HPE to buy Zerto for $374M in data protection-as-a-service push

data stream
The acquisition highlights the growing importance of data management and data protection to enterprises.(Getty Images)

HPE has agreed to acquire Zerto, a cloud data management and protection company, in a $374 million cash deal that expands the HPE GreenLake edge-to-cloud platform and fits with HPE Storage’s ongoing migration to become a cloud-native, software-defined data services business.

Zerto’s journal-based continuous data protection (CDP) technology includes disaster recovery, backup, and data mobility in a single, simple cloud data management and protection software solution that spans on-premises, hybrid, and multi-cloud environments. HPE plans to make these offerings available in an as-a-service model through the HPE GreenLake and HPE Data Services Cloud Console.

The data protection-as-a-service market is growing rapidly. It is expected to increase from $7.7 billion last year to $15.3 billion in 2024, according to a forecast from IDC that was released late last year. That represents a 19% compound annual growth rate. 

“We know every organization today sees data as their most critical asset,” said Antonio Neri, President and CEO, HPE, during a webcast to announce the acquisition. “But the complexity to manage data has never been higher. The threat to data has never been more severe. In addition, the need to turn data into insights has never been more important. As data continues to grow exponentially from edge to cloud, organizations need a new data experience to unlock enterprise agility, power innovators and unleash the full potential of data.”

He added that HPE already has been moving in the direction of making it easier for companies to leverage and protect data by creating a unified data operations approach. The company also has committed to the as-a-service model as a future go-to-market model. For HPE, the deal will help accelerate the company’s R&D talent roadmap and HPE’s shift into data management and protection services businesses, Neri said. 

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Being offered as-a-servce from HPE will give Zerto, which is co-headquartered in Herzliya, Israel and Boston, much broader market reach and distribution than it has had previously, the companies said. It also will be able to tap into HPE’s installed base of customers.

HPE said the acquisition will contribute more than $130 million in run-rate revenue at software gross margins, with about one-third of the revenue expected to contribute to HPE’s aaS Annualized Revenue Run-Rate (ARR), which suggests that Zerto also has been using other sales models--not just as-a-service--to reach the market.

The acquisition is expected to close in the fourth quarter of HPE’s fiscal year 2021, subject to regulatory approvals and other customary closing conditions. Zerto’s management team will be organized under HPE Storage, reporting to Tom Black, Senior Vice President and General Manager.