Carbonite Paid $146 Million to Buy Competitor Mozy, Dell Subsidiary

Carbonite, Inc. entered into a definitive agreement to acquire competitor Mozy, Inc. with similar offerings, from a subsidiary of Dell Technologies Inc. for $145.8 million in cash.

The company will fund the transaction with existing cash and newly secured financing commitments in the form of a $120.0 million revolving credit facility. The credit agreement will allow the company to borrow, as needed, for general corporate purposes, including acquisitions. The transaction is expected to close during the first quarter of 2018 and is subject to customary closing conditions and regulatory approvals.

The deal expands Carbonite’s customer base and better positions it to offer its data protection platform to every segment of the market.

Mohamad Ali, president and CEO, Carbonite, said: “Carbonite’s competitive advantage is our flexible data protection platform, which serves every scenario, from backing up individual laptops to maintaining uptime for hundreds of business servers. This deal provides Mozy customers scalable options for the future and gives Carbonite a broader base to which we offer our solutions.”

Mozy, founded in 2005, has been part of EMC since 2007 and now part of Dell. It is a leading provider of online backup as well as Carbonite, but with a lot of competitors. It was operated sort of as a separate entity within Dell. When Mozy was acquired by EMC, they started moving to the mid-market into larger customers faster than Carbonite did and so 85% of their customers is 35,000. 85% of their revenue is in the mid-market.

Six million individuals and 100,000 businesses backup their files to Mozy data centers, the firm being headquartered in Seattle, WA, with offices in Draper, UT, London, England, Cork, Ireland, and Shanghai, China.

Mozy demonstrated a consistent level of profitability, has 35,000 business and 100,000 consumers customers, and 2,000 resellers and partners. So Carbonite will adds new customer and expands partner channel with opportunity for cross-sell.

Also beginning in 2005, Carbonite is similar to Mozy in many ways, a cloud subscription business focused on the mid-market.

A few years ago, Carbonite was a consumer-focused company generating just over $100 million in revenues in cloud backup services. The market was changing quickly and the company had to change, acquiring several companies (see below).

Since 2014, Carbonite has delivered business products bookings with a CAGR greater than 40%, transforming from a consumer-centric organization to one that generates approximately 70% of its bookings from businesses.

Carbonite expects Mozy to contribute approximately $50 million to $55 million of bookings, with approximately 85% coming from business offerings. It also expects Mozy to contribute non-GAAP revenue in the range of $40 million to $45 million and approximately $0.25 per share in non-GAAP net income.

Carbonite offers three product categories, one for home users, one for businesses, and one for servers (Server Basic, Server Prime and Server Pro Bundle) supporting backup for Oracle, SQL, Exchange and other databases.

On its side, Mozy offers also three products: MozyHome, a backup service for individual consumers, MozyPro for business use and MozyEnterprise for large companies.

Comparison of Basic Home Packages

(Source: We Rock Your Web, June 5, 2016)

Comparison of Premium Home Packages

(Source: We Rock Your Web, June 5, 2016)

Comparison of Basic Business Packages

(Source: We Rock Your Web, June 5, 2016)

Comparison of Premium Business Packages

(Source: We Rock Your Web, June 5, 2016)

Acquisitions of Carbonite

(Source: StorageNewsletter.com)

Acquisition of Mozy

(Source: StorageNewsletter.com)