Owl in a day's work: Commvault picks up software-defined type Hedvig for $225m

Commvault has said it will fork out nearly a quarter of a billion dollars to buy Hedvig, a software-defined storage startup. For the Cohesity rival, this is a $225m bet that data unification and so-called operational efficiencies will pay off. In April last year, the firm tussled with activist investor Elliot Management, and …

[StorageJockey]

Riccardo is not just ex-DXC, he is the former COO of Cohesity, ex-VMware, ex-EMC. The former leader of sales for Cohesity is now at the helm of sales at Commvault whose CEO is a former ex-VMware, ex-EMC. The backup space is full of "old friends" and this mix should be interesting. The looming shadow is Elliot Mgmt as the Private Equity backer of Commvault. My uneducated guess is that Riccardo has another 2 quarters to get CVLT back on track (Sanjay gets 3-4 quarters) before Wall Street and Elliot demands a head on a platter.

They won't catch Cohesity but they can slow the bleeding enough to flip this to Dell, HPE, Oracle, IBM, etc. My crystal ball says CVLT is acquired in 2020/2021 if not sooner.

[Anonymous Coward]

Hedvig doesn't fix Commvault. Here is how you fix Commvault: more sales, NEW customers, reduce churn, etc. Commvault buying a life raft when the ship is sinking. They need to shore up customers, add NEW logos and THEN consider enhancing the technology. Right now, they are bleeding cash and seen as a market share donor (going to Rubrik, Cohesity, Veeam). This is why Elliot is involved. I give Riccardo two more quarters (until early 2020). Sanjay may be able to stretch his tenure a little longer but the ship is taking on water and buying more doesn't patch the hole.

[D_awesome_beast]

Probably only backs up an angry inch

[eurotrash]

"The startup's staff will stay in their Santa Clara HQ, five minutes' walk from Commvault's office there."

How do you know? No-one walks in Santa Clara.

[Anonymous Coward]

Backup is crowded...and getting simple. Being expensive and complex is a death kneel.

Better faster easier is the new mantra for backup. Commvault like EMC (networker / avmar / iDPA ) are still a chore and a half to setup. A Cohesity / rubrik take about an hour to install and setup by comparision. There is no other hardware that is needed, no vms to manage, just turn on the appliance and login to the IP to manage, thats it. Want to add storage or performance, add a node... done. Commvault is trying like mad to meet this model with hyperscale, but its a bit late to the game and still EXPENSIVE. Backup should not cost more than primary storage...

[AlexHam]

Another bad deal and grossly overpaid for a company with little/no customers/rev. These boards should be audited for bad deals. Delaying the inevitable with fake strategic moves to fool the market. CMVLT is dead.

[Anonymous Coward]

Solving the wrong problem!

This acquisition is flawed at so many levels. Here's why:

1. Commvault does not have a TAM problem - the Backup and Recovery TAM is roughly $12B depending on who you talk to. New comers like Rubrik and Cohesity have latched on to this TAM and are growing like weeds. Veeam has recently crossed $1B in booking in the same space while Commvault has struggled to grow its topline revenue and market share (sitting at 7% for years) despite a product that is far more capable than it's competition. Commvault leadership is calling this a way to inject growth back into the company. When you are not executing well on your existing TAM, how does TAM expansion help inject growth?

2. GTM execution leaves a lot to be desired - Commvault brand awareness and marketing spend is a joke as compared to it's competition. Additionally, they haven't been able to attract A players in sales and their Channel presence is non-existent.

3. Selling storage requires the field to know storage - the Commvault field is selling backup and recovery software (and barely keeping the boat afloat) and expecting them to go sell storage is going to be a tall ask.

4. Spending $225M on a company that has 20 customers and at best $10M in bookings makes it obvious that either Commvault has no experience in M&A and/or the Hedvig board/leadership really knows how to sell themselves.

In the end, this acquisition is mostly just going to end up being a distraction from the core problem at hand, which is, GTM execution. The company should have instead spent the money on marketing/brand awareness, activating the channel, and hiring top talent that can sell their product. Unlikely that the $225M spent on this M&A will ever see the ROI.

[Aviato]

Re: Solving the wrong problem!

Spot on analysis. Commvault will be sold and this acquisition will end up in the trash heap.