Zoom Video Communications Inc. ZM recently announced that it is acquiring Workvivo, a leading employee engagement platform. The deal is expected to close in the first quarter of 2024. Terms of the acquisition were not disclosed. The move is part of Zoom’s broader plan to expand services beyond video conferencing and into the broader realm of workplace productivity and collaboration.
Workvivo is an employee communication and engagement platform that enables organizations to connect their employees across departments, locations and levels. The platform provides a social network for employees to share ideas, celebrate milestones and collaborate on projects in a seamless and engaging way.
Workvivo offers a range of features including news feeds, recognition badges, surveys, polls and more to help organizations improve communication and engagement with their employees.
How profitable would the acquisition be?
With the acquisition of Workvivo, Zoom Video aims to enhance its existing video conferencing capabilities with a more comprehensive set of workplace tools. As soon as the deal closes, Zoom Video plans to make Workvivo’s features available on its platform.
This acquisition is expected to benefit Zoom in several ways. First, it will help Zoom Video break into the space of employee communication and collaboration platforms. Acquisition will also do Meta platformMETA workplace, MicrosoftMSFT Yammer and SalesforceCRM Simpplr to its direct competitors.
Second, the acquisition will allow Zoom to tap into a rapidly growing market for employee engagement platforms. With the rise of remote work and the need for businesses to keep their employees connected and engaged, the market for employee engagement platforms is expected to grow significantly in the coming years.
With the acquisition of Workvivo, Zoom will be able to position itself as one of the leading companies in the employee engagement space and grab a decent share of that market. In the first quarter of fiscal 2024, Zoom Video expects revenue growth of approximately 1% year over year. This growth could be boosted by the acquisition of Workvivo.
Should you take advantage of the potential benefit of investing in an ETF?
Investors are likely to pay attention to this acquisition as well. Zoom’s share price has been volatile in recent months, with investors worried about the company’s ability to sustain the rapid growth it has experienced during the pandemic.
However, this acquisition signals that Zoom is actively looking to expand its services and maintain its position as a key player in the technology industry. ZM currently has a Zacks Rank #3 (Hold).
Initially, investors who still have more faith in big players like Meta Platform, Microsoft and Salesforce’s.com may be hesitant to invest in Zoom to play in the employee engagement segment. Therefore, these people can play ETFs with a large amount of Zoom to play this acquisition news. The ETF approach reduces company-specific risks.
Focus on large-cap ETFs
ETFs like ARK Innovation ETF ARKK and ARK Next Generation Internet ETF ARKW have 9.3% and 8.3% Zoom Video exposure. Zoom holds the second position in each of the funds.
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