Zoom is Buying the Cloud Contact Software Vendor

Zoom announced on Sunday that it would acquire Five9, a cloud contact center Software vendor, in an all-stock deal valued at $14.7 billion. The acquisition is Zoom’s first billion-dollar deal, and it comes as the company prepares for a post-pandemic world in which staff will return to work. According to FactSet, it’s the second-largest US tech deal this year, behind Microsoft’s planned $16 billion acquisition of Nuance Communications.

Zoom CEO Eric Yuan said, “We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers.” On Friday, Five9 had a market capitalization of $11.9 billion, or $177.60 per share. Five9 owners will receive 0.5533 Zoom Video Communications shares for each Five9 share, according to Zoom.

This values Five9 at $200.28 per share, a 13 percent premium, and accounts for around 14% of Zoom’s market capitalization of close to $107 billion. In the 16 months since Covid-19 shut down offices worldwide, forcing workers in financial, retail, tech, and law offices to communicate from remote locations, Zoom has been one of the top growth stories.Zoom anticipates a natural downturn after growing revenue by 326 percent in 2020, primarily as businesses reopen and face-to-face meetings resume. While the company has developed new items to prepare for upcoming changes in its industry, it has grown to the point where organic growth is unlikely to satisfy Wall Street on its own.

As Microsoft steps up competition in video chat with Teams, it also needs new revenue sources. The stock price of Zoom soared about 400% last year, but it has already slumped 36% since its October high. Since early 2020, Five9 has experienced fast growth as demand for call center technology that allows representatives to work from home has increased. Companies, particularly contact centers, had to adapt to cloud Software of all kinds quickly.