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Veeam acquisition of N2WS enhances cloud protection

Veeam will integrate N2WS technology into the Availability Platform. The companies' research and development teams will work together following Veeam's acquisition of N2WS.

Eight months after investing in N2WS, Veeam Software today said it acquired the cloud data protection company for $42.5 million.

The all-cash Veeam acquisition is the backup and recovery vendor's first in 10 years. N2WS provides cloud-native, enterprise backup and disaster recovery for Amazon Web Services (AWS) through its Cloud Protection Manager.

N2WS was founded in 2012 and released its first product in 2013. It will operate as a stand-alone business, keeping its brand name and becoming "A Veeam Company" while selling Cloud Protection Manager.

Veeam disclosed its investment in N2WS in May 2017, and began selling N2WS technology through an OEM deal as part of Veeam Availability for AWS. Peter McKay, Veeam co-CEO and president, said the investment and partnership allowed his company to monitor the N2WS business, use its technology and accelerate Veeam's AWS capabilities.

Cloud Protection Manager is built specifically for AWS and automates backup and recovery for Amazon Elastic Compute Cloud instances. It is available in the AWS Marketplace.

"Technology wise, it's a good addition to the portfolio," McKay said.

Cloud-native data protection is seeing high growth, said Phil Goodwin, research director of storage systems and software at IDC.

"This puts them square in the middle of that marketplace," Goodwin said.

The challenge with a company specifically targeted for AWS data protection is that organizations are going to have workloads in multiple clouds and on premises.

"I think they intend to address it," Goodwin said of Veeam's answer to the challenge.

The sky's the limit

Both companies reported significant growth in the last year. N2WS grew revenue by 102% in 2017. Veeam hit $827 million in total bookings revenue in 2017, an increase of 36% year over year, and claims more than 282,000 customers.

Veeam's Peter McKayPeter McKay

Veeam was founded in 2006 as a virtual backup company, but has since added physical and cloud protection.

Investing in and then buying N2WS helped alleviate any concerns with the Veeam acquisition, McKay said. N2WS, which was privately held before the acquisition, now has more than 1,000 customers.

"I think we've de-risked it quite a bit," McKay said.

Veeam's investment helped N2WS build up its team last year. The company had seven employees at the beginning of 2017 and now has 42, N2WS CEO Jason Judge said.

Veeam funded N2WS through a round led by Insight Venture Partners, which is a large investor in Veeam. The companies did not disclose the amount invested in N2WS.

As part of the Veeam acquisition:

  • Veeam will have access to N2WS technology and research and development to integrate data protection for AWS workloads into the Veeam Availability Platform.
  • N2WS will have access to Veeam's research and development and its alliances and partners, including nearly 55,000 resellers and 18,000 Veeam Cloud & Service Providers. 
  • Current Veeam customers will receive special offers and incentives for Cloud Protection Manager from N2WS.
The R&D teams will be working together on bigger things.
Ezra Charmvice president of marketing, N2WS

"The R&D teams will be working together on bigger things," said Ezra Charm, N2WS vice president of marketing.

There is some overlap in customers, but N2WS is focused solely on AWS protection, Charm said. He said the deal presents an opportunity for N2WS to sell to Veeam customers who don't know the company and those who don't yet use AWS.

"We have a lot more resources available to us as part of Veeam," and can accelerate development, Charm said.

Lofty goals for Veeam and N2WS

The typical backup and recovery customer is evolving to think more cloud-first, McKay said.

The acquisition helps Veeam as its cloud business and enterprise base are both growing. Veeam reported a year-over-year increase of 57% in cloud bookings for the fourth quarter. The vendor attained a 62% year-over-year increase in large enterprise deals, and reached 500% annual growth for deals over $1 million, according to its latest revenue report.

McKay said in 2017 that he didn't feel acquisitions were needed for Veeam revenue to hit $1.5 billion by 2020. But the Veeam acquisition only helps the revenue goals, which now include a push to get to $2.2 billion by 2022, McKay said.

Veeam last acquired a company in 2008, when it bought privately held Nworks, a creator of enterprise management connectors.

McKay said there was a time when Veeam was possibly growing too fast, and a lot of employees were stretched trying to do too much. In the last 18 months, though, the company has added employees from outside and developed teams internally. The company has 3,100 employees and will likely add 700 in the next year, including 230 in research and development, McKay said.

N2WS plans to add employees as well, across its three offices: its headquarters in West Palm Beach, Fla.; its research and development center in Haifa, Israel; and its new office in Edinburgh, Scotland.

The Veeam acquisition closed at the end of 2017. Judge will continue to lead N2WS as its CEO and all teams including sales, marketing, research and development, and customer service will stay intact, according to Veeam.

N2WS and Veeam are well-positioned to take advantage of the growing infrastructure-as-a-service market, Charm said.

"It's really the new hotness in IT," Charm said. "It's changing the way people are talking about IT and infrastructure."

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