IPO Report: Five9(FIVN)

Five9 ($FIVN) is a pioneer and leading provider of cloud software headquartered in San Ramon, CA.

Sevenother companies are scheduled for the week of March 31, 2014.  The complete IPO calendar is available at IPOpremium.

The manager and joint managers are J.P. Morgan, Barclays, BofA Merrill Lynch.  The co-managers are  Pacific Crest Securities, Canaccord Genuity, Needham & Company.  SEC Filings

FIVN scheduled a $100 million IPO with a market capitalization of $460 million at a price range midpoint of $10 for Friday, April 4, 2014 on the Nasdaq.

Overview

Five9 is a pioneer and leading provider of cloud software for contact centers.

Conclusion

The rating on FIVN is positive. Sales were up ‘only’ 32% for 2013 vs 2012.

Business

Five9 is a pioneer and leading provider of cloud software for contact centers.

Since inception, FIVN has exclusively focused on delivering its platform in the cloud and is  disrupting a significantly large market by replacing legacy on-premise contact center systems.

FIVN believes it achieved this leadership position through its expertise and technology, which has empowered it to help organizations of all sizes transition from legacy on-premise contact center systems to its cloud solution.

Virtual Contact Center (VCC) cloud platform

FIVN believes it achieved this leadership position through its expertise and technology, which has empowered it to help organizations of all sizes transition from legacy on-premise contact center systems to its cloud solution.

FIVN’s solution, which is comprised of its VCC cloud 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 FIVN’s application programming interfaces.

FIVN’s VCC cloud platform routes each customer interaction to an appropriate agent resource, and delivers relevant customer data to the agent in real-time to optimize the customer experience.

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

History

Since founding its business in 2001, FIVN has focused exclusively on delivering cloud contact center software.

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

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

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

FIVN believes this shift has helped it diversify its client base while significantly enhancing its opportunity for future revenue growth.

To complement these efforts, FIVN also has focused on building client awareness and driving adoption of its solution through marketing activities, which include internet advertising, digital marketing campaigns, social marketing, trade shows, industry events and telemarketing.

Dividend Policy

No dividends are planned.

Intellectual Property

FIVN’s intellectual property portfolio includes twenty registered and seven pending trademarks, four issued U.S. patents and seventeen pending patent applications and one registered copyright.

FIVN has pending patent applications and limited trademark registrations outside the U.S. In general, FIVN’s patents and patent applications apply to aspects of its VCC cloud platform.

Competition

FIVN currently competes with large legacy on-premise contact center system vendors that offer on-premise enterprise telephony and contact center systems, such as Avaya and Cisco; and legacy on-premise software companies with a historical focus on CTI, such as Aspect, Genesys and Interactive Intelligence.

These companies are expanding their traditional on-premise contact center systems with cloud-based offerings, either through acquisition or in-house development.

Additionally, FIVN competes with vendors that historically provided other contact center services and technologies and expanded to offer cloud contact center software. These companies include inContact and LiveOps.

5% stockholders

Michael Burkland              6.0%
Jayendra Das                  6.7%
Mitchell Kertzman         23.1%
David S. Welsh              19.7%
Hummer Winblad Venture Partners V, L.P.         23.1%
Entities affiliated with Adams Street Partners     19.7%
Entities affiliated with Partech International        17.3%
Mosaic Venture Partners           17.3%
SAP Ventures Fund I, L.P.           6.7%

Use of proceeds

FIVN expects to net $90 million from its IPO. Proceeds are allocated as follows:

for general corporate purposes, which FIVN expects to include growing its business by expanding its direct sales force and investing to grow its international client base, as well as other working capital, operating expenses and capital expenditures.