Zoom Uses Rising Stock Price for Big Purchase
Zoom Buys Five9 for $14.7 Billion
Zoom (ZM), the video communication platform which became a household name during the pandemic, is buying Five9 (FIVN), a customer service software company, for $14.7 billion in an all-stock deal.
Zoom’s popularity surged during the pandemic as people turned to the platform as a way to work and socialize while social distancing. Zoom’s value has more than tripled since March of 2020,gaining more than 46% this year alone. Zoom is now using some of its fortune to make what is its biggest purchase to date.
The acquisition of Five9 will help Zoom expand the services it offers its enterprise customers. With Five9, which makes customer service software, Zoom can expand into the $24 billion call center market.
Zoom Chases New Growth
Zoom was focused on managing an onslaught of new users in the early days of the pandemic, but more recently it has been making moves to ensure it can continue to grow once life returns to normal. Zoom recently acquired Keybase, to add end-to-end encryption to its offering, and Kites, which makes translation software.
Five9 will support Zoom Phone—an offering to replace companies’ traditional telephone networks with cloud-based systems.
This market has been growing in popularity in recent years. The pace of adoption for the technology picked up during the pandemic when call center employees were forced to work from home. Other competitors in the market include Amazon’s (AMZN) cloud unit, Genesys Telecommunications Laboratories (GCTI), and NICE inContact (SAAS).
Tech Companies Make Transformative Buys
Zoom, which has a market capitalization of around $106 billion, has been seeing record growth even as people begin returning to pre-pandemic habits. For the three months which ended April 30, the company’s revenue was up 191%.
Zoom is among a growing number of technology companies which are using their high share prices to bankroll acquisitions. Salesforce.com (CRM) spent $27.7 billion to acquire Slack Technologies, and Advanced Micro Devices (AMD) paid $35 billion for the chipmaker Xilinx in 2020. These companies are diversifying and expanding to protect the growth they saw during the pandemic.
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