Zoom, the video-conferencing platform that became hugely popular during the Covid-19 pandemic, is spending a whopping $14.7 billion on cloud-based software company Five9 to boost its appeal with business clients.
Zoom (ZM) announced the acquisition Sunday night. In a statement, it said the move will “help enhance Zoom (ZM)’s presence with enterprise customers and allow it to accelerate its long-term growth opportunity.”
Five9 provides software to customer service centers for over 2,000 clients around the globe.
The all-stock deal will give Five9 (FIVN) shareholders about 0.5 a share of Zoom’s Class A common stock for each Five9 (FIVN) share they own.
Eric Yuan, Zoom’s billionaire CEO and founder, said the addition of Five9 was a natural fit.
“Enterprises communicate with their customers primarily through the contact center, and we believe this acquisition creates a leading customer engagement platform that will help redefine how companies of all sizes connect with their customers,” he said in a statement.
Scott Kessler, an analyst who leads technology, media and telecommunications coverage for Third Bridge, said the deal “seems intended to expand the company’s enterprise offerings and relationships, as well as its total addressable market.”
“It’s worth noting this would be by far Zoom’s largest ever M&A deal … perhaps designed to make an impact from a diversification perspective,” Kessler told CNN Business.
Back in June, Zoom announced plans to acquire German company Kites, which develops real-time machine translation. Terms of that deal were not disclosed.
Zoom, a 10-year-old company based in San Jose, California, has been one of the pandemic’s biggest success stories.
Just two years ago, the company was valued at almost $16 billion. Its market cap has since swelled to reach about $106.7 billion.
But while the coronavirus crisis has helped Zoom become a household name, the company faces pressure to find new avenues of growth as economies reopen and the need for remote conferencing dips.
Even with its breakneck success, analysts say that Zoom will eventually also need to add new features to encourage more people to pay for its services.
The company’s latest acquisition allows it to push into a whole new sector: customer service centers. Zoom itself said Sunday that it was looking to “build the customer engagement platform of the future,” while estimating that it was entering a “$24 billion contact center market.”
The two firms will hold a Zoom call Monday to share more details of the deal.
— Samantha Murphy Kelly contributed to this report.