Zoom is buying cloud contact center provider Five9 for $14.7 billion

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Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., center, reacts while ringing the opening bell during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, April 18, 2019. Zoom reported net income of $7.6 million on revenue of $331 million for the year ended January, and is now worth nine times the $1 billion valuation it secured after a funding round two years ago.

Victor J. Blue | Bloomberg | Getty Images

Zoom announced on Sunday that it’s buying 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.

Five9 closed on Friday with a market cap of $11.9 billion, or $177.60 a share. Zoom said Five9 stockholders will receive 0.5533 shares of Zoom Video Communications for every Five9 share. That values Five9 at $200.28 a share, a 13% premium.

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.

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 allowed representatives to work 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 told CNBC’s Jim Cramer 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.”

This is breaking news. Please check back for updates.

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