Specialist
Former VP at Veritas Technologies LLC
Agenda
- Veritas Technologies’ 1-3-year growth and profitability outlook given recent EBITDA declines
- Product and solution set evolution and differentiating factors
- Competitive positioning and market share evolution, focusing on Commvault (NASDAQ: CVLT), Rubrik, Veeam and Cohesity
- M&A strategy, integration capabilities and growth opportunities
Questions
1.
Could you highlight some key trends in the data back-up and management industry that you’ve identified in the last few years?
2.
Given the market trends you mentioned, how would you describe the evolution of Veritas Technologies and its product set in recent years? Do you think the company has been adapting to market trends at a suitable rate?
3.
You mentioned capturing new logos or more market share was a bit challenging for Veritas because it wasn’t the target of the PE group. Would you say there was just too much focus on profitability optimisation, EBITDA margins and so on?
4.
Given there was perhaps slower top-line growth for Veritas, at least initially, since it was taken over by the PE firm, would you say revenue growth rates were around a certain range of mid-to-high-single digits, or were they in double digits, but lower end of it?
5.
With the sort of product set Veritas has, would the say the company is capable of achieving higher growth rates than it has right now, it’s just a matter of having that right strategic focus, which it might be doing now with increased focus on NetBackup?
6.
I read an article on Bloomberg Law that suggested Veritas’s earnings, at least in Q3 2022, dropped by almost half. If that were true, where do you think it has gone wrong for Veritas? Is it, again, what we mentioned around not having the right investments in the right areas, or just the priorities?
7.
If the reports were true about the sharp declines for Veritas, could some of it also be attributed to shifting from a perpetual licence model to a subscription model, the perpetual licence being the go-to in the legacy space?
8.
If we look at Veritas’s product mix, I understand the four core areas it’s split into are data protection, availability, insights and compliance. How would you roughly segment these in terms of their contributions, whether it be a rough percentage range or just ranking them first to fourth?
9.
Given the nature of Veritas’s clients being large enterprises, the Fortune 500 companies, I understand that in the last few years the focus wasn’t necessarily on new logos, but if the company were to shift that approach, how much growth remains in that high-up segment?
10.
If Veritas were to look for new logos in the mid-market, I think Commvault is quite strong here. Would there be any sorts of pricing constraints if Veritas were to go into the mid-market? Would the company be potentially too expensive for certain customers? Is there a certain sized customer that can go for Veritas?
11.
We discussed how Veritas’s focus in the last few years was to expand within the existing customer base and it wasn’t really on new logos. Was that more often in the form of cross-selling something from the compliance, availability and insights side, or was it essentially selling more storage off to the customer? Was Veritas working with the existing customer base by increasing the contract price at renewal? How did that pan out?
12.
Given the nature of Veritas’s large enterprise clients, with enormous amounts of data already backed up, is there actually much of a churn risk for the company? Would it cost the customer as much, if not more, to replace it completely vs sticking with it, even if the performance wasn’t up to scratch or innovating as fast as competitors?
13.
Do you think Veritas’s renewal rate – or churn rate, however you’d like to define it – has somewhat increased, at least since the company was acquired by its PE sponsor?
14.
Given that its current PE sponsor has held Veritas for several years now – I think just over six years – would the company hypothetically be better off to be acquired by a financial or a strategic buyer, or do you think IPOing might be the best option here for that capital injection?
15.
If the strategic buyer route would make most sense for Veritas, do any companies or examples come to mind as to who Veritas might play best with?
16.
In terms of Veritas’s performance outlook, in the present economic backdrop and with the potential of a macro downturn, do you think these sorts of events can still hinder the growth of a player such as Veritas or any other data management player? Or has the perception of data back-up and recovery upgraded to a must-have as opposed to the nice-to-have that it might have been before?
17.
On the note of competition to Veritas, you mentioned players such as Rubrik, Cohesity and Commvault, and we could even consider Veeam. Do you believe these players are capturing market share from Veritas at a significant rate, or would you say the company doesn’t need to be too worried about this?
18.
Would you say growth drivers for the companies are about picking the right solution to layer on top of the data back-up side? I understand perhaps data back-up might be becoming more of a commodity and it’s more about the solutions that have been layered on top of or around it, whether it be security-related ones, compliance or ransomware.
19.
In terms of differentiation, you highlighted how Veritas has 20-plus years of engineering roots behind its tech. Would you say that’s the core differentiator for the company against players such as Commvault and Cohesity?
20.
In terms of other players, you said Commvault might be capturing pretty good market share. In terms of this company’s differentiation points, is it the case that it’s been able to adapt well to the things you mentioned – about UI, for example – or would you highlight anything else about Commvault?
21.
Regardless of what the next step will be at Veritas – whether the company is acquired by a strategic buyer or another financial investor – if it were in your hands, what would you prioritise to boost the growth rate to a more reasonable level, or boost it to what you think it could achieve given the current product set, customer base and so on? What key things would you want to tick off?
22.
Would you like to highlight anything else regarding Veritas?
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