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Five9 Inc. is being bought by Zoom Inc. for $14.7 billion

Zoom Video Communications Inc. is buying Five9 Inc, a cloud contact center provider. This $14.7 billion all-stock deal is Zoom’s largest-ever acquisition. It is looking to expand beyond its core video-conferencing services. The deal makes strategic sense, and helps accelerate Zoom’s product roadmap outside of its core offering. It marks Zoom’s first billion-dollar acquisition, as the company prepares for a post-pandemic world with employees returning to the office. It is the second biggest US tech deal this year, behind Microsoft’s planned $16 billion purchase of Nuance Communications.

Zoom’s circumstance

Zoom’s mobile app interface

Zoom has become a household name and investor favorite in the year since the coronavirus pandemic. Businesses and schools adopted its services to hold virtual classes, office meetings and socialisations. Zoom has been among the top growth stories for 16 months since the beginning of COVID-19. The epidemic caused a sudden shutdown of offices across the globe, forcing workers in finance, retail, tech, and law offices to communicate from remote locations. Analysts and investors are looking to see how Zoom will sustain its hot streak of growth. Its rivals Microsoft Corp., Cisco Systems Inc. and Alphabet Inc.’s Google are unignorably snapping at its heels. The San Jose, California-based company is now shifting focus to its two-year-old cloud-calling product Zoom Phone and conference-hosting product Zoom Rooms as bigger players amp up their video products.

The reason why Five9 is chosen

Five9’s software is used by more than 2,000 clients across the globe to interact with their clients. It has grown rapidly since early 2020. It surged the demand for the call center technology that allows representatives to do their jobs from home. Companies had to quickly adapt to cloud software of all sorts, including for their contact centers. “We’re not having to convince customers that cloud is an acceptable option anymore,” said Rowan Trollope, CEO of Five9. “They’re just diving in.” It counts firms such as Under Armour, Lululemon Athletica Inc. and Olympus Corp as customers.

Five’s mobile app interface

“We are continuously looking for ways to enhance our platform. And the addition of Five9 is a natural fit. It will deliver even more happiness and value to our customers,” said Zoom CEO Eric Yuan. The acquisition will help enhance Zoom’s presence with enterprise customers. It will also accelerate Zoom’s long-term growth opportunity by adding the $24-billion contact center market. Five9 will become an operating unit of Zoom. Rowan Trollope will become a president of Zoom, staying on as chief of the unit. The transaction is expected to close in the first half of 2022.

Sources of information include CNBC and Reuters.