Software company NICE announced on Wednesday that it is acquiring LiveVox, an AI-driven proactive outreach provider, in a deal valued at $350 million. This strategic move is aimed at bolstering NICE’s product offerings with artificial intelligence (AI) capabilities, specifically designed for the management of service systems within companies.
LiveVox operates within the same domain as NICE and augments it with a product portfolio centered on artificial intelligence, particularly for proactive customer engagement. NICE capitalized on the recent declines in the U.S. stock market, particularly taking advantage of the negative sentiment surrounding companies that went public through SPAC mergers.
In 2021, LiveVox was merged into a SPAC at a valuation of $840 million. However, its stock value has experienced declines since then, ultimately reaching a low of less than $200 million. Under the terms of the merger agreement, at the closing of the transaction LiveVox stockholders will receive $3.74 in cash for each share of LiveVox common stock.
LiveVox, an American company with a two-decade history, is expected to generate revenues of $145-148 million in 2023. This represents an 8% growth compared to the previous year. Notably, this growth rate is on par with that of NICE, which has been experiencing a slowdown. Many attribute this slowdown to the challenges of competing with companies possessing more advanced AI capabilities.
In contrast to NICE, LiveVox is currently operating at a loss. Nevertheless, its losses narrowed in the second quarter of 2023 to $4 million, down from $10 million in the corresponding period. The acquisition is slated to be finalized in the first half of 2024 and is expected to begin contributing to NICE’s operating profitability and earnings per share in the latter half of the following year.
NICE’s stock performance has been lackluster over the past year, resulting in negative returns for its investors, primarily due to a significant deceleration in its growth rate. Additionally, the company faces a looming threat of market disruption from generative artificial intelligence technologies, such as ChatGPT. These technologies have the potential to replace some of NICE’s solutions that currently rely on a combination of human service representatives and bots.
Despite this acquisition, NICE’s shareholders have responded with relative indifference, and the company’s stock remains stable at a market cap of around $11 billion. It appears that the market may have expected a larger-scale deal, given Nice’s substantial cash reserves of $1.7 billion, or an acquisition of a faster-growing company that could provide a boost to its growth prospects.
However, Barak Eilam, CEO of Nice, has a track record of identifying valuable opportunities, as evidenced by Nice’s well-timed entry into the cloud market through the acquisition of Incontact in 2016 for $940 million.
“Today, we are taking another major step in making smart conversational AI a reality,” said Eilam. “The era of Digital Engagement is already here and we are excited to enable organizations to propel their Digital Engagement and Conversational AI forward. In joining forces with LiveVox we now have the strongest and broadest proactive outreach portfolio. NICE has a remarkable track record in augmenting its leading innovation with complementary acquisitions.”
