Egnyte, a provider of enterprise file management products, is shifting its strategy to place itself between a company’s datacenter and its cloud storage provider. Previously, the company tried to be a cloud storage solution that worked with a firm’s current on-premises file system. Now, Egnyte wants to become the intelligence layer between any company’s current storage system and their cloud provider of choice.
The move was presaged by Egnyte’s decision to shift its storage of new client data to Google’s cloud. Google Ventures is an investor in the company.
Given the shift at company — for a detailed product breakdown of what Egnyte has planned, TechCrunch’s Ron Miller has the full score — I spoke to its CEO Vineet Jain about the health of Egnyte, and its future financial performance.
The company appears to be in modestly rude health. It expects its gross margin to expand from 68 percent in 2014, to 74 percent in 2015. Egnyte also expects to reach cash-flow breakeven this year, and profitability in the first quarter of 2016. That growth in gross margin is not surprising, given that the firm is focusing less on the raw storage of data, and more on helping IT departments learn about the information use of their charges, shifting bits between servers and cloud providers for the most efficient storage solution.
Previously, Egnyte noted that it was on track for $100 million in 2015 revenue, well within the current IPO window in terms of top line.
As a player in the cloud storage and enterprise productivity space, Egnyte is part of the same crew as Box, which is currently shoving forward with an initial public offering of its shares. Box has larger revenues than Egnyte, but also loses far more cash — if Egnyte will reach parity between its outgoings and comings inside of the current year, it will do so before Box; Box, however, has around $240 million in annual recurring revenue, making it a larger firm in total.
So Egnyte is growing, has a new product focus, and is approaching profitability. That sounds like a candidate for an IPO inside of the next six quarters, provided that corporate funding source Google doesn’t snap up the company. Egnyte is working to build its business by landing enterprise-scale customers, a group that Google itself wants to convert to its storage, compute and productivity tools. Egnyte could be a leg up in that market.
For now, however, it seems that the firm is content to work to differentiate itself from the raw cloud storage market, where margins have gone from slim to none to worse. If you can make a dollar selling a gigabyte of cloud storage, points to you. Egnyte, which has no free option, has long made that point, and is living up to its previous rhetoric of saying that being freemium in cloud storage is a losing proposition.
As always, viva la platform wars.
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