Double-Take, Isilon Go Public

Isilon Systems and Double-Take Software today joined the growing list of storage vendors to go public and received a warm welcome from investors. (See Isilon Announces IPO.)

Trading under the symbol "ISLN" on Nasdaq, clustering specialist Isilon announced a public offering of 8,350,000 shares of its common stock at a price of $13 per share this morning, above its initial range of $8.50 to $9.50 a share. (See Isilon Moves Closer to IPO and Isilon Reveals IPO Plans.)

Isilon's shares opened at $25, and then dipped slightly to close at $23.20, although this was more than $10 (77.69 percent) above the vendor's initial price.

Replication vendor Double-Take, which is trading under "DBTK," priced its stock at $11, which was the high end of its range. The vendor originally set its planned IPO terms last month, saying it hoped to sell up to 7.5 million shares for between $9 and $11. (See Double-Take Seeks IPO.)

Trading on Double-Take's shares started shortly after Isilon's this morning, opening at $13.50 before eventually closing at $12.66.The offerings bring the number of storage IPOs this year to at least four. WAFS startup Riverbed and backup software vendor CommVault went public one day apart in late September. (See Riverbed Comes Out at $9.75 and CommVault Swims in Public Pool.) InfiniBand chip vendor Mellanox has also revealed plans to go public, but has yet to set a share range. (See Mellanox Ready for IPO .)

After a lean few years for storage IPOs, Isilon and Double-Take's performance will be closely watched by a number of other private vendors. 3PAR, BlueArc, Compellent, EqualLogic, and LeftHand Networks are among the firms that have hinted they will consider IPOs in 2007 if market conditions are favorable.

In documents filed with the SEC today, Double-Take revealed that the company recorded $40.7 million in revenue and lost $3.8 million last year, although the vendor's performance in the first nine months of this year appears more solid, with revenues of $41.8 million and income of $5.2 million.

Double-Take took steps in recent months to smooth its path to the public markets. In May, the vendor expanded its business by acquiring French-based Sunbelt System Software. (See Double-Take Buys Distributor.) Then changed its name from NSI Software in March because Double-Take -- the name of NSI's product family -- had greater brand recognition. (See NSI Becomes Double-Take.)

In an SEC filing, the vendor said that its net proceeds from the public offering will be approximately $48.2 million, of which approximately $38 million will be used for working capital and "other general corporate purposes."Isilon faced some speculation that it could be a tough sell for investors, mainly because it faces competition with EMC and Network Appliance to achieve significant growth in the clustered storage/NAS market. (See Isilon Snaps Its Clusters.)

In documents filed with the SEC last month, Isilon revealed it had a strong third quarter in revenue but continues to lose money. The vendor reported $17.8 million in revenue for the quarter and lost $5 million. For the first nine months of 2006, its revenue was $41.6 million -- nearly double its 2005 total of $21 million and more than triple its $12.4 million revenue from the first nine months of last year. Still, Isilon lost $15 million so far this year and has a $64.7 million accumulated deficit.

The market has reacted positively to recent storage IPOs. Riverbed exceeded its target price and CommVault hit the high end of its range. Share prices have since risen for both. Riverbed's IPO price was $9.75 and it opened today at $30.60. CommVault opened today at $19.90, up from its $14.50 IPO price.

James Rogers, Senior Editor, Byte and Switch