Five9 Announces Exercise of the Option to Purchase Additional 1.00% Convertible Notes Due 2029

Rhea-AI Summary

Five9, Inc. (FIVN) announced the exercise of a $97.5 million option to purchase additional convertible senior notes due 2029, resulting in a total offering size of $747.5 million. The notes are expected to settle on March 1, 2024, with approximately $95.3 million in additional net proceeds. Five9 plans to use the proceeds for capped call transactions and general corporate purposes.

Insights

Financial Analyst

The exercise of the option to purchase additional convertible senior notes by Five9, Inc. represents a significant capital raise, increasing the total offering size to $747.5 million. This financial maneuver is indicative of the company's strategy to bolster its balance sheet, potentially to fund growth initiatives or to strengthen its cash reserves. Convertible notes are hybrid securities offering potential upside through conversion to equity while providing downside protection as fixed-income instruments. The decision to enter into additional capped call transactions suggests an attempt to manage potential dilution from the conversion of these notes, which is a common practice to reassure existing shareholders.

From a financial perspective, the additional $95.3 million in net proceeds could provide Five9 with the liquidity to navigate the competitive landscape of the CX (Customer Experience) platform market. The use of funds for general corporate purposes and working capital indicates a focus on operational flexibility. However, investors should be mindful of the impact such debt instruments may have on the company's long-term financial health, particularly in terms of interest obligations and the potential for dilution of existing shares.

Market Research Analyst

The private placement of convertible notes to qualified institutional buyers demonstrates market confidence in Five9's business model and growth prospects within the Intelligent CX Platform sector. Nevertheless, it is crucial to monitor the company's subsequent financial statements to assess how these funds are allocated and whether they translate into revenue growth or improved operational efficiencies. Comparing Five9's financial leverage and capital expenditure to industry benchmarks will be essential in evaluating the effectiveness of this capital raise.

Moreover, the timing of the settlement, expected in 2024, may coincide with strategic initiatives or market expansions that could reshape Five9's competitive position. The tech industry, particularly the SaaS (Software as a Service) sector, is rapidly evolving and Five9's ability to innovate and adapt will be critical. Analysis of the company's investment in research and development, as well as any shifts in market share post-funding, will provide further insights into the potential impact of this capital raise on the company's market positioning.

Legal Expert

The offering of convertible notes under Rule 144A is a strategic approach to raise capital while bypassing the more stringent public offering regulations. It is targeted exclusively at qualified institutional buyers, which typically include entities such as pension funds, investment firms and insurance companies capable of absorbing larger and more complex financial instruments. The legal stipulation that neither the notes nor the shares of common stock issuable upon conversion have been registered under the Act highlights the private nature of this transaction and the restrictions on the resale of the securities.

Investors should be aware of the regulatory framework governing such private placements and the implications it may have on the liquidity and marketability of these securities. The absence of public registration means less transparency for the general market, which can be a double-edged sword—limiting information for potential investors while allowing the company to operate with greater discretion.

SAN RAMON, Calif.--(BUSINESS WIRE)-- Five9, Inc. (NASDAQ: FIVN), the Intelligent CX Platform provider, today announced the exercise of the entire $97.5 million aggregate principal amount option to purchase additional 1.00% convertible senior notes due 2029 (the “notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the “Act”), resulting in a total offering size of $747.5 million. The notes to be sold in connection with the exercise of the option to purchase additional notes have the same terms in all respects as the other notes to be sold in the offering. The total offering of $747.5 million aggregate principal amount of notes is expected to settle on March 1, 2024.

The net proceeds from the sale of notes in connection with the exercise of the option to purchase additional notes is expected to result in approximately $95.3 million of additional net proceeds. Five9 expects to use a portion of the net proceeds from the sale of the additional notes to enter into additional capped call transactions with one of the initial purchasers in the offering and other financial institutions. The remainder of the additional net proceeds from the sale of the additional notes is expected to be used for working capital and other general corporate purposes.

The notes were and will be offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Act. Neither the notes nor the shares of common stock issuable upon conversion of the notes, if any, have been, nor will be, registered under the Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful.

Forward-Looking Statements

This news release contains certain forward-looking statements, including statements regarding the anticipated closing date of the notes offering, the expected proceeds from the sale of additional notes and the expected use of proceeds, that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include, among others: (i) whether Five9 will be able to consummate the offering, (ii) the satisfaction of customary closing conditions with respect to the offering of the notes, (iii) the anticipated use of net proceeds of the sale of the additional notes which could change as a result of market conditions, changes in our business or for other reasons, (iv) prevailing market conditions, (v) the impact of adverse general economic conditions, including the impact of macroeconomic deterioration, including continuing inflation, increased interest rates, supply chain disruptions, decreased economic output and fluctuations in currency rates, the impact of the Russia-Ukraine conflict, the impact of the conflict in Israel, and other factors, that may continue to harm our business; and (vi) the other risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our most recent annual report on Form 10-K. Such forward-looking statements speak only as of the date hereof and readers should not unduly rely on such statements. We undertake no obligation to update the information contained in this press release, including in any forward-looking statements.

About Five9

The Five9 Intelligent CX Platform provides a comprehensive suite of solutions for orchestrating fluid customer experiences. Our cloud-native, multi-tenant, scalable, reliable, and secure platform includes contact center; omni-channel engagement; Workforce Engagement Management; extensibility through more than 1,000 partners; and innovative, practical AI, automation and journey analytics that are embedded as part of the platform. Five9 brings the power of people, technology, and partners to more than 3,000 organizations worldwide.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229315273/en/

Investor Relations Contacts:

Five9, Inc.

Barry Zwarenstein

Chief Financial Officer

925-201-2000 ext. 5959

IR@five9.com

The Blueshirt Group for Five9, Inc.

Lauren Sloane

Lauren@blueshirtgroup.com

Source: Five9, Inc.

FAQ

What did Five9 announce regarding convertible senior notes?

Five9 announced the exercise of the entire $97.5 million option to purchase additional 1.00% convertible senior notes due 2029, resulting in a total offering size of $747.5 million.

When are the notes expected to settle?

The notes are expected to settle on March 1, 2024.

How much additional net proceeds are expected from the sale of notes?

Approximately $95.3 million of additional net proceeds are expected from the sale of notes.

What does Five9 plan to use the proceeds for?

Five9 plans to use a portion of the net proceeds for capped call transactions and the remainder for working capital and general corporate purposes.

Under which Act were the notes offered?

The notes were offered under Rule 144A of the Securities Act of 1933.