In Run-Up To IPO, Networking Firm Acacia Reveals Channel Sales Are Part Of The Strategy

All signs are pointing to an initial public offering of stock next week for Acacia Communications, a maker of high-speed optical networking technology that's disclosed in a filing with the U.S. Securities and Exchange Commission that it has agreements in place with channel partners.

Maynard, Mass.-based Acacia hasn't publicized its channel work on its website, and the company declined comment, but one solution provider executive told CRN he's aware that Acacia has been making moves to ramp up channel sales.

"These guys have really only just begun to embrace" the channel, said Jamie Shepard, a senior vice president at Lumenate in Marlborough, Mass.

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Acacia, which offers subsystems for high-speed transport in communications networks, this week updated its proposed IPO plan with the SEC to show that shares in the offering are expected to price at between $21 and $23 apiece. The company is looking to list on the Nasdaq with the ticker symbol ACIA, and the Wall Street Journal reports that the IPO is likely going to be priced May 12.

In its SEC filing, Acacia disclosed that confidentiality arrangements are in place with channel partners and resellers, among others. However, the filing shows that about 73 percent of Acacia’s revenue in 2015 came just from the company’s five largest customers. The firm reports it had "more than 25 customers" for the 12 months ended March 31, 2016. "We plan to continue to acquire new customers through expanded sales and marketing and brand recognition efforts," Acacia said in the SEC filing. The firm generated a total of $239 million in revenue and net income of $40.5 million last year.

It remains to be seen whether an IPO from Acacia would have a positive impact on solution providers. Shepard, of Lumenate, said he doesn't have a sense of how well-primed Acacia is for the unforgiving public markets. But, Shepard added, for "anybody that goes public now in the tech sector, and that embraces the channel, the channel is clearly going to rise and fall with what that company is doing on Wall Street."

Channel programs, he noted, are often the victims when publicly traded companies get pressure from Wall Street to make cuts and increase profits. "Even if the product's fantastic, we're losing a lot of funds behind the scenes if they don't make their numbers," he said.