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Why Five9 Stock Climbed 17% in October

What happened

Shares of Five9 (NASDAQ: FIVN) gained 17% in October, according to data from S&P Global Market Intelligence. The cloud-based customer contact company got a boost from an earnings and guidance beat at the end of the month.

^SPX data by YCharts.

Five9 published its third-quarter results after the market closed on Oct. 29, posting better-than-anticipated sales and earnings. The company posted adjusted earnings of $0.27 per share on revenue of $112.14 million, topping the average analyst estimate's call for earnings of $0.18 per share on sales of $101.1 million.

Image source: Getty Images.

So what

Five9's third-quarter sales climbed roughly 34% year over year, and the company's adjusted gross margin came in at 65.4%, up from 64% in the prior-year quarter. Adjusted earnings per share in the quarter were up 35% compared with Q3 in 2019.

The company also paired the earnings release with an announcement that it would be acquiring Inference Solutions, a provider of virtual agent software. The terms of the deal have yet to be disclosed.

Now what

Five9 stock has continued to gain ground amid momentum for the broader market in November's trading. The company's share price is up roughly 14% in the month so far.

FIVN data by YCharts.

Five9 is guiding for sales to come in between $114.5 million and $115.5 million in the fourth quarter, good for 24.6% growth year over year at the midpoint of the target. Adjusted fourth-quarter earnings are projected to be between $0.22 and $0.24 per share, ahead of the consensus target for per-share earnings of $0.22 at the time of the company's Q3 release.

The company has a market capitalization of roughly $10.9 billion and is valued at 25.8 times this year's expected sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Five9. The Motley Fool has a disclosure policy.


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