OpenText's 2019 purchase of Carbonite and Webroot continues to pay dividends in the SMB (small and midsize business) market, CEO Mark Barrenechea told Wall Street analysts during the software company's Q4 2020 earnings call on August 6.
Note: OpenText's fiscal 2020 ended on July 30, 2020. The company's fiscal year 2021 is now under way, and runs through July 2021.
OpenText ($OTEX) continues to more tightly integrate the Carbonite data protection and Webroot cybersecurity portfolios, with new developments set to debut in the first half of fiscal 2021 -- which essentially means MSPs should see key milestones and ongoing enhancements through December 2020, Carbonite CTO Hal Lonas told ChannelE2E in a recent interview.
Carbonite, Webroot: OpenText CEO Shares Milestones
For MSPs in the small business IT services market, the CEO and CTO comments are reassuring. OpenText had minimal SMB market experience ahead of the $1.42 billion Carbonite acquisition, which included the Webroot cybersecurity tools.
Fast forward to present day, and Barrenechea during the August 6 earnings call pointed to these Carbonite milestones and developments:
- "Carbonite delivered another strong quarter of operations, validating our expansion into SMBC markets and enhancing the strength of our cyber resiliency offerings," Barrenechea said.
- Carbonite generated $116 million of revenues in Q4 and $235 million since the date of acquisition, and continues to be accretive to adjusted earnings and cash flows.
- In fiscal 2021, OpenText will release new security enterprise offerings that "leverage the capabilities of Carbonite, Webroot, BrightCloud, integrated with our existing encase offerings."
- OpenText is now selling select products such as OpenText Core and Hightail to the SMB channel.
- "The business has been incredibly resilient in our first six to seven months of owning it," Barrenechea said.
- The SMB channel business continues to leverage RMM (remote monitoring and management) software integrations and partnerships to win new MSP engagements.
- In fiscal 2021, "one of our big efforts is cross-selling and having our enterprise teams now bring Carbonite to the enterprise."
Carbonite, Webroot: R&D Includes Integrations
Still, M&A deals often come with a few weeks or months of getting to know each other. This particular M&A deal had two layers to note. Carbonite completed the Webroot acquisition in March 2019. Then, OpenText disclosed plans to acquire that combined business in November 2019.
Amid all that M&A activity, it took Carbonite and Webroot a bit more time than originally expected to pull together new data protection and cybersecurity integrations, ChannelE2E believes.
Over the next few months, it sounds like the two platforms will increasingly feel like a single, integrated solution that delivers more cyber resilience capabilities, based on a ChannelE2E briefing with Lonas a few weeks ago.
SMB and MSP Technology Competition
Admittedly, dozens of companies offer SMB data protection and cybersecurity tools to MSPs. Key OpenText SMB rivals include Datto on the data protection front, and SentinelOne on the endpoint protection front.
Datto, likely the MSP data protection market share leader, is exploring a potential IPO. SentinelOne, meanwhile, is quietly winning market share among MSPs that are seeking endpoint protection from ransomware attacks, according to ChannelE2E check-ins with partners. Key SentinelOne alliances include SolarWinds MSP, which OEMs the technology as SolarWinds Endpoint Detection and Response.
Still, only a handful of technology companies own and develop backup, disaster recovery (BDR) and endpoint security tools under one roof. OpenText -- armed with Carbonite and Webroot -- certainly fits that rare description. But the market isn't standing still. Data protection companies such as Acronis have evolved into cybersecurity specialists. And MSP platform providers such as Kaseya and SolarWinds MSP, among others, have data protection and security product lines.
Amid that competition, OpenText's latest financial results suggest Carbonite and Webroot are performing well. Moreover, OpenText's overall business continues to grow -- despite coronavirus-related economic challenges. Overall revenue was $826.6 in Q4 of fiscal 2020, up 10.6 percent compared to Q4 of fiscal 2019, the company says.
