Cohesity Stock: Can You Buy IPO?

Cohesity was created in a heroic attempt to solve one of the greatest problems plaguing data analytics: data duplication. But, can you buy stock in Cohesity?

Data duplication creates operating inefficiencies, leads to poor customer service, and can cost an organization a lot of foregone profits.

However, solving this problem is no simple feat (thus, why it has not been solved so far effectively). This article will offer a more comprehensive, behind-the-scenes, look inside Cohesity.

Their stock could be the next big thing in the technology space!

Cohesity History

Cohesity offers their followers, customers, and general public an insight into their operational strategy and mission statement on their company website.

“Our CEO, Dr. Mohit Aron’s experience as the lead developer on the Google File System, then as co-founder/CTO of Nutanix, led to him being dubbed the ‘father of hyperconvergence’.

Cohesity represents his third generation of design, specifically aimed at solving one of the largest and most complex problems in IT: simplifying data infrastructure.

In a few short years, Cohesity counts many Global 1000 companies and federal agencies among its customer base, including top telecommunications providers, aerospace firms, banks and executive departments of the US government.

On average we have seen 40% net new customer growth quarter over quarter for the last year.

We believe in a high integrity, collaborative, customer-obsessed culture. Our motto is: Stay humble and keep learning.”

This 40% growth in new customers is almost unparalleled across the global investing horizon. Sustainable growth is the key to long-term profitability.

Sure, you can invest in low yielding US Treasuries (or even worse, negative yielding foreign sovereign debt), but Cohesity stock could bolster growth in a well-diversified portfolio.

Data Fragmentation and Silos

Cohesity offers a great piece of literature called the “Cohesity Data Management Guide“. Essentially, it’s a more in-depth breakdown of their product and the problems it can solve for customers.

“Data has exploded in volume and been scattered across a myriad of locations from multiple public cloud environments and data centers to remote offices and the edge, often with little global oversight.

At each of these locations, data is isolated in specialized infrastructure for functions such as backup, disaster recovery, network storage, archiving, dev/test and analytics, often from multiple vendors.

To make matters worse, there are silos within silos.

For example, a single backup solution can require several dedicated infrastructure components, such as backup software, master and media servers, target storage, deduplication appliances and cloud gateways, each of which may hold a copy of a given data source.

cohesity stock solves data silos and fragmentation
Source: Alooma

Each infrastructure component may come from different vendors with their own user interface and support contracts.

It is not unusual to find four or more separate configurations simply to perform backup for different data sources.

These infrastructure silos have a knock-on impact on operational efficiency. There is typically no sharing of data between functions, so storage tends to be overprovisioned for each silo rather than pooled.

Likewise, multiple copies of the same data are propagated between silos, taking up unnecessary storage space.”

Speaking from personal experience, I once worked for a Fortune 50 manufacturer, and data duplication was a MASSIVE problem.

Accounting, marketing, and sales teams all had differing information surrounding outstanding customer account balances. Trust me, data duplication is an absolute nightmare for organizations.

Project Management and Implementation

360 Cloud Solutions offers some of the most famous implementation failures of all-time. These are examples used to illustrate how complex (and costly) implementation procedures can be.

“Perhaps one of the best-known ERP implementation failures occurred at Hershey’s during the Halloween season in 1999.

Due to mishap after mishap involving the company’s SAP ERP, CRM, and supply chain applications, the company failed to deliver $100 million dollars worth of Hershey Kisses during the season, resulting in a startling 8% stock dip.

Perhaps most startling, the United States Navy sunk $1 billion dollars into four different ERP pilot projects since 1998, and all four have failed.

All four installations, which were based on SAP AG software. turned out to be incompatible and redundant, ultimately failing to meet the requirements of the Navy.

While in this case, the only cost was the money spent on purchasing the programs, this is an ERP implementation failure of epic proportions.”

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While I was in college taking an information systems course, my professor was an adjunct who was the head of IT project management for a Fortune 100 insurance firm.

He told countless stories from his career about these incredibly long, complicated projects with dozens of simultaneously moving pieces.

Let’s not forget, Cohesity may offer a tremendous product, but the implementation and follow-through is what really counts.

Cohesity Stock IPO

The Cohesity IPO date has not been set, and company executives have not publicly disclosed whether or not they are planning to take the firm public. However, they have had major replacements at the top.

Within the past year, Cohesity hired a new CFO, which is the first major step towards being perceived as a “here to stay” firm. A trained CFO can bring decades of experience to a new company.

Typically, “unicorn” CFOs are charged with the tasks of controlling working capital, reducing the cash burn rate, and making sure financial statements are properly accounted for under GAAP.

We have seen this time-and-time again, but a CFO change is a leading indicator in IPO due diligence. Nonetheless, Cohesity’s spokesperson denied to comment on any future IPO.

They did leave us with the following quote. “The company is quite pleased with its current funding, having recently completed a Series E funding round for $250M.”

A Series E funding round is later in the funding process, and some firms have gone public after Series C or Series D funding.

Cohesity Stock Price

Forbes covered the latest round of funding and valuation for Cohesity.

“It’s one of tech’s wonkiest corners, but it now boasts two of Silicon Valley’s youngest startups to reach a billion-dollar valuation.

And with billions of dollars at stake in the fast-growing hyper-converged secondary-storage market, SoftBank’s Vision Fund has now placed its typically outsize bet.

Cohesity announced on Monday that it had raised $250 million in a Series D round led by SoftBank Vision Fund, minting the second billion-dollar startup in just a few months in the large…market for secondary storage.

SoftBank’s investment in Cohesity valued the company at just over $1 billion, sources tell Forbes, meaning the San Jose, California-based company reached the unicorn milestone in just five years.

You may not have heard of Cohesity, but it’s playing in what it says is a $60 billion market.”

Assuming the Softbank valuation is correct (and that’s a big assumption considering they overvalued WeWork by $40 billion), we can draw further conclusions about the future share price.

Based on an estimated $1 billion valuation (and 20 million shares outstanding), Cohesity stock could IPO in a price range from $40-60.

This is totally dependent on capital structure, growth rate, and free cash flow projections; thus, I could be totally wrong!

Cohesity Stock Alternatives

Got it. You love the idea of investing in a technology play for growth, but you aren’t sold on Cohesity stock. What are some of your other potential options?

Yes, investment returns are never guaranteed, but the Nasdaq has produced quite the prospective list of winning plays over the past decade.

Can You Buy Stock in Cohesity?

No, Cohesity stock can’t be purchased, but an upcoming IPO would point towards a $40-60 share price. Cohesity can capitalize on their operating leverage advantage over peers.

Will Cohesity stock be the next Oracle? Who knows (I don’t have a crystal ball). Undeniably, they offer a tremendously valuable product for businesses drowning in unanalyzed data.

Data is the new oil. How will you take advantage of this new data revolution?

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