eResearch | Last month Zoom Video Communications (NASDAQ: ZM), an American communications technology company, announced the acquisition of Five9 (NASDAQ: FIVN), a leading provider of cloud contact center software based in the U.S. and Kites, which provides real-time Machine Translation solutions.
Five9 Acquisition
Founded in 2003 in California, Five9 is a contact center software based on cloud technology. Through its Intelligent Cloud Contact Center, Five9 helps to improve the overall customer experience.
Five9 works in digital engagement, analytics, workflow automation, workforce optimization, and practical AI in a network of more than 2,000 customers worldwide. Ultimately, by enhancing agent and supervisor productivity and by connecting contact centers to the businesses, Five9 helps to improve customer loyalty and increase revenue.
The Transaction
Five9 shareholders will receive 0.5533 shares of Zoom Class A common stock for each share of Five9. Based on the closing price of Zoom Class A common stock on July 16 and values the transaction at almost $14.7B or $200.28 per Five9 common stock. The price paid represented a 12.8% premium on the closing price of $177.6 on July 16.
Subject to customary approvals, the deal is expected to close in the first half of 2022 and both Board of Directors of Zoom and Five9 have already endorsed the transaction.
Following the deal, Zoom expects to speed up its long-term growth opportunity with the addition of the $24B contact center market. Additionally, Five9 applications allow management and enhancement of customer interactions across several different channels in which Zoom expects to solidify its presence among enterprise customers.
FIGURE 1: Zoom and Five9 Combination
“We are continuously looking for ways to enhance our platform, and the addition of Five9 is a natural fit that will deliver even more happiness and value to our customers,” said Eric S. Yuan, Founder and CEO of Zoom.
Kites Acquisition
On June 29, Zoom announced the acquisition of Kites GmbH, a start-up focused on real-time Machine Translation solutions. The transaction is expected to build upon Zoom’s platform and improve meeting productivity. Zoom believes that Machine Translation technology will play a strategic role in enhancing the current platform for customers worldwide.
Kites GmbH
Founded in 2015 by Dr. Sebastian Stüker and Dr. Alex Waibel, the Company aims to break down language barriers and bring seamless cross-language interaction to reality. Kites is a start-up developed to provide real-time Machine Translation (“MT”) solutions.
Deal Highlights
- The details of the deal were not disclosed.
- Zoom will be assisted by 12 research scientists from the Kites’ team and will provide multi-language translation capabilities to the Zoom users.
- Zoom is considering opening an R&D department in Germany in the future where Dr. Waibel will be advising on Zoom’s MT research and development.
“Kites emerged with the mission of breaking down language barriers and making seamless cross-language interaction a reality of everyday life, and we have long admired Zoom for its ability to easily connect people across the world” said Dr. Waibel and Dr. Stüker.
Industry Overview
According to a research report published by Global Market Insights in 2021, the Machine Translation (MT) market revenue should achieve $3 billion by 2027.
MT market growth has been boosted by the increasing demand for high-speed translation and content localization.
Interestingly, MT systems have specific demands from the health care sector. Users have the necessity of understanding health information in their own language. Innovative technologies to fight the Covid-19 pandemic have been supported by health care facilities.
As an example, in August 2020 MyGov Covid-19 website in India was streamlined with a platform that translates the site into ten Indian languages called Anuvadak.
Key players in the MT market are Alibaba Cloud (NYSE: BABA), Amazon.com (NASDAQ: AMZN), Cloudwords, Google (NASDAQ: GOOG), IBM Corporation (NASDAQ: IBM), Microsoft Corporation (NASDAQ: MSFT), Moravia IT, Omniscien Technologies, Raytheon Technologies (NYSE: RTX), Systran International, Tencent Cloud (SEHK: 700), and Yandex Cloud (NASDAQ: YNDX).
Zoom Video Communications
Founded in 2011, Zoom is headquartered in California and provides a featured communications platform as a scalable and safe option for individuals, small and large businesses.
FIGURE 2: Zoom and Five9 – 1-Year Stock Chart
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