8×8, Inc. Recently announced that it would acquire the private company Wavecell Pte Ltd. The acquisition of Wavecell was valued at about $125 million. 8×8 is publicly traded on the New York Stock Exchange (stock symbol: EGHT ) . 8×8 has a market cap of around $2.4 billion. In 2018, the 8×8 company had $297 million in revenues. Over the previous month, its stock traded between $23 and $26 per share.

8×8 is a cloud services provider offering contact center solutions and enhanced communications for businesses of all sizes. 8×8 will benefit through the acquisition of Wavecell by expanding its cloud communication services to incorporate the Cloud-Platform-as-a-Service (CPaaS) technology developed by Wavecell as well as open up new markets for its cloud-based services in Asia.

Wavecell joins the many other subsidiaries currently owned by 8×8, which include Centile, Contactual, LeChat, MarianaIQ, Netergy Microelectronics, Visit, Zerigo, 8×8 Europe, 8×8 Australia, 8×8 UK Investments, and 8×8 Research and Innovation.

Capturing the Growing Global Market for CPaaS

8×8 is headquartered in San Jose, California and plans to expand to Asia. Wavecell is headquartered in Singapore. This was one of the main motivators driving the acquisition. The other motivator is the extension of 8×8’s cloud services to become more competitive.

Wavecell

Wavecell offers an excellent B2B cloud-based API platform that includes SMS text messaging, chatbots, interactive video, and voice APIs. Wavecell technology is currently offered in 190 countries through partnerships with network operators in those countries. The Wavecell APIs support at-scale deployments of enterprise-level apps, which have multi-factor authentication capability, omnichannel communications, and application-to-person (A2P) messaging.

8×8

8×8 already has a subscriber base of over one million businesses that buy 8×8 cloud-based services, which include voice support, video, chatbots, and contact center customer services. CEO of 8×8, Vick Verma, says the acquisition allows the company to offer cloud-based applications with enterprise-level APIs on a global scale.

Competition

UCToday reports that competition for 8×8 in the CPaaS marketplace includes the industry leader Twilio. Other established challengers include Bandwidth and Vonage. Vonage now owns Tokbox that is bought in 2018 for $35 million and Nexmo that it acquired for $230 million in 2016.

CPaaS Global Market Size

VoIP Innovations notes that the CPaaS global market was $876 million in 2016 and is expected to increase ten times to reach $8.2 billion by 2021.

Conclusion

The acquisition of Wavecell by 8×8 was achieved at a reasonable price and immediately expands the 8×8 footprint to have an extended presence in 190 countries. Starting with Wavecell’s home base in Singapore and then expanding marketing efforts to other parts of Asia is a value proposition that is likely to produce positive financial results for 8×8 that are worthy for investors to consider.