Genesys, a global cloud leader in customer experience orchestration, today announced a $580m round of funding.
The oversubscribed round was led by Salesforce Ventures with participation from other investors ServiceNow Ventures; Zoom Video Communications; funds and accounts managed by BlackRock, D1 Capital Partners and another large US-based West Coast mutual fund manager. This offering values Genesys at a valuation of $21bn.
“Two years ago, we saw the challenge businesses faced in meeting the expectations of consumers and employees around digital experiences. We realized we had an opportunity to transform not only our company but the overall industry,” said Tony Bates, CEO and Chairman of Genesys. “We believe this fundraise, including raising from leading strategic investors, validates the achievements we have made to date and will accelerate our continuing efforts to expand and realize the vast Experience as a Service market opportunity ahead.”
Over the last two years, Genesys has undergone a significant transformation across its leadership, business model, solution portfolio and ecosystem, resulting in strong growth. The company’s cloud and subscription bookings, which make up more than 90% of total new bookings, grew more than 100% year-over-year in the first half of fiscal year 2022.
Genesys also introduced the industry’s first multicloud architecture, delivered several hundred innovations across its customer experience platforms, released a new workforce engagement solution and launched the Genesys DXTM solution, a conversational artificial intelligence (AI) and digital experience product targeted at new sales and marketing audiences. Acquisitions also further enhanced the company’s capabilities in AI and experience orchestration.
“Customer expectations continue to rise exponentially around personalized, empathetic, and connected experiences,” said John Somorjai, EVP of Corporate Development and Salesforce Ventures at Salesforce. “We believe our investment in Genesys will not only help accelerate the company’s success but the success of our joint customers.”
Today’s announcement reflects the company’s ongoing commitment to enhance its ecosystem through new and expanded strategic alliances, most recently with Google Cloud. Genesys has also introduced initiatives for system integrators, channel partners, technology partners and independent consultants that provide them with a programmatic path to business as part of the ecosystem.
Nearly 7,000 organizations around the world, including 17 of the top 20 Fortune 500 companies, now deliver customer or employee experiences with Genesys. Given the strength of the Genesys cloud offerings, ecosystem and customer momentum, the strategic investments highlight the commercial opportunities for new use cases, new industries, new buyers and new geographies.
Genesys was advised by Goldman Sachs as exclusive placement agent and Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel.
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Blackstone is betting on the future of e-commerce. As more of our spending moves online, more goods will have to be collected, packaged, labeled, shipped from, and returned to warehouses. The e-commerce vendor with the most efficient network of warehouses will be best positioned to slash delivery times from days to hours, giving it a competitive advantage over its rivals. Blackstone wants to be their landlord. By renting out those warehouses to the highest bidder, it stands to cash in as more of the economy moves online: The world will spend $4.2 trillion on e-commerce this year, and the sector is expected to top $10 trillion by 2025.
Demand for warehouses soared during the pandemic
The pandemic accelerated two trends that have made warehouses a hot commodity. First, people at home under lockdown spent more on e-commerce and less on travel, services, and brick-and-mortar stores. Second, it scrambled the world’s supply chains, creating global shortages of everything from toilet paper to semiconductors.
That’s forced investors and executives to think more about logistics than they ever had before. To beef up their e-commerce supply chains, companies started buying up warehouses. Amazon, for instance, has bought 33 warehouses since March 2020, more than doubling the number of fulfillment facilities it owns, according to data from real estate analytics platform Reonomy. Walmart and Target have tripled their investments in warehouses since the start of the pandemic, according to Reonomy. Private equity firms like Blackstone and KKR invested heavily in warehouses, too.
One way to gauge demand in real estate is to look at a sector’s “net absorption rate,” which measures how many square feet of property became occupied in a given year, minus the number of properties that became vacant. When net absorption is high, it means lots of owners are buying up properties and putting them to use. This year, net absorption in the logistics sector, which includes warehouses, hit record highs.
Blackstone battles Prologis over warehouses
Before the pandemic, the undisputed king of the warehouse world was Prologis, a real estate investment trust founded in 1983. The San Francisco-based firm owns about 1 billion square feet of warehouse properties around the world. Blackstone only started buying up warehouses about 10 years ago. As recently as May 2020, the private equity firm controlled 850 million square feet. By the end of that year, however, it scooped up another 350 million square feet surpassing Prologis.
Blackstone’s aggressive expansion promises a new rivalry in the tight market for warehouse real estate. Data from Prologis shows warehouse vacancies hitting a record low of 3.9% in the US, even as new warehouse construction continues to grow.
Blackstone argues its warehouse business will leverage the data from all of Blackstone’s other businesses to make better investment decisions. “We operate as one globally connected business and we have a constant view into what’s happening in the markets and our portfolio,” said Caplan, the head of Blackstone’s real estate division.
Prologis is betting that its early entry into the industry, and prime real estate, will give it a durable advantage over rivals. “We’ve been in the business for 40 years and we’ve cultivated a portfolio that [includes a lot of properties near major cities],” said Cris Caton, who heads strategy and analytics at Prologis. “The new supply that comes online is farther from city centers and less competitive than the standing stock.”
Although the companies are sparring for dominance, the warehouse industry is growing so fast that there is room for more than one global player. The fiercest competition emerged in redesigning warehouses, not known as a hotbed of innovation. Prologis still has the edge there: the firm built some of the first multi-story warehouses in North America to save space in dense cities so e-commerce firms can reach urban customers faster.
Source: Quartz
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