Netezza Nudges IPO

Data warehousing specialist Netezza is the latest IT vendor to bust an IPO move, filing its S-1 with the Securities and Exchange Commission (SEC) last night. (See Netezza Files S-1.)

Netezza is one of a number of vendors playing in the data warehousing space, which includes IBM, Teradata, and startups DATallegro and Greenplum. (See IBM Streamlines BI , LSI Powers Teradata, and Greenplum Eyes Data Warehouses.) The Framingham, Mass.-based firm's flagship product is its NPS appliance, a combination of storage and database technology that offloads tasks often done by storage gear. (See Netezza Boosts Data Appliance and Netezza Unveils New System.)

Last year Netezza unveiled a high-end 100-Tbyte version of its NPS device and it is touting the platform as a faster way for users to load, access, and query data, compared to traditional data warehouses. (See Netezza Extends Series, Netezza Boosts Data Appliance, Netezza Breaks Up the Family, and Netezza Spawns a Monster.)

According to yesterday's SEC filing, Netezza has shipped over 200 of its appliances to 87 customers. These include AOL, Amazon, Capital One Services, the U.S. Army Corps of Engineers, and the Department of Veterans' Affairs. (See Netezza Adds Customers and Netezza Launches Federal Division .)

At least one analyst told Byte and Switch that he is not surprised by Netezza's S-1 and its growing momentum amongst users. "They apply more intelligence to the data itself [than other vendors]," said Steve Duplessie, senior analyst at the Enterprise Strategy Group, explaining that this produces faster queries. "They offload a lot of the work that a traditional database would have to do [because] they already have the data indexed and categorized."The S-1 filing also reveals that Netezza's revenues are growing, from around $54 million in 2006 to just under $80 million in fiscal 2007.

With users facing yet more compliance pressures, data warehouse sizes are growing at a clip. Analyst firm IDC, for example, says that almost a quarter of organizations expect their data warehouses to at least double in size over the next three years.

The vendor has picked up more than $68 million in funding to date, with the most recent round a $15 million Series D in early 2005. (See Netezza Nets $15M More, Netezza Nets $20M More, and Startups Score in Funding Uptick.)

After a barren spell for storage IPOs, recent months have seen a flurry of public offerings. Last month, for example, chipmaker Mellanox opened with an impressive share price on its first day of trading. (See Mellanox Exceeds IPO Hopes, Mellanox Goes Public, and Mellanox Ready for IPO .) This followed similar moves from Isilon, Riverbed, Double-Take, and Commvault. (See Double-Take, Isilon Go Public, Riverbed Comes Out at $9.75, and CommVault Swims in Public Pool.)

Earlier this year, EMC announced plans to spin off 10 percent of its VMware shares into an IPO, and InfiniBand specialist Voltaire is also rumored to be planning its own public offering. (See VMware to Spin Out and IPO Talk Strikes Voltaire.)Enterprise Strategy Group's Duplessie told Byte and Switch that, despite recent Wall Street anxiety, the market for IPOs is solid. (See Chinese Shockwaves.) "We're in a relatively vibrant technology IPO market for a number of reasons," he said. "It has been a non-existent market for six years, so there is that 'oh, it's back' glamor to it."

The analyst also cited the caliber of firms moving into the public arena. "The companies that have gone out with IPOs have been good, solid companies -- they have not been crappy, pipe-dream firms," he said.

Credit Suisse Securities and Morgan Stanley will act as joint book-running managers for Netezza's offering, which is expected to bring in $100 million, with Needham and Company and Thomas Weisel Partners acting as co-managers.

James Rogers, Senior Editor Byte and Switch