Zoom is buying Five9, a provider of cloud contact center software, in an all-stock deal valued at $14.7 billion.
The billion-dollar deal is a bet on the future of home working and hybrid working and comes even as workers are beginning to returning to offices.
The transaction marks Zoom’s first billion-dollar acquisition and comes as the company prepares for a post-pandemic world with employees returning to the office. It’s the second-biggest U.S. tech deal this year, behind Microsoft’s planned $16 billion purchase of Nuance Communications, according to FactSet.
Zoom founder and CEO Eric Yuan said in a blog post that the acquisition will accelerate the company’s long-term growth by adding the $24 billion contact center market. That will give the company greater exposure to more business clients. Yuan added that it also the deal also complements the Zoom Phone, a cloud phone system that is seeing strong demand.
“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,”
CEO Eric Yuan
The size of the deal would have seemed unthinkable when Zoom Video Communications Inc. went public in early 2019, before it became a household name. With the arrival of the pandemic and a global shift to working from home, it was everywhere.
“The trend towards a hybrid workforce has accelerated over the last year, advancing contact centers’ shift to the cloud and increasing demand by customers for customized and personalized experiences,” Yuan said in a separate blog post about the deal.
Zoom’s stock price has more than tripled since pandemic lockdowns started last year, and in the first quarter of 2021, they reported growth of about 191% to $956 million.
The video conferencing platform transformed into the global name on everyone’s lips during the pandemic.
Zoom has said it does not expect growth to continue at the pace it enjoyed last year, but so far business remains strong.
The company expects sales to rise more than 40% this year, reaching more than $3.7 billion (£2.66 billion).
And more acquisitions could be on the cards as it looks to expand its offering in the hybrid employee marketplace.
A 20-year-old company, Five9 will become an operating unit of Zoom after the deal, which is expected to close in the first half of 2022, the two firms said. Rowan Trollope will become a president of Zoom and continue as Five9 CEO.
The deal is expected to close in the first half of 2022. It still needs approval from Five9 shareholders.