CRM - Zoom's Acquisition Of Five9: 1 + 1 2
- Zoom is acquiring Five9 in an all-stock deal at an enterprise value of ~$15B.
- At 25x P/S, Five9 seems like an expensive purchase. However, Zoom is using market currency to make this acquisition. Hence, Five9 could prove to be a very smart buy.
- By entering the $24B contact center market, Zoom is expanding its TAM to $86B (~40% jump in TAM).
- The combination of Zoom and Five9 creates a best-of-breed cloud communications portfolio that's likely to win significant market share. Therefore, this deal could be a needle-mover for Zoom.
- Although I like the Five9 acquisition, Zoom already is trading at its fair value with expected returns only just above my investment hurdle rate. Hence, I rate Zoom a modest buy at $375.
For further details see:
Zoom's Acquisition Of Five9: 1 + 1 > 2