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July 19, 2021
Zoom's first major acquisition, a $14.7 billion July purchase of cloud call center operator Five9, shows how much competition in videoconferencing is hotting up.
Even while Eric Yuan's company revenue saw its first-quarter revenue come to $956 million, 191% ahead of a year before, Facebook and Alphabet are bringing their A-game to their own Messenger Rooms and Meet products.
Along with the sizzling competition, the San Jose-based company is preparing for a post-pandemic slowdown in its growth.
So Zoom is looking to court contact centers with Five9, which will sit alongside Zoom Phone and Zoom Rooms, its cloud-calling and conference-hosting suites.
"Together we will build the customer engagement platform of the future," the company added on Twitter.
As well as Zoom's largest acquisition to date, it is its fourth since the global pandemic began.
In May 2020, Zoom bought secure messaging and file-sharing company Keybase Financial Group to improve its encryption offerings.
Then in March, Zoom was part of a group acquiring a minority share in the software company Assembled. In June, it agreed to buy a German translation startup, kites (for Karlsruhe Information Technology Solutions).
It is an all-stock transaction which values Five9 shares, which closed Friday at $177.60, at $200.28.
Each Five9 shareholder is set to receive 0.5533 shares of Zoom class A stock.
In going shopping for acquisitions to bolster its wares, Zoom is strengthened by the ongoing rally in its share price, which rose by a factor of five last year and by a further 7.3% so far in 2021.
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Contact centers are a $24 billion annual market, Yuan said in a blog post announcing the purchase.
And it's a market where Zoom and its new acquisition will be competing with Cisco, RingCentral and Amazon (which launched its Amazon Connect product in 2017).
Putting contact center and videoconferencing together is also a move not entirely unlike Cisco's, which has knitted its contact center product together with its Webex conferencing software.
This is the story of how I created @Five9 with 6 credit cards and a simple desire. And how anyone with belief in themselves can do it too.— john sung kim (@JohnSungKim) July 19, 2021
Congrats to Eric Yuan and @Zoom on the acquisition. America is still a pretty great place for immigrants. 🇺🇸 https://t.co/HlEFqx6pzx
Five9 has been working on "intelligent cloud contact center" products which work with conversational AI, to improve call handling and reduce the time agents spend on after-call work.
The big growth ahead in contact centers looks then to lie in integrating these types of offerings with data and AI.
So a sales or customer services agent can instantly call up a user's complaints or purchase history. And maybe, offload lower-value calls to self-service while donning the white gloves for higher-spending customers.
Five9's CEO Rowan Trollope will stay on as the unit's head in the all-share deal, expected to close in the first half of next year.
The Japanese camera company Olympus Corp, US sportswear maker Under Armour, and yoga and running apparel business Lululemon Athletica are all among Five9's call center customers.
Want to know more OSS and BSS? Check out our dedicated OSS and BSS channel here on Light Reading.
He had begun the company "with six credit cards and a simple desire," Kim added.
Meanwhile Zoom's desire is equally simple: to continue its growth even after the pandemic.
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