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Zoom is expanding into the lucrative cloud contact center market in a big way by acquiring publicly-listed Five9 in an all-stock deal worth $14.7 billion.
Founded in 2001, Five9 offers a suite of tools to help businesses manage their customers in-bound communications, spanning voice, messaging, email, and more. The Five9 platform also includes CRM integrations, intelligent routing to connect each request with the most suitable agent, and an AI-powered assistant that suggests what actions they should take next.
Digital transformation
As with just about every cloud-focused company in the technology sphere, Five9 has been a major beneficiary of society’s broader digital transformation throughout the pandemic, with its shares roughly tripling in value in the 12-month period starting March 2020. And to persuade Five9’s shareholders to bite, Zoom is offering around $200.28 per share, representing a 13% premium on Five9’s Friday closing price.
While Zoom is probably better known as that enterprise app that transcended the office environment during the pandemic to become the default group video chat tool for millions of people globally, it has also offered a cloud-based business phone system called Zoom Phone since 2019. And this is where Zoom sees Five9 serving as a complementary technology — Zoom is going all-in on the enterprise communication vertical.
“Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers,” Zoom founder and CEO Eric S. Yuan said in a press release.
But perhaps more than that, Zoom will be in a strong position to cross-sell and up-sell its various products, so that an existing Five9 customer will be offered Zoom’s range of conference and meeting-focused tools, while Zoom can try to shoehorn its own customers onto Five9 as part of a holistic single-subscription offering.
The global cloud contact center market was pegged as a $11.5 billion industry in 2020, though this figure is estimated to more than triple within four years. A quick peek across the industry reveals that investors are betting big on this upwards trajectory, with the likes of Talkdesk last year raising $143 million at a $3 billion valuation, while Aircall last month secured $120 million at a $1 billion valuation.
Zoom said that it expects the Five9 acquisition to close in the first half of 2022, though it is, of course, still subject to approval from Five9’s shareholders. Assuming the remaining hurdles are passed, Five9 will operate as a unit inside of Zoom, with Five9’s CEO Rowan Trollope continuing in his current role while also becoming Zoom’s president, reporting directly to Yuan.
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