You can zoom in to buy Five9 in an all-stock deal worth $14.7 billion

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Zoom Video Communications Inc. , the video conferencing service that has become a household name globally during the pandemic, to use some of the resulting increase in its share price into a $14.7 billion acquisition to secure growth.

The Five9 Inc. all-stock deal will help. Zoom, a provider of cloud-based customer service software, is working to expand its potential offerings to corporate and enterprise customers. The company said Sunday that the growth opportunity will allow Zoom to tap into the $24 billion call center market.

Zoom, which began trading in public markets in 2019, has been one of the biggest beneficiaries of the shift to remote work and distance education. The company’s stock has more than tripled in value since widespread shutdowns prevailed in the US and elsewhere more than a year ago.

Zoom in recent months has stepped up efforts to ensure it continues to grow even as the effects of the pandemic wear off and people return to their desks and switch to hybrid work.

“The trend toward a mixed workforce has accelerated over the past year, leading to call center shifts to the cloud and increased customer demand for personalized, personalized experiences,” Zoom CEO Eric Yuan said in a blog post announcing the deal.

The deal is Zoom’s largest ever acquisition. Last year it bought Keybase Inc. To help it build end-to-end encryption capabilities for its video conferencing service, and last month it acquired translation software company Kites GmbH.

Yuan said the Five9 deal will help support the company’s Zoom Phone business, which replaces office phone systems with a cloud-based service.

Many companies use call centers or call centers to provide agents who answer customer questions. The cloud-based, online call center market has been gaining popularity in recent years. The pace of adoption of this technology accelerated during the pandemic, when many call center employees were working remotely.

The other competitors in the sector are Amazon. The cloud division of com Inc. and Genesys Telecommunications Laboratories Inc. and NICE inContact.

Zoom isn’t the only tech company using its soaring share price to help fund a major acquisition. Business software provider Salesforce.com last year agreed to acquire Slack Technologies Inc. For $27.7 billion in stock and cash – one of the most visible examples of a big player in the cloud computing race to add strength to the pandemic’s remote work boom. Advanced Micro Devices Inc. Last year, it bought rival chip maker Xilinx in a $35 billion all-share deal.

Zoom’s revenue in the three months to April 30 is up 191% from a year ago to about $956 million. Its stock has more than doubled in value since last year, giving Zoom a market value of $106.7 billion, according to FactSet.

Zoom was primarily known for offering free video conferencing services during the pandemic, but paying users have also grown exponentially as companies move to connect with their employees and customers. Zoom ended the year with 467,100 customers with more than 10 employees, a nearly sixfold increase from the previous year.

As part of the agreement, Five9 shareholders will receive 0.5533 shares of Zoom common stock for each share of Five9 Inc. Zoom’s shares have risen more than 46% over the past year, buoyed by increased user numbers since the pandemic.

“Combining efforts with Zoom will provide Five9 business customers with access to the best solutions, especially Zoom Phone, that will enable them to drive more value and achieve real results for their business,” said Rowan Trollope, CEO of Five9.

Zoom said the two companies’ boards of directors approved the deal, which is subject to approval by Five9 shareholders. She said the deal is expected to expire in the first half of 2022 and also needs approvals from regulators.

Once the deal closes, Five9 will be the operating unit of Zoom. Mr. Trollope will remain in his position and become president of Zoom, reporting to Mr. Yuan.

Write to PR Venkat at [email protected] and Newley Purnell at [email protected]

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