This week, popular video conferencing platform Zoom announced its intentions to acquire Five9, Inc., a pioneer in cloud contact centers, in an all-stock transaction valued at $14.7 billion. The acquisition will mark Zoom’s official entry into the already teeming CCaaS space (contact center as a service), where it will have to contend with heavyweights such as Cisco, AWS, Avaya, Mitel, NICE, Genesys, 8x8 and Twilio. Zooming (no pun intended) out a bit, this deal also represents a big play on Zoom’s part to insert itself into the vast enterprise IT market, where businesses increasingly seek unified solutions and the simplicity and consistency they offer. Let’s take a closer look at the proposed deal and how it will potentially bolster Zoom’s overall value proposition for the enterprise.
A well-functioning contact center is essential for many businesses to best support, engage and ultimately retain their customer bases by ensuring their needs are met. All of that said, a contact center can also be a massive headache for the inexperienced business to deploy and manage. If done wrong (and we’ve all experienced those less-than-enlightened attempts), it can make for a lot of impatient, unhappy customers. Instead of muddling through the process on their own, many companies these days are turning to CCaaS. Over the past several years, as-a-Service models such as CCaaS have taken the IT world by storm, providing everything from devices (DaaS, PCaaS) to software (SaaS) to enterprises via fully-managed, cloud-based subscription models. This strategic outsourcing enables businesses to instead focus more time and resources on their core, value-adding operations.
Five9’s cloud-based contact center features a suite of user-friendly software designed to manage and optimize customer interfacing. “Seamless engagement” seems to be a phrase Zoom has zeroed in on to describe what Five9 brings to bear. The company leverages AI to provide integrated video, voice, social and SMS/Chat channels for customers to engage with enterprises in real-time. Five9 facilitates these interactions by providing AI-based context, valuable analytic insights, automation and self-service capabilities. Additionally, Zoom touts Five9’s high scalability, ease-of-use and cloud security.
Together, Zoom believes the two companies will form the industry’s “first complete best-of-breed cloud communications portfolio.” Additionally, the company expects the acquisition will provide significant growth opportunities in the channel and international markets.
Along with Five9’s integration comes its considerable $24 billion TAM (total addressable market). This number joins Zoom’s standalone $62B TAM for an impressive cumulative TAM of $86B. The companies tout it as a “highly synergistic combination” that will provide significant cross-selling opportunities for both company’s existing product lines. In particular, Zoom is bullish on the Five9 contact center’s ability to drive momentum in its Zoom Phone offering, a cloud-based digital alternative to traditional phone offerings. Additionally, all 1,999 of Zoom’s upmarket/enterprise customers will benefit from cutting-edge contact solutions. On the flip side, the communication tools provided within the Zoom Portfolio (and the Zoom Phone in particular) should be a boon to Five9’s existing call center customers.
The acquisition is expected to be completed in the first half of 2022, subject to approval by Five9’s stockholders. After the deal closes, Five9 will operate as a business unit within Zoom and remain under current Five9 CEO Rowan Trollope. Trollope will also assume a President at Zoom, where he’ll work alongside Zoom CEO and Founder Eric S. Yuan.
Zoom is a different company than last year in the early days of the pandemic when the press and analysts widely pilloried it for various self-admitted privacy and safety blunders. This was not all that surprising for a company suddenly thrust into the spotlight and unfamiliar with such levels of public, enterprise and government scrutiny. While I was amongst Zoom’s chorus of critics at the time, I’ve been impressed by the measures the company has taken to beef up its privacy and security credentials since then. I think this acquisition is one that just makes sense. It’ll benefit both parties significantly and offer a new, more holistic communications solution for enterprise customers.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.