Vonage Expands Vision in Cloud Contact Center Market with the Decision to Acquire NewVoiceMedia

By Sudipto Ghosh On Sep 20, 2018

Vonage’s Announcement to Acquire NewVoiceMedia Would Advance Company’s Strategy to Provide an Integrated, Cloud Communications Platform

Today, Vonage Holdings Corp. has entered into an agreement to acquire privately-held Contact Center platform provider, NewVoiceMedia. In an official press release, Vonage has agreed to acquire NewVoiceMedia for an equity price of $350 million paid in cash. The acquisition combines Vonage’s robust UCaaS and CPaaS solutions with NewVoiceMedia’s pure-play cloud contact center offerings, providing an end-to-end communication experience for a company’s employees and customers.

Vonage Addressing a Large and Growing Total Addressable Market

Together, 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. Within this, the contact center is a $9 billion market today, and with NewVoiceMedia, Vonage will be well-positioned to capture a healthy share of this opportunity with a recognized leader in the space.

Vonage CEO Alan Masarek said, “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.”

Alan added, “This acquisition accelerates Vonage’s growth strategy and leadership position in cloud communications, strengthens our presence with global mid-market and enterprise clients, and deepens our integrations and key go-to-market relationships with CRM providers, especially Salesforce.com.”

NewVoiceMedia Provides Scale in High-Growth, Cloud Contact Center Market

NewVoiceMedia is the largest privately-owned, pure-play, cloud contact center company globally, and is a recognized leader in the space. NewVoiceMedia is in the Leader’s quadrant of the Gartner CCaaS Magic Quadrant for Western Europe and was included for the third consecutive year on the Forbes Magazine Cloud 100, a list of the top 100 private cloud companies in revenue, sales growth, valuation, and culture.

Over 700 primarily mid-market and enterprise customers rely on NewVoiceMedia for a range of customer engagement use cases, from inbound customer support to outbound sales, including worldwide brands like Adobe, Siemens, Time Inc., FundingCircle, and Rapid7.

Dennis Fois, CEO of NewVoiceMedia, said, “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.”

NewVoiceMedia will continue to be led by Dennis Fois, who has more than 25 years of experience in international leadership, strategy, sales and marketing in the technology and financial services markets. Upon closing, the senior leadership team and its more than 400 employees, comprised of talented business leaders, skilled technologists, and a strong sales organization will join Vonage. Together, they will create an expanded customer experience center of excellence.

“Vonage is acquiring a high-growth software company that brings a cloud-native contact center solution that can be integrated with Vonage’s existing assets to create an expanded enterprise communications software suite and, as importantly, 400+ customer experience professionals, deployed globally,” observes Sheila McGee-Smith, President & Principal Analyst, McGee-Smith Analytics, LLC.

Sheila adds, “NewVoiceMedia is particularly well-positioned to address larger-scale deployments due to its global scale and strong partnership with Salesforce.com. Additionally, the NewVoiceMedia team will be a big part of jump-starting Vonage’s attack on the huge CCaaS market opportunity.”

Transaction Overview

Under the agreement, NewVoiceMedia shareholders will receive equity consideration of $350 million. Vonage is financing the acquisition through a combination of existing revolver capacity, cash on hand and cash on the balance sheet of NewVoiceMedia. Pro forma for the transaction, Net Debt to LTM Adjusted OIBDA will be approximately 3.3x and is expected to be below 3.0x within two quarters.

The enterprise value paid for NewVoiceMedia represents approximately 3.8x projected 2019 revenue. The Company expects to realize annual run rate synergies of approximately $10 million by year-end 2019 and meaningfully higher by year-end 2020, which include revenue synergies from cross-selling and cost synergies from the cost of service and G&A savings.

The transaction is expected to close in the fourth quarter of 2018 and is subject to standard regulatory review and customary closing conditions. The Company plans to update financial guidance, taking into account the acquisition, in its third-quarter earnings release.