Zoom today announced plans to acquire Workvivo, a six-year-old Irish startup focused on improving companies’ internal communications and culture. The terms of the deal weren’t disclosed.
While many enterprise communication tools — such as Zoom — specialize in real-time communication, Workvivo is very much about the asynchronous. The platform is less about project-specific collaboration than it is about fostering employee engagement at a broad level, including an activity feed, people directory, surveys and a conduit for critical company communications — a bit like a modern-day intranet.
Founded out of Cork in 2017, Workvivo has amassed a fairly impressive roster of customers too, including Amazon, RyanAir and Bupa. The company has raised nearly $40 million since its inception, including a $22 million Series B last year led by existing investor Tiger Global. Interestingly, it also received an angel investment from Zoom founder, chairman and CEO Eric Yuan back in 2019, making today’s announcement perhaps a little less surprising.
Workvivo was perfectly positioned to capitalize on the remote work revolution spurred by the global pandemic, with the company reporting a 200% growth in ARR (annual recurring revenue) in 2020. And this, it seems, is a major reason why Zoom has elected to buy Workvivo. In its announcement today, Zoom noted that businesses “need to think differently” today in order to retain talent and build a strong company culture.
“Today’s workforce is hybrid and distributed — with people working from home, in an office, at a remote location, on the frontlines of a retail floor or warehouse, as a pilot or flight attendant in an aeroplane, a nurse in a healthcare clinic, or anything in between,” it wrote. “Engaging employees and driving culture through connection is no longer a ‘nice to have’ — it’s imperative for success in today’s business environment.”
While Workvivo had seemingly performed well during the pandemic boom times, so had Zoom. The video communication giant hit a market cap of $160 billion in the middle of 2020, but in the intervening years — as with most other tech companies — its valuation returned to base, settling back at its pre-pandemic norm of around $20 billion. Thus, Zoom announced back in February that it was laying off around 15% of its workforce, impacting some 1,300 people, with Yuan pointing to its rapid growth during the pandemic and the global economic turmoil that followed as a key reason it had to cut back.
In general, though, Zoom is still performing fairly well, reporting a year-on-year revenue spike of 4% at its most recent earnings, though its growth overall has slowed significantly. But Zoom is clearly being careful not to rest on its laurels, and with Workvivo under its wing, it will give Zoom a direct artery into a slew of big-name enterprise clients, while diversifying its product suite to support existing and new customers requiring both real-time and asynchronous communication tools.
Zoom isn’t particularly well-known for its M&A activity, with only four previous known acquisitions to its name across its 12-year history. But when it does buy a company, there’s usually a clear strategic strand running through it — for example, last year it snapped up conversational AI startup Solvvy as it forged a path into the lucrative customer service space.
Zoom said that it expects the Workvivo transaction to close in the first quarter of its 2024 fiscal year, which basically means by the end of next month. After this, it will set about integrating Workvivo’s features into Zoom itself, though there is no word on what this will mean in the long run for Workvivo as a standalone platform.
Workvivo’s founders John Goulding and Joe Lennon, and the whole Workvivo team, will join Zoom once the deal closes.