Cohesity CEO On Closing The Veritas Acquisition, Competing With Veeam, Rubrik, And More

‘We're a product company that is going to innovate like crazy. This isn't about just consolidating and cutting costs. We're going to be innovating 5x to 10x the competitors, as we always have been, with an engineering team that's 2x the size of many of our honorable modern competitors,’ says Cohesity CEO Sanjay Poonen.

Ten months after data protection and data resilience technology developer Cohesity unveiled its plan to acquire the enterprise business of Veritas, the deal, worth an estimated $3 billion, officially closed this week.

The acquisition springs Cohesity, formerly the sixth-largest data protection and data resilience vendor, to vie with rival Veeam for first or second place, depending on which vendor or analyst one talks to.

Combined, Cohesity claims to serve over 12,000 enterprise customers, including a solid majority of the Fortune 100 and global 500 companies, with a combined revenue of over $1.7 billion, annual recurring revenue of $1.5 billion, and an adjusted cash EBITDA of 28 percent.

While Cohesity is expected to become a stronger competitor, CEO Sanjay Poonen is very careful not to badmouth any of what he calls the company’s “honorable competitors."

“IBM is actually a strategic partner of ours,” Poonen told CRN in an exclusive meeting. “They invested in Cohesity, so I consider IBM a friend. And Dell also partners with us. We've got a lot of NetBackup customers running on [Dell] Data Domain. Our message to Dell is we'd like to partner with you. Veeam, Commvault, and Rubrik are competitors, but they're honorable competitors. They've got good products.”

Poonen also talked about the IPO Cohesity originally planned for 2024 only to delay it in order to focus on the Veritas business acquisition, saying that an IPO is a nice milestone but not a goal in of itself, and that Cohesity is already in better financial shape than its public competitors.

“We’ve got a combination of growth and profitability,” he said. “And we also have the Who's Who of the Fortune 100 and global 500 as customers. It's a very special state. From what we hear from our bankers, there'll continue to be strong interest. The bankers who helped us [with the acquisition] are extremely excited whenever we feel right about that next step. We went through that [IPO] process before I got here. As the market changed, we decided to delay. So we'll be ready when the market's ready.”

There’s a lot going on at Cohesity, which is now set to reshape the data protection and data resilience industry. To understand how the pieces fit together, read the entire Q&A with CRN, which has been lightly edited for clarity.

How do you feel now that the acquisition is closed?

I'm feeling good. It’s been an exciting day for us in our 11-year history. This is like being reborn. We started the company 11 years ago. I was there. The founders started with zero in revenue. And here we are with a major milestone, the fastest company to cross $1.5 billion in revenue. And for the pro forma year ending fiscal 2024 in July, which is our fiscal year, we crossed $1.7 billion in revenue, and very profitable with a 28-percent adjusted cash EBITDA margin. And we have a line of sight to $2 billion in revenue. So we’ve been reborn with the possibility of creating not just a market share leader in this space, but a $2 billion ‘Rule of 40’ company. Rule of 40 means growth and margin add to over 40.

We held an all-hands meeting with all the over 5,500 employees in the new company, and I gave them three things we wanted to be focused on. Number one is to have a really engaged workforce. I think if you're going to serve customers well, it has to start with your employees being focused and really engaged. Number two, we're a product company that is going to innovate like crazy. This isn't about just consolidating and cutting costs. We're going to be innovating 5x to 10x the competitors, as we always have been, with an engineering team that's 2x the size of many of our honorable modern competitors. And the third objective is customer obsession. If we do those three things well, I think we can continue to build a great company that maybe one day will be $5 billion revenue.

What is the integration plan?

We had the product teams talking to each other, but technically, because we were competitors, we could not share. We could prepare some of the ideas of roadmap, but we weren’t allowed to look at each other's code base until the deal closed. But as of [Tuesday], the engineering teams can get into a greater level of detail.

We have six important priorities we want to get done in six months on the product side. So [former Veritas Executive Vice President of Products] Deepak Mohan, who's going to be leading engineering, and [Chief Product Officer] Vasu Murthy, who will lead product management, those two folks are really going to be working very closely with each other's teams to make sure that the Cohesity Data Protect side will be separate from the NetBackup team. Think of two really good cars. Think about NetBackup as a Mercedes, and Data Protect like a Tesla. We're going to protect investment in both really good cars. We'll have a common management console for both, and we'll be thinking through integration scenarios so customers can move to Data Protect if they're ready.

But for a NetBackup customer, we have really good engineering plans to continue to evolve that product and take care of those customers. We'll have appropriate and very attractive renewal assurance programs to make it very commercially attractive. There'll be no gouging on pricing, things of those kinds. It's going to be very, very attractive for a customer to stay with us. We’ve called that entire effort as ‘no customer left behind.’ That is really important to our future. ‘No customer left behind.’ And I plan to call the top 1,000 Veritas customers in the first 100-plus days and really show my commitment as CEO to all of them.

It's very exciting. I get energized talking to employees, to customers, and to engineers. It's a new day for Cohesity. And if you look at the history of the data protection industry, no one's crossed $2 billion in revenue in a long time. Maybe at its peak, Veritas was there. IBM had been there 20 years ago. So this is rare air where we're going to create new record as the industry’s biggest company. We can get to $2 billion. And then I think if we get to $5 billion in revenue, that would be incredible. This space hasn't ever seen a company hit that spot, and that's going to be the next focus.

After you last talked to CRN, we had a chance to talk with Veeam CEO Anand Eswaran. …

Yeah, I saw that. He's a good friend of mine. I actually sent him a note when [Veeam’s $2-billion secondary funding] was announced last week to congratulate him.

Eswaran (pictured) said he expects Veeam to remain number one despite your claim that the Cohesity and Veritas enterprise business combined will be number one. What’s happening?

The analysts will decide market share. In an infographic we published on our website, we basically show our analysis of proforma analyst information. Analyst market share stats are as of end of 2023. But look at our revenue, which at the end of August was $1.7 billion. Revenue is the important part. ARR (annual recurring revenue) is a forward-looking leading indicator. It's not a GAAP metric. Revenue is what people use for market share. I'm pretty sure at the end of August, we were the biggest in revenue. I don't think anybody's bigger than $1.7 billion in revenue. That was for the [fiscal] year ending July. We'll see how that plays out. The leading analysts will do their [next] market share assessment for 2024 to probably come out around March or April of next year. We’ll see how this plays out.

Veeam’s number two, Dell’s number three, IBM’s number four, Commvault’s number five, Rubrik’s number six. IBM is actually a strategic partner of ours. They invested in Cohesity, so I consider IBM a friend. And Dell also partners with us. We've got a lot of NetBackup customers running on [Dell] Data Domain. Our message to Dell is we'd like to partner with you. Veeam, Commvault, and Rubrik are competitors, but they're honorable competitors. They've got good products. We're just differentiated because the ‘5 Ss’ that we've talked about—speed, scale, security, simplicity, smarts—just make us a better platform, as evidenced by our work with 85 percent of the Fortune 100 and 70 percent of the global 500. So we're really going to be focused there.

I have a lot of respect for the CEOs of those companies. They're good people. Many of them I've worked with and actually helped during my VMware days, including Veeam and Commvault. So I know Anand Eswaran and [Commvault CEO] Sanjay Mirchandani, and they're good people, and we compete honorably. We have to build the best platform. That’s been the pride of this company. Customers are now saying Cohesity and now Veritas have the best technology. … There will be three or four good companies in this industry, and our job is to stay number one in market share while innovating like crazy and taking care of our customers. We respect each other's businesses, and you'll hear me speaking very honorably about all our competitors.

Speaking about competitors, of the top six data protection vendors, it’s interesting that four of the six appeared to be run by CEOs of Indian ancestry. There’s you, Anand Eswaran, Sanjay Mirchandani, and Bipul Sinha at Rubrik. Then there’s George Kurian at NetApp. What do you think is driving that success?

[And there’s also] Thomas Kurian at Google Cloud, and Satya Nadella at Microsoft and Adobe CEO Shantanu Narayen. Listen, the Indian American community I think is about 4 million people. And we're all connected to each other. We see each other at events, we support each other. So I'm really happy for the Indian American community when this happens, whether it's our industry or others. We have to be role models for other immigrant communities and to the U.S. at large.

This is an amazing country where, if you work hard, anything is possible. We all came here at different ages. I came here as an undergrad in the late 1980s, and was very fortunate that Dartmouth College in New Hampshire, that I knew nothing about, gave me a scholarship to come here. And I was very fortunate to then get a job at Apple in the early 1990s to begin my tech career. Many of these other Indian Americans we've talked about, including in our industry, all have very special stories.

So I think whether it's the Indian American community or the immigrant communities or Americans who lived here for multiple generations, we form an incredibly diverse country with enormous possibilities. When I think about the U.S. economy and the incredible possibilities this country offers, whatever political, ethnic, or other affiliation you have, we can treat people respectfully and can work really hard. Our goal is to keep this country safe and the world safe. Our mission is to protect, secure, and provide insights into the world data so that every organization can rely on us for resilience.

With the closing of the acquisition of Veritas’ enterprise business, the remainder of the old Veritas is now known as Arctera. Does the new Cohesity going forward have any business relationship with Arctera?

We have a good partnership with them. [Arctera CEO] Lawrence Wong is a good friend. He's a former executive at Veritas. We have many sorts of partnerships. We will have many common customers. We'll have employees in multiple locations. We have a very good partnership with them, and there are places where we will be helping them where we can. We have to run our companies separately. There's no vendor overlap. And I wish Lawrence and that team, many of them former Veritas employees, the best, and we want them to be successful.

When Cohesity first unveiled the move to acquire Veritas’ enterprise business, it decided to delay its IPO. Now that the acquisition is closed, when do you expect to start ramping up for an IPO?

We've always talked about it as an important milestone. But we now have to integrate Cohesity and Veritas. We feel very good about our business plan for the rest of the fiscal year. We want to close fiscal 2025 strong and meet the plan that we have. There was incredible investor interest in this deal. We raised well over $3 billion in equity and cash. So I expect that to continue. If you look at the comps of many of our honorable competitors like Commvault and Rubrik in the public markets, we valued this company at about $7 billion or $7.5 billion last year. Since then, the comps in this industry have sort of doubled.

We think this company has an enormous amount of potential, and we will take it public at the right time, when we're ready. That's obviously an important milestone. In the meantime, I tell people we're here building a long-term company—you don't focus on just one milestone—and when you do that, you create sustainable growth. There are very few companies in this space. We might be the only one that's a ‘rule of 40’ company today. Some companies are growing fast, but not profitably. Some are profitable or not growing as fast. We’ve got a combination of growth and profitability. And we also have the Who's Who of the Fortune 100 and global 500 as customers. It's a very special state. From what we hear from our bankers, there'll continue to be strong interest. The bankers who helped us [with the acquisition] are extremely excited whenever we feel right about that next step. We went through that [IPO] process before I got here. As the market changed, we decided to delay. So we'll be ready when the market's ready, and our employees will work really hard to make that an important milestone.

The other thing that's important is we have some really incredible strategic partners who chose to invest in and double down with us. Let me start with Nvidia. I really want to thank [Nvidia CEO] Jensen Huang for his faith in us. He's quoted in our press release. We’re a data protection company with investment from Nvidia, the biggest market cap company and the king of AI. To have Jensen personally approve a quote and approve the investment in this company is very special.

IBM is technically a competitor of ours, but it chose to invest in us. It is also a strategic partner. We are very grateful to [CEO] Arvind Krishna and his team for really doubling down on the partnership and investment. And we also have Amazon, Google, Cisco, HPE, and Qualcomm as strategic investors who are in many cases exclusive partners. You'll see some newer investors showing up on the corporate side in the coming months. All these investors want to see Cohesity be successful.