Vonage seems to be on a bit of a roll recently. Following their previous acquisition of the leading Video API provider TokBox, the now UCaaS giant has announced an agreement to acquire leading CPaaS solution provider NewVoiceMedia.
While I’m not too surprised to see Vonage snatch up a Communication and Contact Center platform to add into their portfolio, it is a little surprising to see just how quickly they are pushing forward and committing to their new growth strategy.
Clearly, Vonage is looking to move beyond just a leading Business VoIP provider, pushing full force into becoming a Cloud Communication powerhouse, and doing so by snatching up some of the best-of-the-best solutions.
The Nitty Gritty Details
For a whopping $350 million paid in cash, Vonage has entered into an agreement to acquire the formerly privately-held NewVoiceMedia. This is actually pretty huge, as Vonage hasn’t previously had a clear cut or dedicated Contact Center as a Service solution.
According to their formal presentation, Vonage expects this deal to close within Q4 of this year (2018), following necessary approvals of course. By bringing in this entirely new aspect to their platform, Vonage is planning to utilize and integrate the solution with their existing assets to “create an expanded enterprise communications software suite.”
Back to the details, Vonage is financing this acquisition through a combination of existing “revolve capacity, cash on hand, and cash on the balance sheet of NewVoiceMedia,” according to the announcement.
What’s even more interesting, however, is that original announcement explains that “the value paid for NewVoiceMedia represents approximately 3.8x projected 2019 revenue.” Based off this, Vonage further expects to realize “annual run rate synergies of approximately $10 million by year-end of 2019” with predictions of that reaching significantly higher by year-end of 2020.
Who is NewVoiceMedia?
So, who exactly is NewVoiceMedia, and why did Vonage go for this previously privately-held provider specifically? That’s a good question, and the answers aren’t too hard to uncover.
Right off the bat, NewVoiceMedia describes themselves as “Cloud Contact Software Designed for Salesforce.” As they are a “global contact center platform,” NewVoiceMedia is one of the largest cloud contact center providers around the world.
With over 700 mid-market and enterprise customers, NewVoiceMedia offers a completely global network including a strong presence not only in the U.S., but within Europe, The Middle East, Africa, Asian and Pacific markets as well. In fact, NewVoiceMedia boasts that they support 60+ countries around the globe, and are able to count some pretty big names among their users.
But of course, their global presence isn’t all they’ve got going for them. Listed as a Leader in Gartner’s Magic Quadrant report on Contact Center as a Service for Western Europe, NewVoiceMedia is considered a “pure-play” company.
Meaning, NewVoiceMedia places a high priority on a particular product or solution. In this case, the provider differentiates themselves from other solutions by offering incredibly deep and advanced integration with popular CRM platforms, with a heavy focus on Salesforce.
Now, many providers offer strong integrations, but NewVoiceMedia’s solution is at least partially designed with intense Salesforce CTI integration in mind, which makes perfect sense seeing how Salesforce is one of the most popular, globally available, CRM solutions on the market. NewVoiceMedia specifically leverages these robust CRM relationships to offer unique value to end-users, ultimately driving sales.
What Does this Mean for Vonage?
Of course, the absolute major win here for Vonage is the inclusion of a completely Cloud focused Contact Center solution, one that could potentially integrate neatly into their existing product stack.
As I mentioned above, Vonage has been previously lacking this segment within their solution offerings, instead focusing more on Business VoIP, Unified Communications, and even their robust API platform with Vonage. What is a little confusing here is that Vonage just recently announced and introduced their own Vonage CX Cloud Contact Center solution, but we will have to wait and see how these two platforms will work together.
We actually saw the provider’s expansion begin with the inclusion of TokBox just a little while ago, and it’s of no surprise really to see them pushing forward even further.
I would also fully expect to see a new marriage between the Video API introduced with the TokBox acquisition on top of this entirely new Contact Center platform. According to the original announcement, “Vonage and NewVoiceMedia will be addressing a total addressable market that is expected to grow 60% over the next four years to approximately $80 billion, according to IDC.”
By absorbing this new contact center solution, Vonage is diving headfirst into an $8 billion market, and what better way to do it than with what is already considered a leading, globally capable provider.
The major benefit to Vonage here is the simple the fact that they are absorbing a cloud-based solution that has the potential to easily integrate directly with their existing platforms. But looking even further, within their investor presentation, Vonage outlined a few other positive outcomes for both providers:
- Single UCaaS + CCaaS Platform which enables product-level combination of both solutions and cross-sell with owner economics
- Strengthens Vonage’s sales footprint and penetration of mid-market and enterprise clients globally
- Bolster CPaaS roadmap through future addition of programmable contact center tools
- Introduces deep CRM integration and go-to-market relationships, particularly with Salesforce
- Positions Vonage at scale in the large and high-growth cloud contact center market.
In fact, what’s really interesting to note is that this acquisition will directly position Vonage as the largest independent cloud communications company, when measured by revenue alone.
Vonage CEO Alan Masarek explained:
“We are thrilled to announce the acquisition of NewVoiceMedia, which represents a major step forward in the realization of our strategic vision to deliver a differentiated, fully-programmable communications solution that drives more meaningful customer interactions and better outcomes for businesses.”
What Will Everything Look Like after the Dust Settles?
At the end of the day, Vonage is most likely planning to directly absorb NewVoiceMedia into their existing portfolio, with deep integration to their already successful UCaaS platform. How exactly we will see Vonage offering, branding and marketing this new solution is yet to be seen.
But when it comes down to organizational changes and overall intent, the original press release for this announcement does shine some light on the near-future plans. First off, NewVoiceMedia’s leadership team will be joining Vonage in order to “continue to drive growth and innovation in cloud contact center.”
Dennis Fois, CEO of NewVoiceMedia, commented:
“Vonage and NewVoiceMedia share a powerful vision to serve businesses with cloud communications that connect employees and enable personalized conversations with their customers and prospects. Together, we can help businesses create richer experiences through a state-of-the-art, global, programmable cloud communication platform.”
At least initially, Mr. Fois will continue to directly lead NewVoiceMedia, with Vonage leveraging his 25 plus years of experience in international leadership, strategy, sales and marketing within both technology and financial services market.
However, the press release does go further to explain that “upon closing, the senior leadership team and its more than 400 employees, compromised of talented business leaders, skilled technologies, and a strong sales organization, will join Vonage.”
Dennis Fois, CEO of NewVoiceMedia, commented, “Vonage and NewVoiceMedia share a powerful vision to serve businesses with cloud communications that connect employees and enable personalized conversations with their customers and prospects. Together, we can help businesses create richer experiences through a state-of-the-art, global, programmable cloud communication platform.”
While nothing is cleanly laid out just yet, I would fully expect to see Vonage directly integrate NewVoiceMedia’s platform into their own, in an attempt to create a well-rounded and simplistic user experience in order to deliver the best solutions possible to customers and clients.
A Follow Up to the TokBox Acquisition
I did briefly want to take a second to look back at Vonage’s previous announcement to potentially apply additional context, and some speculation on my own part. As we saw a month ago, Vonage acquired the leading WebRTC Video API provider TokBox.
As I wrote during that announcement, this then all-cash transaction added in a new critical aspect to Vonage’s existing communications platform, further expanding their support for video. What is particularly interesting to myself is that TokBox is a leading provider leveraging WebRTC, another technology I have discussed previously.
Without going into too much detail, the major benefit of WebRTC is the simplicity behind the protocol — users do not need to download or install any plugins, the necessary data for compatibility is within the web browser or application.
I am personally very curious to see how this overall strategy plays out, now with not one but two leading providers and entirely unique solutions making their way into Vonage’s platform. It is entirely possible that Vonage may look to expand the TokBox acquisition beyond video conferencing tools, introducing a new Video based Contact Center solution.
The Bottom Line
I’m not trying to say this is the only reason they grabbed both providers, far from it. However, chances are these are both highly calculated moves that will potentially slot together in some way.
Again, only time will tell and I am curious to see how everything follows up, but at the end of the day this is clear evidence of Vonage pushing full steam ahead in an effort to grow their portfolio into a much more well-rounded offering, positioning them even closer to, and in some cases ahead of, the competition.
