Five9 faces shareholder suit over bookings claims before Feb 21, 2024

Kuehn Law is investigating Five9 Inc. officers and directors over a federal securities lawsuit alleging they breached fiduciary duties to shareholders.

The probe follows a federal securities lawsuit claiming insiders misrepresented Five9's net new business as "strong irrespective of the macro," Kuehn Law said in a statement. The Southampton, New York-based firm is a shareholder litigation practice that pays all case costs and does not charge its investor clients.

The lawsuit alleges Five9's net new business was hampered by macroeconomic issues such as constrained and scrutinized customer budgets, contrary to company statements. It also claims Five9 was in the midst of a challenging bookings quarter because of sales execution and efficiency issues, and that the company was not "seeing very strong bookings momentum." Insiders also lacked "enough information" about existing customers going live, the suit says, so statements that Five9 would see a positive inflection in its dollar-based retention rate lacked a reasonable basis.

Dollar-based retention rate is a key metric for subscription software companies, measuring how much recurring revenue is retained from existing customers over time. A positive inflection would signal that Five9's installed base was expanding its spending, a claim the lawsuit says lacked support.

Five9, a cloud contact-center software provider that says it serves more than 3,000 customers and 1,400 partners globally, has not commented on the lawsuit. The company separately announced Aug. 18 that it granted a restricted stock unit award covering 26,982 shares to Sarah Bennett, its new vice president of revenue strategy and operations, as an employment inducement under Nasdaq Listing Rule 5635(c)(4).

Shareholders who purchased FIVN stock before Feb. 21, 2024, should contact the firm immediately, Kuehn Law said, as there may be limited time to enforce their rights. The firm can be reached at [email protected] or (833) 672-0814.

The lawsuit adds to pressure on Five9's management as investors weigh the accuracy of its forward guidance. A finding against the company could lead to financial penalties or restatements, and the investigation may weigh on FIVN shares as the cloud software sector faces scrutiny over growth claims. The next development to watch is the firm's investigation and any subsequent legal filings, which could determine whether the company faces sanctions or must revise prior statements.

This article is for informational purposes only and does not constitute investment advice.