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Eric Yuan, founder and CEO of Zoom Video Communications Inc., center, responds by ringing the opening bell during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, United States, on Thursday April 18, 2019. Zoom reported net profit of $ 7.6 million on revenue of $ 331 million for the fiscal year ended January, and is now worth nine times the valuation of $ 1 billion it earned after a roundtable two years ago.
Victor J. Blue | Bloomberg | Getty Images
Zoom said on Sunday it was buying Five9, a cloud contact center software provider, in a stock deal valuing the company at $ 14.7 billion.
The deal marks Zoom’s first billion-dollar acquisition and comes as the company braces for a post-pandemic world with employees returning to the office. It is the second-largest US tech contract this year, behind Microsoft’s $ 16 billion purchase of Nuance Communications, according to FactSet.
“We are always looking for ways to improve our platform, and the addition of Five9 is a natural solution that will bring even more happiness and value to our customers,” Zoom CEO Eric Yuan said in A press release.
Five9 closed Friday with a market cap of $ 11.9 billion, or $ 177.60 per share. Zoom has stated that shareholders of Five9 will receive 0.5533 shares of Zoom Video Communications for each share of Five9. This values Five9 at $ 200.28 per share, a premium of 13%.
Zoom has been one of the main growth stories in the 16 months since Covid-19 caused a sudden closure of offices around the world, forcing workers in finance, retail, technology and the right to communicate from remote locations.
After increasing its revenue by 326% in 2020, Zoom is facing a natural slowdown, especially as businesses reopen and face-to-face meetings resume. While the company has launched new products to accommodate upcoming changes in its business, it is now so important that organic growth alone is unlikely to satisfy Wall Street.
Zoom’s share price jumped nearly 400% last year, although it has fallen 36% since peaking in October.
Five9 has grown rapidly since the start of 2020, as demand for call center technology that would allow representatives to work from home has increased. Businesses have had to adapt quickly to cloud software of all kinds, including for their contact centers.
Five9’s revenue soared 33% to $ 435 million last year. CEO Rowan Trollope told CNBC’s Jim Cramer in May that the company signed two of its biggest contracts in the last period, expecting them to generate more than a combined $ 20 million per year.
“We no longer have to convince customers that the cloud is an acceptable option,” he said. “They are just diving.”
The agreement brings together two former Cisco executives. Yuan, who founded Zoom in 2011, previously helped create WebEx, which Cisco bought in 2007 for $ 3.2 billion. He stayed with Cisco until he left to launch Zoom.
Trollope joined Cisco in 2012 after a 22 year career with Symantec. He eventually became senior vice president in charge of all Cisco collaboration products and was considered by some analysts to be CEO Chuck Robbins’ best lieutenant. He stepped down to take on the role of CEO of Five9 in 2018.
This is last minute news. Please check for updates.
WATCH: Five9 CEO Talks Demand For Call Center Technology
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