Vonage has entered into an agreement to acquire privately-held Nexmo for $230 million in cash and stock to bolster its position in cloud communications.
San Francisco-based Nexmo is a global leader in the Communications Platform as a Service (CPaaS) segment of the Cloud Communications market, being the world's second largest CPaaS company by revenue. 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.
According to industry analyst IDC, the CPaaS market is expected 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 companies such as Uber, Alibaba and Snapchat, and traditional companies like KLM Airlines and Daimler, each of which are important existing customers of Nexmo.
With the addition of Nexmo, Vonage will have a total addressable market of nearly $28 billion by 2018, said the company.