Vonage Holdings has agreed to acquire privately-held Nexmo, a provider of communications platform as a service (CPaaS), for $230 million in cash and stock.
San Francisco-based Nexmo provides communication application program interfaces (APIs) for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice, creating better customer engagement for their business.
“In 2014, we set out on a mission to become the clear leader in cloud communications for business. With the acquisition of Nexmo, we are now uniquely positioned to lead the market,” said Vonage CEO Alan Masarek. “By combining Vonage’s rapidly growing unified communications as a service (UCaaS) business, with Nexmo, the second largest player in CPaaS, we are creating the future of cloud communications. These companies represent a set of strategic, technology and human resources assets that deliver the broadest services offering in our industry.”
Industry analyst IDC expects CPaaS to grow to an $8 billion market by 2018. This rapid growth is being driven by the demand for communications within business apps and workflows, and the needs of new economy companies such as Uber, Alibaba and Snapchat, and traditional companies like KLM Airlines and Daimler, each of which are important Nexmo customers. With the addition of Nexmo, Vonage will have a total addressable market of nearly $28 billion by 2018.
“Vonage’s acquisition of Nexmo creates a Cloud Communications company that can not only help an enterprise’s employees be more productive using robust UCaaS solutions, but can also enable enterprises to improve how they engage with their customers through embedded, contextual communications, on any platform and on any device,” said Mark Winther, VP of Worldwide Telecom Consulting for IDC.
