Zoom Video Communications Inc., ZM -4.19% the videoconferencing service that turned a family identify globally through the pandemic, plans to parlay among the ensuing rise in its share worth right into a $14.7 billion acquisition to safe progress.
The all-stock deal for Five9 Inc., FIVN 3.52% a supplier of cloud-based customer-service software program, will assist Zoom develop its potential choices for enterprise and enterprise shoppers. The expansion alternative will enable Zoom to faucet right into a $24 billion contact-center market, the corporate stated Sunday.
Zoom, which began buying and selling within the public markets in 2019, has been one of many largest beneficiaries from the shift to distant work and distance education. The worth of the corporate’s shares has greater than tripled since widespread lockdowns took maintain within the U.S. and elsewhere greater than a yr in the past.
Zoom in latest months has stepped up efforts to make sure it might proceed rising even as soon as the consequences of the pandemic wane and other people return to the workplace and shift to hybrid work.
“The development in direction of a hybrid workforce has accelerated during the last yr, advancing contact facilities’ shift to the cloud and growing demand by clients for personalized and customized experiences,” Zoom Chief Govt Eric Yuan stated in a weblog publish asserting the transaction.
The deal is Zoom’s biggest-ever acquisition. Final yr it purchased startup Keybase Inc. to assist it construct end-to-end encryption capabilities for its videoconferencing service, and final month it acquired translation software program maker Kites GmbH.
Mr. Yuan stated the deal for Five9 would assist help the corporate’s Zoom Cellphone enterprise, which replaces workplace phone techniques with a cloud-based service.
Many corporations use contact facilities, or name facilities, to offer brokers who reply clients’ questions. The cloud-based contact-center market, which operates over the web, has been gaining recognition in recent times. Adoption of the know-how has accelerated through the pandemic, when many contact heart workers have been working remotely.
Different rivals within the sector embrace Amazon. com Inc.’s cloud division, Genesys Telecommunications Laboratories Inc., and NICE inContact.
Zoom isn’t the one tech firm to make use of its rising share worth to assist fund a significant acquisition. Enterprise software program supplier Salesforce.com Inc. final yr agreed to accumulate Slack Applied sciences Inc. for $27.7 billion in inventory and money—one of the crucial pronounced examples of a giant participant in cloud computing racing so as to add muscle within the pandemic’s remote-work increase. Superior Micro Units Inc. final yr agreed to purchase rival chip maker Xilinx Inc. in a $35 billion all-stock deal.
Zoom’s income within the three months to April 30 surged 191% from a yr in the past to about $956 million. Its shares have multiplied in worth since final yr, giving Zoom a market capitalization of $106.7 billion, in keeping with FactSet.
Zoom primarily turned recognized for offering its videoconferencing providers free through the pandemic, however paying customers have additionally grown considerably as corporations moved to attach with their staff and clients. Zoom ended the yr with about 467,100 clients with greater than 10 staff, an almost sixfold improve from a yr earlier.
As a part of the settlement, Five9 stockholders will obtain 0.5533 shares of Class A standard inventory of Zoom for every share of Five9 Inc. Zoom’s shares are up greater than 46% over the previous yr, fueled by elevated consumer numbers for the reason that pandemic hit.
“Becoming a member of forces with Zoom will present Five9’s enterprise clients entry to best-of-breed options, significantly Zoom Cellphone, that can allow them to comprehend extra worth and ship actual outcomes for his or her enterprise,” Rowan Trollope, the CEO of Five9 stated.
Zoom stated the boards of administrators of each corporations have permitted the transaction, which is topic to approval by Five9 shareholders. The deal is anticipated to shut within the first half of 2022 and in addition wants approvals from regulators, it stated.
As soon as the transaction closes, Five9 can be an working unit of Zoom. Mr. Trollope will stay in his position and change into a president of Zoom, reporting to Mr. Yuan.
Write to P.R. Venkat at venkat.pr@wsj.com and Newley Purnell at newley.purnell@wsj.com
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