Barracuda Networks going private

Barracuda Networks became the latest public technology vendor to go private when equity firm Thoma Bravo agreed to pay $1.6 billion this week to acquire the security and data protection vendor.

The Barracuda Networks acquisition is expected to close in February, before the end of Barracuda Networks’ fiscal year. The security and data protection company said it does not expect any executive changes while all the current Barracuda employees will remain as part of the private company.

Barracuda Networks offers backup and email security for mid-market companies.  It offers the Barracuda Essentials for cloud-based security, archiving and backup for Microsoft 365 and Exchange. It also provides the Barracuda Message Archiver for compliance and e-discovery and a Cloud Archiving service.

The Barracuda backup and recovery appliances handle physical-to-physical systems, physical-to-virtual systems and virtual-to-virtual configurations. The cloud-to-cloud backup service protects Microsoft Office 365, SharePoint Online and OneDrive. Data is deduplicated and compressed to reduce backup windows before it is stored in the Barracuda Cloud.

Barracuda Networks declined a request to comment on the acquisition.

Dave Russell, vice president and distinguished analyst at Gartner, said he is skeptical of private equity buy outs but Thoma Bravo has a good track record with its technology acquisitions.

“My angle on this is whenever a private equity firm (buys a vendor), is it really good news?” Russell said. “That is not usually what happens. They tend to milk (the company).  If I look for a silver lining in this, it’s if Barracuda can get out of the distraction of quarterly reports, they can replicate what SonicWall and Blue Coat got from Thoma Bravo, which is investment.”

“Thoma Bravo has a history of investing and increasing R&D over time.”

This past summer, Barracuda Networks took its first step in delivering disaster recovery in the public cloud by allowing customers to replicate to an Amazon Simple Storage Service (S3) cloud. Customers can replicate data from an on-premises physical or virtual appliance to an Amazon S3 bucket. Barracuda previously offered appliances with built-in software replication to either the Barracuda Cloud Storage or to another Barracuda Backup appliance in an off-site location or to external disk or tape.

The support of the Amazon S3 cloud allows customers a choice to store data off-site either in the proprietary Barracuda cloud or use the Amazon Web Services (AWS) public cloud as a data protection target.

Barracuda Networks’ Essentials for Email Security has had promising growth in the past few quarters. The product has integrated backup and email archiving embedded in it. Rod Mathews, senior vice president and general manager of data protection business at Barracuda, called that Barracuda’s first step with a major public cloud offering. The AWS offering began in North America and they planned to expand in Europe later this year.

“Down the road we will be able to do multi-cloud for Microsoft Azure,” he said in August.

In October, Barracuda claimed to support more than 85 PB of storage in its cloud, and said it helps customers with approximately 3 million backup jobs and more than 12,000 recoveries per month.

Barracuda acquired managed service provider Intronis for $65 million in October 2015.

Barracuda last month reported income of $94.3 million for its last full quarter, up from $87.9 million from the same quarter a year ago. Most of its revenue — $76 million – came from subscriptions. Appliance revenue slipped from $21 million a year ago to $18.3 million, and its profit of $1.6 million dropped from $2.4 million the previous year.

Russell said Barracuda Networks’ previous success was attributed to being early to market with appliances, owning its supply chain and “almost concierge-like service.”

“Three or four years ago, that was unique,” he said. “Now you have many kinds of appliances and vendors. The market has gotten more crowded. Barracuda has been having on and off financial challenges for a year now. They needed a shot in the arm.”