Zoom stock is up over 9% in early trading this morning. Five9 shareholders were ultimately unsatisfied with the small premium that Zoom was set to pay. We look forward to welcoming the Keybase team and are excited for the possibilities of what we can build together. Sign up for free newsletters and get more CNBC delivered to your inbox. In a bid to assuage privacy concerns, video conferencing giant Zoom today acquired encrypted messaging and file-sharing platform Keybase.. When technology companies see a successful product, they often copy it as quickly as they can. Zoom has a long way to go before it can claim to have a portfolio of cloud software products, like Salesforce, Adobe and ServiceNow. Zoom Rooms and Zoom Phone participants will be able to attend if explicitly allowed by the host. Discovery CEO David Zaslav addressed a company-wide town hall meeting via Zoom on Wednesday and stated flatly, "We are not for sale, absolutely, not for sale." The speculation about a possible Comcast-WBD merger dates back to the summer of 2021 , when Zaslav and Comcast CEO Brian Roberts met at the Allen . The Five9 deal is one of the 10 largest U.S. enterprise software transactions on record, according to FactSet, and is bigger than any acquisition ever by Amazon, Google, Oracle, Cisco or Adobe. Keybases experienced team will be a critical part of this mission. "Overall, we are encouraged by Zoom's strategy to supercharge its platform with this acquisition rather than rely purely on its own internal R&D chops, which would have taken years to scale," wrote VanVliet, who has a buy recommendation on Zoom, in a report on July 19. In complement to its failed merger's press release, Five9's management highlighted significant . The company had $1.9 billion in cash and equivalents on its balance sheet at the end of July. Since its launch in 2014, Keybases team of exceptional engineers has built a secure messaging and file-sharing service leveraging their deep encryption and security expertise. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Lyft (NASDAQ: LYFT) stock has been rising on the back of rumors of acquisition from an activist investor. "Acquisitions are not only useful to acquire customers but are super critical to satisfy a product vision you may have.". Zoom became the most well-known video-conferencing app during the COVID-19 after gaining about 635 % in 2020. The. Another enterprise giant that may see value in Zoom is Salesforce. Five9 adds a projected $650 million in revenue next year to the $4.8 billion in sales that analysts expect from Zoom, according to StreetAccount. Join Us December 13-15, 2022. If your company uses Teams at work, you probably use Teams for video. Please see our June 17, 2020 blog post for more information. In some cases, you can identify forward-looking statements by terms such as anticipate, believe, estimate, expect, intend, may, might, plan, project, will, would, should, could, can, predict, potential, target, explore, continue, or the negative of these terms, and similar expressions intended to identify forward-looking statements. It is not decrypted until it reaches the recipients devices. Free-to-use and low-cost Zoom accounts have been lifesavers during the pandemic, and those small businesses may be a growth engine for technology companies long-term. Acquisition talks cooled for a while and picked up in the last three months, said people with knowledge of the transaction, who asked not to be named because the discussions were confidential. Zoom said in July that it was acquiring Five9 in an all-stock purchase for $14.7 billion, its first billion-dollar-plus purchase and, at the time, the second-biggest tech deal of the year. Five9 CEO explains why Zoom deal failed. Zoom Video reported revenues of $1.1 billion in the last reported quarter, representing a year-over-year change of +4.9%. "Contactcenterisanabsolutelyreallyimportantpartofthephonestrategy," Steckelberg said in response. But lately, Wall Street has been asking for more and pushing. CNBC's Alex Sherman contributed to this report. These end-to-end encrypted meetings will not support phone bridges, cloud recording, or non-Zoom conference room systems. The video chat company's historic growth during the Covid-19 pandemic vaulted its market cap from $9.2 billion at the time of its 2019 IPO to a peak of $159 billion in October, putting it tentatively even with Cisco. Zoom is actually already integrated into the larger Salesforce platform as well, so bringing the product in-house could bring added benefits. explore acquisition. April 2022. Additionally, some features that are widely used by Zoom clients, such as support for attendees to call into a phone bridge or use in-room meeting systems offered by other companies, will always require Zoom to keep some encryption keys in the cloud. Five9 shares fell 2% in extended trading following the statement from the companies. When Zoom topped the $100 billion mark last year, it had been public for just over 14 months. Zoom's agreement to buy cloud contact center software company Five9 was scuttled on Thursday, after Five9 shareholders rejected the deal. Despite dominating social media, Facebook has struggled to enter the enterprise market in a meaningful way. $76.14 Five9 isn't the only player in cloud-based business contact centers, so Zoom could still go shopping. We are proud to announce the acquisition of Keybase, another milestone in Zooms 90-day plan to further strengthen the security of our video communications platform. Like with Microsoft, Slack and Zoom could be a great start to a small business's app suite, creating a feeder pipeline for the Salesforce platform. We. Zoom also shuffled internal responsibilities this year, putting CFO Kelly Steckelberg in charge of business development, a job that had previously been held by operating chief Aparna Bawa, people close to the matter said. Price as of December 9, 2022, 4:00 p.m. The video conferencing company isn't part of a big suite offered by a big tech company that will be maintained long after the pandemic ends. 2022 CNBC LLC. Learn More. Cost basis and return based on previous market day close. So why is Zoom's stock down 42% from its all-time high, and in freefall after another strong quarterly report? That's why selling to a larger company may be a smart move before everyone else adds the same functionality Zoom has. The CEOs, who both previously worked on collaboration products at Cisco, know each other well and forged a product integration in 2019, when Zoom launched a phone offering. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption Risk Factors and elsewhere in our most recent filings with the Securities and Exchange Commission (the SEC), including our annual report on Form 10-K for the year ended January 31, 2020. After reporting second-quarter 2021 revenue of $1.02 billion, up 54% from a year ago, management expects revenue of $1.015 billion to $1.02 billion in the third quarter. Getting there required three multibillion-dollar acquisitions and four distinct revenue sources. Zoom has lost about one-third of its value since then, despite reporting 191% revenue growth in the latest quarter, as investors prepare for a post-pandemic future and as competition picks up, most notably from Microsoft Teams. EPS of $1.07 for the same period compares with $1.11 a year ago. Eric Yuan, founder and chief executive officer of Zoom Video Communications Inc., speaks during the BoxWorks 2019 Conference at the Moscone Center in San Francisco, California, U.S., on Thursday, Oct. 3, 2019. Zoom to Acquire Solvvy and Advance the Next Frontier of Customer Service May 12, 2022 4 min read We're excited to announce that we've entered into an agreement to acquire Solvvy, a leading conversational AI and automation platform for customer support. A branch of the U.S. Department of Justice was reviewing the deal out of concern about potential foreign participation, according to a letter dated Aug. 27 that was sent to the Federal Communications Commission. However, not all forward-looking statements contain these identifying words. Comparably. Encryption keys will be tightly controlled by the host, who will admit attendees. Salesforce's COO denied the . According to Deadline, Warner Bros. Seagen (NASDAQ: SGEN) is down 3.3% in pre-open trading following news it named David R. Epstein as CEO, which is dashing M&A hopes. We are very excited about the future possibilities and really want to learn more. Zoom founder Eric Yuan poses in front of the Nasdaq building as the screen shows the logo of the video-conferencing software company Zoom after the opening bell ceremony on April 18, 2019 in New York City. "The thesis in favor of acquisition would be to pick up the asset on the cheap since it's lost so much. Chuang, who has been friends with Zoom CEO Eric Yuan since his pre-Zoom days at WebEx, says Yuan is now in a position familiar to Salesforce CEO Marc Benioff, whose company has more than doubled in value since mid-2018 to $240 billion. I mentioned that Microsoft already has a big presence in enterprise video conferencing, but buying Zoom would make it the dominant player. He followed by suggesting that details could be revealed around the time of the company's Zoomtopia conference in September. Representatives from Zoom and Five9 declined to comment. Zoom (ZM -0.28%) was arguably the biggest winner from the pandemic, becoming not only an indispensable tool for schools and businesses but also a household name. Editors note: This blog post was edited on Aug. 3, 2021 to include the most up to date information on Zoom encryption. Yuan went a step further in June on Zoom's quarterly earnings call. They never overlapped at Cisco Yuan left to start Zoom a year before Trollope joined but the connection is key as they both saw the challenges of retrofitting a legacy technology company for the cloud era. Five9 shareholders rejected Zoom's agreement to buy the cloud contact center software maker for what had been a $14.7 billion all-stock offer. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. There's no guarantee that businesses would be excited to add Facebook as an enterprise solution, but this could be a big foot in the door -- and if Facebook truly has enterprise dreams, it may need to make a big move to get into the market. To that end, we will be taking the following steps: We are committed to remaining transparent and open as we build our end-to-end encryption offering. Zoom Rooms and Zoom Phone participants will be able to attend if explicitly allowed by the host. That's potentially a decline sequentially, which is terrible for a growth stock trading for 24 times sales. Solvvys proprietary technology will broaden Zoom Contact Centers offering with scalable self-service and conversational AI. In other words, the stock market is giving Zoom the tools to become a major dealmaker. While it's still just a toddler on the Nasdaq, Zoom is now being forced to take on adult responsibilities for investors, thanks to its unexpectedly rapid ascent. By pulling together some existing functions, the company was able to offer a customer service experience inside the Zoom tool set. Between development of new products and big acquisitions into parallel markets, Yuan is trying to ensure that Zoom is more than just a pandemic stock, and that its status as an enterprise giant remains long after we say goodbye to Covid-19. "It allows them to use their currency to buy things that are impactful," said Alfred Chuang, a partner at venture firm Race Capital and the co-founder of BEA Systems, which Oracle bought for $8.5 billion. The company has built an. List of Zoom 's 4 Acquisitions, including Solvvy and Liminal Save Search Companies Contacts Investors Funding Rounds Acquisitions People Events Schools Hubs Saved Acquirer Name Add Acquisitions filter includes any Zoom E.g. Dogpatch Advisors. "The way we approach that today is through partnering. Zoom's market share in the higher education system is quickly eroding from Microsoft and Google. We are proud to announce the acquisition of Keybase, another milestone in Zooms 90-day plan to further strengthen the security of our video communications platform. Travis Hoium has no position in any of the stocks mentioned. Zoom soared past $100 billion in market cap without ever doing a significant acquisition or finding a second meaningful source of revenue. This could make the entire Salesforce ecosystem more valuable. This acquisition marks a key step for Zoom as we attempt to accomplish the creation of a truly private video communications platform that can scale to hundreds of millions of participants, while also having the flexibility to support Zooms wide variety of uses. Zoom's slowing growth is a sign that both workers are going back to the office and that big tech's assault on its business is starting to take hold. Dec 28, 2021 10:36AM EST. Once we have assessed this feedback for integration into a final design, we will announce our engineering milestones and goals for deploying to Zoom users. Zoom Video Communications ZM recently announced the acquisition of assets from Liminal a start-up offering an event production solution. "A Zoom acquisition is unlikely due to a number of factors," Bonner said in an email. Ultimately, the acquisition price was a modest 13% premium to Five9's last closing price before the announcement. "Ihopewewill be able todomore," he said, indicating that Zoom may go beyond integrations with call center technology providers. Video chat and conferencing aren't new, but Zoom became a verb when the pandemic started, putting a new focus on the service. "That said, it was in no way foundational to the success of our platform, nor was it the only way for us to offer our customers a compelling contact center solution.". In the three years since reaching a $100 billion market cap, Salesforce has completed four billion-dollar-plus deals, including Slack and the $15.7 billion purchase of Tableau. Global M&A has hit a record $2.4 trillion, up 158% over 2020, according to a Refinitiv Deals Intelligence reportthe highest since the company began collecting data in 1980. Five9 to remain a stand-alone company? If your school is a Google school, it probably uses Google Meet for video calls. Brent Leary, principal analyst and founder at CRM Essentials, who watches the customer service space, says that this may be a more practical deal than the one with Five9. One benefit I could see for Microsoft is that Zoom is a simple-to-use tool for small businesses that may not be using most of Microsoft's products today. Eric and Rowan are very good friends.". Our goal is to provide the most privacy possible for every use case, while also balancing the needs of our users and our commitment to preventing harmful behavior on our platform. Though the rumored $5 billion price tag would be more than Zoom currently has on hand, they would be able to leverage to make the deal. To help fix that problem, Zoom whose stock trades 35% below its October 2020 high announced it would pay $14.7 billion in stock to acquire Five9, a cloud-based customer-service software . The company acquired Slack in order to enter the enterprise communications market, and Zoom integrates into Slack already -- and could further entrench Salesforce as a business app. All Rights Reserved. Five9 also picked up customers that needed to set up remote and distributed call centers. I have invited Andy Carluccio (Liminal Co-Founder), Jonathan Kokotajlo (Liminal Co-Founder), and Sam Kokajko (Zoom Event Specialist Team, Manager) to the Zoom Test Kitchen on Friday, December 31st at 3:00 pm eastern.. Lyft's stock is down over 66% over the past year, as exuberance stemming from the previous few years that led to excessive valuations has started to moderate, especially within tech sectors, leading to many stocks retreating significantly from their highs. Zoom swung for the fences last summer when its stock value was soaring, offering almost $15 billion to buy Five9 to get . Cramer on Zoom-Five9: People like the deal due its cloud-based service, Zoom CFO Kelly Steckelberg on plans to innovate for a post-pandemic world, Zoom's acquisition of Five9 is a 'steal of a deal,' says analyst, Zooms acquisition of Five9 is a steal of a deal, says analyst. Today, audio and video content flowing between Zoom clients (e.g., Zoom Rooms, laptop computers, and smartphones running the Zoom app) is encrypted at each sending client device. Transaction Marks Key Milestone in Zoom's 90-Day Security Plan SAN JOSE, Calif. and NEW YORK, May 07, 2020 (GLOBE NEWSWIRE) -- Zoom Video Communications, Inc. (NASDAQ: ZM) and Keybase today announced that Zoom has acquired Keybase, a secure messaging and file-sharing service. Here's why I think selling would be the best option for Zoom long-term, plus three potential buyers who could use Zoom in their portfolios. The company was reliant on a single product and had completed just one tiny acquisition. We want to hear from you. Top Salesforce execs say it doesn't have a 'real appetite' for more huge acquisitions any time soon, and deny that it competed with Zoom on a key $15 billion deal. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Kites Team to Help Enhance Zoom's Machine Translation Capabilities. Zoom does not and will not proactively monitor meeting contents, but our trust and safety team will continue to use automated tools to look for evidence of abusive users based upon other available data. build a mechanism to decrypt live meetings for lawful intercept purposes. We will continue to work with users to enhance the reporting mechanisms available to meeting hosts to report unwanted and disruptive attendees. To make the world smarter, happier, and richer. May 2022. Zoom, the video-conferencing platform that became hugely popular during the Covid-19 pandemic, is spending a whopping $14.7 billion on cloud-based software company Five9 to boost its appeal with. Velchamy Sankarlingam, president of Product and Engineering at Zoom, certainly recognizes that this acquisition gives the company crucial functionality for competing in this space. As these big enterprises saw the success of Zoom, they copied parts of its product and folded video conferencing into their suite of tools, hoping to wedge Zoom out of the market. Zoom dives deeper into intelligent customer service with Solvvy acquisition. These end-to-end encrypted meetings will not support phone bridges, cloud recording, or non-Zoom conference room systems. As the company wrote in a blog post announcing the new service: Combining contact center functionality with Zoom unified communications solutions, Zoom Contact Center can operate as a standalone customer experience solution or integrate directly into an existing website or application. An ephemeral per-meeting symmetric key will be generated by the meeting host. For three months in a row, deals have topped $500 billion. "It allows them to use their currency to buy things that are impactful," said Alfred Chuang, a partner at venture firm Race Capital who previously co-founded BEA Systems and sold it to Oracle for $8.5 billion in 2008. This acquisition marks a key step for Zoom as we attempt to accomplish the creation of a truly private video communications platform that can scale to hundreds of millions of participants, while also having the flexibility to support Zoom's wide variety of uses. Shopify and Snap, which went public in 2015 and 2017, respectively, are the only companies in the group that trade for a richer multiple to sales. "The acquisition is expected to help enhance Zoom's presence with enterprise customers and allow it to accelerate its long-term growth opportunity by adding the . As we do this work to further protect our users privacy, we are also cognizant of our desire to prevent the use of Zooms products to cause harm. We are excited to integrate Keybases team into the Zoom family to help us build end-to-end encryption that can reach current Zoom scalability. With Solvvy, the company gets more automation and intelligence and the ability to clear routine questions without having to speak to a person. CNBC's Ari Levy contributed to this report. Our goal is to provide the most privacy possible for every use case, while also . The company's planned $14.7 billion purchase of Five9 is the first indication that it's willing to use its inflated market cap on big deals. Zoom will offer an end-to-end encrypted meeting mode to all accounts. Zoom's initial talks with Five9 date back to last year, according to people familiar with the matter. While some large tech acquisitions, most notably in the semiconductor industry, have been nixed of late by regulators, it's highly unusual for companies to willingly terminate their own deal. Making the world smarter, happier, and richer. And thats that, as the Zoom deal to buy Five9 is called off. REUTERS/Carlo Allegri. Got a confidential news tip? But Zoom said last week, when news of the review was reported, that it still expected the deal to close in the first half of 2022. The nine-year-old app's (Zoom) market crossed $140 billion in October 2020, surpassing Exxon Mobile, which was 130 years old. Another acquisition attempt from Zoom wouldn't surprise me. And Zoom is taking advantage, announcing earlier this week the $14.7 billion purchase of Five9, which sells cloud-based software to call centers. Conversational AI integration with Zooms communications platform seem like a nice combination that strengthens both sides and potentially creates better experiences for both customers and employees interacting with each other, he told TechCrunch. Zoom announced the deal earlier today, signifying that the video chat servicewhich has seen a massive surge in use in the midst of worldwide coronavirus lockdowns . Our customers will benefit from an automated, integrated, and easy-to-deploy contact center, which will help answer end-customers questions and solve issues faster improving the overall customer experience and driving operational savings, Sankarlingam wrote in a blog post announcing the deal. "Not everything has worked out," Chuang said, but he argues it's important to take take big swings, even if the business is currently in good shape. Merck (NYSE: MRK) was seen as a buyer of the company but an . ZoomInfo Acquisitions. If Facebook could acquire Zoom and leverage it to become an enterprise solution, it could develop Workplace and virtual reality for serious business use. The company's planned $14.7 billion purchase of Five9. explore acquisition. Zoom ( ZM -0.28%) was arguably the biggest winner from the pandemic, becoming not only an indispensable tool for schools and businesses but also a household name. In July, Zoom hired Abhisht Arora, a 21-year Microsoft veteran and Teams program manager, as its head of corporate strategy, reporting directly to Yuan. Get this delivered to your inbox, and more info about our products and services. Zoom has acquired the Zoom-based broadcast tools created by the startup Liminal, along with two of the company's co-founders, the videoconferencing platform announced in a post on its blog. Get this delivered to your inbox, and more info about our products and services. With revenue growth stalling out, Zoom needs to make something happen now or risk being pushed out of the market by bigger tech rivals. Zoom could invest in building the product itself, but customers "do not want to wait," Yuan said. The company has now lost an opportunity to quickly broaden its capabilities after its stock rallied during the coronavirus pandemic. We are also investigating mechanisms that would allow enterprise users to provide additional levels of authentication. clear filters. And that's exactly why I think it's a perfect buyout target now that the stock has come off its highs. 2022 2021 2020 2019 2018 2017 2015. Encryption keys will be tightly controlled by the host, who will admit attendees. The video-conferencing software company announced it's IPO priced at $36 per share, at an estimated value of $9.2 billion. The merger between Zoom Video Communications ( ZM -1.31%) and Five9 ( FIVN 2.16%). 2022 CNBC LLC. And unlike Facebook, Zoom would fold into Microsoft's existing services very nicely. Facebook, Microsoft, Zillow Search 4 results Statistics Edit View Timeline Export to CSV Transaction Name Acquiree Name We plan to publish a detailed draft cryptographic design on Friday, May 22. The cryptographic secrets will be under the control of the host, and the hosts client software will decide what devices are allowed to receive meeting keys, and thereby join the meeting. Taylor, perhaps naturally, sounded unconcerned, suggesting that major acquisitions can take time to digest. Zoom was looking to Five9 to reduce its dependence on the video and audio meetings that have become so popular within businesses and other organizations. Late last year, the company entered the live events space with the launch of a homegrown product called OnZoom, expanding the video platform beyond the workplace and betting that online gatherings, in some form, are here to stay. By June 2020, the value of the company was $67 billion. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. all all. Mergers and acquisitions have roared back this year, with potential takeover targets everywhere. But neither has anywhere near the name recognition as Zoom. Mitel? "When you have a very fast-growing company and become very successful, most people don't want to rock the boat," he said. Eventually the deal fell apart when the stock price plunged, but Zooms desire to get into customer service one way or the other didnt diminish. While the companies did not share a purchase price, Solvvy, which launched back in 2013, raised $16.5 million along the way, according to Crunchbase data. Shares of Zoom and Five9 moved 10% or more in a single week on several occasions this year, making it difficult to come to terms. Zoom soared past $100 billion in market cap without ever doing a significant acquisition or finding a second meaningful source of revenue. "I can't imagine this will be last one.". Analysts like BTIG's Matt VanVliet said the decision to buy instead of build is the right one. Yuan and Steckelberg drove the Five9 deal, the people said. If a company is already using Microsoft or Google, it may want to stick to that platform and eventually cut Zoom from its subscriptions, which is a challenge for Zoom as it doesn't have the same suite of solutions to offer as larger competitors. Five9 shareholders rejected Zoom 's acquisition because the offer did not appropriately value the cloud contact center software company, Five9s chief . But Keybase users are not happyand some are even threatening to delete their accounts. Bawa has assumed increased responsibilities elsewhere in the business. However, the encryption keys for each meeting are generated by Zooms servers. SAN JOSE, Calif.and SAN RAMON, Calif., July 18, 2021(GLOBE NEWSWIRE) -- Zoom Video Communications, Inc.(NASDAQ: ZM) today announced it has entered into a definitive agreement to acquire Five9, Inc.(NASDAQ: FIVN), a leading provider of the intelligent cloud contact center, in an all-stock transaction valued at approximately $14.7 billion. 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