Cohesity and Veritas Will Form a New Data Protection Firm

Data management firm Cohesity has agreed to combine with the data protection business of Veritas by the end of 2024. While terms weren’t announced, Bloomberg cited sources as affirming the value of the deal at roughly $3 billion or more. Veritas’ press release states that the combined value of the two companies will be $7 billion, an amount that could portend an IPO for Cohesity next year.

When combined, the company will be led by current Cohesity CEO Sanjay Poonen, who took the helm in August 2022 when founder Mohit Aron stepped aside to take a role as chief technology and product officer. The new company will retain the Cohesity name.

A separate company will be formed for the portion of Veritas that doesn’t combine with Cohesity. That company will be named DataCo and will be led by Lawrence Wong, currently SVP of Strategy and Products at Veritas.

Many Advantages Claimed

Cohesity’s CEO Poonen sees multiple advantages in the combination. There will be a combined total of 10,000 customers, including 96 of the Fortune 100 and 80% of the Global 500, the companies said. Partners will total 3,000. And according to the press release, on a pro forma basis for the fiscal year ending July 2023, the two companies combined had revenues over $1.6 billion, annual recurring revenue (ARR) of $1.3 billion, and an adjusted cash EBITDA margin of 27%.

“This deal will combine Cohesity's speed and innovation with Veritas’ global presence and installed base,” stated CEO Poonen in the press release.

Going forward, Cohesity’s product lineup, including cloud-native secondary storage and data management-as-a-service (DMaaS) via the Cohesity Data Cloud platform, will continue to be sold and supported in its entirety. The portion of Veritas that’s being spun off for combination with Cohesity offers NetBackup for hybrid cloud backup and security, along with NetBackup Appliances, and Veritas Alta SaaS Protection platform.

The combined company will focus on integrating its products with an emphasis on AI and data security. “When we talk to customers, they tell us they grapple with two issues today – security and generative AI,” said CEO Poonen on a video made for the announcement. “Our complementary strengths of both companies will address these challenges and will deliver many benefits to our customers and partners.”

Potential IPO and TAM

This deal could bring Cohesity to the level of size and valuation it needs to press on with the IPO it’s planned for over two years. Delayed by apparent internal strife in the ranks and unfavorable macroeconomic conditions, that move has been anticipated but stalled. But the addition of Poonen as CEO brought many changes to the company, including the addition of C-suite executives from top-notch backgrounds in public technology companies.

At the same time, Cohesity’s plans could put it behind archrival competitor Rubrik, which is rumored to be planning an April 2024 IPO. There are also the usual integration challenges. According to online sources, Veritas has about 7,000 employees, not all of which will land in the combined firm; Cohesity has about 1,500.

Still, as enterprise data becomes the root of generative AI applications, it’s likely that Cohesity-plus-Veritas will have plenty of room to benefit. The press release anticipates a total addressable market (TAM) of $30 billion, including data replication and protection software.

Futuriom Take: The combination of Cohesity and Veritas' data protection business comes at a time when demand for enterprise data protection is primary. It broadens the market potential for both and could be the run-up to a Cohesity IPO.