Cloud Stocks: Analysis Of Zoom’s Five9 Acquisition


Online video conferencing player Zoom Video Communications (Nasdaq: ZM) has benefited from the pandemic conditions. The company is continuing to expand its market presence through acquisitions. Recently, it announced the acquisition of Five9, its biggest acquisition so far.

Zoom’s Financials

Revenues for the first quarter grew 191% to $956.2 million, shattering the market’s forecast of $908.18 million. Excluding items, Zoom reported an EPS of $1.34, again beating analysts’ estimate of $0.98.

Among key metrics, Zoom now has more than 497,000 customers with more than 10 employees, recording a growth of 87% over the year. Customers contributing more than $100,000 in trailing twelve-month revenues grew 160% to 1,999.

It forecast revenues of $985-$990 million for the second quarter with an EPS of $1.14-$1.15. It expects to end the current year with revenues of $3.975-$3.990 billion and an EPS of $4.56-$4.61. The market was looking for revenues of $991.29 million and an EPS of $1.16 for the quarter and $4 billion for the year with an EPS of $4.68.

Zoom’s Acquisitions

Recently, Zoom announced the acquisition of California-based Five9 (NASDAQ: FIVN) for an estimated $14.7 billion. Founded in 2001 by Gus Laredo, James Southworth, John Sung Kim, Lovepreet Singh, and Ray Soto, Five9 is a provider of cloud software for the enterprise contact center market. It provides access to a cloud-based contact center software that is reliable, secure, and compliant, thus increasing agent productivity and delivering tangible business results, while also creating memorable customer experiences.

As explained by its former CEO and current Executive Chairman Mark Burklaud, it is a routing engine for customer interactions that intelligently distributes multi-channel interactions between the consumer and the agent in the contact center. Additionally, being a cloud-based solution, the platform also allows companies to migrate to its platform with minimal upfront investment.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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