Institutional investors have offered to purchase some of the equity that Cohesity Inc. employees hold in the data management provider at a valuation of $3.7 billion, $1.2 billion more than what the company worth last year.

The investors participating in the tender offer include Steadfast Capital Ventures,  DFJ Growth, Foundation Capital, Wing Venture Capital and others. They are looking to purchase $145 million worth of equity, Cohesity disclosed in its announcement of the transaction today. 

“We believe the oversubscribed, non-dilutive tender offer based upon this increased company valuation speaks volumes about Cohesity’s performance and future outlook,” said Cohesity founder and Chief Executive Officer Mohit Aron.

Cohesity sells software that helps organizations manage the data they keep in their cloud and on-premises environments. It maintains a presence in several parts of the data management market. Cohesity provides products that enable administrators to back up business records, recover them if the main version becomes unavailable and optimize data storage costs by deduplicating and compressing information.

Cohesity’s core data protection and optimization features are complemented by a raft of more specialized tools. The company has developed, among other technologies, a machine learning system that detects when ransomware attempts to encrypt business records.

Mirroring a shift that is also happening at many other information technology suppliers, Cohesity’s product strategy is becoming increasingly focused on the public cloud. In the months leading up to its valuation boost today, the company introduced a managed cloud-based version of its DataProtect data protection product. Cohesity disclosed plans to introduce similar software-as-a-service versions of other offerings in the future. 

Cohesity partnered with Amazon Web Services Inc. to host the software-as-a-service portfolio. On top of being a key technology partner, AWS is one the winners from the newly announced jump in Cohesity’s valuation. AWS parent Amazon.com Inc. last year made an equity investment of undisclosed size into the data management provider as part of their partnership. 

The $3.7 billion valuation suggests investors believe Cohesity’s increased cloud focus and broader product strategy put it in a strong position for future growth. The company is expanding its top line rapidly: Cohesity today disclosed that its annual recurring revenues have jumped nearly 90% on a year-over-year basis. That’s from a likely substantial revenue base, since it was reported in 2018 that Cohesity had achieved an “annual sales pace” of more than $200 million. 

Cohesity’s revenue jump over the past year was partially the result of a threefold increase in the number of customers that are spending a total of $5 million or more on its solutions. Another contributor was a 30% net increase in annual recurring revenues from existing users.

Moving to a business model that places a stronger emphasis on SaaS products has also paid dividends for other players in the data management market. Commvault Systems Inc. disclosed record revenues in its most recent earnings report that it partially credited to strong demand for its Metallic backup and recovery platform, which is delivered on an as-a-service basis.

Commvault is listed on the Nasdaq, while Cohesity is privately held. Asked about Cohesity’s stock market plans by Bloomberg today, Aron said that an initial public offering is “not far off.”

Photo: Cohesity