Critical Review: Five9 (NASDAQ:FIVN) versus Applied Digital (NASDAQ:APLD)

Applied Digital (NASDAQ:APLD) and Five9 (NASDAQ:FIVN) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares Applied Digital and Five9’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Digital	-61.84%	-75.46%	-20.50%
Five9	-6.56%	-9.09%	-2.88%

Valuation & Earnings

This table compares Applied Digital and Five9’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Digital	$55.39 million	16.77	-$44.65 million	($0.79)	-8.57
Five9	$939.06 million	3.37	-$81.76 million	($0.85)	-50.38

Applied Digital has higher earnings, but lower revenue than Five9. Five9 is trading at a lower price-to-earnings ratio than Applied Digital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Applied Digital and Five9, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Digital	0	0	5	0	3.00
Five9	0	2	13	0	2.87

Applied Digital currently has a consensus price target of $8.40, indicating a potential upside of 24.08%. Five9 has a consensus price target of $82.71, indicating a potential upside of 93.17%. Given Five9’s higher probable upside, analysts plainly believe Five9 is more favorable than Applied Digital.

Institutional and Insider Ownership

65.7% of Applied Digital shares are owned by institutional investors. Comparatively, 96.6% of Five9 shares are owned by institutional investors. 20.5% of Applied Digital shares are owned by company insiders. Comparatively, 1.8% of Five9 shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Applied Digital has a beta of 4.56, suggesting that its stock price is 356% more volatile than the S&P 500. Comparatively, Five9 has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

About Applied Digital

Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services. The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022. Applied Digital Corporation is based in Dallas, Texas.

About Five9

Five9, Inc., together with its subsidiaries, provides intelligent cloud software for contact centers in the United States and internationally. It offers a virtual contact center cloud platform that delivers a suite of applications, which enables the breadth of contact center-related customer service, sales, and marketing functions. The company's platform comprises of including interactive virtual agent, agent assist, workflow automation, workforce engagement management, AI insights, and AI summaries that allows to manage and optimize customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces. It also matches each customer interaction with an agent resource and delivers customer data to the agent in real-time through integrations with adjacent enterprise applications, such as CRM software, to optimize the customer experience and enhance agent productivity. The company serves customers in various industries, such as banking and financial services, business process outsourcers, retail, healthcare, technology, and education. Five9, Inc. was incorporated in 2001 and is headquartered in San Ramon, California.