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Carbonite, Webroot Hit Business Goals; Parent OpenText Restructures

Craig Stilwell, EVP, SMB, OpenText

Mark Barrenechea, CEO, OpenText

Carbonite and sister business Webroot hit their financial targets in the most recent fiscal quarter. But amid the coronavirus pandemic and its economic impact, parent OpenText has rolled out a restructuring plan that includes some layoffs and temporary pay cuts, CEO Mark Barrenechea disclosed on the company’s May 1 earnings call.

OpenText completed the $1.45 billion Carbonite-Webroot acquisition in December 2019. The deal’s big focus involves a Cyber Resilience strategy — which essentially blends data protection and cybersecurity into a 360-degree, automated business protection system for MSPs and their SMB customers. Executive VP Craig Stillwell is leading that SMB effort.

Carbonite, Webroot, OpenText: Recent Financial Performance

Fast forward to present day, and the acquired Carbonite and Webroot assets “had a solid first quarter of operation and we are on our internal business case for the acquisition,” Barrenechea told Wall Street analysts on May 1. Indeed, the Carbonite data protection and Webroot cybersecurity businesses generated $110 million of revenues during the period.

When further quizzed about Carbonite’s performance during the quarter, Barrenechea pointed to “good integration and execution, as well as an uptick” in the Work From Home (WFH) opportunity.

OpenText’s overall business exceeded expectations for the quarter ended March 31, 2020. Total revenue was $814.7 million — up 13.3 percent. And GAAP net income was $26.0 million. The figures exceeded Wall Street’s expectations.

OpenText Restructuring: Some Layoffs, Temporary Pay Cuts

Still, it’s unclear how long the current economic challenges will continue. Amid that reality, OpenText took several steps to restructure its business while also cutting certain costs through mid-2021. The moves were disclosed by Barrenechea on the earnings call.

The changes include temporary cash payroll cuts through mid-2021 by the following percentages:

  • CEO, 63%.
  • Board of Directors fees, 15%;
  • executive leadership team, 15%,
  • managers, 10%; and
  • contributors by 5%, with some exceptions in India and in Philippines.

Permanent restructurings include:

  • Closing 50% of OpenText’s offices — most of which are smaller locations.
  • Staff cuts of about 5 percent.

OpenText isn’t alone. Multiple technology companies have confirmed targeted staff cuts since the coronavirus pandemic rocked the U.S. economy starting in mid-March 2020.

Startups have been particularly hard-hit. Over 35,000 startup employees have been laid off amid the COVID-19 pandemic.

Data Protection & Cybersecurity: MSP Options

Meanwhile, OpenText’s SMB business — the Carbonite and Webroot portfolios — are growing. But the combination of data protection and cybersecurity faces growing competition.

Earlier today, Acronis unveiled Acronis Cyber Protect — a service that spans backup and disaster recovery (BDR),  anti-malware, cybersecurity, and endpoint management tools. MSPs can manage the integrated service from a single management console, the company says.

Potential competition may also come from these areas:

Amid all those variables, the Carbonite and Webroot teams still hit internal business goals in OpenText’s latest quarter.

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