Cohesity CEO Updates On Veritas Acquisition, IPO And Becoming A $2B Company

‘I’ve said consistently [the IPO’s] not the destination. It's a milestone. We decided to close this acquisition before the IPO. We decided, rather than go public, to do the deal, to go from number seven to number one in the market, to close the year closer to $2 billion in revenue instead of $500 million,” says Cohesity CEO Sanjay Poonen.

Ready To Roll Out The Red Carpet For Veritas

Cohesity is in the final stretch of its massive $3-billion acquisition of data protection and cyber resilience peer Veritas. The acquisition, slated to happen before the end of the calendar year, is on track to combine Cohesity, an 11-year-old relative newcomer and pioneer in combining cyber resilience and data protection, together with Veritas, a decades-old data protection pioneer with one of the industry’s largest customer bases and intellectual property portfolios.

Sanjay Poonen, a former top executive of SAP and VMware who in mid-2022 joined Cohesity as CEO, exclusively told CRN that his company is ready to be the first data protection technology developer to cross the $1-billion mark in revenue in only 11 years, and is laying the groundwork for quick growth to $2 billion and beyond.

Becoming number one in the crowded data protection market is a real milestone for Poonen, who has been working on the acquisition—and the lofty goal—for 15 months.

“[Veritas] takes us from number seven in this space to number one, and that’s a good position to be in,” he said. “We obviously want to stay humble and hungry. But for an 11-year-old company to get to number one in a very crowded space—there’s 50 players in this market—it’s a big moment.”

Poonen said the new Cohesity will have all the parts needed to quickly—and profitably—grow the combined company into the future, including 12,000 customers, over 3,000 channel and technology partners, and strategic partnerships with the leading cloud and on-premises infrastructure providers.

The approvals are nearly complete, negotiations are nearly finished, and the new combined executive team has been put together. For a look at what has been done so far to prepare for the closing of the Cohesity-Veritas deal, and what the future looks like, read CRN’s Q&A with Poonen, which has been lightly edited for clarity.

What's the latest on Cohesity’s acquisition of most of Veritas? How close are you to closing?

We expect to close by end of the calendar year. We're in the final stages of all the regulatory and other approvals, so I expect that to continue. We've said all along that's our timeline. We feel good about that. It's a major milestone for us as an 11-year-old company. This year, we will be pro forma, meaning when you put the two companies together at the end of our fiscal 2024, a $1.7-billion revenue company at 28 percent adjusted EBITDA. So very profitable. And we will be the fastest company in our space to cross a billion dollars in revenue at the 11-year mark. When I looked at other companies that have gotten to a billion dollars in data protection in the past, no one got to $1 billion in 11 years. We're very proud of that. Obviously, the acquisition is a major step in getting there. …

So, pro forma for the year that ends August 2024 is $1.7 billion. Going forward, our goal is to become a $2-billion revenue company soon and continue profitable growth. We're creating a very strong customer base. I've been talking to many of those customers. They’ll include over 85 percent of the Fortune 100, and nearly 70 percent of the global 500. We’ll have 12,000 customers and over 3,000 partners including VARs, systems integrators, cloud companies, tech companies, and security companies. Many of them are not just strategic partners with us, but also equity investors in us. Nvidia [for example] has made a big investment with us and is also a key partner with us.

[Veritas] takes us from number seven in this space to number one, and that's a good position to be in. We obviously want to stay humble and hungry. But for an 11-year-old company to get to number one in a very crowded space—there’s 50 players in this market—it’s a big moment.

What is the integration plan?

So after it's official, hopefully next month, we’ll go into calendar 2025 in the middle of our fiscal year and start the integration process. We're very excited about a lot of the innovations we have planned. This is going to be a company that always celebrates its modern technology platform. We're going to bring the best of the engineering teams of Veritas and Cohesity together. The new company is going to be called Cohesity. We're bringing together an engineering team that's going to innovate like never before. … I've been [at Cohesity] coming up on a little over two years. Personally, it's a big milestone for me because I've been working on this for at least 15 months. But it's a fantastic team. I'm also very excited about the team coming in from Veritas. There will be a blend of both teams on the executive side.

Are there any potential roadblocks that would slow down or stop the deal’s close?

Obviously there are a couple of steps that are involved in the regulatory process, but we expect them to close by the end of the calendar year.

This summer, there were reports in the Financial Times and other media about disagreements between the private equity backers of Veritas and Cohesity over debt issues from the acquisition. Is that an issue?

No comment. At the time, we said these negotiations are par for the course. We didn't comment. Good news is, when it gets resolved, when we close, you should just assume that all of those discussions came to a good, fruitful close.

When you look at what Veritas offers, the technology, the R&D, and so on, are there any parts of Veritas that Cohesity might feel doesn’t serve the company’s mission going forward?

No. Those decisions were made in what we took from Veritas. There are certain pieces that we left behind that will become a new company publicly called Arctera. We only took the parts of Veritas that we felt we could focus on, that was valuable to us. We left behind Backup Exec, InfoScale, and the vaulting compliance business. We’ll have NetBackup, which has connectors to every source system, I think 500-odd connectors. They've got patents in this area for many decades, 30 or 40 years. They've got a cloud-native capability. They’ve obviously got a huge customer base. So the entirety of that business is very helpful to us. As we come together, there’ll be things that evolve in the next five years.

NetBackup is the premier data protection solution that's been around for many decades and is active at I think at least 7,000 or 8,000 customers that we will bring. In many cases, they're running that backup on top of a storage platform like a [Dell] Data Domain. We don't do that at Cohesity. That's called a disaggregated data protection solution. We will support that. In fact, I told Dell executives that we’re very committed to supporting NetBackup running on Data Domain for customers who want that today.

Cohesity invented a new category, web-scale hyperconverged architecture, 11 years ago. That is the next generation of where customers are going. We invented that. And a year later, Rubrik emulated that same architecture. A few years later, Commvault bought a company called Hedwig with that same architecture. That'll certainly become the blueprint of how we think about hyperconverged and cloud for the future, and that'sreasonably complimentary to NetBackup. But there's many use cases of NetBackup that we don't do, with disaggregated backups on top of Data Domain only one example.

All our products will have a common management control plane, Cohesity Helios, which Gartner recognizes as one of the best management control planes the industry bar none, run on top of both NetBackup and Cohesity DataProtect. [The console] looks the same when customers move from one to the other. We'll be able to move data seamlessly, because we will know the formats of both. And we will have the largest number of connectors to private cloud solutions like VMware, Nutanix, Red Hat; public cloud solutions like AWS, Azure, Google, and Oracle; and SaaS such as Microsoft 365, Google Workspace, Salesforce, and Jira Service. … We could only do that with the combined engineering team of Cohesity and Veritas. It would be hard for any one company to do it on their own.

How far down into the midrange and SMB spaces will the new Cohesity go?

Today, most of our business comes from the enterprise, but our logos come from a combination of midmarket and enterprise. We will have 12,000 customers, but the concentration of bookings or revenue will come from the Fortune 500 and global 500. We're going to be extremely strong in verticals including financial services, banking, insurance, public sector, government, telco, business services like consulting firms, and healthcare. I believe, from my experience at SAP and VMware, when you get the biggest logos of the world to adopt you as a customer and you keep them really happy, such as the top banks, every other bank wants to be like them one day. So our goal is to get the top of the pyramid in the Fortune 100 and the global 500 to be extremely happy, satisfied customers of the new Cohesity. Many of them already are, and I'm working a lot with them already as they grow with us. Then the smaller banks all one day want to be like those bigger banks. …

Let's just say one day we were able to go from 12,000 customers to 120,000 customers. That growth, 10x, will come from midmarket customers. But it'll explode very much through the channel. But I think we've got several years where we can take the high end of the enterprise and do even more with them in the top five or 10 verticals that are very focused on cyber resilience, on data opportunities. And that's how, if you look at other great companies I admire like ServiceNow, for example, they've concentrated their effort on the enterprise. SAP and VMware were very similar. For the first few years, we want to make sure that that focus stays really strong. But we obviously have to get logo proliferation and business growth also from the midmarket.

Are professional services a big part of what Cohesity offers, or is that pretty much left to the channel?

Not as much as it was from my experience at SAP and VMware. … It's much smaller here. So I think that's a much bigger opportunity. The way I described this to channel partners at the Best of Breed conference is that we're on a path to become a $2 billion revenue company, hopefully soon. How much of that $2 billion, I asked the value-added resellers, do you want to take through your distribution scheme? That's obviously a big buy, bigger than many of our competitors put together in revenue. Then on top of that, for every dollar of subscription revenue that we create, there's going to be 1x or 2x services revenue, so it could be $2 billion to $4 billion worth of services for cyber resilience. At the end of the day, this is keeping companies safe. It's security. It's infrastructure. We work closely with many VARs and systems integrators, but also security companies like Mandiant, Palo Alto, Arctic Wolf, and PwC. That’s going to be a tremendous opportunity for a new breed of services including infrastructure services around implementing data protection, backup, recovery, and immutability, and cyber resilience services. …

And because we will be the biggest player, we hope we can create a draft, if you will, of services opportunities for all of them. We certainly will have to have some professional services. For example, many of our customers expect us to staff what are called technical account managers or professional service residents. Those will usually be used to grease the skids for a much larger services engagement from one of our partners.

Has Cohesity restarted plans for an IPO yet?

No. That's something we'll have to evaluate. It's clearly something that's on our radar as a milestone. But I’ve said consistently it's not the destination. It's a milestone. We decided to close this acquisition before the IPO. We decided, rather than go public, to do the deal, to go from number seven to number one in the market, to close the year closer to $2 billion in revenue instead of $500 million.

We also wanted to flesh out our team. It's not just the existing team that's coming together from Cohesity and Veritas. We brought two new people in. In May, we brough in Craig Martell, an incredible AI visionary. He was the chief digital and AI officer for the Department of Defense and is now our CTO. Last month we brought in Vasu Murthy as our chief product officer. He previously led product management at Rubrik, and before that was at Oracle. So there is a mixture of executives coming in from the outside that love our vision. And I think you're going to find that same thing play itself out down at the various different ranks. The executive team and the leadership team are going to be driven by people who, first of all, create an incredible culture.

What are your plans for your first few days after the merger with Veritas closes?

We're going to have 12,000 customers coming together from the combination of Cohesity and Veritas. I'm very committed to them. In the first 100 days, I want to call the top 1,000 customers of Veritas by lifetime revenue. I'm going to call them myself. I'm going to try and get to all of them in 100 days. During COVID, I learned a lesson: It doesn't take a long time to call 1,000 customers. We had to do it all over 30-minute Zoom calls. I was at VMware at the time, and I don't know if I got quite 1,000, but I got close. I would like to give the personal touch to many of the largest customers of Veritas and tell them that we got their back, we're going to be innovating with them like crazy, we're going to help them understand where they want to go with their current products, with their roadmap, and that they've got a tremendous ally in me. That's the style I set when I was at SAP and VMware. I want that culture here in the new Cohesity, whether it's the existing Cohesive executives or the new Veritas executives joining my executive team or new people like Craig or Vasu that join us, and then relay those values down to every layer inside this company. There’ll be over 5,500 employees in the new company. We want to make sure that that's the culture we're setting up. This is an iconic company at the 11-year mark. We're just getting started.

What’s the significance of bringing Craig Martell (pictured) and Vasu Murthy into Cohesity?

Where we have the opportunity to hire from the outside, we like people with domain experience. What I liked about Craig was his deep knowledge of AI. What I liked about Vasu was his deep knowledge about the data protection space and its relevance to companies in the areas of analytics and data protection.

We have a culture where we want the best. We want to be a magnet for talent. I didn't want this company to just be all VMware people joining, so I've been very careful as we brought new people in to have a mixture of talent from multiple companies. I and other people on my executive team came from VMware. There are people from inside Cohesity who stepped up and have done more. There will be people from Veritas who were there for a long time and know this space really well. You take Deepak Mohan (executive vice president of Veritas’ engineering organization), who has been in the data protection space for a long time. He knows the space really well. He's going to be leading our engineering effort. Lenny Lucas (Veritas’ executive vice president of customer success) who's coming from their side knows their customers well and will be running customer experience and support. He's been there for a couple of decades. Lissa Hollinger (senior vice president and chief marketing officer) and Brian Hamel (executive vice president of worldwide field operations) are also coming in. Those four executives coming in from Veritas that have been named publicly.