Cohesity IPO on Hold After Executive Exodus

What's happened to Cohesity's IPO?

The privately held cloud-native secondary storage and data management-as-a-service (DMaaS) company confidentially filed for public offering back in December 2021. Months later, it’s looking less likely we’ll see that IPO anytime soon – if ever.

With market conditions weakening, it seems likely that the Cohesity IPO is on long-term hold. In addition, internal sources say the company is struggling on a number of fronts, including firming up its market position and battling a high turnover in executive staff, leading some to believe that all is not well in the core culture of Cohesity.

We reached out to Cohesity for confirmation about the IPO and executive departures: “We don’t comment on rumor or speculation,” a spokesperson said.

Massive Executive Flight

One major problem may be the major turnover in executive staff and the message that sends downstream into the company's staff. Since April 2019, the company has lost at least 22 senior employees, including three SVPs, nine VPs, and a CTO, Global Field (Rawlinson Rivera). Among others who left were a chief product and development officer (Vineet Abraham), a VP of manufacturing operations (Bill Fu), an SVP of worldwide sales (Mark Parrinello), a VP of worldwide channels (Todd Palmer), a chief people officer (Paul Whitney), an SVP of finance (Lorenzo Montesi), and an SVP of business operations (Stacey Cast).

Of 35 Cohesity executives currently listed on workplace tracking site Comparably, 22 have left the building – representing 63% of the executive cohort listed on Comparably’s site.

Several employees that Futuriom spoke to say there is indeed a malaise among Cohesity employees following changes in direction at the top -- and that the delay in the IPO is not helping that matter.

Message boards are filled with negative chatter as well. “Toxic environment,” wrote one reviewer on Indeed.com in June 2022. “Lack of trust pervades the company culture, executive micromanagement and meddling, engineering team has lost its mojo and struggles with delivery and quality…”

“There’s reports of major issues within engineering and support, both with quality and a toxic work environment,” wrote another Reddit poster.

Data Message Remains Consistent

Meanwhile, the rumor mill grinds on. It’s time for a reality check. Indeed, a thread on Reddit maintains the firm called off the IPO in a companywide meeting two months ago.

One rumor has it that Cohesity has skipped its IPO because it is confused about its direction. “They can’t seem to decide if they want to solve data fragmentation problem or be storage box or be something else,” wrote one participant on the Reddit thread mentioned above.

To be fair, Cohesity has not changed its public message and has consistently maintained that its Helios platform offers artificial intelligence-based data management and security along with secondary storage that ensures resilience in the face of ransomware threats.

The company’s most recent announcements bear this out: Cohesity has extended two of its leading DMaaS products to Singapore and Southeast Asia and is selling Helios in the Middle East. Early in May 2022, it released Fort Knox, an addition to its DMaaS series that vaults AWS data securely off site for retrieval in the event of a ransomware attack. Cohesity also has integrated Helios with Palo Alto Networks’ Cortex XSOAR security orchestration, automation, and response (SOAR) platform for improved ransomware detection and recovery.

The Market Doesn't Help

It is important to look at the context in which Cohesity has stalled (or perhaps abandoned) its IPO. The market has taken a huge hit. This doesn't help employee morale, especially if they have lots of compensation connected to high valuations and promises of an IPO that gets postponed when the market weakens.

As early as this past March 2022, IPO activity had dwindled to nothing in the tech sector. The war in Ukraine, supply chain woes, inflation, and interest rate hikes have blocked the public pathway for many startups. Venture capital funding has dropped as well.

What about our earlier speculation that a special purpose acquisition company (SPAC) might take Cohesity public? That too seems doomed. “Alongside the drop in traditional listings, IPOs by new special purpose acquisition companies declined by 80% from the same period of last year,” wrote Drew Singer in Law.com’s Daily Business Review in March of this year.

Perhaps Cohesity is wise to avoid IPO, if indeed the company has called it off at all. “IPO was never canceled, not sure where you’re getting that info from but it’s false,” wrote a Reddit poster. “The market is a blood bath due to the interest rates and inflation. It would take a fool to go IPO during this market.”

All of this brings us to conclude that Cohesity is probably wisely waiting out the current macroeconomic situation. And while the company continues to proceed apace in the data management market, it seems to have a few personnel issues to confront. The next few months should bring more clarity all around.