Veeam ARR growth impressive in final 2021 quarter as Kasten grows out of sight

Veeam recorded 27 per cent annual recurring revenue growth in 2021’s final quarter – its 16th consecutive double-digit growth quarter – while the Kasten by Veeam business unit grew booking 900 per cent – an amazing amount. But five Fortune 500 Veeam customers appear to have walked. Is Veeam’s actual revenue growth slowing?

Update. Veeam response to slow growth suggestion. 27 January 2022.

Although Veeam did not reveal actual revenue growth for the quarter it’s still a good introductory quarter for incoming CEO Anand Eswaran who issued the results statement quote. “Veeam is outpacing the overall market maturation, growing at a much more rapid rate, and is firmly at the epicentre of the data ecosystem. This is a testament to our employees and company culture, the pace of development and innovation, and our collaboration with partners to deliver solutions that exceed customer expectations and build trust.”

Veeam tells us more than 450,000 users have downloaded Veeam Backup & Replication v11 since its launch in Q1 ’21. Its quarterly ARR growth rates throughout 2021 started at 25 per cent and progressed to 26, 28 and then 27 per cent. Veeam’s quarterly results announcements imply its lost five Fortune 500 customers as the customer base in the Fortune 500 was 82 per cent in Q1 of 2021, the same in Q2 but 81 per cent in Q3 and Q4. That’s a one per cent fall, meaning five customers.

Eswaran said IDC was underestimating the DPaaS market. “IDC expects the total Data Protection-as-a-Service market to reach $18.4 billion in spending by 2025. Given the current global landscape and the fact that businesses now have more data than ever to protect – from ransomware and cyberattacks, compliance and new regulations, and the complexities of remote working environments – I believe that the market opportunity is even larger than what is being predicted.”

He didn’t supply his own growth number. If other DPaaS vendors think the same thing then the market looks great for all of them.

Veeam bought Kubernetes container-protecting Kasten in October 2020. In its first full year of results since then reported a 900 per cent year-over-year increase in bookings for 2021 and quadrupled the size of its staff. If there were any doubts about the size of the cloud-native app backup market they can be laid to rest. 

Andy Langsam, senior vice president of Kasten by Veeam, said “As Kubernetes adoption dramatically accelerates, customer demand for backup and disaster recovery tools continues to grow. We are building our team, strengthening our community efforts, solidifying partnerships and investing in product enhancements.”

A source in the data protection industry was asked if Veeam’s growth could be slowing, and said “It has slowed to next to nothing in the last two years. Their growth rate was in the 20s. They reported $963 million in 2018, nothing in 2019, $1 billion in 2020. That’s 3.8 per cent in two years. It didn’t slow. It stalled. Now they’re not giving total revenue numbers, only focusing on ARR. Of course ARR is growing, they didn’t have it before 2020 (save support fees).”

Veeam response

A Veeam spokesperson said: “We feel these comments are inaccurate.

“As you know, over the past few years Veeam has transitioned from reporting total bookings to annual recurring revenue (ARR), like a number of vendors in the market, to better reflect the state of the business.  This is not unusual, and in fact aligns to many organizations across the IT space; you have spoken to us before about this when reporting on financials.  Per your article and your ‘source’, let’s look at the facts and review recent announcements, market data etc..

“Your ‘source’ suggests we are stagnating with only 3.8 per cent growth over two years.  This is inaccurate.  Look back at our financial announcements (see below and what is on, and what you have reported on before), which state that for FY’2018 we reported $963M in bookings, and then one quarter later in Q1’2019, we reported annual (i.e., trailing 12 months) bookings of $1B… or ~3.8 per cent growth in one quarter… not over two years as your ‘source’ stated.  Add to this the data from IDC: IDC positioned us as #2 WW with year-over-year growth during H1’21 of 25.3% compared with 17.9% in H2’20.  I believe that the information presented here paints a very different picture, and is something that shows your ‘source’ was wrong in their interpretation.”