer, Chief Sales Officer, and Executive Vice President, Transformation and Strategy, and joined the S&P SmallCap 600 on August 3, 2026.
For the third quarter of 2026, Five9 guided revenue to $316.0 to $322.0 million and GAAP net income per share to $0.09 to $0.16. Full-year 2026 revenue guidance is $1.260 to $1.272 billion, with GAAP net income per share guidance of $0.71 to $0.82. The release did not provide prior guidance, so reported results cannot be assessed against prior company outlook in this filing.
Management, verbatim
Q2 marks our third consecutive quarter of accelerating subscription revenue growth, with AI revenue accelerating even faster, and further evidence that our focused execution is producing results. Closing a 9-figure TCV agreement through the Google Marketplace and launching Five9 Voice AI Agents in the same quarter underscore the breadth of our platform and the strength of our market position. With the executive appointments in June, I am confident we have the right team and strategy to extend this momentum and compete to win in AI-empowered customer experiences.
Amit Mathradas, Chief Executive Officer
Not in the filing
stated, not guessed- Absolute subscription revenue for the second quarter of 2026 and the second quarter of 2025.
- Segment revenue and segment-level comparisons.
- GAAP operating income and non-GAAP operating income.
- Gross profit and adjusted gross profit.
- Free cash flow.
- Cash, cash equivalents, marketable securities, and debt balances.
- Share repurchases, dividends, or other capital-return activity.
- Prior-quarter comparisons for reported metrics.
- Prior company guidance for comparison with actual results.
- Full-year and third-quarter gross-margin, operating-expense, tax-rate, operating-cash-flow, or free-cash-flow guidance.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.