Video conferencing giant Zoom has entered the call centre market with the $14.7bn acquisition of cloud-based contact centre company Five9.
The all-stock deal will bring Five9’s suite of contact centre software tools to Zoom Phones, the company’s product for replacing legacy phone services. Five9’s contact centre as a service (CCaaS) technology is designed to optimise customer interactions across multiple channels and will integrate with Zoom’s platform.
Zoom will gain a 2,000-strong customer base built up by Five9 over 20 years, with clients including Under Armour, Olympus Corp and Citrix. It will also provide opportunities to cross-sell between the two companies’ customers.
The deal is expected to close in the first half of 2022, subject to regulatory approvals.
“Enterprises communicate with their customers primarily through the contact centre, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers,” said Zoom CEO and founder Eric Yuan. “We are thrilled to join forces with the Five9 team, and I look forward to welcoming them to the Zoom family.”
Five9 will become an operating unit of Zoom with its chief executive, Rowan Trollope, staying on as president.
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“Joining forces with Zoom will provide Five9’s business customers access to best-of-breed solutions, particularly Zoom Phone, that will enable them to realise more value and deliver real results for their business,” said Trollope. “This, combined with Zoom’s ‘ease-of use’ philosophy and broad communication portfolio, will truly enable customers to engage via their preferred channel of choice.”
The Five9 deal follows an explosive year of growth for Zoom as businesses, schools and consumers turned to the company for video communication during the pandemic.
That surge in demand propelled Zoom’s share price by more than 400% in 2020. The company currently has a market cap of $106bn, more than ten times its IPO price just two years ago.
Concerns that the return to the office would slow Zoom’s growth have so far yet to materialise, with the company reporting 191% year-on-year revenue growth in its most recent quarter even as some countries loosen Covid restrictions.
The Five9 deal will be seen as a further bid by Zoom to cement its enterprise offering and expand into the contact centre market that it said is worth $24bn. Contact centres are a central point for customer communications flowing into a company and while these are typically traditional call centres they increasingly rely on software and digital communication tools.
David Bicknell, principal thematic analyst at GlobalData, told Verdict the acquisition is a “step forward” in Zoom’s goal of becoming a “platform company”.
He added: “At some point, the pandemic will come to an end. So Zoom needs to be expanding its communication services and providing increasingly sophisticated tools to target enterprise customers. It needs to diversify its audience to make the most of those new customers it gained last year at the height of the pandemic for its videoconferencing service.”
While Microsoft Teams has emerged as Zoom’s biggest rival, it is not in the tech giant’s interest to put Zoom out of business.
Zoom uses multi-cloud technologies to process its real-time video conferencing traffic, renting data centres and cloud services from Amazon Web Services (AWS), Microsoft Azure and Oracle.
The size of Microsoft’s cloud deal with Zoom is not public knowledge, but for a data-intensive company like Zoom it is likely to be a lucrative arrangement that would be in Microsoft’s interest to maintain.
More traditional conferencing platforms, including Cisco Systems and Webex, have also enjoyed strong growth during the pandemic.
Five9 is Zoom’s largest acquisition to date. According to GlobalData’s market intelligence, Zoom has previously acquired three companies in its ten years of operations. Its most recent acquisition, announced at the end of June, was machine translation startup Karlsruhe Information Technology Solutions for an undisclosed sum.