Edit (11/1/2021): Shareholders of Five9 rejected the acquisition that is referenced in this blog post. To see what's next for Zoom, see this post.
Last month, Zoom officially reached an agreement to acquire Five9 for $14.7 billion in stock. The former became a household staple in 2020 as a result of the COVID-19 pandemic. This acquisition will prove a significant boom for the video conferencing company. This change points to an increased shift to the cloud for communication platforms and contact center software.
Five9 is a leading provider of cloud contact center software. It offers applications, tools, analytics, and cloud-hosted services to boost its customers’ contact center productivity. The CEO of Zoom, stated, “Combining Five9’s Contact Center as a Service (“CCaaS”) solution with Zoom’s broad communications platform will transform how businesses connect with their customers, building the customer engagement platform of the future.”
In 2001, John Sung Kim and Ray Soto founded Five9 to provide an on-premises solution for small call centers. They were one of the first providers to create a software-as-a-service (SaaS) solution based on voice over internet. Although the company struggled at first, it later grew with a new executive team into the success it is today.
Before the recent acquisition, Five9 was already partnered with Zoom. During the pandemic, video conferencing software grew in popularity. More companies than ever before we're forced to rely on remote workers. Employees could do everything at home and make video calls throughout the day to stay in touch. Schools were also using Zoom to hold lessons and meetings. However, as companies forced more employees to return to the office, they relied less on video conferencing. As the fear of COVID-19 fell in people's minds, so did their dependence on Zoom.
The recent acquisition should serve to benefit both companies. Their products were already compatible with one another, and their merger is likely to boost visibility for both Zoom and Five9 with enterprises. According to Zoom, the partnership with Five9 provides tighter integration between Five9 CCaaS and Zoom UCaaS. Five9 users can now access their contacts from both platforms and view the status of their Zoom contacts in real-time. A single click can transfer a call or start a call between a customer and a Zoom contact.
Five9 and Zoom coming together represent a merger of unified communications as a service (UCaaS) and contact center as a service (CCaaS). Clients can expect to improve and streamline their internal communication as well as refine their customer experience. UCaaS refers to cloud-based telecommunications. It allows companies to manage all the ways their employees communicate internally and externally, including both telephone communications and video conferencing. CCaaS manages communications with clients and similar contacts. The service provider, such as Five9, is responsible for the service itself and managing the data centers and their cybersecurity.
While Zoom wasn't the first of its kind, it offered features that competitors such as Skype and Google Hangouts didn't. For example, it could hold many participants at once with very little lag. A single person could manage the group, mute and unmute people, and split the call into breakout rooms.
Needless to say, Zoom provided a consistent and customizable UCaaS experience. This merger results in UCaaS that allows companies to connect clients with relevant employees with a single click. Remote workers can route their company's data through a centralized service and work on whatever device they prefer.
Experts believe that this Five9 acquisition will enable Zoom to offer a more differentiated solution for companies’ communication needs, allowing enterprises to conference and collaborate as well as enhance their customer experience capabilities. For example, a customer can interact with a virtual assistant before talking to a live representative. The representative will then have access to all the customer's relevant information as the system transcribes the conversation in real-time.
Additionally, the merger will allow customer service representatives to seamlessly bring company experts into their calls to answer any questions a customer may have about a product or service. Because Zoom is available on most smart devices, neither worker needs to be in the workplace or on a computer to do their job. The only potential drawback to the Five9 and Zoom collaboration is with regard to enterprises that use other platforms. Five9 customers who don’t use Zoom may turn to other CCaaS services if they prefer other UCaaS options.
The Five9 acquisition cost Zoom a significant amount of money. The overall goal was to boost Zoom’s stock value by increasing visibility to enterprises. On the day of the acquisition, however, Zoom's share price fell 2.0% while Five9’s surged 8.4%.
Despite the current slowdown in its growth, Zoom's earnings have beat estimates, and the company has raised its full-year earnings guidance. Although more people are returning to the workplace, some offices are turning to hybrid models. This continued reliance on remote workers is more than enough reason for Zoom to become prominent once again, especially considering its partnership with Five9.
The Five9 acquisition illustrates that Zoom hasn't given up, despite falling value in the stock market. On the contrary, Zoom has now set the bar for what communication platforms should strive for. Integrating itself with Five9 means Zoom can provide companies better internal and external communication tools. Instead of struggling to connect, users can now interact with the new Zoom Phone system.