Research Note: Commvault to acquire data protection startup Clumio

Commvault Systems has announced its intention to acquire data protection startup Clumio. Clumio is focused on protecting AWS workloads, which fills a gap for Commvault (Commvault Cloud is based on Azure). This acquisition is an ecosystem play, but how does it affect the broader market?

Background

Commvault Systems has announced its intention to acquire Clumio, a data protection startup that focuses on AWS-based workloads. In a press release, Commvault said the acquisition will be funded from cash at hand, with the revenue from Clumio being immediately accretive and adding to cash flow within three quarters.

Although the purchase price is not disclosed in the press release, an SEC filing for the transaction (Commvault is public) values the Clumio business at $47 million. This is a mere 18% of the funds raised by Clumio ($261 million) since it was founded in 2017. Clearly this was a distressed sale in a market that has become quite competitive in recent years.

Clumio

Clumio was founded in 2017 by three former employees of PernixData (acquired by Nutanix for an undisclosed sum in August 2016), including PernixData co-founder Poojan Kumar. The Clumio platform is Data Protection-as-a-Service (DPaaS), which initially protected VMware on-premises workloads and those running in VMC (VMware on AWS).

In 2021, Clumio introduced data protection for S3, which may initially seem an unusual data source. However, unstructured data is just as fallible as any other business information and still needs protection. Clumio Protect for S3 also provided archiving and versioning that exceeded the capabilities of S3 at the time.

Today, Clumio also protects AWS RDS, SQL running on EC2, DynamoDB and, curiously, Microsoft 365, which is clearly not an AWS asset.

Coverage

One of the most important differentiators for any data protection solution is application coverage. Legacy systems have survived for decades partly because they offered significant and widespread support for a range of application platforms, operating systems and storage systems.

For modern data protection, the ability to offer coverage of many platforms, including the four primary data sources (on-premises, Cloud, SaaS and Edge), is a key criterion. Unfortunately for Clumio, building out across multiple platforms is an expensive business, as each target solution is unique in the way data is stored, managed and made available for data protection.

The emergence of SaaS as a major production dependency for many businesses means IT organisations must choose between implementing multiple backup solutions or finding a vendor that can offer holistic data protection across many platforms. In addition, as ransomware, malware and data exfiltration issues become more widespread, data protection is expanding to encompass a degree of data security, or at a minimum to integrate with it.

Keeping on the leading edge of data protection innovation has become a costly business in terms of research and development.

The Architect’s View®

Clumio clearly ran out of runway with revenue generation, which could have been as low as double digit millions and not enough to justify further investment. With a relatively narrow range of supported platforms, Clumio would not be in a position to compete with the market leaders, including Commvault, HYCU, Druva, Cohesity and Rubrik.

However, for Commvault, the acquisition is an opportunity to fill gaps in its AWS support and to gain critical IP that covers AWS S3, RDS and DynamoDB. For a relatively small sum, Commvault gains new customers, boosts revenue, and expands its TAM to cover a new set of workloads. This is a strategy we’ve seen just recently, with the acquisition of Appranix in April 2024.

In the short term, we expect the Clumio brand will exist until Commvault integrates its platform capabilities into Commvault Cloud. At that point the name will go, and Clumio will be another piece of data protection history.

How does this acquisition change our view of the market? As we’ve already highlighted, modern data protection must cover a comprehensive range of application platforms and data sources. The future of data protection will be delivered as SaaS, which puts vendors including Commvault, Druva and HYCU in a strong position.

As data protection is a “sticky” business, the legacy vendors will continue for years to come, albeit in a state of attrition as customers gradually move to new solutions. Alternatively, the legacy providers get acquired, as we’ve seen with Cohesity and Veritas.

Acquiring Clumio is a smart move by Commvault, the cost of which will be repaid relatively quickly and go on to provide value that is multiples of the asking price.

Background

Clumio

Coverage

The Architect’s View®

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