Video Conferencing giant announces $14.7 billion takeover of Five9
In the same week as Apple announced it was delaying the return to office working of much of its workforce, Zoom has announced a multibillion-dollar deal in a bet that remote and hybrid working is here to stay.
Zoom announced its acquisition in a blog post published on Sunday night. In the post, Eric Yuan, Zoom’s founder, and CEO said that the deal would enable its clients to “reimagine the way they do work.”
The timing of the deal comes as many companies begin the process of returning their staff to office working. Zoom has been one of the companies that benefitted from the rise of remote working triggered by the onset of the pandemic. The company went from relative obscurity to a household name, practically overnight.
More recently, investors have been watching it closely, hoping for clues as to how it will fare as more people return to the office.
Zoom enjoyed phenomenal success in 2020. During the fourth quarter of the year, sales were up 370% compared to the same period in 2019. For the current year, sales are still soaring with sales forecast to rise 40%, totaling $3.7 billion.
Zooming in on a new strategy
The business model that Zoom has used up to now relies on charging companies for use of its remote meeting software. It also supplied a limited function version free for general public use.
However, now questions are being asked about the future of hybrid working.
As the pandemic eases and more people return to working from the office, there is uncertainty about just how much of the market will remain for companies supplying remote working services. Despite this uncertainty, many tech firms including Microsoft and Google are still investing resources in the video-conferencing niche.
With the takeover, it seems that Zoom is shifting its strategy.
What is certain is that working from home will not fall back to pre-pandemic levels. The expectation is that people working from home some of the time is going to be the new norm. Analysts believe that Zoom is planning ahead to maximize other revenue streams as the working from home boom eases to a more natural level.
The acquisition of Five9 suggests that Zoom is now prioritizing conference hosting product Zoom Rooms and its cloud-calling product Zoom Phone.
According to Eric Yuan, the deal is part of an overall strategy that – “Is positioning us to accelerate Zoom’s growth and play an even stronger role in driving the digital future, bringing companies and their customers closer together.”
Five9’s business supplies call center software to over 2,000 companies, numbered among them are Canon, Lululemon, and Under Armour. The deal is expected to be concluded by early 2020 and has already been approved by the boards of both companies.
Zoom has set out its stall for the post-pandemic future and with such an ambitious move it is placing a definite bet on the fact that the way we work has changed forever.