Genesys has confirmed that the company has confidentially filed to become an initial public offering (IPO).
With rumors swirling since September, the CCaaS vendor has now officially made the jump from private to public.
While Genesys has not released any further details about the IPO or set a timeframe, the move means that investors will now be able to purchase shares via a stock exchange.
But why would Genesys decide to do this?
The most obvious reason for taking a company public is to raise capital, which would allow Genesys to invest more in daily operations, research, and growth initiatives; reduce corporate debt; and provide employee stock options.
Indeed, when the rumored IPO was first covered by Bloomberg, the publisher’s sources suggested that Genesys could raise up to $2 billion by going public.
This figure followed a round of funding in December 2021 led by Salesforce Ventures that saw Genesys raise $580 million and receive a valuation of $21 billion – 14 times what the company was purchased for by private equity firm Permira Holdings in 2012.
In addition, the vendor released figures in June of this year showing that its CCaaS business had achieved $1.5 billion in annual recurring revenue (ARR) during the previous quarter, marking a 40% year-over-year growth.
It is clear from the recent numbers that if Genesys already had stock, it would be on the rise. But is it the right time to go public? And what are some of the other benefits and potential pitfalls?
To Public or Not to Public
In deciding to take the public plunge at a time when AI contact center technology is in such high demand, and the company is experiencing significant growth, Genesys is certainly striking when the iron is hot.
In particular, the company is currently excelling with its AI offerings, having landed its “largest ever” standalone AI deal back in June.
The first quarter of 2024 also saw the tech firm achieve a year-over-year increase of over 200% in new bookings for its AI products, with over 40% of Genesys’ 6,000 CCaaS customers now using the built-in AI features of Genesys Cloud CX.
Among these customers, notable names include Beyond Bank, Coca-Cola Bottlers’ Sales and Services (CCBSS), and PureGym.
Speaking to Reuters, Joe Endoso, CEO of private investment platform Linqto, was certainly of the opinion that analysts view the growth of the AI market as the key to Genesys’ decision to go public:
While there’s always a risk of a down-round IPO, companies that have leveraged AI effectively, as Genesys has done, might have a chance to exceed or at least match their previous valuation.
The investment specialist also suggested that the fact Genesys filed confidentially might be telling, explaining how the company could be “testing the waters to gauge investor appetite, making this a litmus test for broader market sentiment toward AI-driven businesses and the tech sector as a whole.”
Pros and Cons
Another benefit of raising extra capital through an IPO is the ability for Genesys to make more acquisitions, like its recent purchase of Radarr Technologies, that could enhance its tech stack and strengthen its portfolio.
It also presents the opportunity to look at potential purchases that expand its CCaaS offerings beyond traditional telephony, helping it stay competitive as CRM vendors enter the market with digital channels and self-service tools.
This is an area that Genesys already clearly has an eye on, as evidenced by its partnerships with companies like Salesforce and ServiceNow.
However, there are drawbacks to going public. An IPO requires focusing on short-term quarterly results over long-term goals.
Genesys will also have to contend with the significant time and costs involved in issuing shares.
More News from Genesys
In a recent announcement, Genesys revealed that a major healthcare organization, Modivcare, is using its Cloud platform to enhance services for 34 million members.
Modivcare, specializing in non-emergency medical transportation and in-home care, utilizes Genesys’ AI-powered tools to improve self-service as part of its digital-first strategy.
This includes deploying voicebots and chatbots integrated with web messaging to address medical transportation inquiries.
Elsewhere, the vendor confirmed an expansion of its partnership with Vodafone Idea to help the latter officially enter the CCaaS market.
Through its enterprise division, Vi Business, the telecom operator will provide advanced contact center solutions, combining cloud and telecom services for customers across India.
