Cohesity talks up post-Veritas merger strategy

Eric Brown, Cohesity CFO, revealed insights into its strategy and tactics following the announcement of its acquisition of Veritas’ data protection portfolio in February 2024.

Brown was talking to William Blair analysts and said that Cohesity was unable to engage with Veritas customers for most of calendar 2024, which left the door open to poaching from Commvault and Rubrik.

The first part of its three-stage strategy, after the acquisition closed, was a customer retention phase. It unified the two sales organizations and implemented a single compensation plan that equally rewarded renewals and new business, and empowered reps to negotiate partial down-sells for key Veritas renewals to ensure customer retention.

The next phase of its strategy, in the first half of fiscal 2026 (October 2025 and January 2026 quarters), was focussed on accelerating growth. Sales comp plans were altered to prioritize new business over renewals.

A third phase was started in in the second half of fiscal 2026. Additional sales capacity was put in place. There were incentives for customer migrations from Veritas to Cohesity’s DataProtect offering, and even more emphasis on new business, as sales reps were less focussed on renewals.

Cohesity is hoping to achieve more growth in ARR in the second half, “with management targeting a Rule of 40 score in the mid-30s (calculated as ARR growth + unleveraged free cash flow margin).”

This will be assisted by Cohesity capitalizing on the surge in customer’s AI interest, with AI embedded in the DataProtect offering to assist with anomaly detection, threat identification, data classification, and policy optimization. It aims to provide an agentic recovery and control framework with its data storing backend acting as an agentic workflow restore layer, as well as integrate with other suppliers’ orchestration, security and workflow products.

The third leg of its AI stool is Gaia natural language search and summarization product, which is additionally able to “identify, classify, and understand where data lives, how it is accessed, and how it is used across environments, with planned integrations across modern data platforms such as Databricks, Glean, and Palantir.”

Overall, the analysts think, “Cohesity’s messaging suggests that it sees more leverage in being the underlying data resilience and security layer that integrates into multiple agent ecosystems, which could resonate with large enterprises wary of vendor lock-in.” 

Bootnote

The Rule of 40 is that a SaaS business’ revenue growth rate plus its profit margin should be equal to or greater than 40 percent. A rule of 40 business is generally viewed as a sustainable business, with balanced profitability and growth.