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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 100 added, 78 removed, 278 unchanged (39% of the section changed)

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You should read the following discussion in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.

We are a leading provider of intelligent cloud contact centers with more than 3,000 customers.

We believe we achieved this leadership position through our expertise and technology, which has empowered us to help

organizations of all sizes transition from legacy on-premises contact center systems to our cloud solution.

Our solution, comprised of our Intelligent CX Platform and applications, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through our APIs.

Our Intelligent CX Platform, powered by Five9 Genius AI, matches each customer interaction with an appropriate agent resource and delivers relevant customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and improve agent productivity.

Unlike legacy on-premises contact center systems, our solution requires minimal up-front investment, can be rapidly deployed and adjusted depending on our customer’s requirements.

Since founding our business in 2001, we have focused exclusively on delivering cloud contact center software.

We initially targeted smaller contact center opportunities with our telesales team and, over time, invested in expanding the breadth and depth of the functionality of our cloud platform to meet the evolving requirements of our customers.

In 2009, we made a strategic decision to expand our market opportunity to include larger contact centers.

This decision drove further investments in research and development and the establishment of our field sales team to meet the requirements of these larger contact centers.

We believe this shift has helped us diversify our customer base, while significantly enhancing our opportunity for future revenue growth.

In 2018, we started including AI enhancements to our platform, and AI is now embedded throughout our platform.

To complement these efforts, we have also focused on building customer awareness and driving adoption of our solution through marketing activities, which include internet advertising, digital marketing campaigns, social media, trade shows, industry events, telemarketing and out of home campaigns.

Five9 is a leading provider of the Intelligent CX Platform for enterprise contact centers.

With a foundation in our cloud-native solution, Five9 is now evolving into an AI-native CX platform, empowering enterprises to scale seamlessly, innovate faster, and deliver enhanced customer experiences as the market opportunity continues to expand.

Our reliable, secure, and scalable Intelligent CX Platform, powered by our Five9 Genius AI suite, delivers a comprehensive suite of easy-to-use applications that enable the breadth of customer service, sales, and marketing functions.

We have become an established leader in the AI-powered CX market with more than 3,000 customers.

Our Genius AI suite is a comprehensive portfolio of AI solutions that uses Generative AI to power agentic CX.

The contact center is the system of record for interactions with full conversation history, and our platform serves as a real-time orchestration engine for every customer interaction across all channels, whether it is with a human agent or an AI agent.

As a result, our platform is designed to deliver a seamless collaboration between human agents and AI agents, where each interaction strengthens the next.

This continuous learning loop compounds over time, creating a powerful data flywheel that drives higher performance, accuracy, and personalization for every customer engagement.

We believe this is the structural advantage of our end-to-end AI-powered CX platform.

We provide our solution through a software-as-a-service, or SaaS, business model.

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Macroeconomic Factors

We are subject to risks and exposures, including continued macroeconomic challenges, the Russia-Ukraine conflict and the conflicts in the Middle East.

While the implications of macroeconomic challenges, and global and regional conflicts on our business, results of operations and overall financial position remain uncertain over the long term, we expect that macroeconomic challenges will continue to have an adverse impact on our revenue in future periods.

Reduction in Force Plan

We are subject to risks and exposures, including continued macroeconomic challenges, the impact of global tariff increases and potential future increases and announcements regarding same, and current and potential global conflicts.

While the implications of macroeconomic challenges, and global conflicts on our business, results of operations and overall financial position remain uncertain over the long term, we expect that macroeconomic challenges will continue to have an adverse impact on our revenue in future periods.

Reduction in Force Plans

In August 2024, we announced a reduction in force plan, or the 2024 Plan, as part of our broader efforts to drive balanced, profitable growth, further supporting our positive, long-term outlook and focus on increasing stockholder value.

The 2024 Plan reduced our global full-time employees by approximately 6%.

For the year ended December 31, 2024, we incurred a total of $9.6 million in restructuring costs under the Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which were cash expenditures, of which $2.1 million was recorded in cost of revenue, $1.9 million was recorded in research and development expenses, $4.4 million was recorded in sales and marketing expenses, and $1.2 million was recorded in general and administrative expenses.

For the year ended December 31, 2024, we incurred a total of $9.6 million in restructuring costs under the 2024 Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which were cash expenditures, of which $2.1 million was recorded in cost of revenue, $1.9 million was recorded in research and development expenses, $4.4 million was recorded in sales and marketing expenses, and $1.2 million was recorded in

general and administrative expenses.

For the year ended December 31, 2025, we incurred no costs under the 2024 Plan.

We do not expect to incur any additional costs under the 2024 Plan.

On March 31, 2025, our Board of Directors approved a reduction in force plan, or the 2025 Plan, as part of our broader efforts to prioritize investments in key strategic areas, including AI, as well as to drive profitable growth in supporting our positive, long-term outlook and increasing stockholder value.

On April 3, 2025, we commenced execution of the 2025 Plan, which resulted in the reduction of our global full-time employees by approximately 4%.

During the year ended December 31, 2025, we incurred a total of $7.9 million in restructuring costs under the 2025 Plan, primarily consisting of notice period payments, severance payments, employee benefits and related costs, all of which are cash expenditures, of which $1.6 million was recorded in cost of revenue, $1.9 million was recorded in research and development expenses, $3.4 million was recorded in sales and marketing expenses, and $1.0 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

During the year ended December 31, 2025, we also incurred an additional $2.1 million in stock-based compensation costs related to the 2025 Plan due to additional vesting of share-based awards, of which $0.3 million was recorded in cost of revenue, $0.5 million was recorded in research and development expenses, $1.1 million was recorded in sales and marketing expenses, and $0.2 million was recorded in general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

We do not expect to incur any additional costs under the 2025 Plan.

Key GAAP Operating Results

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For each of the years ended December 31, 2025, 2024 and 2023, no single customer accounted for more than 10% of our total revenue.

As of December 31, 2024, we had over 3,000 customers across multiple

industries with a wide range of license sizes.

We had a net loss of $12.8 million, $81.8 million and $94.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2025, we had over 3,000 customers across multiple industries with a wide range of license sizes.

We had a net income (loss) of $39.4 million, $(12.8) million and $(81.8) million for the years ended December 31, 2025, 2024 and 2023, respectively.

We shifted to a net income position for the year ended December 31, 2025 primarily as a result of disciplined expense management, including stock-based compensation costs.

We expect net income to continue to be positive in 2026.

We have continued to make significant expenditures and investments, including in sales and marketing, research and development, infrastructure and investments in complementary businesses, technologies and intellectual property rights.

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The growth of our business and our future success depend on many factors, including our ability to continue to expand our base of larger customers, grow revenue from our existing customers, innovate and expand internationally.

While these areas represent significant opportunities for us, they also pose risks and challenges that we must successfully address, including the impact of continued macroeconomic challenges, the Russia-Ukraine conflict and the conflicts in the Middle East, in order to successfully grow our business and improve our operating results.

While these areas represent significant opportunities for us, they also pose risks and challenges that we must successfully address, including the impact of continued macroeconomic challenges, the impact of global tariff increases and potential future increases and announcements regarding same, and current and potential global conflicts, in order to successfully grow our business and improve our operating results.

Key Operating and Non-GAAP Financial Performance Metrics

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Annual Dollar-Based Retention Rate 105% 108%

Our Dollar-Based Retention Rate decreased year-over-year primarily due to continued macroeconomic headwinds on our installed base.

Our Dollar-Based Retention Rate decreased year-over-year, reflecting a combination of factors, including continued macroeconomic headwinds, as well as year-over-year challenges related to a single large new customer ramping significantly throughout 2024 and seasonal increases being stronger in the second half of 2024, offset in part by ongoing momentum in AI and expansions of larger existing customers in 2025.

Adjusted EBITDA

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GAAP and reconciliation of adjusted EBITDA to the most directly comparable U.S.

GAAP measure, net loss.

We calculate adjusted EBITDA as net loss before (1) depreciation and amortization, (2) stock-based compensation, (3) interest expense, (4) gain on early extinguishment of debt, (5) interest income and other, (6) exit costs related to the closure and relocation of our Russian operations, (7) acquisition and related transaction costs and one-time integration costs, (8) lease amortization for finance leases, (9) costs related to a reduction in force plan, (10) impairment charges

related to closure of operating lease facilities, (12) provision for income taxes, and (13) other items that do not directly affect what we consider to be our core operating performance.

The following table shows a reconciliation of net loss to adjusted EBITDA for the periods presented (in thousands):

GAAP measure, net income (loss).

We calculate adjusted EBITDA as net income (loss) before (1) depreciation and amortization, (2) stock-based compensation, (3) interest expense, (4) gain on early extinguishment of debt, (5) interest income and other, (6) exit costs related to the closure and relocation of our Russian operations, (7) acquisition and related transaction costs and one-time integration costs, (8) lease amortization for finance leases, (9) costs related to reduction in force plans, (10) one-time expenses related to strategic consulting services for operational review, (11) other cost-reduction and productivity initiatives, (12) legal fees related to the securities class action, (13) impairment charges related to closure of operating lease facilities, (14) office closure lease termination costs, (15) provision for income taxes, and (16) other items that do not directly affect what we consider to be our core operating performance.

The following table shows a reconciliation of net income (loss) to adjusted EBITDA for the periods presented (in thousands):

Year Ended December 31,

Net loss $ (12,795) $ (81,764)

Net income (loss) $ 39,416 $ (12,795)

Non-GAAP adjustments:

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Lease amortization for finance leases 8,911 3,857

Costs related to a reduction in force plan 9,625 —

Costs related to reduction in force plans 8,169 9,625

One-time expenses related to strategic consulting services for operational review 1,265 —

Other cost-reduction and productivity initiatives 4,553 —

Legal fees related to the securities class action 1,774 —

Impairment charges related to closure of operating lease facilities — 2,202

Office closure lease termination costs 95 —

Provision for income taxes (3)

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While the implications of macroeconomic events on our business, results of operations and overall financial position remain uncertain over the long term, we expect that macroeconomic challenges will continue to have an adverse impact on our revenue in future periods.

For example, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeconomic challenges.

For example, despite increases in up-sells and cross-sells, our installed base business, which contributes a significant portion of our annual revenue growth, continues to experience macroeconomic challenges.

Cost of Revenue

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Results of Operations for the Years Ended December 31, 2025 and 2024

Based on the consolidated statements of operations and comprehensive loss set forth in this annual report, the following table sets forth our operating results as a percentage of revenue for the periods indicated:

Based on the consolidated statements of operations and comprehensive income (loss) set forth in this annual report, the following table sets forth our operating results as a percentage of revenue for the periods indicated:

Year Ended December 31,

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Total operating expenses 52 % 59 %

Loss from operations (5) % (11) %

Income (loss) from operations 3 % (5) %

Other income (expense), net:

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Total other income (expense), net 1 % 4 %

Loss before income taxes (1) % (9) %

Income (loss) before income taxes 4 % (1) %

Provision for income taxes 1 % — %

Net loss (1) % (9) %

Net income (loss) 3 % (1) %

Year-to-year comparisons between 2024 and 2023 have been omitted from this Form 10-K but may be found in “Management's Discussion and Analysis of Financial Condition” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2024, which specific discussion is incorporated herein by reference.

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Revenue $1,149,088 $1,041,938 $107,150 10%

The increase in revenue for 2024 compared to 2023 was primarily attributable to our larger customers, driven by an increase in our sales and marketing activities and our improved brand awareness.

The increase in revenue for 2025 compared to 2024 was primarily attributable to our larger customers, driven by our sales and marketing activities and our improved brand awareness.

Cost of Revenue

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% of Revenue 45% 46%

The increase in cost of revenue for 2024 compared to 2023 was primarily due to a $21.0 million increase in depreciation, data center and public cloud costs to support our growing capacity needs, a $10.0 million increase in personnel-related costs, a $6.2 million increase in third-party costs driven by increased customer activities, a $3.1 million increase in amortization of capitalized internal-use software development costs, a $2.9 million increase in USF contributions and other federal telecommunication service fees due to increased customer usage, a $2.7 million

increase in lease amortization of finance leases, and a $0.6 million increase in amortization of intangibles, offset in part by a $1.4 million decrease in usage and carrier costs due to lower rates and by a $0.8 million decrease in consulting costs for global expansion.

The $10.0 million increase in personnel-related costs was primarily driven by increased headcount, higher salaries, and $2.1 million in restructuring costs related to the Plan, offset in part by an $8.4 million decrease in stock-based compensation costs.

The increase in cost of revenue for 2025 compared to 2024 was primarily due to a $17.9 million increase in third-party costs driven by increased customer activities, a $6.9 million increase in depreciation, data center and public cloud costs to support our growing capacity needs, a $6.8 million increase in amortization of capitalized internal-use software development costs, a $4.5 million increase in lease amortization of finance leases, a $2.2 million increase in USF contributions and other federal telecommunication service fees due to increased customer

usage, a $2.2 million increase in usage and carrier costs due to increased volume, a $1.9 million increase in amortization of intangibles in connection with the acquisition of Acqueon in August 2024, offset in part by a $3.3 million decrease in personnel-related costs primarily driven by a decrease in stock-based compensation costs and by a $0.9 million decrease in office, facilities and related costs.

Year Ended December 31,

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The increase in gross profit for 2025 compared to 2024 was primarily due to increases in subscription and related revenues.

We expect gross margin to increase in the long term despite continued investments in professional services, public cloud, cloud operations, customer support and network infrastructure, as we expect revenue growth in the long term to more than offset these increases.

We expect gross margin to increase in the long-term with long-term revenue growth outpacing continued investments in professional services, public cloud, cloud operations, customer support and network infrastructure.

Operating Expenses

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% of Revenue 13% 16%

The increase in research and development expenses for 2024 compared to 2023 was primarily due to a $12.6 million increase in personnel-related costs, a $3.7 million increase in staff augmentation costs, a $3.3 million increase in office, facilities and related allocated costs, and a $1.3 million increase in public cloud development costs, offset in part by a $12.3 million increase in research and development costs (excluding stock-based compensation costs) that qualified for capitalization.

The $12.6 million increase in personnel-related costs was primarily driven by increased headcount, higher salaries, and $1.9 million in restructuring costs related to the Plan, offset in part by a $13.2 million decrease in stock-based compensation costs.

The decrease in research and development expenses for 2025 compared to 2024 was primarily due to a $16.0 million increase in research and development costs (excluding stock-based compensation costs) that qualified for capitalization, which resulted in a corresponding decrease in research and development costs, and by a $1.2 million decrease in public cloud development costs, offset in part by a $4.0 million increase in personnel-related costs primarily driven by increased research and development headcount and higher salaries, reduced in part by a decrease in stock-based compensation costs.

Sales and Marketing

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% of Revenue 27% 30%

The increase in sales and marketing expenses for 2024 compared to 2023 was primarily due to a $15.5 million increase in amortization of deferred contract acquisition costs driven by the growth in sales and bookings of our solution and a $3.0 million increase in personnel-related costs, offset in part by a decrease in overall marketing spend.

The $3.0 million increase in personnel-related costs was primarily driven by higher salaries, and $4.4 million in restructuring costs related to the Plan, offset in part by a $15.0 million decrease in stock-based compensation costs.

The decrease in sales and marketing expenses for 2025 compared to 2024 was primarily due to a $15.0 million decrease in personnel-related costs mainly due to decreased sales and marketing headcount as a result of the 2024 and 2025 Plans and a decrease in stock-based compensation costs, and a $1.3 million decrease in travel costs as a result of reduced business travel, offset by a $14.3 million increase in amortization of deferred contract acquisition costs driven by the growth in sales and bookings of our solution and an increase in overall marketing spend during the period.

General and Administrative

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% of Revenue 12% 13%

The increase in general and administrative expenses for 2024 compared to 2023 was primarily due to a $7.9 million increase in costs associated with the acquisition of Acqueon, a $6.0 million increase in personnel-related costs, and a $2.2 million increase in impairment losses as a result of our commitment to close two operating lease facilities and to abandon the associated leasehold improvements and property and equipment, offset in part by a $1.6 million decrease in office, facilities and related allocated costs.

The $6.0 million increase in personnel-related costs was primarily driven by increased headcount, higher salaries, and $1.2 million in restructuring costs related to the Plan, offset in part by a $3.4 million decrease in stock-based compensation costs.

The increase in general and administrative expenses for 2025 compared to 2024 was primarily due to a $1.9 million increase in hosted software costs, a $1.6 million increase in professional costs mainly associated with strategic consulting services, and a $0.5 million increase in personnel-related costs, offset in part by a $2.2 million decrease in impairment losses related to the closure of two operating lease facilities and the abandonment of the associated leasehold improvements and property and equipment that occurred in 2024.

Other Income (Expense), Net

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% of Revenue 1 % 4 %

The increase in interest expense for 2024 compared to 2023 was primarily due to the issuance of the 2029 convertible senior notes in March 2024.

The decrease in interest expense for 2025 compared to 2024 was primarily due to the maturity of the 2025 convertible senior notes on June 1, 2025, offset in part by the issuance of the 2029 convertible senior notes in March 2024.

In connection with the issuance of the 2029 convertible senior notes, we used part of the net proceeds from the issuance to repurchase approximately $313.1 million aggregate principal amount of our then outstanding 2025 convertible senior notes in privately-negotiated transactions for aggregate cash consideration of approximately $304.9 million.

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See Note 6 to the consolidated financial statements for further details.

The increase in interest income and other for 2024 compared to 2023 was primarily due to higher interest income on our marketable investments due to higher investable balances and higher interest rates and from an increase in foreign currency transaction gains, offset in part by a $1.3 million impairment charge of an equity investment.

The decrease in interest income and other for 2025 compared to 2024 was due to lower investable balances primarily resulting from cash paid in connection with the maturity of the 2025 convertible senior notes and the repurchase of our common stock, as well as lower interest rates, and an increase in foreign currency transaction losses, offset in part by a $1.3 million impairment charge of an equity investment that occurred in 2024.

Liquidity and Capital Resources

To date, we have financed our operations, primarily through sales of our solution, net proceeds from our equity and debt financings, including the issuance of our 2029 convertible senior notes in March 2024, issuance of our 2025 convertible senior notes in May and June 2020 and of our 2023 convertible senior notes in May 2018, and lease facilities.

To date, we have financed our operations primarily through sales of our solution, net proceeds from our equity and debt financings, including the issuance of convertible senior notes in March 2024, May and June 2020, and May 2018, and lease facilities.

As of December 31, 2025, we had $746.7 million in working capital, which included $232.1 million in cash and cash equivalents, and $464.8 million in marketable investments.

Our 2025 convertible senior notes matured on June 1, 2025, and we settled our obligations with respect to the 2025 convertible senior notes through a cash payment of $434.4 million in connection therewith.

Our intent is that all marketable investments are available for use in our current operations, including marketable investments with maturity dates greater than one year from December 31, 2025.

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We plan to continue to finance our operations in the future primarily through sales of our solution, net proceeds from equity and debt financings, and lease facilities.

Our future capital requirements will depend on many factors including our growth rate, continuing market acceptance of our solution, the strength of the global economy, customer retention, growth within our installed base, our ability to gain new customers, the timing and extent of spending to support research and development efforts, the outcome of any pending or future litigation or other claims by third parties or governmental entities, the expansion of sales and marketing activities and personnel, the introduction of new and enhanced offerings, expenses incurred in expanding our operations in Portugal, and the effect of the length and severity of the continued macroeconomic challenges, the Russia-Ukraine conflict, and the conflicts in the Middle East, on these or other factors.

We currently plan to use cash to settle amounts due under our convertible senior notes that mature on June 1, 2025.

We may also acquire or invest in complementary businesses, technologies and intellectual property rights, such as our recent acquisitions of Aceyus in August 2023 and Acqueon in August 2024, which may increase our use of cash and future capital requirements, both to pay acquisition costs and to support our combined operations.

Our future capital requirements will depend on many factors including our growth rate, continuing market acceptance of our solution, the strength of the global economy, customer retention, growth within our installed base, our ability to gain new customers, the timing and extent of spending to support research and development efforts, the outcome of any pending or future litigation or other claims by third parties or governmental entities, the expansion of sales and marketing activities and personnel, the introduction of new and enhanced offerings, expenses incurred in expanding our operations internationally, and the effect of the length and severity of the continued macroeconomic challenges, the impact of global tariff increases and potential future increases and announcements regarding same, and current and potential global conflicts, on these or other factors.

We may also acquire or invest in complementary businesses, technologies and intellectual property rights, such as our acquisitions of Aceyus in August 2023 and Acqueon in August 2024, which may increase our use of cash and future capital requirements, both to pay acquisition costs and to support our combined operations.

We may raise additional capital through equity or debt financings at any time to fund these or other requirements.

However, we may not be able to raise additional capital through equity or debt financings when needed on terms acceptable to us or at all, depending on our financial performance and condition, economic and market conditions, the trading price of our common stock, and other factors, including the length and severity of the current economic downturn and fluctuations in the financial markets, including due to the Russia-Ukraine conflict and the conflicts in the Middle East.

However, we may not be able to raise additional capital through equity or debt financings when needed on terms acceptable to us or at all, depending on our financial performance and condition, economic and market conditions, the trading price of our common stock, and other factors, including the length and severity of the current challenging macroeconomic environment and fluctuations in the financial markets, including due to the impact of global tariff increases and potential future increases and announcements regarding same, and current and potential global conflicts.

If we are unable to raise additional capital as needed, our business, operating results and financial condition could be harmed.

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If we raise additional funds through the incurrence of additional indebtedness, we will be subject to increased debt service obligations and could also be subject to restrictive covenants and other operating restrictions that could negatively impact our ability to operate our business.

Share Repurchase Program

As of December 31, 2025, $100.0 million remained available under the 2025 Repurchase Program.

See Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein for additional information about our share repurchase program.

In October 2025, our Board of Directors approved the 2025 Repurchase Program, which authorized the repurchase of up to $150.0 million of our common stock through December 31, 2027.

The shares may be repurchased at management’s discretion, either on the open market or in privately negotiated block transactions.

Management’s decision to repurchase shares will depend on price, blackout periods and other corporate developments.

Purchases may occur from time to time and no maximum purchase price has been set.

As part of our Share Repurchase Program, on November 11, 2025, we entered into the ASR program with JPM.

Under the terms of the ASR program, on November 12, 2025, we made an aggregate payment of $50 million and received an initial delivery of 1,926,782 shares of our common stock, representing approximately 80% of the total number of shares of our common stock expected to be purchased under the ASR program.

The shares received were immediately retired and recorded as a reduction to additional paid-in-capital within stockholders’ equity.

Given our ability to settle in shares, as described below, the remaining prepaid forward contract amount was classified as a reduction to additional-paid-in-capital upon issuance and as of December 31, 2025.

Under the ASR program, upon settlement, we either receive additional shares of common stock from JPM or are required to deliver additional shares of common stock or cash to JPM, at our election.

The final number of shares repurchased was based on the average of the daily volume-weighted average prices of our common stock during the term of the ASR program, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR program.

Cash settlement is not mandatory pursuant to the terms of the ASR program.

The ASR program was completed on February 2, 2026, which resulted in delivery of 701,517 additional shares.

The final share settlement was based on the average daily volume-weighted average price of our shares, netted against the initial delivery.

The following table summarizes our cash flows for the periods presented (in thousands):

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Net cash provided by operating activities $ 226,207 $ 143,168

Net cash used in investing activities (266,550) (259,562)

Net cash provided by financing activities 342,725 94,579

Net increase (decrease) in cash, cash equivalents and restricted cash $ 219,343 $ (36,145)

Net cash provided by (used in) investing activities 122,305 (266,550)

Net cash (used in) provided by financing activities (478,566) 342,725

Net (decrease) increase in cash, cash equivalents and restricted cash $ (130,054) $ 219,343

Cash Flows from Operating Activities

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Net cash provided by operating activities was $226.2 million during the year ended December 31, 2025.

Net cash provided by operating activities resulted from our net loss of $12.8 million, adjustments to reconcile net loss to net cash provided by operating activities of $283.1 million, primarily consisting of $166.3 million of stock-based compensation, $71.5 million of amortization of deferred contract acquisition costs, $52.9 million of depreciation and amortization, $15.4 million of reduction in carrying amount of right-of-use assets, $5.5 million of amortization of

issuance costs on our convertible senior notes, a $2.2 million impairment charge as a result of our commitment to close two operating lease facilities and to abandon the associated leasehold improvements and property and equipment, a $1.3 million impairment charge of an equity investment, $(20.8) million of accretion of discount on marketable investments, and a $(6.6) million gain on early extinguishment of debt, partially offset by use of cash for operating assets and liabilities of $(127.1) million primarily due to the timing of cash payments to vendors and cash receipts from customers.

Net cash provided by operating activities resulted from our net income of $39.4 million, adjustments to reconcile net income to net cash provided by operating activities of $317.3 million, primarily consisting of $148.1 million of stock-based compensation, $86.0 million of amortization of deferred contract acquisition costs, $61.8 million of depreciation and amortization, $20.3 million of reduction in carrying amount of right-of-use assets, $4.6 million of amortization of issuance costs on our convertible senior notes, partially offset by use of cash for operating assets and liabilities of $(130.5) million primarily due to the timing of cash payments to vendors and cash receipts from customers and $(7.9) million accretion of discount on marketable investments.

Cash Flows from Investing Activities

Net cash used in investing activities of $(266.6) million in 2024 was comprised of $1,289.4 million related to purchases of marketable investments, $167.2 million, net of cash acquired in connection with the acquisition of Acqueon, $42.4 million in capital expenditures and $22.2 million in capitalized software development costs, offset in part by $1,254.5 million related to cash proceeds from sales and maturities of marketable investments.

Net cash provided by investing activities of $122.3 million in 2025 was comprised of $932.1 million related to cash proceeds from sales and maturities of marketable investments, offset in part by $(745.4) million related to purchases of marketable investments, $(39.1) million in capitalized software development costs and $(25.0) million in capital expenditures.

Cash Flows from Financing Activities

Net cash provided by financing activities of $342.7 million in 2024 was related to net cash proceeds of $728.8 million from the issuance of the 2029 convertible senior notes, net of initial purchasers' discounts and commissions and debt issuance costs, $14.8 million from the sale of common stock under our employee stock purchase plan, $0.5 million cash received from the partial termination of capped calls associated with the 2025 convertible senior notes, and $0.5 million of cash proceeds from the exercise of stock options, offset in part by $304.5 million from the repurchase of a portion of the 2025 convertible senior notes, $93.4 million from the payment for capped call transactions associated with the 2029 convertible senior notes, and $4.0 million of payments related to finance leases.

Net cash used in financing activities of $(478.6) million in 2025 was related to $(434.4) million of cash paid in connection with the maturity of the 2025 convertible senior notes, $(50.0) million of cash paid for the repurchase of our common stock and $(9.8) million of payments related to finance leases, offset in part by $12.5 million from the sale of common stock under our employee stock purchase and $3.1 million from the exercise of stock options.

Contractual and Other Obligations

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In May and June 2020, we issued $747.5 million aggregate principal amount of our 2025 convertible senior notes in a private offering.

The 2025 convertible senior notes mature on June 1, 2025 and are our senior unsecured obligations.

The 2025 convertible senior notes bear interest at a fixed rate of 0.50% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020.

The 2025 convertible senior notes matured on June 1, 2025, and we settled our obligations with respect to the 2025 convertible senior notes in cash in connection therewith.

Prior to maturity, the 2025 convertible senior notes bore interest at a fixed rate of 0.50% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020.

The total net proceeds from the offering, after deducting initial purchasers’ discounts and commissions and estimated debt issuance costs, were approximately $728.8 million.

As of December 31, 2024, the aggregate principal amount outstanding of our 2025 convertible senior notes was $434.4 million.

We currently plan to use cash to settle amounts due under our convertible senior notes that mature on June 1, 2025, which will decrease our cash and cash equivalents, could preclude us from making other investments in our business and operations, and could necessitate or accelerate additional fundraising by us.

In March 2024, we issued $747.5 million aggregate principal amount of our 2029 convertible senior notes in a private offering.

The 2029 convertible senior notes mature on March 15, 2029 and are our senior unsecured obligations.

The 2029 convertible senior notes mature on March 15, 2029 and are our senior unsecured

The 2029 convertible senior notes bear interest at a fixed rate of 1.00% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024.

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We had outstanding operating lease obligations of $61.0 million as of December 31, 2025, with $15.1 million payable within 12 months, $23.4 million payable within one to three years, $20.9 million payable within three to five years, and $1.6 million payable after five years.

We also had outstanding finance lease obligations of $20.8 million as of December 31, 2024, with $8.6 million payable within 12 months and $12.2 million payable within one

to three years.

We also had outstanding finance lease obligations of $15.3 million as of December 31, 2025, with $9.1 million payable within 12 months and $6.2 million payable within one to three years.

We entered into three-year equipment finance lease agreements and recognized $3.9 million right of use assets during the year ended December 31, 2025, which were reported within "Finance lease right-of-use assets" and are being depreciated on a straight-line basis over the lease term.

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Cloud Services and Software and Maintenance

As of December 31, 2024, we had outstanding cloud services and software and maintenance agreement commitments totaling $38.1 million, of which $20.0 million is expected to be purchased within one year, and $18.1 million is expected to be purchased within one to three years.

During the year ended December 31, 2024, we entered into equipment finance lease arrangements that resulted in a $8.8 million additional reduction of our outstanding cloud services commitment.

See Note 10 for more information.

As of December 31, 2025, we had outstanding cloud services and software and maintenance agreement commitments totaling $167.0 million, of which $55.4 million is expected to be purchased within one year, $108.1 million is expected to be purchased within one to three years, and $3.5 million is expected to be purchased within four to five years.

Hosting and Telecommunication Usage Services

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In addition, we have entered into indemnification agreements with our directors, officers and certain employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

There are no claims that we are aware of that could have a material effect on our consolidated balance sheet, consolidated statements of operations and comprehensive loss, or consolidated statements of cash flows.

There are no claims that we are aware of that could have a material effect on our consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), or consolidated statements of cash flows.

Contingencies — Legal and Regulatory

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We are currently party to the following action:

On December 4, 2024, a purported holder of our securities filed a putative class action complaint against us, our Chief Executive Officer, and our Chief Financial Officer in the United States District Court for the Northern District of California alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, based on alleged false and/or misleading statements or omissions regarding us and our business and seeking unspecified damages on behalf of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities, including call options, from June 4, 2024, through the close of trading on August 8, 2024.

On December 4, 2024, a purported holder of our securities filed a putative class action complaint against us, our then-current Chief Executive Officer, and our then-current Chief Financial Officer in the United States District Court for the Northern District of California alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, based on alleged false and/or misleading statements or omissions regarding us and our business and seeking unspecified damages on behalf of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities, including call options, from June 4, 2024, through the close of trading on August 8, 2024.

On February 3, 2025, Lucid Alternative Fund, LP moved to be appointed lead plaintiff of this action pursuant to the Private Securities Litigation Reform Act of 1995.

On March 18, 2025, the court appointed Lucid Alternative Fund, LP as lead plaintiff and approved lead plaintiff’s selection of lead counsel.

Per the court’s subsequent order on March 27, 2025, Lucid Alternative Fund, LP filed an amended complaint on May 30, 2025.

We moved to dismiss the amended complaint on July 29, 2025, and the court took the motion under submission after oral argument on December 18, 2025.

We cannot predict the duration or outcome of this lawsuit at this time.

As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible losses arising from this lawsuit.

We intend to vigorously defend ourself in this lawsuit.

We intend to vigorously defend this lawsuit.

On March 18, 2025, a related shareholder derivative action was filed in the United States District Court for the Northern District of California on behalf of nominal defendant Five9, Inc.

and against its directors and certain of its officers seeking to assert claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and for contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934.

The Company was served with the complaint on March 20, 2025.

On April 4, 2025, the parties to the derivative action jointly filed a stipulation with the court to stay the derivative action until the resolution of the motion to dismiss in the securities action, as well as any subsequent motion to dismiss any further amended complaint in the securities action.

On April 8, 2025, the court approved the stay stipulation.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets,

liabilities, revenue, expenses and related disclosures.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.

On an ongoing basis, we evaluate our estimates and assumptions.

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We also offer bundled plans, generally for smaller deployments, whereby the customer is charged a single monthly fixed fee per license that includes both subscription and unlimited usage in the contiguous 48 states and, in some cases, Canada.

Professional services revenue is derived primarily from Intelligent CX implementations, including application configuration, system integration, optimization, education and training services.

Professional services revenue is derived primarily from Intelligent

CX implementations, including application configuration, system integration, optimization, education and training services.

Customers are not permitted to take possession of our software.

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The estimation of variable consideration for each performance obligation requires us to make subjective judgments.

In the early stages of our larger contracts, in order to allocate the overall transaction fee on a relative stand-alone selling price basis to our multiple performance obligations, we estimate variable consideration to be included in the transaction fee to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

In order to allocate the overall transaction fee on a relative stand-alone selling price basis to our multiple performance obligations, we estimate variable consideration to be included in the transaction fee to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

When services are included in the contract with the customer and are not sold at their stand-alone selling price, we are required to estimate the number of licenses the customer will use, especially during the initial ramp period of the contract, during which we bill under an ‘actual usage’ model for subscription-related services.

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The revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added and excise taxes.

We record USF contributions and other regulatory costs on a gross basis in our consolidated statements of operations and comprehensive loss and record surcharges and sales, use and excise taxes billed to our clients on a net basis.

The cost of gross USF contributions payable to the USAC and suppliers is presented as a cost of revenue in the consolidated statements of operations and comprehensive loss.

We record USF contributions and other regulatory costs on a gross basis in our consolidated statements of operations and comprehensive income (loss) and record surcharges and sales, use and excise taxes billed to our clients on a net basis.

The cost of gross USF contributions payable to the USAC and suppliers is presented as a cost of revenue in the consolidated statements of operations and comprehensive income (loss).

Business Combinations, Goodwill, and Acquisition-Related Intangible Assets

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis