Cohesity has completed its acquisition of Veritas NetBackup, a move that marks a significant milestone in the data protection industry. This acquisition, announced ten months ago, consolidates Cohesity’s position as the leading data protection software provider by market share. The merger brings together two industry giants, promising enhanced capabilities and a broader customer base.
Cohesity’s acquisition of Veritas NetBackup allowed it to potentially serve over 12,000 customers, with more than 10,000 clients coming from Veritas. The combined entity now serves a significant portion of the world’s largest companies, including over 85 of the Fortune 100 and nearly 70 percent of the Global 500. This strategic acquisition not only expands Cohesity’s customer base but also aims to solidify its market presence. Integrating Veritas’s extensive global footprint with Cohesity’s innovative architecture and AI/security capabilities highlights a powerful consolidation in the industry.
Acquisition Completion and Market Leadership
Cohesity has officially finalized the purchase of Veritas NetBackup, emerging as the world’s largest data protection software provider by market share. The merger combines over 12,000 customers into its fold, with more than 10,000 coming from Veritas alone. This consolidation now offers services to a vast array of the world’s largest companies, involving over 85 of the Fortune 100 and nearly 70 percent of the Global 500. The sheer scale of this customer base underpins the industry dominance now enjoyed by Cohesity.
Not just expanding the customer base, the merger elevates Cohesity’s market presence significantly. By combining Veritas’s extensive global footprint with Cohesity’s innovative architecture and AI/security capabilities, the company is positioned to deliver unmatched data protection solutions to its clients. This strategic alignment underscores Cohesity’s unwavering commitment to protecting, securing, and deriving valuable insights from global data. Cohesity’s promotional drive becomes evident, promoting a vision of not just defending data but leveraging it for transformative insights and business resilience.
Business Spin-offs and Leadership Changes
While the acquisition was largely centered on Veritas NetBackup, several other components of Veritas were not included in the deal. These excluded segments encompass Veritas Backup Exec, data compliance, and InfoScale storage management. As a strategic maneuver, these parts have been spun off into a separate entity named Arctera, effectively led by CEO Lawrence Wong. The decision to create Arctera allows for a focused approach, ensuring that each business unit thrives under dedicated leadership while Cohesity can concentrate on its core objectives.
The formation of Arctera represents a deliberate effort to optimize distinct business units. By spinning off these components, Cohesity eliminates potential dilution of focus, channeling its energy and resources into the seamless integration and enhancement of the NetBackup business. This approach not only ensures a smooth transition for existing customers but also sustains robust support across all products. The establishment of Arctera serves a vital role in maintaining the sustained growth and continued excellence of the spun-off units.
Strategic Vision and Commitment to Innovation
Cohesity CEO Sanjay Poonen underscored that the merger aligns perfectly with the company’s mission to protect, secure, and derive insights from global data. Integrating Cohesity’s architecture with Veritas’s global reach is anticipated to spur significant advances in cyber resilience and data security. Poonen assured customers of continued support for existing products from both Cohesity and Veritas, pledging that no customer will be left without support. This continuity is crucial in maintaining customer confidence and loyalty during the transitional phase.
A key aspect of Cohesity’s strategic vision revolves around AI and data insights as competitive advantages for global CIOs. By leveraging these advanced technologies, Cohesity aims to enhance its data protection solutions and provide clients with robust security and valuable insights. This commitment to innovation is designed to place Cohesity at the forefront of the industry, driving forward industry standards and paving the way for new, more efficient data protection paradigms. In this manner, the integration promises not just continuity but a powerful evolution in capabilities and service delivery.
Financial Metrics and Growth Projections
Cohesity proudly claims the title of the fastest organization in the data protection space to eclipse $1.5 billion in annual revenue, an impressive feat for a company founded only in 2013. The financial strength and rapid growth of the combined Veritas-Cohesity entity are further validated by revenue figures exceeding $1.7 billion and an annual recurring revenue (ARR) of $1.5 billion for the fiscal year ending in July 2024. These figures underscore the formidable potential and market dominance of this merger.
When stacked against competitors like Veeam, who surpassed $1.5 billion in annual revenues in 2021, Cohesity’s accelerated timeline reveals a competitive edge. In contrast, rivals such as Commvault and Rubrik have reported significantly lower revenues, highlighting the superior market positioning of the Cohesity-Veritas conglomerate. Analysts are bullish on the future, with forecasts of double-digit ARR growth for the combined company in 2025, suggesting it will secure or top market share rankings moving forward. These financial metrics paint a very rosy picture for stakeholders looking to invest in the rapidly expanding data protection sector.
Industry Reactions and Competitive Landscape
Cohesity’s strategic acquisition positions it in direct competition with industry heavyweights like Rubrik and illustrates the intensifying need for robust data security and cyber resilience that extends beyond traditional backup and recovery solutions. AI and data insights are cornerstones of Cohesity’s competitive strategy, designed to offer significant advantages over rivals. This forward-looking approach capitalizes on the growing demand for smarter, more resilient cyber protections in a landscape where data breaches and cybersecurity threats are ever-present.
Despite Cohesity’s aggressive push into market leadership, competitors like Rubrik have expressed criticism. Rubrik emphasizes the importance of acquisitions that deliver immediate, clear value without complicating integrations. Cohesity counters this with its strategic partnership with Nvidia, aimed at integrating GenAI on the Nvidia AI Enterprise platform. This collaboration underscores Cohesity’s commitment to innovation and strategic growth, setting it apart from competitors through technological sophistication and strategic alliances.
Analysts’ Perspectives and Funding Strategy
Financial analysts mirror the optimism surrounding Cohesity’s strategic acquisition, with William Blair analyst Jason Ader forecasting double-digit annual recurring revenue growth for the merged entity in 2025. This optimistic outlook is built on the solid financial foundation established through the acquisition, valued at a reported cost of $3 billion. Funded through a combination of equity and debt from investment groups, this significant investment highlights the strong confidence in Cohesity’s strategic vision and growth potential.
Despite private equity house Carlyle acquiring Veritas for $7.4 billion in 2015, the current acquisition didn’t yield expected profit margins in valuation terms. The intricate funding strategy, including Series G shares and a subsequent Series H financing round, reflects Cohesity’s robust financial planning and strategic foresight. Analysts recognize this as a pivotal moment for the merged entity, signifying both an ambitious step toward industry dominance and a well-coordinated financial strategy to support long-term objectives.
Future Outlook and Strategic Focus
The completion of Cohesity’s acquisition of Veritas NetBackup signifies a monumental shift in the data protection landscape. This merger represents a transformative moment, offering unparalleled security, insights, and resilience for global enterprises. Cohesity’s unwavering focus on AI and cyber resilience sets the stage for future growth and industry leadership. As the data protection landscape evolves, Cohesity is well-positioned to lead with innovative solutions and a robust customer-centric approach.
In the highly competitive and dynamic market, the Cohesity-Veritas merger marks a pivotal point, heralding new opportunities and challenges in the quest to secure and leverage the world’s data. The strategic vision extending from this merger underscores the combined entity’s commitment to delivering advanced data protection, robust support systems, and continuing innovation in AI and cybersecurity. As global enterprises grapple with an ever-increasing volume and complexity of data, Cohesity’s forward-looking strategies place it at the helm, guiding the industry toward new frontiers of data security and management.
