What's Up with the Cohesity IPO?

It’s been just a few months since privately held Cohesity filed for IPO, but the cloud-native secondary storage and data management-as-a-service company isn’t showing any signs of jumping into the public pool. And neither are its cohorts who last year also signaled similar goals for IPO. Seems the market temperature just isn’t right for taking the plunge.

Last time we checked, Cohesity was so close to going public that we removed it from the Futuriom 40 list of privately held cloud-tech companies, since it seemed to be on the edge of disqualification. It seems we acted too soon. Still, judging by a record number of hits on our website, interest in the company’s IPO hasn’t dwindled. Exactly what that interest signals, however, isn’t quite clear.

There’s still news coming out of the firm, including industry recognitions, new hires, and a technology partnership with Rackspace (Nasdaq: RXT) that brings Cohesity’s multicloud backup and recovery to VMware-based clouds. But so far, not a peep about follow-up on the S-1. And as of this writing, Cohesity hadn’t responded to our request for comment.

So What’s the Story, Cohesity?

Given market conditions, it may be possible that Cohesity, and some of its fellow cloud tech unicorns, could be considering alternatives to IPO, including ownership by a special-purpose acquisition company (SPAC) or merger with another player.

Could Cohesity be shopping for a SPAC? There would be advantages to the SPAC approach, which can help guard a company against the volatility of a public float. Still, there are risks involved in SPACs, including the dilution of share value and a complicated relationship between the acquired company and the SPAC.

Interestingly, Cohesity’s latest tech partner Rackspace was bought by Apollo Global Management for $4.3 billion in 2016 (Rackspace went public again in August 2020), a private equity company that last August raised $500 million in a fund to invest in SPACs. It’s all about who you know, right?

Another alternative could be merging with a public company. Cohesity has an impressive list of tech alliances, each of which could encourage speculation.

Market Meandering

It makes sense that Cohesity, like other ambitious startups, including Cockroach Labs and Databricks, to name just two, have been spooked by recent market woes. Geopolitical unrest led by the war in Ukraine, along with ongoing component supply chain delays, inflation, and the specter of recession, has investors running for the hills.

Further, what appeared to be mere volatility last month has morphed into a consistent downturn in stock markets in general and tech stocks in particular.

Nasdaq shares have fallen over 18% since the start of 2022; the S&P 500 is down 12% in the same timeframe. The Nasdaq-100 Technology Sector Index fell over 24% this year, and the S&P North American Technology Sector Index dropped more than 23%.

While it’s not out of the question that Cohesity could still brave an IPO, it seems less likely as the year unfolds with its rising uncertainties. We’ll be watching for further developments.