Is Cohesity Inc. IPO a Good Buy?

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Contributor, Benzinga
March 3, 2022

When Russian President Vladimir Putin gave the green light to invade neighboring Ukraine — an action that the international community decried as reckless — he surely did not anticipate the ferocious resistance that Ukrainian soldiers (and even everyday civilians) afflicted in defense of their country. Backed into a corner, the Kremlin seems committed to play a dangerously fatal game of the sunk cost fallacy.

Under this dynamic, actors having dragged their way into a particular circumstance — be it attending a concert miles away, heaping more wagers on a losing team or waging a war that will only lead to economic devastation — feel compelled to keep moving to recoup their initial investment. Because of this temptation, the U.S. government warned that armed conflict in Ukraine could spill over globally in the form of cyberattacks.

Even more alarming, a global cyberwar is no empty threat. Recently, The Times of India reported that possible Russia-backed threat actors breached the digital defenses of a key domestic supplier for Toyota Motor Corp. (NYSE: TM), forcing the automotive giant to temporarily shut down its factories. To be clear, the Japanese government is investigating the true origins of the attack.

However, the message has been sent. Cyberwar and its consequences are real, thus adding greater relevancy to the upcoming new listing of Cohesity Inc.

What Does Cohesity Do?

A data management firm, Cohesity specializes in simplifying and streamlining the litany of information in the digital sphere so that its enterprise-level clients can thrive in the connectivity paradigm. While the company’s core business focuses on the front end of digitalization through its Software-as-a-Service (SaaS) platform, it also levers tremendous acumen on the backend, such as backup, data recovery and ransomware mitigation.

As the technology firm’s brand suggests, it consolidates the myriad digital needs of organizations, facilitating a cohesive network by which companies can effectively manage their business without getting bogged down with connectivity concerns that fall outside their core revenue-generating channels. Specifically, Cohesity offers the following solutions:

  • Backup and recovery: Offers radical simplification of data backup and recovery from a single platform.
  • Data security and governance: Facilitates greater control and visibility of potential data security threats and vulnerabilities from compliance risks.
  • Ransomware recovery: Provides countermeasures to ransomware attacks and initiates recovery processes.
  • File and object services: Transitions legacy data and files into modern software-defined file and object services with intelligence, scalability and efficiency.
  • Disaster recovery: Automates failover and failback orchestration and ensures business continuity and readiness protocols from unexpected incidents.
  • Cloud: Advances multi-cloud strategies through backup and recovery mechanisms, archival systems and analytics.
  • Dev/Test: Reduces development cycles and products' time to market through enhanced software controls and features.
  • Long-term retention: Improves data retention management on and off site for regulatory and industry compliance.
  • Technology partners: Integrates platforms from leading cloud-computing service providers to suit enterprise needs.

Interest in the company runs high thanks to the tremendous momentum of its subscription-based business. However, prospective participants in the new listing should be aware that data management is a competitive arena. Therefore, due diligence is absolutely necessary.

When is the Cohesity IPO Date?

One of the heavily anticipated market debuts, Cohesity has not yet revealed a date for its initial public offering (IPO) or the first time a company distributes its equity shares for retail investors. However, analysts for months have forecasted their belief that the company will enter the IPO calendar sometime in the first quarter of this year.

Of course, the end of Q1 is rapidly approaching, suggesting that interested buyers should prepare their assessment of the company, especially if they’re seeking to acquire shares at their initial offering price. Admittedly, though, investors suffer from some disadvantages. Primarily, the public has no access to Cohesity’s financial information. Though management filed for an IPO late last year, it did so in a confidential manner.

If the filing with the U.S. Securities and Exchange Commission (SEC) had been public, investors could access Cohesity’s Form S-1 IPO prospectus, revealing a wealth of fiscal information that potential buyers could access. As it stands now, investors don’t even know what exchange Cohesity is targeting, nor what its ticker symbol will be.

Therefore, it’s impossible without understanding the number of shares offered and at what price the deal is attractive for retail investors. However, according to a Bloomberg report, Cohesity’s management team is targeting a valuation between $5 billion to $10 billion. Such a figure would make the data management firm one of the biggest new listings of 2022 thus far.

Beyond the specifics of the company, Cohesity may issue its IPO at an ambiguous moment in market history. On one hand, the geopolitical flashpoint in eastern Europe represents one of the most powerful catalysts for the new listing. But on the other hand, turmoil that spills over into the international arena eventually erodes market confidence.

Since the dawn of the internet, cyberattacks and digital crimes have been a vexing problem. Yes, connectivity allows the flow of information across borders, facilitating among other attributes cultural exchange and broader understanding. At the same time, this connectivity exposes users to the ghoulish and nefarious elements of humanity.

Further, the very power of the U.S. and western allies to protect freedom and democracy through economic sanctions can create immense bitterness to innocent bystanders, thereby provoking both physical and digital retaliation. As the Toyota example recently demonstrated, anyone and everyone can be victimized through cyberwarfare, necessitating Cohesity’s front- and backend services to navigate — and if necessary recover from — digital breaches.

Still, on the domestic front, soaring consumer inflation will likely only worsen through sanctions, as the global energy profile often depends on commodities sourced from nations with questionable human rights records. Therefore, sustained conflict could lead to severe penalties across the board, reducing investor appetite for any risk-on endeavor.

What Analysts are Saying About Cohesity IPO

As mentioned above, without public access to the Form S-1, it’s extraordinarily difficult for analysts to judge the valuation of Cohesity and the viability of its potentially upcoming IPO. That said, bullish analysts will almost certainly point to the company’s tremendously positive momentum.

According to a corporate press release, adjudicators named Cohesity to the Forbes 2021 Cloud 100 list, “the definitive ranking of the top 100 private cloud companies in the world.” This is the third year in a row that the company appeared in the ranking. As well, Cohesity garnered awards for its backup and recovery endeavors along with its distributed file systems.

Moving forward, mitigation from data breaches is likely to be a major catalyst for Cohesity. Prior to the escalation of conflict in eastern Europe, experts from Industry Research predicted that by 2027, the global data backup and recovery software market size would reach $9.76 billion, representing a compound annual growth rate (CAGR) of 9.8% between 2021 and 2027.

Needless to say, the worryingly exceptional skill with which Russian hackers have compromised U.S. security infrastructures suggests that this market segment will only rise in demand, bolstering Cohesity’s already remarkable relevance.

Still, critics will mount their case, which may revolve around Cohesity’s potential valuation concerns amid an environment that does not favor non-dividend-bearing growth firms. Also, should Russia’s economy collapse due to the implosion of its ruble currency, the erosion of a global economic powerhouse could impose untold consequences.

Cohesity Financial History

While fiscal data for Cohesity is limited because of its confidential IPO filing, it’s patently obvious that the data management specialist is a darling within the private-equity crowd. Primarily, Japanese conglomerate SoftBank Group Corp. (OTCMKTS: SFTBY) is a strong supporter, leading a $250 million raise in June 2018. Overall, Cohesity has raised $660 million across five private-equity funding rounds.

As for its operations, the latest data indicates that Cohesity’s trailing-year revenue run rate for the quarter ended July 31, 2021, exceeded $300 million. On a year-over-year basis, company top-line sales grew 70%.

Cohesity Potential

While the average cost of a data breach in 2021 jumped to $4.24 million — the highest tally since records were kept — the severe reality today is that breaches can cost human lives. As The Washington Post indicated, U.S. water supplies face digital vulnerabilities that could have the potential to poison innocent American citizens.

Though Cohesity’s core business is geared toward addressing and mitigating the aftershocks of cyber breaches, potential attacks on critical systems is an entirely different ballgame. Should a Russia-backed cyber campaign directly lead to casualties in the U.S. or official western European allies, such an assault could trigger Article 5, a collective defense clause that would see NATO confront its longtime adversary.

In that scenario, all bets are off.

Where to Buy Cohesity IPO Stock

Given that Cohesity has yet to reveal a launch date, investors have options. They may either acquire shares at the open, which would necessitate knowing how to buy stocks. Or they may apply for pre-IPO access, with more information below.

Either way, you will need a brokerage account to begin your investing journey. Below is a list of best brokers to consider.

Cohesity Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

Cohesity Pre-IPO

While information on accessing Cohesity shares at their pre-IPO (initial offering) price is limited, you may consider opening an account with EquityZen to get the latest scoop.

Frequently Asked Questions

Q

What is Cohesity inc?

A

Cohesity develops software allowing IT professionals to backup, manage and gain insights from their data across multiple systems or cloud providers.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.