Zoom Video Communications
ZM
recently entered into a definitive agreement to acquire
Five9
FIVN
, a provider of the intelligent cloud contact center, in a deal worth nearly $14.7 billion to target business clients looking to boost customer engagement.
Expected to close in the first half of calendar year 2022, the deal will give Zoom access to the $24 billion global contact center market. It will combine Five9’s Contact Center as a Service (CCaaS) solution with Zoom’s broad communications platform.
Per Grand View research report, the
global CCaaS market
is expected to grow at a CAGR of 15.7% from 2021 to 2028.
Zoom’s deal with Five9, which offers services to call centers via cloud computing, will help expand the company’s Zoom Phone offering. While Zoom is predominantly known for its video conferencing services, it has been promoting various office collaboration products including Zoom Phone, a cloud phone system, and its conference software, Zoom Rooms.
The all-stock transaction values Five9 shares at $200.28 with shareholders in the company set to receive 0.5533 shares of Zoom class A common stock and is subject to approval by Five9 stockholders. Goldman Sachs & Co. LLC is serving as exclusive financial advisor and Cooley LLP is serving as legal counsel to Zoom.
We believe Zoom’s ability to generate strong cash flows will enable it to make further investments in product development and acquisitions in the future. This Zacks Rank #1 (Strong Buy) company has cash and cash equivalents (including marketable securities) worth $4.7 billion as of Apr 30, 2021. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Year to Date Performance
Image Source: Zacks Investment Research
User Growth, Portfolio Strength to Fend off Competition
Zoom shares have returned 7.3% in the year-to-date period against the Zacks
Internet – Software
industry’s decline of 6.7% as conferencing platforms, which also include
Cisco
’s
CSCO
Webex and
Microsoft
MSFT
Teams, have seen a surge in usage due to the coronavirus-induced shift to online working, learning and socializing.
Zoom has been benefiting from an expanding enterprise customer base backed by its cloud-native unified communications platform. Its solutions combine video, audio, phone, screen sharing and chat functionalities and make remote-working and collaboration easy.
Zoom is one of the leading names in the
unified communications and collaboration (UC&C)
space, which is expected to witness a healthy CAGR of 27.8% during 2021-2026, per Mordor Intelligence report.
User addition and portfolio expansion are being hailed as key catalysts for Zoom to continue on its growth trajectory in 2021. At the end of the fiscal first quarter of 2022, Zoom had roughly 497,100 customers (with more than 10 employees), up 87% year over year.
The company had 1,999 customers with more than $100,000 in trailing 12-month revenues, up roughly 160% year over year.
Demand for Zoom Video’s platform and expanding suite of solutions are expected to remain robust and aid the company’s top-line growth in the near term.
Moreover, a strong partner base that includes the likes of Atlassian, ServiceNow and Dropbox is expected to benefit the company in winning enterprise customers.
The availability of Zoom For Home, which supports remote working for business professionals, has been a key catalyst.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report