Intrinsic value of Five9, Inc. - FIVN

Previous Close

$52.87

  Intrinsic Value

$26.17

stock screener

  Rating & Target

str. sell

-51%

Previous close

$52.87

 
Intrinsic value

$26.17

 
Up/down potential

-51%

 
Rating

str. sell

We calculate the intrinsic value of FIVN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  30.60
  28.04
  25.74
  23.66
  21.80
  20.12
  18.60
  17.24
  16.02
  14.92
  13.93
  13.03
  12.23
  11.51
  10.86
  10.27
  9.74
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.21
Revenue, $m
  337
  431
  542
  671
  817
  981
  1,164
  1,365
  1,583
  1,820
  2,073
  2,343
  2,630
  2,932
  3,251
  3,584
  3,934
  4,298
  4,678
  5,074
  5,486
  5,914
  6,358
  6,821
  7,301
  7,800
  8,319
  8,859
  9,421
  10,005
Variable operating expenses, $m
  260
  333
  418
  516
  628
  753
  893
  1,046
  1,214
  1,394
  1,586
  1,792
  2,011
  2,243
  2,486
  2,742
  3,009
  3,288
  3,579
  3,881
  4,196
  4,524
  4,864
  5,217
  5,585
  5,967
  6,364
  6,776
  7,206
  7,653
Fixed operating expenses, $m
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  92
  94
  96
  98
  100
Total operating expenses, $m
  313
  387
  474
  573
  686
  812
  954
  1,108
  1,277
  1,459
  1,652
  1,860
  2,080
  2,314
  2,558
  2,816
  3,084
  3,365
  3,658
  3,961
  4,278
  4,608
  4,950
  5,305
  5,675
  6,059
  6,458
  6,872
  7,304
  7,753
Operating income, $m
  23
  45
  69
  98
  131
  169
  210
  256
  306
  360
  421
  483
  549
  619
  692
  769
  849
  934
  1,021
  1,112
  1,207
  1,306
  1,409
  1,516
  1,627
  1,742
  1,862
  1,987
  2,117
  2,252
EBITDA, $m
  34
  57
  84
  116
  153
  194
  239
  290
  345
  404
  468
  536
  609
  685
  766
  850
  938
  1,031
  1,127
  1,227
  1,331
  1,440
  1,553
  1,670
  1,792
  1,918
  2,050
  2,187
  2,330
  2,478
Interest expense (income), $m
  4
  17
  11
  14
  19
  24
  30
  37
  44
  52
  61
  70
  80
  91
  103
  115
  128
  141
  155
  170
  185
  201
  218
  235
  253
  272
  291
  311
  332
  354
  376
Earnings before tax, $m
  7
  34
  55
  80
  107
  139
  174
  212
  254
  300
  351
  403
  458
  516
  577
  641
  708
  778
  851
  927
  1,006
  1,088
  1,174
  1,263
  1,355
  1,451
  1,551
  1,655
  1,763
  1,876
Tax expense, $m
  2
  9
  15
  21
  29
  38
  47
  57
  69
  81
  95
  109
  124
  139
  156
  173
  191
  210
  230
  250
  272
  294
  317
  341
  366
  392
  419
  447
  476
  507
Net income, $m
  5
  25
  40
  58
  78
  101
  127
  155
  186
  219
  256
  294
  334
  377
  421
  468
  517
  568
  621
  677
  735
  795
  857
  922
  989
  1,059
  1,132
  1,208
  1,287
  1,369

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  188
  241
  303
  375
  457
  549
  651
  763
  885
  1,017
  1,159
  1,310
  1,470
  1,639
  1,817
  2,004
  2,199
  2,403
  2,615
  2,836
  3,066
  3,306
  3,554
  3,813
  4,081
  4,360
  4,650
  4,952
  5,266
  5,593
Adjusted assets (=assets-cash), $m
  188
  241
  303
  375
  457
  549
  651
  763
  885
  1,017
  1,159
  1,310
  1,470
  1,639
  1,817
  2,004
  2,199
  2,403
  2,615
  2,836
  3,066
  3,306
  3,554
  3,813
  4,081
  4,360
  4,650
  4,952
  5,266
  5,593
Revenue / Adjusted assets
  1.793
  1.788
  1.789
  1.789
  1.788
  1.787
  1.788
  1.789
  1.789
  1.790
  1.789
  1.789
  1.789
  1.789
  1.789
  1.788
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
  1.789
Average production assets, $m
  38
  49
  61
  76
  92
  111
  132
  154
  179
  206
  234
  265
  297
  331
  367
  405
  445
  486
  529
  573
  620
  668
  719
  771
  825
  881
  940
  1,001
  1,065
  1,131
Working capital, $m
  1
  1
  2
  2
  2
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
  23
  25
  27
  28
  30
Total debt, $m
  132
  180
  236
  300
  374
  456
  548
  649
  759
  878
  1,005
  1,141
  1,286
  1,438
  1,598
  1,766
  1,942
  2,125
  2,316
  2,515
  2,722
  2,938
  3,161
  3,394
  3,636
  3,887
  4,148
  4,419
  4,702
  4,996
Total liabilities, $m
  170
  217
  273
  337
  411
  494
  586
  687
  797
  915
  1,043
  1,179
  1,323
  1,475
  1,635
  1,803
  1,979
  2,162
  2,354
  2,553
  2,760
  2,975
  3,199
  3,431
  3,673
  3,924
  4,185
  4,457
  4,739
  5,033
Total equity, $m
  19
  24
  30
  37
  46
  55
  65
  76
  89
  102
  116
  131
  147
  164
  182
  200
  220
  240
  262
  284
  307
  331
  355
  381
  408
  436
  465
  495
  527
  559
Total liabilities and equity, $m
  189
  241
  303
  374
  457
  549
  651
  763
  886
  1,017
  1,159
  1,310
  1,470
  1,639
  1,817
  2,003
  2,199
  2,402
  2,616
  2,837
  3,067
  3,306
  3,554
  3,812
  4,081
  4,360
  4,650
  4,952
  5,266
  5,592
Debt-to-equity ratio
  7.020
  7.450
  7.770
  8.000
  8.180
  8.320
  8.430
  8.510
  8.580
  8.630
  8.680
  8.710
  8.750
  8.770
  8.790
  8.810
  8.830
  8.840
  8.860
  8.870
  8.880
  8.890
  8.890
  8.900
  8.910
  8.910
  8.920
  8.920
  8.930
  8.930
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  25
  40
  58
  78
  101
  127
  155
  186
  219
  256
  294
  334
  377
  421
  468
  517
  568
  621
  677
  735
  795
  857
  922
  989
  1,059
  1,132
  1,208
  1,287
  1,369
Depreciation, amort., depletion, $m
  10
  12
  15
  18
  21
  25
  29
  33
  38
  44
  47
  53
  59
  66
  73
  81
  89
  97
  106
  115
  124
  134
  144
  154
  165
  176
  188
  200
  213
  226
Funds from operations, $m
  15
  37
  55
  76
  100
  126
  156
  189
  224
  263
  303
  347
  394
  443
  495
  549
  606
  665
  727
  792
  859
  928
  1,001
  1,076
  1,154
  1,236
  1,320
  1,408
  1,500
  1,596
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
Cash from operations, $m
  15
  37
  55
  75
  99
  126
  155
  188
  223
  262
  302
  346
  393
  442
  494
  548
  605
  664
  726
  790
  857
  927
  999
  1,075
  1,153
  1,234
  1,319
  1,407
  1,498
  1,594
Maintenance CAPEX, $m
  -6
  -8
  -10
  -12
  -15
  -18
  -22
  -26
  -31
  -36
  -41
  -47
  -53
  -59
  -66
  -73
  -81
  -89
  -97
  -106
  -115
  -124
  -134
  -144
  -154
  -165
  -176
  -188
  -200
  -213
New CAPEX, $m
  -9
  -11
  -13
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -63
  -66
Cash from investing activities, $m
  -15
  -19
  -23
  -27
  -32
  -37
  -43
  -49
  -56
  -63
  -70
  -78
  -85
  -93
  -102
  -111
  -120
  -130
  -140
  -151
  -162
  -172
  -184
  -196
  -208
  -221
  -235
  -249
  -263
  -279
Free cash flow, $m
  0
  19
  32
  49
  67
  89
  113
  139
  168
  199
  233
  269
  307
  348
  392
  437
  484
  534
  586
  640
  696
  755
  815
  879
  944
  1,013
  1,084
  1,158
  1,235
  1,315
Issuance/(repayment) of debt, $m
  -76
  48
  56
  65
  74
  83
  92
  101
  110
  119
  127
  136
  144
  152
  160
  168
  176
  183
  191
  199
  207
  215
  224
  233
  242
  251
  261
  272
  283
  294
Issuance/(repurchase) of shares, $m
  115
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  39
  48
  56
  65
  74
  83
  92
  101
  110
  119
  127
  136
  144
  152
  160
  168
  176
  183
  191
  199
  207
  215
  224
  233
  242
  251
  261
  272
  283
  294
Total cash flow (excl. dividends), $m
  39
  66
  88
  113
  141
  171
  204
  240
  278
  318
  360
  405
  452
  501
  552
  605
  660
  717
  777
  839
  903
  970
  1,039
  1,111
  1,186
  1,264
  1,345
  1,429
  1,517
  1,609
Retained Cash Flow (-), $m
  -120
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
Prev. year cash balance distribution, $m
  244
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  163
  61
  82
  106
  133
  162
  194
  229
  266
  305
  346
  390
  436
  484
  534
  586
  641
  697
  756
  817
  880
  946
  1,014
  1,085
  1,159
  1,236
  1,316
  1,399
  1,486
  1,576
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  157
  56
  71
  87
  103
  118
  131
  143
  153
  160
  164
  166
  166
  162
  157
  149
  139
  128
  116
  104
  91
  78
  66
  55
  45
  36
  28
  22
  16
  12
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Five9 Inc. (Five9) is a provider of cloud software for contact centers. The Company's purpose-built Virtual Contact Center (VCC) cloud platform delivers a suite of applications that enable the breadth of contact center-related customer service, sales and marketing functions. The Company's solution, which consists of its VCC cloud platform and applications, allows simultaneous management and optimization of customer interactions across voice, chat, e-mail, Web, social media and mobile channels, either directly or through its application programming interfaces (APIs). The Company's VCC cloud platform 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 customer relationship management (CRM) software, to optimize the customer experience and agent productivity.

FINANCIAL RATIOS  of  Five9, Inc. (FIVN)

Valuation Ratios
P/E Ratio -235.1
Price to Sales 17.4
Price to Book 94
Price to Tangible Book
Price to Cash Flow 403
Price to Free Cash Flow 470.2
Growth Rates
Sales Growth Rate 25.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 130%
Total Debt to Equity 153.3%
Interest Coverage -2
Management Effectiveness
Return On Assets -7.8%
Ret/ On Assets - 3 Yr. Avg. -22.5%
Return On Total Capital -16.1%
Ret/ On T. Cap. - 3 Yr. Avg. -36.9%
Return On Equity -42.9%
Return On Equity - 3 Yr. Avg. -104.7%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 58.6%
Gross Margin - 3 Yr. Avg. 52.9%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -12.9%
Operating Margin -4.9%
Oper. Margin - 3 Yr. Avg. -18.7%
Pre-Tax Margin -7.4%
Pre-Tax Margin - 3 Yr. Avg. -21.5%
Net Profit Margin -7.4%
Net Profit Margin - 3 Yr. Avg. -21.5%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

FIVN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FIVN stock intrinsic value calculation we used $258 million for the last fiscal year's total revenue generated by Five9, Inc.. The default revenue input number comes from 0001 income statement of Five9, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FIVN stock valuation model: a) initial revenue growth rate of 30.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FIVN is calculated based on our internal credit rating of Five9, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Five9, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FIVN stock the variable cost ratio is equal to 77.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $52 million in the base year in the intrinsic value calculation for FIVN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8% for Five9, Inc..

Corporate tax rate of 27% is the nominal tax rate for Five9, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FIVN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FIVN are equal to 11.3%.

Life of production assets of 3.5 years is the average useful life of capital assets used in Five9, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FIVN is equal to 0.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $142.748 million for Five9, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 59.342 million for Five9, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Five9, Inc. at the current share price and the inputted number of shares is $3.1 billion.

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