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Quest Software flipped from one private equity owner to another

By
Chris Mellor
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Private equity-owned Quest Software, which supplies data management and protection software, has been bought by Clearlake Capital for an undisclosed amount, reported to be $5.4 billion.

Quest was started up in 1987 and grew to the point where, with 100,000 customers, it was bought by Dell, who combined it with information security business SonicWall. Dell, needing money to help it buy EMC, sold it all off to private equity business Francisco Partners and Elliott Management in mid-2016 in a deal thought to be worth $2 billion.

Buyer Behdad Eghbali, Co-founder and managing partner at Clearlake, issued an acquisition quote, saying: “We have long admired Quest as a leading identity-centric cybersecurity, data intelligence, and IT operations management software platform and the Company’s software solutions that help secure enterprise IT environments.”

Seller Dipanjan “DJ” Deb, Co-founder and CEO of Francisco Partners, said: “We are proud of the tremendous progress Quest has made since re-launching as an independent company, and I want to recognize Patrick Nichols and the management team for strong execution. We have a long and successful track record executing divisional carve-out transactions and are grateful to have had the opportunity to work with the Quest team to create value for the company, its customers, and its partners. We wish the Quest organization well in its new partnership with Clearlake.”

Quest CEO Patrick Nicholls, who was appointed in May 2020 and stays on as CEO, said: “Quest has evolved to become a market leader in identity-centric cybersecurity, data intelligence, and IT operations management and I want to thank Francisco Partners for helping Quest realise this vision. Our new partnership with Clearlake will accelerate Quest’s momentum as a leader and innovator as we increase our investment pace in our core product roadmaps, cloud/SaaS offerings, and global presence.”

More to the point Prashant Mehrotra, partner, and Paul Huber, principal at Clearlake, said: “Now with significant scale and completely independent, Quest is strategically differentiated in the market as a buy-and-build platform and industry consolidator, and we’re thrilled to partner with Patrick, Carolyn and the management team to help Quest accelerate growth organically and through M&A.”

There’s going to be acquisitions with Clearlake providing cash. Francisco Partners has, in effect, sold at a profit — the Wall Street Journal reports the sales was for $5.4 billion, including debt. Francisco Partners will now let Clearview take Quest and run with it while it presumably looks for another “divisional carve-out transaction.” 

Some Quest history

The SonicWall information security part of this Dell division was spun out in November that year by Francisco Partners and Quest then underwent layoffs and a reorganisation.

Since then Francisco Partners helped grow the Quest business, acquiring Balabit Corp for the one Identity unit in 2018, Binary Tree in September last year and erwin in January this year. Quest has four operating segments:

  • One Identity and OneLogin identity-centric cybersecurity software covering all aspects of a unified identity security and management approach to combat identity sprawl and identity-based attacks.
  • Platform Management for Microsoft offering IT operations resilience and flexibility, securing and managing Active Directory.
  • Information Management and erwin by Quest; data operations and intelligence software to optimise performance and deliver apps faster, with offerings including Toad for Oracle, erwin Data Modeler, erwin Data Intelligence, Foglight, ApexSQL and SharePlex.
  • Data protection and endpoint management software to control data growth and optimise system availability with NetVault, QoreStore, and Kace offerings.

The current team of exec managers at Quest stays in place and the deal should close in early 2022.

Storage news ticker – November 29

By
Chris Mellor
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…

Amazon Web Services’ massive virtual and in-person re:Invent is now taking place with lots of announcements expected over the next few days. New CEO Adam Selipsky will be taking the stage. Register for the virtual event here and expect the usual Amazon overkill in terms of options and choices and recommendations.

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From December 1, according to an AWS blog, data transfer from Amazon CloudFront is now free for up to 1TB of data per month (up from 50GB), and is no longer limited to the first 12 months after signup. The company is also raising the number of free HTTP and HTTPS requests from 2,000,000 to 10,000,000, and removing the 12-month limit on the 2,000,000 free CloudFront Function invocations per month. The expansion does not apply to data transfer from CloudFront PoPs in China. AWS free tier general customers will be able to migrate 1009GB per month of data out from a region to the internet, up from 1GB per month currently. This includes Amazon EC2, Amazon S3, Elastic Load Balancing, and so forth. The expansion does not apply to the AWS GovCloud or AWS China Regions.

…

Quest Software announced the general availability of a new turnkey system using data backup, protection, and management technologies — Lenovo ThinkSystem hardware, Veeam Backup software and Quest QoreStor software — for channel partners and end-users.

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DDN business unit and enterprise storage provider Tintri has a ransomware recovery event in its GeekOut! Technology demo series scheduled for December 1 at 10am PST (18:00 UTC). Register here to listen to Tintro CTO Brock Mowry opining on Tintri and ransomware.

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Live data replicator WANdisco has achieved Amazon Web Services (AWS) Migration and Modernization Competency status for AWS Partners. WANdisco’s LiveData Migrator allows production applications to continue to operate on-premises while their data is migrated to Amazon Simple Storage Service (Amazon S3). Production data becomes available in the cloud immediately and continues to be updated with changes throughout the migration. AWS launched the AWS Migration and Modernization Competency to allow customers to engage specialised AWS Partners that activate data and modernise applications. 

…

Veeam announced Yamaha Brazil, a division of the Fortune 500 company Yamaha Motor, has used Veeam Availability Suite to replace several legacy backup systems for its hybrid cloud infrastructure. The Veeam backed-up can be analysed for customer info relevant to digital marketing. The Veeam SW supports regulatory compliance for Brazil’s General Data Protection Law (LGPD).

…

A Veeam blog by Rick Vanover says that a Veeam Universal Storage API plug-in is now available for the Dell EMC PowerStore product. This provides backup capabilities, a new recovery option, and test capabilities with DataLabs from Dell EMC PowerStore snapshots. Vanover writes: “The heart of the plug-in with Dell EMC PowerStore is the ability to back up from the storage snapshot versus the VMware snapshot alone.” Faster PowerStore snapshots can be used to directly drive file, application and complete VMware VM recovery.

Sapphire Rapids, extra performance and IO heft, and a SKU nightmare

By
Chris Mellor
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Intel revealed more Sapphire Rapids memory information at Supercomputing ’21 with capacity, bandwidth and tiering data. Datacentre servers will become much faster and capable of running more containers and virtual machines — but at the expense of SKU complexity.

Update. Diagram corrected to show Optane PMem 300 series connectivity doesn’t use PCIe bus. 2 Dec 2021.

Sapphire Rapids is the fourth generation of Intel’s Xeon Scalable Processor brand datacentre server CPU, following on from Ice Lake. According to Intel it will offer the largest leap in datacentre CPU capabilities for a decade or more.

It has a 4-tile design, using an EMIB (Embedded Multi-die Interconnect Bridge) link to unify them into what appears to be a monolithic die. The processor, with up to 56 cores — 14 per tile — supports:

  • DDR5 DRAM — up to eight channels/controllers,
  • HBM2e — up to 64GB of in-package memory with up to 410GB/sec bandwidth per stack, 1.64TB/sec in total;
  • Optane Persistent Memory 300 series;
  • PCIe 4.0 and 5.0;
  • CXL v1.1.

The EMIB functions also as an interposer, linking each CPU tile to its HBM2e stack. There is a three-level memory hierarchy, with HBM2e at the top, then socket-linked DRAM and Optane PMEM 300 series. HMBe2 will bring “orders of magnitude more memory bandwidth” according to Jeff McVeigh, VP and GM for the Super Compute Group at Intel. He said: “The performance implications for memory-bound applications I[are] truly astonishing.”

Intel Sapphire Rapids 4-tile diagram.

The processor has a coherent shared memory space, across CPU cores and DSA and QAT acceleration engines. DSA accelerates input data streaming while Quick Assist Technology (QAT) speeds encryption/decryption and compression/decompression.

The coherent memory space applies to processes, containers and virtual machines.

There can be up to 64GB of HBM2e memory, divided into four units of 16GB, one per tile, each built from 8x 16Gbit dies.

The Sapphire Rapids CPU can operate in four NUMA (Non-Universal Memory Architecture) modes with a sub-NUMA Clustering feature

Sapphire Rapids options include HBM2e with no DRAM, or DRAM with HBM2e — in which case we have flat mode and caching mode. Flat mode has a flat memory design embracing both DDR5 DRAM and HBM2e, but with the DRAM and HBM2e each having its own NUMA mode. 

In caching mode the HBM2e memory is used as direct-mapped cache from DRAM and is invisible to application software. With the alternative flat mode application software has to use specific code to access the HBM2e memory space.

As Optane also has its different modes, such as application direct (DAX), the use of non-persistent (HBM2e and DRAM) and persistent (Optane PMem 300) memory by applications will become more complicated. Intervening system software, such as MemVerge’s Big Memory Computing offering, will become more useful because they promise to hide this complexity.

Blocks & Files diagram.

It’s obvious that server configuration variations will become more complex as well, with servers coming with Sapphire Rapids CPU variations (how many cores did you want?), HBM2e-only and no DRAM, HBM2e and DRAM, PCIe 4.0 and/or 5.0, CXL1.1 or not, Optane PMem 300 and no Optane. This could be a SKU nightmare.

Intel’s Ponte Vecchio GPU will also support HBM2e and PCIe 5, and Intel considers Sapphire Rapids and Ponte Vecchio as natural partners — the one for general workloads and the other for GPU-intensive work. Will there be a GPUDirect-type link between Sapphire Rapids servers and Ponte Vecchio GPUs, echoing Nvidia’s software to bypass server CPUs and get stored data into its GPUs faster than otherwise? We don’t know but the idea seems to make sense.

22dot6 adds extra cloudiness to its Valence software

By
Chris Mellor
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All-singing, all-dancing TASS (Transcendent Abstracted Storage System) supplier 22dot6 has updated its Valence software — making it easier to set up and operate private, hybrid, and public cloud storage.

22dot6 is not your usual storage supplier. It was founded in 2015, has just five staff listed in LinkedIn, and no known external funding. Hammerspace-like Valence was first announced in May and, as of now, we don’t know how many customers 22dot 6 has for the software.

Diamond Lauffin.

But its founder, Diamond Lauffin, has a long-term storage industry track record — co-founding, for example, Nexsan and being an EVP sales at Qualstar from 1993 to 2000. In other words, take it seriously.

Valence VSR storage controller.

A Lauffin announcement statement said: “Most enterprise storage managers are getting pressure from upstairs to shift to the cloud, but often times it is difficult for executives not on the front line to understand what’s actually involved in this process, and how complicated it can be. A TASS architecture is the answer, and from sunrise to sunset the Valence Cloud Suite combines the features and optimal practices required for enterprise level data management in the cloud.” 

This Valence Cloud Suite release adds:

  • Point-and-click private cloud setup;
  • Unifies private and public clouds into a single pool;
  • Cloud-to-cloud data migrations and reverse migrations with no pointers, links or stub files;
  • Transparent, multi-protocol, cross-platform support for all security and permissions with a single point-and-click;
  • Metadata-level analytics, lookups and data reports of public cloud data;
  • Individual, file-level data integrity audits that run transparently in the background and provide a red light/green light analysis of all data, protecting against file deletion, modification, corruption, or disappearance;
  • Geographic control over where data subject to regulation is located and file level data immutability.

Comment

We know of no independent analysis of the TASS software, and no evidence of 22dot6 engagement with analysts like Gartner, Forrester, ESG or the Evaluator Group. Contact 22dot6 to find out more.

This could be great storage software and have its use grow quickly, or it could be a storage curio — terrific in its own right but not a mass-market product. Keep your eyes on it just in case.

Storage news ticker – November 26

By
Chris Mellor
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An Arcserve announcement appears to have had an embargo breakdown or similar event, as SecurityBrief Asia has put out a story — “Arcserve partners with Google Cloud to deliver cloud business continuity solution” — which is dated 11 November 2021. It describes the availability of Arcserve Cloud Services (DRaaS) on the Google Cloud Platform.

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A DoKC (Data on Kubernetes Community) report entitled “Data on Kubernetes 2021” surveyed 500 Kubernetes-using respondents and found half of them are running half or more of their production workloads on it. Some 90 per cent believe it is ready for stateful workloads, and 70 per cent are running them in production. DoKC is a Kubernetes supplier trade group with levels of membership. Top level (platinum) members are DataStax, EDB, MayaData (bought by DataCore) and Pure-owned Portworx.

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Taiwan-based contract semiconductor manufacturer United Microelectronics Corp. (UMC) is paying an undisclosed sum to Micron as the price of the legal action between the two being dropped. UMC pled guilty to Micron DRAM IP theft in October last year and was fined $60 million by the USA. The stolen IP was passed to China’s Fujian Jinhua which wanted it for DRAM manufacturing.

…

OWC Mercury Elite Pro mini.

OWC has updated its OWC Mercury Elite Pro mini portable flash drive with USB-C support, delivering up to 542MB/sec real-world performance. Drive capacities are 480GB, 1TB, 2TB and 4TB — or you can buy the product with flash drive and stick one in yourself. The 480GB model is priced at $94. 

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China-based SmartX has announced version 5.0 of its SMTX ZBS distributed block storage product which can deliver 770,000 4K random read IOPS from a 3-node cluster. V5.0 introduces support for RoCE v2, NVMe-oF (alongside existing iSCSI support) and Optane Persistent Memory. It can provide 8GB/sec bandwidth for 256K sequential reads, saying this is close to the physical limit with a 25GbitE network card.

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Richard Henderson, technical director at TigerGraph, believes that, in 2022, “digital twins” will appear everywhere, and be based on real-time analytic graph databases. A digital twin is a real-time model of a business and its environment. It provides, he says, a complete and current view of the physical business situation, using the business events and data that are probably already available in individual operational silos and data marts. This, combined with graph analytics, can deliver a detailed and immediate digital scenario, showing the impact and risk associated with any delays or failures within that network. Graph analytics will combine these individual events and the map of the network to produce a “zoomable” big picture view of the entire operation.

….

NexuStorage says blocks and files can come from object storage

By
Chris Mellor
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NexuStorage’s Nexfs software serves block and file data from an object-backing store using sub-file chunking to reduce data movement and help data tiering, and claims great tier-one storage cost savings and good performance.

It has devised Nextassert software to do this without traditional data mapping indices, relational or NoSQL databases, manifests, stub files or symlinks. The company is a nine-month-old founder-funded startup based in New Zealand, and briefed a virtual IT Press Tour on its technology

Founder Glen Olsen, an ex-product manager at DataCore-acquired Caringo, said his Nexfs technology removes the gap between the worlds of file and block storage on the one hand and object storage on the other, with the object storage either on-premises or in the public cloud. Nexfs delivers, he said, a unified, intelligent, cost-effective, massively scalable, data-lifecycle-enabled, storage system that can provide an up to 95 per cent reduction in primary storage capacity. 

The software runs on industry-standard servers and is available as a no-charge, downloadable Community Edition, with subscription-based, SLA-backed support coming soon.

Nexfs

Nexfs is a file system. It splits files into chunks of between 1MB and 8MB in size and stores these chunks on three tiers of media: fast SSDs, slower SATA disk drives, and slower-still object storage. Nexfs presents data through either block or file interfaces, with iSCSI, NFS and SMB/CIFS interfaces supported. There is no direct access to the underlying object storage, although an open source web proxy providing S3 access is on the roadmap.

Blocks & Files diagram.

Chunks are placed on the hot, warm or cold tiers according to their access profile or personality and can be moved up or down a tier by a SmartTier function. This background process uses low and high tide so-called watermarks to decide if and when and how aggressively to move data between the tiers, with object storage regarded as the infinitely scalable back-end. Its migration of data between tiers can be triggered by file closure, a change in a file data chunk, and/or according to a set time schedule.

SmartProtect automatically copies data in the hot tier to the cold object tier and also copies POSIX file metadata to the hot tier and to the object tier. This means primary data is still available after a drive or system failure.

SmartClone puts cloned copies of files on an object storage tier for protection or distribution. If a single client changes part of the file, the changed chunks are unique to that client. 

The actual storage hardware can be local drives on servers, a SAN, or on-premises object stores — for example, from MinIO, Cloudian and Scality, and AWS. The object access method is S3.

Because the underlying file data is chunked, its access time is lower than that needed for a full file access. Chunks from a file can reside on different tiers:

In effect a chunk is an object, and sets of chunks make up a file or, in the block case, a volume. There can be millions of chunks, and mapping their location on the storage drives and their relationship with their parent file is what the Nextassert software accomplishes.

Nextassert

NexuStorage claims its sub-file chunk technology with Nexassert allows massive multi-terabyte sized files to be stored in the cloud or object storage and treated as though they reside on traditional block storage.

Olsen said data mapping indices, databases or manifests are a performance bottleneck and can cause data loss if they are corrupted or destroyed. Nextassert sidesteps both problems.

He said: “This works because we don’t have a data location index and Nexfs can actually calculate where the data is.” Nexassert patent-pending software can (apparently) directly locate and access data belonging to a single file that resides on different storage classes without maintaining a separate index or manifest. How? We don’t know.

Olsen’s LinkedIn profile says he has filed a patent called “Addressing file data chunks over a REST interface without maintaining a file data chunk database, index or manifest.” We haven’t been able to find any more details than this.

It seems to us that the Nextassert technology will be crucial to the delivery of Nexfs’s performance and scalability. 

NexuStorage company

Glen Olsen is the founder, funder and CEO of NexuStorage. Development has been done by up to 50 external contractors. This is the typical Silicon Valley startup business model, and it’s not unusual according to him. The entire time at Caringo, he said, “I was … a contractor. I was never actually a permanent employee. And to be honest, over time, 90 per cent of Caringo’s work force was the same — they were all contractors.They had very few permanent employees.” 

He said NexuStorage is a pre-revenue company and, once it starts earning revenue, then it may have permanent employees.

Alternatives

Open source Ceph provides file, block and data access using an underlying object store.

Pavilion Data provides block, file, and object access from its all-flash hardware, claiming it’s the most performant, dense, scalable, and flexible storage platform in the universe.

StorONE provides file, block and object storage on the same drives, supporting all drive types — NVMe, SAS, SATA SSDs and HDDs — in the same server.

NexuStorage will need to have advantages not shared by these products to make headway in the market.

Comment

This is a courageously funded startup with unique software technology that effectively includes data lifecycle management and could provide an effective way of reducing primary storage usage. We’ll watch its progress with interest.

Short and sweet – DDN opens up about rulers, subscriptions and SCM

By
Chris Mellor
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DDN is looking favourably at supporting ruler-format flash drives and a subscription business model, but doesn’t think storage-class memory is needed quite yet.

These points came across when we got the opportunity to send a few questions to Dr James Coomer, DDN’s VP for product management.

James Coomer.

Blocks & Files: Will DDN support the EDSFF ruler format drives?

James Coomer: Yes, we will switch to EDSFF form factor as soon as enough viable media in large capacity points is available, which is the main inhibitor today. 

Which particular formats look to be the most appropriate for you?

We are primarily looking at E1.S and E1.L support.

Do you think there are too many EDSFF product formats, compared to the current M.2, AIC, U.2 and 3.5-inch storage drive formats?

Yes too many, and too many competing standards. The market conditions regarding supply are already a bit difficult, so the additional complexity of too many formats doesn’t help.

Will the EXAScaler base system hardware be used in the Tintri enterprise storage product line?

The EXAScaler base system hardware is already being used as the mainline platform for both VMStore and IntelliFlash. The VMStore T7000 series and the IntelliFlash N6000 and H6200 both use the same underlying hardware as the DDN EXAScaler appliances.

Will DDN move to a subscription business model?

Yes. With our upcoming software offerings we are adding subscription. Also we are seeing requests for customers for private cloud managed by DDN at their side or other datacentres, for which we have offerings.

How do you view the storage-class memory (SCM) product scene, with Optane SSDs and DIMMs, and the fast SLC-flash-based drives from Samsung and Kioxia? What is DDN’s view on using SCM technology?

SCM at this point are niche products as the cost is too high, capacity too low and the application-level performance improvements are not high enough for most customers to move in this direction aggressively. As prices will come down they will be used in our efficient hierarchical storage management stack when we see more customer demand, but nothing prevents us from using it today. We just don’t see enough demand yet.

Comment

Excellent answers – short, direct and clear. Thank you Dr James.

GigaOM takes notice of DPUs

By
Chris Mellor
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Data Processing Units (DPUs) help organisations build denser, faster, more efficient and cost-effective IT infrastructures, with the goal of providing an overall lower total cost of ownership.

This is the thrust of a GigaOm Sonar report, written by analyst Enrico Signoretti, looking at early-stage emerging technologies. DPUs are hardware accelerators, usually installed on commodity x86 servers, to offload specialised compute tasks such as security, storage and networking. They can be implemented as ASICs, FPGAs or proprietary Systems-on-Chip (SOCs) using Arm or specially-developed processors.

The Sonar report evaluates suppliers’ products looking at their performance, programmability, power efficiency, longevity and cost. It also checks key characteristics needed for enterprise adoption: architecture, drivers, APIs, ecosystem, management and support.

The included suppliers are Fungible, Intel, Kalray, Marvell, Nvidia, Pensando and Pliops. They are placed in a triangular 2D area to represent their relative positions as Challengers or Leaders. The three axes defining the space are technology, strategy and roadmap. The three axes start at the same central point (signifying a higher score) and then move outwards.

Here is the report’s Sonar diagram: 

The orange squares are the suppliers’ starting positions, and the arrows show their direction of movement. At this early state of DPU development they are all Leaders – although Marvell is on the Leader/Challenger boundary – and all located in the technology-centric area of the diagram. 

Nvidia and Pensando are the overall best-positioned, with Fungible, Intel and Pliops next, followed by Kalray and Marvell.

The report contains descriptive sections for each supplier, describing their product’s characteristics, its strengths and its challenges. It advises: “The DPU is a component of the server. Look to purchase it with the server so the vendor provides warranty and support for both as part of the server maintenance plan.” That seems too be an excellent point for all but hyperscaler customers.

GigaOm’s Sonar Report for Data Processing Units (DPU) is available to GigaOm subscribers. 

Dell has record quarter, but flattish storage lets the side down

By
Chris Mellor
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Dell’s quarterly revenues rose 21 per cent year-on-year to a record $28.4 billion, but storage revenues were anaemic with a mere 0.9 per cent rise to $3.89 billion.

This was the best third quarter in Dell Technologies history — helped, Dell said, by robust demand, durable competitive advantages, and strong execution. The company generated record revenue of $28.4 billion in the quarter ended October 29, up 21 per cent, with growth in all business units, customer segments and geographies, and strength across commercial PCs, servers and (much less so) storage. VMware revenue was $3.2 billion — up 10 per cent with general strength across its product portfolio. Dell has now separated itself from VMware.

Chuck Whitten, co-COO Dell Technologies, said in a statement: “We’re three quarters into what will prove to be a historic year for Dell, and we are just beginning to write the next chapter of the Dell Technologies story. We are uniquely positioned in the data era, with durable advantages and market-leading positions. Our strategy is focused on growing our core business and in adjacent multi-billion-dollar markets including multi-cloud, edge, telecom and as-a-Service.”

Jeff Clarke, vice chairman and co-COO Dell Technologies, said in his statement: “Our product, global operations and sales teams did an outstanding job this quarter as we shipped a record number of products and delivered record revenue.”

Yes, but storage rather let the side down. We’ll focus on that while acknowledging that Dell has done an outstanding job elsewhere in its results for the quarter.

Storage

Storage revenues in the Infrastructure Solutions Group (revenues $8.4 billion; up 5 per cent) were almost flat while server-plus-networking revenues rose 9 per cent year-on-year to $4.5 billion.

A chart shows a widening gap between the two product categories over the past three quarters:

The seemingly stubborn resistance Dell’s storage shows to product sales growth is holding ISG revenues back. We should say that Dell is the leading storage product shipper, being number one in external enterprise storage, storage software, all-flash arrays, hyperconverged systems, converged systems, and purpose-built backup appliances. Yet it has barely grown storage revenues over the past three quarters while competitors — such as Pure Storage and NetApp — have grown their revenues.

What is the problem? A results presentation slide said there was “Strong storage demand, orders growth in Hyperconverged Infrastructure up 47 per cent, Data Protection up 26 per cent and Midrange up 18 per cent.” There must have been significant weakness elsewhere in the product range to have overall storage growth be just 0.9 per cent

This suggests disappointing high-end array sales could be a factor and possibly also low or no growth in Dell’s PowerScale file and ECS object storage products. There could be increased competition from suppliers such as Infinidat, Pure Storage, VAST Data, Qumulo and others to account for this.

Earnings call

We looked for any clues in Dell’s earnings call. Co-COO Jeff Clarke declared: “We are pleased with our storage performance in Q3, where we saw storage return to growth.”  

He declared: “Momentum in our mid-range storage business continues to be led by PowerStore, where 23 per cent of PowerStore customers renewed to Dell storage and 28 per cent were repeat buyers. PowerStore is the fastest-ramping storage product in our history.”

That’s all very well but storage must have been a disappointment to Clarke with its lacklustre growth.

Answering a question, CFO Tom Sweet said: “Storage demand tends to be more back-end loaded in the quarter, and we clearly saw that again this quarter, perhaps a bit more than in prior quarters. And as a result of that, we were not able to convert that backlog to revenue … and we also deferred a fair amount of revenue to the balance sheet, just given the service attach rate as well as the software content within the storage.”

Whitten jumped in to strengthen Dell’s answer here: “We’re encouraged by storage orders growth because in the most strategic category, software defined storage, we grew 47 per cent, mid-range orders grew 18 per cent, which is now the fourth consecutive quarter our mid-range business has grown. … Data protection grew, unstructured data grew and our entry-level orders grew as well in the storage business, so … we remain encouraged by the orders growth.”

Will this backlog translate into growth next quarter? Possibly not, as Sweet said: “The reality is, as we highlighted in the talk track that we’re continuing to face supply chain challenges. And so how much of server demand gets converted or backlog gets converted into shippable revenue is something that the teams are working every day.”

He also said though: “that Q4 tends to be a higher storage quarter for us.”

It seems fair to assume that Dell is facing headwinds in the high-end array, filer and, possibly, object storage space. There must have been quite severe revenue declines in its storage portfolio outside the highlighted growth areas, such as the mid-range. This suggests that there are product weaknesses needing to be fixed and that could be a multi-quarter exercise.

Nutanix spent more money than it earned in latest quarter, but no one’s worried

By
Chris Mellor
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Nutanix reached a negative landmark, with losses exceeding revenues in its latest quarter, but financial analysts are happy with its progress. 

Revenues were $378.52 million in its first fiscal 2022 quarter, which ended October 31, up 21 per cent annually, for a loss of $419.8 million. For every dollar it earned Nutanix spent $1.11 — it bought its growth. The year-ago quarter’s loss was $265 million. In the previous quarter it dropped 92 cents in costs for every dollar of revenue. Things have got worse.

President and CEO Rajiv Ramaswami’s results statement read: “Our first quarter was a good start to our fiscal year, demonstrating strong year-over-year top and bottom line improvement.” The “bottom line” term certainly did not refer to GAAP net income.

CFO Duston Williams said: “We achieved record ACV billings, which grew 33 per cent year-over-year, and saw 21 per cent year-over-year revenue growth, our highest growth in over three years.”

Financial summary

  • Free cash flow — improved to -$1.9M from -$16.3M a year ago;
  • Gross margin — 78.5 per cent compared to 78.3 per cent a year ago;
  • Annual Contract Value (ACV) — $183.3M vs last year’s $137.8M, up 33 per cent;
  • Annual Recurring Revenue (ARR) — $952.6M vs $569.5M a year ago;
  • Cash and cash equivalents at end of period — $350.99M compared to $504.5M last year.

The quarter was the third in a row showing annual growth and one with a steep rise:

Nutanix announced a strategic partnership with Citrix in the quarter which was unfortunately followed by Citrix announcing a restructuring and layoff program and the departure of CEO David Henshall. That’s unfortunate timing.

Nutanix grew its customer count by 570 in the quarter to a total of 20,700 but the increase was the lowest for five years or more. The customer acquisition rate trend is downwards. We might say Nutanix is spending more, as shown by deepening losses, to gain fewer new customers.

But customer spend increased and analysts were not concerned, as we shall see.

There was a minimal impact of Nutanix’s business from the COVID resurgence, as customer businesses have learnt how to do remote working. There was little to no supply chain impact as Nutanix has multiple hardware partners.

Nutanix saw more customers buying more products — 42 per cent of customer deals involved at least one so-called emerging product, which includes all add-ons beyond the basic HCI offering. This was up slightly, 7 points Nutanix said, year-on-year. A basis point is equal to 1/100th of one per cent, which is why we said it was up slightly.

Analyst views

Wells Fargo’s Aaron Rakers told subscribers: “[Nutanix] delivered positive F1Q22 results (and forward guide) driven by a seasonally strong federal business, significant upselling, and continued execution on subscription renewals.” He said Nutanix “provided investors with increased confidence in the company’s path to profitability,” and “Nutanix expects significant growth in emerging products and new ACV bookings in F2Q22.”

Rakers commented on the customer acquisition rate: “While new logo additions decelerated, Nutanix’s ASP per new logo was up year over year and quarter over quarter as it focuses on quality/efficiency of new logos. [Nutanix] now has 1,580 customers that have purchased >$1 million, up 68 quarter over quarter.”

Williams said in the earnings call: “We are generating more new logo ACV bookings with less new logos,” which explain’s Rakers’ view.

William Blair’s Jason Ader said: “Nutanix reported another solid beat-and-raise in its fiscal first-quarter print as the company benefited from improving hybrid cloud infrastructure demand, returns on its solution selling investments (including higher win rates, healthy renewals, and a strong attach rate for add-on products), and enhanced partner leverage.” 

Ader also sees a “significant renewal opportunity ahead”. He pointed out that: “Management continues to view its rapidly approaching renewal opportunity as the key to unlocking operating leverage and achieving its target of free cash flow break-even in the next 12–18 months (as well as operating profit in calendar 2023).”

This means analysts were not concerned over the big loss, with Ader saying: “The company gained operating leverage from the higher revenue and spent less than expected.” But he did point out: “Risks to the Nutanix story include competition from Dell/VMware and cloud titans, a high cash burn and deep level of operating losses.”

Guidance

The guidance for the next quarter is for revenues between $400 million and $410 million — an annual increase of 16.9 per cent at the $405 million mid-point. Growth is slowing. Revenue guidance for the whole fiscal 2022 year is $1.615 to $1.630 billion — a 16.7 per cent increase on FY2021 at the mid-point.

Pure’s great revenue rebound – profits beckoning

By
Chris Mellor
-

Pure has grown third quarter revenues a whopping 37 per cent year-on-year, surging back after last year’s third quarter 4 per cent revenue fall. That was its first negative growth quarter since we started reporting its results more than five years ago.

Revenues in the quarter ended October 31, 2021, were $562.7 million. They were $410.6 million a year ago, with a loss of $28.7 million — less than half the year-ago $74 million loss. But look at the quarterly trends so far this fiscal year. The chart below shows a declining loss trend throughout this fiscal year and if the fourth quarter comes in at the predicted $630 million then Pure could turn a profit — a GAAP profit — its first ever. That would be a landmark event in its history. 

See the profit/loss trend in FY2022 at the right end of the chart.

Chairman and CEO Charlie Giancarlo said in his results statement: “With Q3 revenue up 37 per cent year-over-year and with increasing profitability, it’s clear that Pure continues to set the pace for the industry.”

CFO Kevan Krysler said: “Our strong Q3 performance was fueled by increased customer demand and execution across the entire business. We are in a great innovation cycle with our portfolio.” 

Giancarlo’s prepared remarks reflected this, as he predicted: “Our next announcement, on December 8th, will … extend the breadth of our FlashArray platform.” 

Financial summary:

  • Subscription services revenue — up 38 per cent year-on-year;
  • Subscription Annual Recurring Revenue (ARR) — $788.3M, up 30 per cent year-over-year;
  • Gross margin — 66.6 per cent;
  • Operating cash flow — $127.0M;
  • Free cash flow — $101.3M;
  • Total cash and investments — $1.4B.

Pure gained 345 new customers in the quarter — 12 per cent year-over-year growth — taking its total to, we calculate, just shy of 10,000 (actually 9,992 give or take).

The Q3 revenue bounce back is seen clearly in a chart of revenues by quarter by fiscal year — see the yellow line’s dip and steep ascent.

The trends are good and Pure has uplifted its full year forecast to $2.1 billion — a 25 per cent increase on FY2021. This, with its Q4 $630 million contribution, rebuts any ideas that the Pure would be hit hard by the departure of sales chief Dominic Delfino earlier this month. He was replaced by Dan FitzSimons, who got a “special shout-out” from Giancarlo.

Earnings call

Giancarlo said in the earnings call that Pure had: “double-digit quarter-over-quarter growth across all product lines and across both US and the international markets” and “Pure continues to take share.”

He made a remark that strengthens our belief that Pure could make a profit in the next quarter: “We are also pleased with our strong profitability trend continuing through this fiscal year.” Krysler said he saw no sign of demand relaxing in his initial look at the next fiscal year.

Giancarlo acknowledged supply chain problems but said they had been largely overcome. “This past quarter, global semiconductor availability was more challenging than last quarter, and we expect this environment to continue into next year. However, our operations team and the strong partnerships we’ve built with our suppliers have continued to work well, minimising impacts to our customers and our business.”

Pure will publish its first environmental, social and governance report early next calendar year, with Giancarlo saying: “Pure’s products use dramatically less energy and create far less waste than competitive offerings.”

Hyperscaler FlashArray//C sale

Krysler dropped this gem about a product sale: “Our sales growth this quarter also includes sales of FlashArray//C to one of the top 10 hyperscalers.” A $10 million-plus FlashArray//C sale to a hyperscaler was predicted back in August. Without that sale the quarter’s growth “would more likely be in the high 20s,” rather than the reported 37 per cent. This particular sale could be repeatable with Krysler saying: “No reason for us not to believe that it’s repeatable and conversations continue.”

Giancarlo said that: “It’s also worth noting that the overall footprint savings was a key part of winning the initial deal,” referring to a disk-based alternative.

He talked about a disk-to-flash crossover, saying: “We believe very strongly that as flash continues to decline relatively to the declines in magnetic disk, that there’s inevitably going to be a crossover point where every player everywhere including the hyperscalers will start switching from disk to flash. And it’s just a matter of time and their particular use case or instance before that happens.  … before flash is used in a more … mainstream way in the hyperscale environment.”

Gartner’s 2021 Hyperconverged Magic Quadrant: Leaders unchanged, bye-bye DataCore, hello Visionary StorMagic

By
Chris Mellor
-

All the action is centred down on the bottom-left in Gartner’s latest hyperconverged infrastructure (HCI) software magic quadrant (MQ).

This annual MQ rates HCI suppliers on low-to-high “completeness of vision“ and “ability to execute” axes, defining a rectangular space divided into four squares: Niche Players with low vision and executive ability, Visionaries with more vision but low executive ability, Challengers with higher executive ability but low vision, and Leaders with high vision and high ability to execute. It’s a quick guide to supplier choices for Gartner clients, backed up by a separate and more thorough critical capabilities report.

This year’s HCI MQ has no change in the Challengers and Leaders quadrants, the former being empty and the latter the domain of just two players: Nutanix and VMware, and their respective positions are effectively unchanged. Nutanix is maybe closer to the ideal balanced execution ability/vision line.

Down in the bottom left, we wave goodbye to DataCore, which has been ejected this year. We see Quantum inheriting the acquired Pivot3 slot and moving to the left and downwards. StorMagic, with its vSAN product, moves into the Visionaries quadrant, which pleases it mightily. An announcement said: “This is the fourth consecutive year that StorMagic has been included in the report, and we are incredibly proud to be recognised, for the first time ever, as a ‘Visionary.’”

2020 edition of Gartner’s HCI MQ.

You can get a complementary copy of this 2021 HCI MQ from the StorMagic website.

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