Cohesity & Veritas Deal

By Patrick Moorhead - February 13, 2024

The Six Five team discusses Cohesity & Veritas Deal.

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Transcript:

Daniel Newman: You and I had the chance to sit down-

Patrick Moorhead: Huge.

Daniel Newman: … with Cohesity’s CEO, Sanjay Poonen, and we got to hear the inside skinny of a mega deal, Pat, in data protection tying up two of the largest players in the space and creating a, what, $1.6 billion revenue per year company, Veritas and Cohesity, and 1.3 billion of ARR. So some key early points, this is going to take some time, it’s going to take approval. This wasn’t an overnight sign deal, not like maybe in the future group buy as a company and then here we grow again. This is a serious moment of growth. There’s been a lot of competition. You’ve got Rubrik, you’ve got Cohesity, you’ve got Commvault, you’ve got Veritas, you’ve got Dell, mega player, and there’s more. This particular space has been somewhat fragmented. This was a super interesting deal. I give Sanjay Poonen a lot of credit for creativity because in many ways it was a reverse merger. They’re calling it a combination or a tie-up. Listen-

Patrick Moorhead: It’s an acquisition, baby.

Daniel Newman: It’s an acquisition. Sanjay is going to be the CEO. He’ll be guided by Veritas’ CEO, Greg Hughes, who will be a part of the board and he’ll be an advisor to Sanjay, but you’re talking about a mega company now that serves, what, well over 90% of the Fortune 100 are working with either Veritas or Cohesity, I think 96 pack of the 180% of the Global 500, a mega ecosystem, a substantial set of bars, integrators, and partnerships with companies like NVIDIA and others that they work with. Really good moment for the company, Pat. Gives them size and scale.

You know where I think it’s heading. I can’t speak to where they think it’s heading, but I think it’s Veritas private company, through its last go private effort, Cohesity definitely was on the trajectory. We heard rumors rumbling or news rumbling this last week about Rubrik going public. I think this is going to go public. I think this was the step one, do this tie up. Step two, find all the synergies. Step three, announce an IPO and, of course, make sure you get your AI story in line, get your synergies and costs in line, get your customers in line, use the best innovation. I think Cohesity had a lot of their front end speed and innovation for data protection. Veritas had a lot of that deep, long-term customer relationships, and they were deeply rooted inside of the customers.

This is a really good way to unearth a whole bunch of business. They do have overlapping products. There will be some, it looks like, spin off, divesting of certain parts that aren’t going to make sense for this tie up, and we’re going to keep an eye on how they do that with those different business units, but, Pat, cybersecurity is on the rise. That’s why I launched Cybersphere this week. We are going to start focusing much more not just on data protection, but cybersecurity as a whole. Cohesity tied up with Veritas has a good story to tell.

Great quote, by the way, in the press release. I never liked seeing analyst quotes in press releases unless they’re mine, but you really did do a good job. I think that for the 10,000 customers and 3,000 partners of this combined venture is going to be able to support. There’s a good story here. It’s always exciting to see some very strategic consolidation, and appreciated Sanjay giving us some time and let’s go.

Patrick Moorhead: The combined company size is impressive. You’re looking at 1.6 billion in revenue. You’re looking at 1.3 billion in ARR, 27% EBITDA margins. God, I love EBITDA margins and I love EBITDA cash. It’s big. What it does, it catapults Cohesity really up the chain in terms of market share as it relates to data protection. So that’s not going to be on day one when it combines.

The things that I’ll be looking out for, Daniel, integration is everything on this, and in particular, I think in this case, the technological integration of the architectures. How do you do that? Because there can really only be one architecture if you want to scale, otherwise, you’re not going to get any of the benefits of the combined companies. Then you’ve got the idea of opex integration. I’m not just talking about layoffs, I’m talking about who runs sales, who’s running finance, who’s running customer operations. These things have to get worked through very quickly.

I do have confidence in Sanjay when I look at his background and talking. He’s definitely aware that it needs to happen. His goal, obviously, is to do this as quickly and painlessly as possible on the technology side. He actually told me this in a side conversation that we had. What I like about this the most, Daniel, is it just shakes it up. We’ve already seen Commvault come out and basically AstroTurf this, by the way, exactly what I would’ve expected from Commvault or even that matter, Rubrik, talking about the integration and what it means to customers. I consider that basic selling techniques to go after your competition. So I think it’s going to be interesting. I’ll be interested to hear what Rubrik has to say, Dell, IBM, folks like that.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.