Veeam CEO On Expanding Microsoft AI Relationship, Microsoft’s Veeam Investment, And Potential IPO

‘Being a public company is certainly on the radar. The beautiful thing about being a very profitable company is we don’t have to do it for the sake of liquidity, but we will do it inevitably as the next milestone in Veeam’s journey,’ says Veeam CEO Anand Eswaran.

Veeam Tuesday significantly expanded its partnership with Microsoft. As part of the blockbuster deal, Microsoft took an undisclosed equity stake in Veeam and announced plans to co-develop AI innovations to integrate Microsoft AI services across Veeam’s portfolio of data resilience and management technologies.

Veeam CEO Anand Eswaran, in an exclusive interview, told CRN that while Veeam is already a profitable company, the investment from Microsoft brings a new level of visibility as it moves toward an IPO either this year or next.

“I think this equity stake is a signal to the market about Microsoft's trust in Veeam, which should basically help the market overall and as we expand share,” Eswaran said.

Microsoft’s investment in Veeam comes as a few key Veeam competitors have been making serious financial moves, such as Rubrik going public last year and Cohesity’s huge acquisition of Veritas’ enterprise data protection business. Eswaran said these moves come as every company realizes the importance of having a resilient data posture.

“Data is what runs businesses right now,” he said. “If access to their data stops, their business stops. That is at the heart of what’s happening here. Data resilience is a board priority. In fact, based on everything I’ve seen, I think 2025 will be the year of data resilience, where it’s going to literally break out in a pretty meaningful way. We’re at the right place at the right time.”

Here is more of CRN’s conversation with Eswaran.

There’s a lot of news out of Veeam today, Anand.

I’m excited. There’s like three different things all related to deepening Veeam’s relationship with Microsoft. We’ve been a Microsoft partner for a long time. Last year, just about this time, we talked about deepening that partnership, and we became strategic partners with co-sell, co-innovation, all of those things together. Last year was the first full year of Veeam Data Cloud, the control plane. It’s a platform on Azure. A year later, we’re doubling down. And ‘doubling down’ means we are further investing in co-innovation, further taking Microsoft’s AI services across the portfolio. So for me, Microsoft’s investment and taking an equity stake is the signal of their validation of Veeam being the premier No. 1 player in data resilience. That’s what excites me.

You said that Veeam is not a public company. Does this expanded relationship with Microsoft, including the equity investment, push Veeam closer to becoming a public company?

Yes. I mean, being a public company is certainly on the radar. The beautiful thing about being a very profitable company is we don’t have to do it for the sake of liquidity, but we will do it inevitably as the next milestone in Veeam’s journey. We are watching the macro. We operate like a public company today, and flipping the switch will take no time. We will talk to you very soon about some things on that journey.

By ‘soon,’ do you mean we could expect an IPO this year?

It’s a possibility this year or early next year. We haven’t really picked a time, but yes, this definitely was a step. The Microsoft equity investment is a step. It creates market validation. And yes, expect to see something like that.

If Veeam is already a profitable company, as you said, why take investment from Microsoft at all? You could have expanded the Microsoft relationship without getting more money from Microsoft, right?

I think Microsoft taking a stake in Veeam is a market signal more than anything else. I’ll give you some simple examples. If you look at Microsoft 365, probably one of the most critical SaaS apps in the industry, Veeam has a third of the share in protecting Microsoft 365 data. One-third of the users are protected today with Veeam. And by the way, the number of users protected today, by our estimate, is less than 15 percent of the total Microsoft 365 daily active users. So there’s a long runway, and this is super critical. So I think this equity stake is a signal to the market about Microsoft’s trust in Veeam, which should basically help the market overall and as we expand share.

You said Veeam is profitable. Can you talk a little bit about that?

I’ll give you a sense of it. We just closed the books in 2024. We finished 2024 with more than $1.74 billion in ARR [annual recurring revenue], and we expect to reach $2 billion in 2025. Just in 2024, we did more than half a billion dollars in adjusted cash EBITDA. That’s 30 percent margins. If you look at our financial health, we’re operating close to the rule of 50, which is sort of the benchmark for public companies, not just in our space, because we have no one close to that here. [Rule of 50 is a financial metric for SaaS companies, looking to see if the combined revenue growth percentage and the profit margin totals to at least 50.] But in general, it’s a benchmark for a public SaaS company. And so we’re pretty excited about where we are. The third element of what you look to see about how well a company is doing is customer retention. In our most important base—greater than 60 percent of our revenue comes from midsize enterprise and larger enterprise—our enterprise gross retention is in the neighborhood of 95 percent. Our enterprise net retention is in the neighborhood of 125 percent as we finished 2024. Those are true benchmarks. So when you put all of it together—our scale, our growth, our profitability, margin, our net retention and gross retention—these are signs of a truly benchmark SaaS business. That's the financial piece of it.

The other piece of it is the pace of innovation. Last year, we had the highest velocity of innovation in our 18-year history. We moved into BaaS [Backup as a Service]. We are one of the few companies that give customers a choice of whether to self-manage the products, to have Veeam offer a first-party service, to leverage a partner’s managed services or cloud services, or leverage Veeam’s products as a service. We offer our customers a choice. Last year was the first full year of Veeam’s first-party BaaS offerings, and the reaction and the uptake were absolutely incredible. We expect to reach $2 billion in ARR this year.

One thing that hasn't changed: We’re a channel-first, partner-first company. Everything we do goes through a partner, and we’re doubling down on that.

How much is Microsoft investing in Veeam?

We’re not sharing those detailed numbers. We didn’t even share it for the secondary funding round we did in December. We haven’t shared numbers or percents. Insight Partners continues to be the majority investor in Veeam. And we talked about TPG Capital, Neuberger German Capital Solutions, etc., coming in December. Microsoft is coming in as an equity investor. That’s about what we are sharing.

Does Veeam have any other strategic investors?

No, we’ve been very selective. We are extremely profitable. And for us, this is about the deepening of the partnership with Microsoft. So we’re being very picky around who comes in as a strategic investor, and we’re giddy about Microsoft being that one.

Microsoft’s investment, and talk of Veeam perhaps going public, comes right on the heels of Rubrik going public last year and Cohesity’s huge acquisition of Veritas’ enterprise data protection business. These are big moves in the data protection industry. What’s going on here in the industry as a whole?

I think the key thing is data resilience has moved from what was historically just the IT admin’s responsibility to become now a board priority. We’ve seen many different events of attacks by nation-state actors, different ransomware breaches, the velocity of ransomware attacks increasing. You saw the CrowdStrike attack cripple so many different companies across the world. And so every company now realizes the importance of having a resilient posture across their data. Data is what runs businesses right now. If access to their data stops, their business stops. That is at the heart of what’s happening here. Data resilience is a board priority. In fact, based on everything I’ve seen, I think 2025 will be the year of data resilience, where it’s going to literally break out in a pretty meaningful way. We’re at the right place at the right time. And for us now, it’s more than just revenue growth, share and leadership we’re driving. I think it’s a responsibility given what the world is going to see in 2025.

With the expanded Microsoft relationship, what are some of the big things we’ll see in terms of Veeam’s product offerings?

Accelerating AI use cases across our product portfolio, that’s what you should expect to see. New joint engineering resources working on difficult problems together. It couldn’t come soon enough to infuse AI across our portfolio. When I say AI, I look at it across four different dimensions.

The first is, how do you make your products better using AI? You’ve already seen some of the benefits of this in Veeam Backup & Replication v12.3, which we released on Dec. 3. We launched AI-based malware detection, as well as IOC [indicators of compromise] protection where we apply AI to different file patterns and usage patterns and predict behavior and get ready before a breach actually happens.

The second way we’re looking at it is how can we empower our customers better? This is where the Veeam AI Digital Assistant or Veeam Copilot across our Veeam Data Cloud backup-as-a-service platform [are key]. We are using AI to actually create solutions to empower our customers in a conversational way to do their jobs better.

The third thing we do is leverage AI services to create insights from the data itself. We protect close to 18 exabytes to 20 exabytes of data, and we want to create insights from that data that’s easy to understand, such as does a company have the right compliance posture? Are they compliant with GDPR based on what they’re doing? Are there instances of personal information data or sensitive data in their backup data? We want to help understand compliance postures in an easy way by applying AI to backup data.

The fourth thing we are road-mapping and working through now is, at some point, data fuels AI. So if the data is not protected and goes away, it impacts how you leverage AI. If the data is manipulated, you could actually get precisely wrong recommendations from your AI. And so we’re working through what we need to do with LLMs and language models to protect AI itself in the first place.

So expect to see an accelerating velocity of innovation on injecting AI into multiple services across the data resilience solution set.

Veeam is expanding its relationship with Microsoft now, particularly with AI. Are you doing anything similar with Google or Amazon Web Services?

We partner with Google. We partner with AWS. Many customers have Google or AWS as their hyperscaler of choice, and we work with all of them in a pretty meaningful way. And so, yes, we partner across the board with every hyperscaler.

Do you partner with them at the same level as you do with Microsoft?

I would call Microsoft the pinnacle of partnerships for us at Veeam.