NetApp is selling its Spot and CloudCheckr CloudOps portfolios to FinOps business Flexera for a reported $100 million.
Spot provides ways to find and use the lowest cost public cloud instances. CloudCheckr is a public cloud cost-optimization facility. Flexera says the combination of Spot’s AI and ML-enabled technology and its own hybrid cloud expertise will provide a comprehensive FinOps offering that enhances financial accountability and efficiency in cloud operations. It also fits in FinOps’ expanding scope, “which now includes datacenters, SaaS applications, and public cloud,” plus software licensing and sustainability.
Flexera CEO and President Jim Ryan stated: “A tsunami of artificial intelligence applications is exponentially increasing organizations’ consumption of cloud resources. Yet we hear from many organizations about the difficulty in answering basic questions like ‘what technology services do we use?’ and ‘why are our cloud bills so high?’ Our acquisition of Spot is the next step in Flexera’s strategic plan to provide organizations with a full panorama of their technology spend and risk across the entire IT ecosystem. We want to make it easy for anyone to find and analyze any data related to spend and risk for any kind of technology, anywhere it lives.”
Haiyan Song, NetApp EVP for Intelligent Operations Services, said: “This decision reflects NetApp’s sharpened focus and underscores our commitment to intelligent data infrastructure and long-term growth opportunities. After a thorough evaluation, it is clear that Flexera’s established expertise and global reach provide the ideal environment for the Spot business to thrive and scale. This move not only allows the Spot team and portfolio to unlock their full potential within Flexera’s ecosystem but also reinforces our dedication to driving value creation and achieving our ambitious growth objectives.”
The Spot portfolio was not storage-focused so fell outside NetApp’s core business. Song said in a blog: “This move will enable us to further our focus on core business areas, aligning the mission of intelligent operations services (also known as CloudOps) to our primary focus on intelligent data infrastructure … Our strategy is to align our CloudOps portfolio with our core storage offerings and focus on delivering the value of intelligent operations services to our customers.”
She revealed: “Many employees currently working on the Spot portfolio are anticipated to join Flexera … We are dedicated to facilitating a smooth transition for all affected employees, providing comprehensive support, transparent communication, and transition assistance.”
Flexera says the acquired software will “provide continuous automation, optimization, and insights on an organization’s cloud infrastructure and applications. The acquisition will add new capabilities such as Kubernetes cost management and commitment management to Flexera’s industry-leading FinOps portfolio. With the acquisition, Flexera will also create a richer ecosystem of FinOps Managed Service Providers (MSPs) to serve customers’ evolving needs and bring new DevOps users into its robust customer community.”
Putting NetApp on the Spot
Financial details of the transaction were not disclosed, but Bloomberg reports that Thoma Bravo-owned Flexera is paying around $100 million for NetApp’s Spot portfolio.
NetApp bought Israeli startup Spot.io in June 2020 for an undisclosed sum. The price was said to be $450 million, according to the Calcalist, an Israeli business mag. This enabled NetApp to offer containerized app deployment services based on seeking out the lowest cost or spot compute instances.
In October 2021, NetApp acquired CloudCheckr and its cost-optimizing public cloud management CMx platform to expand its Spot by NetApp CloudOps offering. Again, financial details of the transaction were not disclosed. As CloudCheckr’s total funding was $67.4 million, it had been growing fast, and was backed by private equity, thus we expected a $200 million to $300 million acquisition cost range.
This suggests that the total acquisition cost for Spot and CloudCheckr was in the $650 million to $750 million area, far less than the $100 million Flexera is paying.
Spot and CloudCheckr were part of NetApp’s public cloud business, which accounted for 10 percent of its overall revenues in its latest quarter:
By selling the Spot and CloudCheckr parts of it CloudOps business for $100 million, NetApp will forego their revenues in future and could take a revenue hit in its public cloud business in the next quarter or two.
Wedbush analyst Matt Bryson tells subscribers: “While at one point NetApp had larger ambitions around its cloud overlay offerings with NetApp acquiring numerous companies to form what looked like a full stack of cloud management tools, the past couple of years have seen NetApp reduce its focus on non-storage related cloud businesses. Net, we see the divestment of these non-core businesses as in line with this strategic shift.”
He added: “We believe NTAP’s revised strategy is serving the company well as our conversations suggest it continues to compete effectively vs peers with its core array offerings including making inroads into the block market (in line with results the past few quarters); though we do see some risk of margin compression this quarter and next as favorable eSSD pricing dissipates.”
This Flexera-NetApp transaction is subject to customary closing conditions, including the receipt of required regulatory approvals.
