Zoom to Acquire a Contact Centre Vendor?

Zoom execs have held private discussions over an expansion into the contact centre space, according to a report by The Information.

Citing two people with “direct knowledge of the matter”, the publication said that CEO, Eric Yuan, and others in the Zoom leadership team have pondered whether a move into CC should involve an acquisition or the ground-up development of Zoom’s own solution.

The report comes as Yuan prepares to face investors following the publication of Zoom’s quarterly results later today.

UC Today has contacted Zoom for comment, while the vendor declined to comment in The Information’s report.

While the rumours may come as a surprise to many, Zoom has already dipped its toes into the contact centre space through partnerships with the likes of Genesys, Five9, inContact, Talkdesk and Twillio – according to the Zoom website.

Zoom Phone, which has seen tremendous growth since its launch two years ago, has played a crucial role in these integrations.

When the partnership with Genesys was announced last year, Yuan said that Zoom’s growing presence in the contact centre space was “setting a new standard for employee and consumer communication and collaboration”.

 Zoom has not been an acquisitive business over the course of its 10-year existence, with the sole deal coming last May amid immense scrutiny around cybersecurity.

This made its revelation that a recent funding round could be used to fuel acquisitions all the more intriguing.

In a filing with the SEC it stated:

“We may use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies, although we do not currently have any plans or commitments for any such acquisitions or investments”

UC Today’s Take

While this is, at most, speculation, it’s worth looking at who may (or may not) be an option for Zoom if it were to go down the acquisition route.

Zoom did say that the majority of the cash raised recently would be used as working capital and, at $2bn, these funds alone would not be enough to hook in an established contact centre provider.

Twilio, for example, has a market cap of over $60bn, with Five9 valued at $12bn.

While Zoom’s own valuation dwarfs the pair at $114bn, we think an acquisition of that size is highly unlikely – particularly given Zoom’s history of building its own functionality, rather than acquiring.

Other leading names such as 8×8 and Vonage are valued under $4bn but we think these platforms are likely too complex for what Zoom is looking for at this stage.

Elsewhere, Zoom does have a partnership with RingCentral (which has a market cap of $33bn), but this is in the UC space and is looking like winding down as RingCentral pushes its own video platform.

We think that Talkdesk would seem like a more realistic target. The vendor was valued at $3bn during its Series C funding round last July and has been a Zoom contact centre partner since 2019 – longer than some of the other businesses mentioned above.

But overall – if the rumours are true – we expect it to be more likely that Zoom makes smaller, tuck-in acquisitions to complement the development of its own platform, and they wouldn’t be the first to do so.

It’s well known that margins in CC are much higher than in UC, which has led to a number of vendors – including RingCentral, Vonage 8×8 and Twilio – to make the transition.

It will be interesting to see if Yuan is quizzed about the reports during today’s earnings call. Zoom enjoyed a blockbuster 2020 but, with pandemic-forced social distancing expected to be relaxed as we move deeper into 2021, investors will want to know where Zoom’s next wave of growth is coming from.

It could well be the contact centre space.