CommVault's Taking the Plunge

After years of speculation, CommVault filed for an initial public offering (IPO) late Friday in hopes of raising $150 million to take on the big boys of storage software. (See CommVault Files for IPO.)

CommVault has long been considered the most likely storage startup to go public and has been a fixture atop the Byte and Switch Top Ten private companies list, but it took its time before filing its S-1 registration with the SEC, the first step in selling shares. (See CommVault 'Well Positioned' for IPO and CommVault: IPO or HP?)

Its S-1 filing disclosed that CommVault has been profitable for at least a year with a net income of around $480,000 for the fiscal year ended last March 31 and around $9 million for the ninth months that ended last Dec. 31. It generated revenue of around $81 million for the ninth months that ended Dec. 31 compared to $59 million for the same nine-month period in 2004.

CommVault counts 575 employees and more than 3,400 customers, including Ace Hardware, North Fork Bank, and Welch Foods.

"It's a good time for them to file," says Rhoda Phillips, IDC research manager for storage software. "They've made good progress, especially with the addition of their CDP. We hear a lot about them from customers, that they're easy to use and work with a lot of other products."CommVault did not give a target date for its IPO and would not comment on the filing. Its S-1 did say the money it raises will be used to pay off creditors and to develop new software, expand distribution channels, and broaden partnerships. CommVault has OEM deals with Dell and Hitachi Data Systems that account for 18 percent of its revenue.

Although CommVault is mostly known for its backup and archiving software, its QiNetix suite also includes applications for storage management, data classification, and replication. According to its SEC filing, CommVault intends to move into other areas. "We plan to build upon our existing technology foundation to introduce new software applications beyond the traditional data and storage management category," the company said.

While growing and profitable, CommVault remains a small fry compared to its major competitors, EMC, Symantec, Hewlett-Packard, IBM, and CA. For instance, IDC's latest figures put EMC's storage software revenue at $2.6 billion and Symantec's at $1.8 billion in 2005.

There's no guarantee that CommVault will make it public either. LSI Logic's Engenio storage system and blade server startup Egenera filed for IPOs last year, and neither followed through. (See LSI CFO Eyes IPO, Egenera Seeks IPO, and Egenera Waits on IPO.) Engenio postponed its IPO after pricing shares last July, and this month officially cancelled it. (See Engenio Gets Cold Feet.)

But financial analysts don't expect CommVault to get cold feet. "After waiting this long, I don't think they'll change their minds," says analyst Steve Berg of Punk Ziegel & Co.Credit Suisse Securities and Goldman Sachs are the lead underwriters for the IPO, with Merrill Lynch, Thomas Weisel Partners, RBC Capital Markets, and C.E. Unterberg, Towbin also listed as underwriters.

Dave Raffo, Senior Editor, Byte and Switch

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