Zoom Acquires Cloud Call Center Firm Five9 for $14.7B

Zoom Video Communications Inc announced that it’s acquiring Five9, a provider of cloud contact center software, in an all-stock transaction valuing the company at $14.7 billion. The deal 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.

“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,” said Zoom CEO Eric Yuan in a press release. Zoom has been among the top growth stories in the 16 months since Covid-19 caused a sudden shutdown of offices across the globe, forcing workers in finance, retail, tech, and law offices to communicate from remote locations. After expanding revenue by 326% in 2020, Zoom faces a natural slowdown, especially as companies reopen and face-to-face meetings resume.

While the company has launched new products to reckon with coming changes to its business, it’s now so big that organic growth alone is unlikely to satisfy Wall Street. It also needs new revenue sources as Microsoft ramps up competition in video chat with Teams. Zoom’s stock price jumped almost 400% last year, though it’s dropped 36% since reaching its peak in October. Five9 has seen rapid growth of its own since early 2020, as demand surged for call center technology that would allow representatives to do their jobs from home. Companies had to quickly adapt to cloud software of all sorts, including for their contact centers.

Five9′s revenue climbed 33% to $435 million last year. CEO Rowan Trollope in an interview in May that the company signed two of its largest deals during the latest period, expecting them to generate more than $20 million combined annually. “We’re not having to convince customers that cloud is an acceptable option anymore,” he said. “They’re just diving in.” The deal brings together two former Cisco executives. Yuan, who founded Zoom in 2011, previously helped build WebEx, which Cisco bought in 2007 for $3.2 billion. He stayed at Cisco until he left to start Zoom.

Trollope will become the president of Zoom and remain as CEO of Five9, reporting to Yuan. Trollope joined Cisco in 2012 after a 22-year career at Symantec. He eventually rose to become senior vice president in charge of all of Cisco’s collaboration products and was seen by some analysts as the top lieutenant to CEO Chuck Robbins. He departed to take the CEO role at Five9 in 2018. The transaction is expected to close in the first half of 2022. Five9 stockholders still have to approve the deal, and it requires regulatory clearance. Goldman Sachs advised Zoom on the acquisition, and Frank Quattrone’s Qatalyst Partners advised Five9.

The two firms will do a joint Zoom call Monday to share more about the transaction.