Data Domain Goes Public

De-dupe specialist ups the value of its IPO from $78 million UPDATED 12:30 PM

June 27, 2007

4 Min Read
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De-duplication specialist Data Domain is looking to raise almost $111 million in its IPO today, after upping its initial stock price. (See Data Domain Prices IPO.)

Early trading in the shares, which began around midday ET today, was busy, with the stock soon rising to over $21, more than 40 percent above the vendor's $15 range.

The vendor raised its share price to $15 last night, up from its previous range between $11.50 and $13.50, according to documents filed with the SEC. (See Data Domain Prices $78M IPO.) Of the shares under offer, 7 million are being offered by Data Domain, and another 390,000 are being offered by a selling stockholder.

Data Domain's decision to raise its stock price reflects the growing momentum around data de-duplication, which aims to reduce the bulk of backed-up data by ensuring that the same information is not stored in two places. (See Insider: De-Dupe Demystified, Quantum to Offer De-Dupe Duo, and Quantum Intros DXi7500.)

Initially, the Santa Clara, Calif.-based firm was expected to raise around $100 million with its Nasdaq IPO, which is being underwritten by Goldman Sachs and Morgan Stanley. (See Data Domain Files S1.)The company has also granted the underwriters a 30-day option to purchase up to an additional 1,108,500 shares from Data Domain at the IPO price, less an underwriting discount of $1.05 per share.

In yesterday's filing, Data Domain estimates that its own net proceeds from the sale will be $94.2 million. The company confirmed this morning that trading in its shares will start sometime today.

The startup has been slowly adding flesh to the bones of its IPO strategy over the last few months, recently inking a deal with Quantum to avoid de-duplication lawsuits. (See De-Dupe Vendors Shake Hands, Storage Bubble Wrap.)

Analyst firm the 451 Group believes that the offering reflects booming demand for de-duplication products, a market expected to reach $1 billion by 2009, up from $260 million this year. "Data Domain's IPO today is significant in a number of ways," wrote 451 Group research director Simon Robinson in a note. "It indicates that disk-based data protection utilizing de-duplication capabilities is increasingly becoming a 'must have' feature for small to mid-sized organizations."

Other storage vendors are likely to be stung into action around de-dupe, according to the analyst. "Some of them will apply significant pricing pressure over the next 12-18 months as they add de-duplication functionality to their existing product lines," he explained. "We expect EMC, Network Appliance, Quantum Corp and Symantec to be among those vendors applying the most pressure, although all but EMC have much to prove in terms of product capability and customer traction."Data Domain is the latest in a string of storage vendors to bust an IPO move over the last 12 months. Data warehousing specialist Netezza, for example, filed its own S-1 earlier this year, following in the footsteps of Mellanox, Isilon, Double-Take, Riverbed, and CommVault. (See Netezza Nudges IPO, Riverbed Comes Out at $9.75, and CommVault Swims in Public Pool.) More recently, virtualization behemoth VMware has edged closer to its own public offering via parent EMC, and IPO talk continues to swirl around Voltaire and Force10. (See VMware Closer to IPO, VMware Files With SEC, Voltaire Nabs Cash Amid Speculation, and Force10 Round Hits $113M .)

Data de-duplication has been cited by users as one of this year's hottest technologies, with IT managers and CIOs looking to reduce the bulk of backed-up data. (See Top Storage Predictions for 2007, 2006 Storage Winners & Losers , and The Year of Data Protection.) A number of vendors are currently fleshing out their de-dupe strategies, including EMC, which spent $165 million on Avamar last year, Sepaton, and early mover Diligent. (See EMC Picks Up Avamar, Symantec Dips Into De-Dupe, Diligent Breaks Record, and Diligent Unveils SME Solutions.)

James Rogers, Senior Editor Byte and Switch

  • Avamar Technologies Inc.

  • CommVault Systems Inc.

  • Data Domain Inc. (Nasdaq: DDUP)

  • Diligent Technologies Corp.

  • Double-Take Software Inc. (Nasdaq: DBTK)

  • EMC Corp. (NYSE: EMC)

  • Force10 Networks Inc.

  • Goldman Sachs & Co.

  • Isilon Systems Inc. (Nasdaq: ISLN)

  • Mellanox Technologies Ltd. (Nasdaq: MLNX)

  • Morgan Stanley

  • Nasdaq

  • Netezza Corp.

  • Quantum Corp. (NYSE: QTM)

  • Riverbed Technology Inc. (Nasdaq: RVBD)

  • Securities and Exchange Commission (SEC)

  • Sepaton Inc.

  • The 451 Group

  • VMware Inc. (NYSE: VMW)

  • Voltaire Inc.

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