Symantec Buys SwapDrive for $123 Million
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Online storage is back. Last September, EMC Corp. (EMC) bought online storage startup Mozy for $76 million. Last week, Symantec (SYMC) signed a deal brewing since February to buy SwapDrive. A source close to the company says that Symantec paid $123 million.
According to my source, SwapDrive made $13 million in profits last year, on revenues of $22 million. That’s up from $5 million in revenues the year before, and the company is projecting $40 million in revenues this year. Those numbers put the acquisition at roughly 10X profits and 5.6X revenues (most likely those are operating profits, but my source couldn’t say for sure).
Neither Symantec nor SwapDrive issued a press release, but if you go to SwapDrive or Backup.com (the other site it operates) they are both identified as now being operated by Symantec. And Symantec’s PR firm confirms that the acquisition took place and offers the following statement from the company:
Symantec has signed a definitive agreement to purchase SwapDrive, a privately-held online storage company to strengthen the services offerings in the Norton consumer portfolio and to help consumers manage data across their devices. This is a small, targeted acquisition and is a very natural move for us because of our close two-year OEM relationship and existing product partnership on Norton 360. The transaction is expected to close by the end of the June 2008 quarter.
Backup.com alone claims to have 2 million users. In an era where you can get 5 GB of storage for free (from Microsoft’s SkyDrive or AOL’s XDrive, for instance), both SwapDrive and Backup manage to charge $50 a year for 2GB of storage ($100 a year for 5GB). Yeah, I was scratching my head too.
It turns out the real growth-driver for the business is as a white-label online backup and storage service. The company, which was founded in 1998 and is based in Washington, D.C., powers the online backup services sold by more than 60 partners, including Iomega (IOM), Dell (DELL), Intuit (INTU), Best Buy (BBY), and Symantec. All told, the company is adding 13,000 new customers a day, and has 50 employees. The company raised $2.65 million in a series A round in 2001 from Core Capital Partners and some angels. It raised another round later from Contour Ventures and ASAP Ventures. We are still trying to find out the total amount raised, but it is fair to assume that the investors made a very decent return.
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This article has 2 comments:
Jacome
Do companies intentionally not want to let this news out or it is just that they don't want to deal with the hassle/costs unless they really need to?
Was always wondering.......
While I tend not to believe they have $13 million in profit, the amount of revenue is already very impressive. This makes a lot of other small companies feel shy. In this business, most companies are money-losing: just think about some companies offering 2GB to 50GB free storage, or charging only $50/year for unlimited storage... while the storage price is going down, operating a backup service is not the same as using some raw cheap hard disks. We are not sure how the free / cheap service providers can survive without a buyout by some big old industry giant. From that point of view, SwapDrive has been doing really great in business.
DriveHQ.com is another independently-operated major Online Storage and Online Backup service provider.
Like SwapDrive, DriveHQ has Online Storage and Sharing service based on the DriveHQ.com website, FTP and DriveHQ FileManager client software; and we also have business-class Online Backup service using DriveHQ Online Backup enterprise edition.
Unlike many other companies, DriveHQ is not funded by VCs. We have spent many years developing top-notch products and technologies. We make money by offering top-quality products and services to our customers and creating value for them. We offer customized services to small and big companies. Our service has powered from big telecom service providers to small accounting firms, etc. While we look forward to having some good luck, our business focus has always been to create value for our customers and stay profitable. At end of the day, we believe if online storage and online backup is really important for customers, they will pay for it at a good price.
John
www.drivehq.com