A number of call center companies reported earnings in the last few weeks, so it’s time once again for an informal, semi-regular, not-at-all-intended-as-investment-advice look at what’s going on. Twilio and RingCentral both had a bumper crop of news and their stock prices have reflected that; this continues the momentum from the last time we talked about them.
We’re going to cover Cisco and Vonage for the first time, because there’s a lot of call-center-related news there. We’re not covering Avaya today because they don’t report for another two weeks, but we’ll do a stand-alone post on them. (Lots going on there.)
Twilio (NASDAQ:TWLO) beat expectations, reporting $169m in revenue, which is up 68% year-over-year. In September, they acquired Ytica to add analytics to the Twilio Flex contact center. In October, their call recording function was released, pricing it at just $.0025/min. Call recording was once a hugely profitable sector powering the growth of giants like Verint and NICE. Now, companies have to add analytics value on top of recording before they can justify costs above this per-minute baseline.
In October, Twilio acquired SendGrid for $2B. At their annual Signal conference, they announced a chatbot platform. Twilio Flex was officially released prompting VP Al Cook to say, “Current approaches to cloud contact centers typically don’t offer the level of customization that these large organizations need … [unless] … you bludgeon a premises-based contact center into submission…” Personally, I enjoy a good bludgeoning from time to time. We covered Flex quite a bit earlier this year.
RingCentral (NYSE: RNG) reported earnings on November 5, beating estimates and growing revenue 33% over last year. CEO Vlad Shmunis articulated the ambitious goal of reaching $1 billion in revenue in 2020.
In October, Gartner gave RingCentral the coveted lead spot in the UCaaS Magic Quadrant. They recently acquired Dimelo, a cloud product for managing multi-channel customer communications including SMS, email, social media and chat. Some thoughts on that by analyst Robin Gareiss can be found here.
Shmunis has a gift for the soundbite. In this video interview, he took a swipe at Cisco: “We’re winning business for Cisco all the time.” From another interview: “There’s a few hundred million seats out there that are legacy and will eventually change to cloud. Major legacy providers, Cisco, Avaya, Mitel, do not have a born-in-the-cloud platform. They cannot replace that, we can.” I had not heard the “few hundred million” number before. (There’s a discussion on the validity of that number here.)
Vonage (NYSE: VG) reported quarterly revenue of $262m, up 3% from the year-ago quarter. Vonage made big news with a $350m acquisition of cloud call center provider New Voice Media (see our coverage). Vonage was previously relying on reselling InContact’s call center (now owned by NICE). They claim NVM will be co-exist with InContact, but that is likely to be a temporary situation.
Analyst Dave Michels put it this way: “Vonage is becoming a SaaS and IP powerhouse” and later added: “Just look at Vonage and RingCentral – these two competitors were selling the same inContact solution … Resellers are fine, but the real opportunity is owning the stack.” This idea of the “full stack” was echoed by analyst Dan Miller in Vonage, NewVoiceMedia and Nexmo: Defining the Full Solution Stack for Conversational Commerce.
Analyst Zeus Kerravala pointed out that “The addition of the NewVoiceMedia revenue now makes Vonage the largest pure-play cloud communication vendor, as defined by UCaaS + CPaaS + CCaaS. The chart below reflects Vonage Business revenue only, so in actuality, with consumer revenue added in, the gap is much bigger.”
Cisco reported revenue of $13.07 billion which is up 8 percent year-over-year in the quarter. We don’t usually write about Cisco because they don’t break out their call center business as a separate item (it’s in their “Collaboration” unit) making it hard to compare them with other players. But it’s worth talking about the significant news coming from that unit: A restructuring that involves hundreds of lay-offs, the departure of VP Jonathan Rosenberg (he was the face of the collaboration business, leading strategy for their contact center products as well as Webex, Jabber and telepresence products) and the departure of Rowan Trollope who was GM of the collaboration group. (Trollope is now Five9 CEO.) At the same time, Cisco acquired Accompany for $270m and brought on CEO Amy Chang to fill that role.
Michelle Burbick published a good overview with an ominous opening sentence: “Industry watchers have started to question Cisco’s collaboration strategy … grappling with a leadership overhaul … [with a] backdrop of continued transition … to subscription-based model … an awful lot of change with which to contend.” On the other hand, Cisco’s scale dwarfs everyone else in this space, they have a very powerful channel ecosystem, and continue to hold a large market share (44% in Q3’17 according to Synergy).
[UPDATE: Just found out Amy Chang will be giving a keynote at Enterprise Connect. This will definitely be a presentation to watch.]
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