Commvault Acquires Hedvig for $225 Million
Start-up in multi-cloud SDS
This is a Press Release edited by StorageNewsletter.com on September 5, 2019 at 2:32 pmCommvault Systems, Inc. entered into a definitive agreement to acquire SDS start-up Hedvig, Inc. for total consideration of $225 million, which includes the purchase price and ongoing employee retention.
Gartner expects that by 2023, SDS instantiations of vendor storage OSs running in the cloud will become the dominant method of building multi cloud storage infrastructures.
This move to cloud and multi-cloud environments, together with cloud native applications is driving competitive advantage for companies of all sizes; yet the acceleration of data fragmentation is negatively impacting business outcomes. This rapid data growth, generated from a variety of sources stored both within on-premises environments and in the cloud will continue to create significant governance, security and management challenges.
“Multi-cloud data management is a hard problem for customers to solve, and that translates to value. Commvault’s acquisition of Hedvig is an astute strategic move that allows Commvault to differentiate and enhance its offerings – which broadens its addressable market. We believe this increases the value Commvault can bring to these increasingly complex customer problems,” said Crawford Del Prete, president, IDC.
“This acquisition demonstrates how Commvault is leading the way towards the intersection of storage and data management,” said Sanjay Mirchandani, Commvault CEO. “We believe joining Hedvig’s innovative SDS capabilities with Commvault’s industry leading data protection reduces fragmentation and leapfrogs other solutions in the market.”
For years, Commvault has evolved its portfolio to help thousands of customers of all sizes globally protect, manage and use their data more effectively. This is demonstrated by the 600+PB of data managed by its software in the cloud today.
Hedvig drives operational efficiency, addresses the data sovereignty problems stemming from data governance laws, and enables hybrid cloud and multi-cloud capabilities natively. Operational efficiency is achieved via complete protocol consolidation (block, file, and object storage) on a single platform.
“Being completely software based, the Hedvig platform can span multiple data centers across multiple physical geographies including disparate cloud environments,” said Avinash Lakshman, Hedvig CEO. “This may be the most comprehensive solution ever unleashed into enterprise data centers and public cloud environments.”
Hedvig was founded in 2012 by Lakshman, the inventor of Apache Cassandra and one of the inventors of Amazon Dynamo.
The proposed acquisition is expected to close in Commvault’s fiscal third quarter, subject to certain closing conditions.
The transaction is expected to be slightly dilutive to Commvault’s FY’20 non-GAAP EPS and accretive to FY’21 non-GAAP EPS.
“Hedvig’s technology is in its prime. It has been market tested and proven. We believe that the convergence of storage, multi-cloud, and cloud native technologies, combined with our leadership in data management will accelerate the movement towards modern applications built on containers and microservices. Commvault will set the bar for the unification of storage and data management for the future,” Mirchandani added.
Comments
VMworld is just over and we already jumped into real market life with a surprising M&A. Speaking with Commvault during the show, we understood some good news like this one should come soon.
Commvault chose to announce this acquisition in advance of its own GO conference in October where we can expect some new directions from its CEO, Sanjay Mirchandani. And for sure, some product integration, use cases and joint roadmap.
Several Software-Defined Storage (SDS) players seems to be in a tough period, some disappeared (Coho Data, Formation Data Systems, Primary Data, Skylable, and Data Gravity), some got acquired (pretty long list: Maxta, Compuverde, Nexenta, Cleversafe, Infinity Storage, Elastifile, Tintri, Exablox, Noobaa or ScaleIO), some became zombie, I let you identify them, and of course some continue to exist.
From a product perspective, we notice that players promoting a multi-protocol (block, file and object) approach reach hurdles more often than one protocol specialists with strong and deep solution.
It turns out that it's going tougher once again for remaining independent players, we anticipate some other moves in the coming months.
It's also surprising to not read HPE instead of Commvault as HPE is an investor in Hedvig and Milan Shetty, CTO of the datacenter infrastructure activity, HPE, acts as technical advisor for the company. Always looking for a bargain (Nimble, SimpliVity, BlueData and MapR), it's pretty strange that HPE didn't jump into this one. Did they identify another prey even more attractive at a lower cost?
Commvault Perspective
For Commvault, this move is good news following the new blood and motivation injected by Sanjay Mirchandani since he joined the company a few months ago. Known and recognized as a backup pioneer and more globally a data management leader, the company has introduced its own scale-out product named HyperScale deployed on-premises and dedicated to storage backup images. Competition is tough today with players like Rubrik or Cohesity so having a new - let's say recent - solution serves the ambition of the CEO to make significant changes and not parametric ones.
The press release announcing this merge limits the integration of Commvault backup software with Hedvig backup target to address the secondary storage market opportunity. The opportunity together to be much more than that touching multi and hybrid cloud, cloud native apps and primary and secondary storage globally.
According to the figures published by Commvault since 2015 (and probably even before), the company generates more revenue in services than in products moving from 53 to 56% (2015 to 2019) in favor of services. It illustrates a huge installed base, an inertia in revenue but also the lack of innovation on the products side. Globally the revenue grows slowly for several years at approximately 4% when hot competitors show aggressive growth numbers.
Hedvig perspective
From a Hedvig point of view, founded in 2012 with $52 million raised in 4 rounds (2012, 2013, 2015 and 2017), this acquisition confirms the difficulty for the company to raise a new round and the limited footprint even with a brilliant team, a recognized technology and some interesting references. The company was very visible in 2015, 2016 and 2017 and suddenly disappeared from the radar 18 months ago with a certain form of urgency to convert projects and execute sales.
What about the amount? $225 million means a ratio of $4.33 on amount raised which is not exceptional at all.
Nevertheless this move validates developments, technologies and team to enter into a new era and see a broader adoption thanks to the Commvault channel. All Hedvig people stay in Commvault meaning that the acquirer really needs the start-up unique expertise.
To conclude, the buyer gets credibility with Hedvig technology and the acquired company gets a new market vehicle illustrating a win-win situation.
For the time being, both companies will continue to market their product independently and we anticipate some cross/up-sell approach.
Read also:
Exclusive Interview With Avinash Lakshman, CEO and Founder, Hedvig
Start-up just raised new VC round with HPE as investor and technical advisor
by Philippe Nicolas | March 20, 2017 | News
Hedvig Raises $21.5 Million Series C
Total at $52 million; HPE new investor [with our comments]
March 2, 2017 | Press Release
Start-Up Profile: Hedvig
New one in software-defined storage
by Jean Jacques Maleval | March 30, 2015 | News
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