On Sunday, July 18th, online video conference app Zoom announced its intention to acquire Five9, a cloud contact centre software provider. The all-stock transaction places Five9’s value at $14.7 billion and marks Zoom’s first billion-dollar acquisition.
The deal marks the second-biggest US tech deal of 2021, following Microsoft’s $16 billion acquisition of Nuance Communications. It also signifies that Zoom is preparing for a post-pandemic world, with employees returning to their offices, as it expands beyond its traditional video-conferencing services.
“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,” commented Eric Yuan, CEO of Zoom.
Over the past couple of years, Zoom became a household name as businesses and schools adapted to virtual classrooms and conferences. The pandemic saw Zoom become an investor favourite, with its revenue growing 326% in 2020.
But with global vaccination on the rise and restoration of what was once ‘normal’, Zoom is infiltrating new territories in an attempt to sustain its growth momentum. Reportedly, over the past year, the company has added several other services to its bundle, including a cloud phone system and an all-in-one communications appliance.
When Zoom made its debut on the stock exchange, it was valued at $9 billion. Since then, its shares have climbed over 450%.
In a press release issued by Zoom, the company explains that the combination of Zoom’s robust communications platform with Five9’s intelligent cloud contact centre will enable organizations to reimagine the way they engage with their customers.
“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. We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family,” explained Eric Yuan, CEO of Zoom.
California-based Five9 offers cloud-based call centre operator services. With a client base that exceeds 2,000 customers, the company can count giants like Under Armour among them. Five9’s ability to process over 7 billion minutes of calls annually will be a huge advantage to Zoom’s $24 billion contact centre market.
Reportedly, on Friday before the deal, Five9 closed with a market capitalization of $11.9 billion, with each share valued at $177.60. Five9 shareholders are expected to receive 0.5533 shares of Zoom Video Communications for every share of Five9. Based on those calculations, Five9’s value lands at $200.28 per share. In other words, Zoom is acquiring it at a 13% premium.
Legal disclaimer: The material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instruments. UR Trade Fix Ltd accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. The analysis does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Past performance does not constitute a reliable indicator of future results and future forecasts do not constitute a reliable indicator of future performance.
It has not been prepared in accordance with legal requirements designed to promote the independence of research, and as such it is considered to be marketing communication. Although we are not specifically constrained from dealing ahead of the publication of our research, we do not seek to take advantage of it before we provide it to our clients. We aim to establish, maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. We operate a policy of independence, which requires our employees to act in our clients’ best interests when providing our services.