Ten months after first announcing the acquisition, Cohesity has completed its purchase of the Veritas NetBackup business.
It claims this makes Cohesity the world’s largest data protection software provider by market share, with the new combined entity boasting over 12,000 customers and Veritas supplying more than 10,000 of them. The customers include 85-plus of the Fortune 100 and nearly 70 percent of the Global 500. The Veritas Backup Exec, data compliance, and InfoScale storage management offerings – unwanted by Cohesity – have been spun off and are owned by new company Arctera, run by CEO Lawrence Wong.
Cohesity CEO and president Sanjay Poonen stated: “This is a major milestone in the 11-year history of Cohesity, whose mission is to protect, secure, and provide insights into the world’s data. By combining Cohesity’s scale-out architecture and strong generative AI and security capabilities with Veritas’s broad workload support and extensive global footprint, our customers and partners stand to gain more value from their data than ever.”
He added: “As promised, we will honor our ‘no customer left behind’ commitment, supporting existing products from both companies for years to come. As we begin this new chapter, we are committed to driving industry-leading cyber resilience innovations to ensure we are the world’s preeminent choice for data security with differentiated AI capabilities.”
That cyber resilience point makes the competition with Rubrik apparent. Futurum CEO Daniel Newman commented: “Bringing together Cohesity and Veritas’s data protection business – the largest deal in the data protection space to date – addresses the growing need in the market to go beyond backing up and recovering data to handle issues around data security and insights for more robust cyber resilience.
“Cohesity now has the largest workload support with world-class security and insight capabilities, a large presence, and a massive joint ecosystem of service providers, VARs, SI partners, and OEMs … We believe the company will be a key player as they expand beyond data protection, helping global CIOs exploit the potential for AI and turn organizational data into a competitive advantage.”
Cohesity claims it’s the fastest org in the data protection space to exceed $1.5 billion in annual revenue, having been founded in 2013, only 11 years ago. On a pro forma adjusted basis for the fiscal year ending July 2024, the combined Veritas-Cohesity had revenue of over $1.7 billion, annual recurring revenue (ARR) of $1.5 billion, and a 28 percent adjusted cash EBITDA margin.
Our understanding is that Veeam surpassed $1.5 billion in annual revenues in 2021, 15 years after it was founded. Competitor Commvault reported $839.2 million revenues for fiscal 2024 and Rubrik reported $627.9 million revenues in its fiscal 2024 – both rather smaller than the bulked-up Cohesity.
William Blair analyst Jason Ader told subscribers: “We estimate ARR growth will be in the double digits in calendar 2025 and that the company will operate above the Rule of 40. The combined company’s ARR level would place it a rough tie for No. 1 or a close No. 2 in data protection (DP) market share (Veeam just disclosed ARR of $1.7 billion as of the end of September).”
When the acquisition was first announced, Veritas’s data protection operation was understood to have a value of more than $3 billion, including debt. To pay for this, Cohesity had raised some $1 billion in equity and $2 billion in debt from an investment group including Haveli Investments, Premji Invest, and Madrona. The combined Cohesity-Veritas data protection business then had a reported $7 billion valuation. Ader says the acquisition cost a total cash and stock consideration of $3 billion.
Private equity house Carlyle bought the Veritas business from Symantec for $7.4 billion in 2015, and it looks like it has not yet profited from that deal in valuation terms. Regarding the Arctera spin-off, an Arctera spokesperson said: “Arctera’s ownership remains the same as Veritas’ was pre-divestiture. A new capital table was established as part of the transaction.”
Cohesity disclosed that the Veritas acquisition was funded by a Series H financing round led by Haveli Investments and Term Loan B facility arranged by JP Morgan. That is interesting as our records show Cohesity having A, B, C, D, E, and F rounds, totaling $955 million, but no G round. The $150 million F round was announced in April – a couple of months or so after the Veritas acquisition deal surfaced. The G round must have happened in the intervening period and we asked about it.
A Cohesity spokesperson replied: “Series G shares were issued directly to Carlyle as part of the purchase price. We have stated the combined company is valued at $7 billion. This is on the price set in February when the deal was commenced. It does not reflect the increase in valuation metrics (revenue multiple) that we have seen for Rubrik and Commvault. We have not shared publicly the specifics on the amount raised in the H round.”
Nvidia founder and CEO Jensen Huang commented: “Nvidia is excited to partner with Cohesity as they build their GenAI products on top of the Nvidia AI Enterprise. Cohesity is backing up and protecting the world’s data – a goldmine of business value that customers can unlock with GenAI.”
AI-focused Nvidia participated in Cohesity’s F round funding. Cohesity has its Gaia GenAI offering while Rubrik is developing its Annapurna technology in conjunction with Amazon.
Cohesity claims it “now supports the broadest range of workloads within a highly scalable modern architecture.” At a stroke it has joined the data protection/cyber resiliency big league – alongside Veeam and Rubrik, and not forgetting IBM, Dell, and Commvault.
Commvault chief customer officer Sarv Saravanan said of the merger: “There are two kinds of M&A. One that brings near-immediate value to customers and doesn’t force customers to make unnatural choices. We’ve recently taken this approach with our acquisitions of Appranix and Clumio, bringing in game-changing technology and talent that rapidly advances cyber resilience for organizations globally. There are others that appear to be more focused on acquiring customers – and complexity. We don’t believe that approach makes customers safer or more resilient.”
As Cohesity is not forcing Veritas NetBackup customers to make a choice – “no customer left behind” etc. – that aspect of Saravanan’s comment might well be disregarded. However, Ader commented that: “A key motivation for the deal, per Cohesity management, is to make it easy for existing Veritas customers to transition to Cohesity’s more modern backup and recovery platform (though Cohesity will not force this transition and will continue to support Veritas’s NetBackup product for at least the near future).”
Commenting on the acquisition’s effect on Commvault, Ader noted: “We expect this deal will make it harder for data protection vendors like Commvault to take share from Veritas, which as noted has been a major share donor in the DP market over the last few years. While the recently redesigned Commvault Cloud platform appeals to the growing convergence between data protection and data security, the company may need to further differentiate its product set to take share from the Cohesity–Veritas combination.”
Arctera
Arctera is headquartered in Pleasanton, CA, and has more than 1,500 employees spanning the globe. It will operate as three distinct business units centered on the existing Backup Exec (protection), Data Compliance, and InfoScale (resilience) products.
CEO Lawrence Wong stated: “We’re creating the best possible customer experience by dividing our business into focused units that align to customer use cases. Every customer can be certain that Arctera is prioritizing their exacting needs.”
Chief product officer Matt Waxman wrote: “Our three product business units have been great within the Veritas family. But, we believe, if we showcase them in a vehicle of their own – if we truly focus on them – we can create a new industry powerhouse.”
Arctera has tens of thousands of customers around the world, with 70 percent of the Fortune 100 among them. Although 70 large enterprises are using Arctera products, the focus will naturally be on its vast SMB base. That will put it alongside Veeam in terms of customer base scale – protecting tens of thousands.
Wong stated: “The Arctera portfolio of solutions has delivered decades of innovation. Now they will take center stage at Arctera with dedicated engineering, customer care, and sales functions, which we believe will further unlock their value for our customers.”
His exec team includes people with experience at Avaya, Cisco, Dell, HP, and VMware. Read more about Arctera in a Lawrence Wong blog.
