Earlier this month, it was rumoured that Five9 was on the cusp of a Zoom takeover following discussions that had already taken place.
These rumours were made more believable by the fact that just over two years ago, Zoom made an offer to acquire Five9. However, the contact centre software provider Five9 chose to turn it down, following pressure from investors and a sharp decline in Zoom’s share price.
Whether these talks took place or not, both sides released statements saying they were not interested in such a deal, although Five9 admitted it was “working with advisers as it seeks to gauge interest from potential buyers”.
Seeking Alpha reported that a Zoom representative said on a bus tour that it did not want to acquire Five9 and was instead looking to focus on building itself.
Meanwhile, Five9 released a similar statement:
Although Five9’s general policy is not to comment on market rumours or media speculation, Five9 was approached with such an opportunity; however, Five9 is not pursuing any such acquisition.”
Should Zoom and Five9 Team Up?
From this point, it’s purely speculative, but a group of analysts recently interviewed by Charlie Mitchell, Senior Editor at CX Today, have discussed whether such a deal would be beneficial to either side while bringing compelling insights into their current states and future prospects.
Jon Arnold, Tech Thought Leader, Analyst and Speaker, believes that “maybe second time is the charm, but it’s not going to be, and I think it may speak to the idea that Zoom is not getting into the [CCaaS] market as fast as they probably want to.
Perhaps Zoom feels some degree of regret at not snapping up Five9 when it had the chance two years ago: “Complex enterprise-scale deployments are not [Zoom’s] forte at all, that’s why Five9 was a good partner for them… and I think they are seeing now that if they had done it right the first time, we wouldn’t be having this conversation.
“Now… I think it is too late for that move. Zoom will continue to keep doing it their way, and we will see where that goes.
I like Five9 better as a standalone, I always have, and I think it is healthier for the market to have more of these pure plays out there.”
Despite the limitations of being a standalone, such as operating within the limited marketplace of CCaaS, Arnold says, “They are viable, they are making money, so I don’t see why they need to sell right now, but if the right offer came along I am sure they would be game.”
Zeus Kerravala, Founder and Principal Analyst at ZK Research, does not believe there was any seriousness behind the negotiations which were alleged to have taken place.
If there was a bargain on offer, he says Zoom would have gone for it, but there was unlikely to have been much of an emotional investment in these talks on either side.
In fact, Kerravala witnessed that two years ago, nobody seemed upset about the negotiations falling through.
He agreed with Arnold that Five9 is probably better off as a standalone and added that Zoom’s CEO, Eric Yuan, is a “builder, not a buyer”. While Zoom is not getting there as fast as it would maybe have liked to, Kerravala believes that “2024 will be the year of Zoom Contact Centre”.
He concluded that Zoom going it alone is their “best path” forward partly because of the difficulty in integrating their two very different back-end architectures. Dan Miller, Lead Analyst and Founder of Opus Research, and other analysts involved in the discussion also agreed that integrating the two companies would not be easy.
Zerravala thinks there may have been “cursory discussions at best” regarding the acquisition rumours.
First Impressions
Initially, analysts appeared to be a little more divided over the question. Chief Global Analyst at Techaisle, Anurag Agrawal, believed the takeover could help to take Zoom to the next level: “The fusion of Zoom’s supremacy in video conferencing and Five9’s proficiency in cloud contact centre could potentially forge a robust, all-in-one platform for customer interaction.
“This synergy could not only draw in new clientele but also fortify their standing against competitors such as Microsoft and Cisco.”
On the other hand, Steven Karachinsky, CEO at ZIRO, did not think the deal would make any sense, which seems to chime more with the latest round of analysis on CX Today.
Karachinsky believed that from Zoom’s perspective, it is already developing its own contact centre abilities, and Five9 should not be tempted as it is in a much more “robust” position than Zoom.
