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Zoom, Five9 Call Off the Wedding: What’s Next?

Reluctant shareholders have put the kibosh on Zoom’s intention to buy contact-center-as-a-service provider Five9. The deal would have amounted to almost $15 billion. 

But it was an all-stock deal. As it turns out, Five9 shareholders weren’t such fans of that structure. Zoom’s stock has declined 25% since the video conferencing behemoth announced in July it would buy Five9. Those share prices were not shaping up in Five9 investors’ favor. So, on Sept. 30, they voted against Zoom’s proposed, $14.7 billion purchase. As a result, Zoom and Five9 announced they had mutually terminated the acquisition.

Zoom had sought out Five9 for its cloud contact center expertise. Throughout the pandemic, organizations worldwide have relied on Zoom to keep their teams intact through video conferencing. To help users through uncertain times, Zoom has understood that it needs to deliver even more functional and appealing features, and it made good at Zoomtopia 2021. Part of its new platform announcements included the Video Engagement Center, which contains important contact center capabilities. Notably, though, Zoom debuted that component separate from any Five9 announcements. Did the company see Five9 shareholder rejection coming two weeks later or was it already planning to incorporate Five9 into its VEC portfolio? Either way, the answer might not matter much. Zoom and Five9 say they will still work together.

“We will continue to partner with Zoom like we did before, and just as we partner with other UC providers like Microsoft Teams, Nextiva, Mitel, and others,” Five9 told analysts in an Oct. 1 statement. “This allows us to offer customers the choice they often crave when looking at building out their [customer experience] ecosystem.”

Zoom CEO Eric Yuan said his company will “maintain our valued existing contact center partnerships with companies like Five9, Genesys, NICE inContact, Talkdesk, and Twilio.” 

Amalgam Insights believes Five9 did indeed present Zoom with an attractive acquisition target. The 20-year-old Five9 stands out as a pioneer in cloud contact center. It was among the first contact center developers to understand the need for multimodal chat — not just phone conversations, which often frustrate users enduring iffy interactive voice response, but giving agents and customers the ability to communicate over email, social media, chat function, and text. It also homed in on the importance of easy-to-access analytics to help improve the customer experience in real-time. Combining Zoom and Five9 would have added more heft to Zoom’s offerings. Nonetheless, for its part, Five9 is doing just fine on its own as a standalone public company (fluctuating stock prices notwithstanding); it boasts a $10.6 billion market capitalization. While a union between it and Zoom would have created a global giant, both companies can fuel success by partnering with one another — again, as they say they will do. 

Even so, Zoom needs to diversify. The company tripled its value over the past two years, thanks in no small part to COVID-19. Demand for its services led to an extra $50 billion (and counting) in its market cap and spending power. Now is the time for Zoom to prove it can hold onto, and keep powering, its dominant position. For sure, the company made waves at its Zoomtopia 2021 event in mid-September, giving Amalgam Insights analysts reason to predict the video conferencing provider is aware of the mandate in front of it. Zoom debuted much-needed enhancements — from live translation and transcription and Smart Gallery improvements to hot desking and events hosting — that promise to make video conferencing far more than a pandemic-related enabler. Zoom appears to be hyperfocused on innovation.

Still, if it decided to renegotiate a Five9 purchase with cash replacing some stock, the pairing would make a natural fit despite a first failed attempt. If that doesn’t happen, Zoom should keep an eye out for other unified communications and contact center players that would beef up its platform in unique ways. Five9, meanwhile, may be courted by the likes of Salesforce or Adobe as the contact center becomes an even more ferocious battleground for supporting customer centricity. Both of those companies are high on the list of vendors needing to augment their video conferencing platforms with differentiated integrations, and both have deep pockets.

Overall, even if Zoom does not retool its bid, or if Five9 moves on to greener pastures, both Zoom and Five9 must stay trained on the future. Hybrid work represents the next major paradigm for organizations, and it’s a challenging one for them to navigate. They have to accommodate in-office and remote workers, and many of those people will flow between the two modes. This calls for stringent attention to concerns including data protection, yet requires easy-to-use tools and omnipresent support for the shifts between in-person and at-home working. The vendors that make hybrid work simple and smooth are the ones that will prevail. As Zoom continues its mission to “make video communications frictionless and secure,” it must continue to lead both with the innovation and flexibility that made it a surprise hit in 2020. And regardless of whether Five9 is acquired or remains an independent vendor, the demand for omnichannel and preferred channel support will stick. As such, Five9 will keep evolving cutting-edge technologies to improve the state of customer interaction.