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Carbonite CEO: EVault Partners Driving SMB Revenue Growth

Mohamad Ali

Mohamad Ali

Carbonite has successfully integrated the EVault acquisition into the company’s overall business, and a renewed channel partner commitment are accelerating the backup company’s SMB business — including MSP wins in the midmarket — according to CEO Mohamad Ali and other company executives.

Carbonite acquired EVault from Seagate at a fire sale price in December 2015 as part of a push toward midmarket business continuity services. During a Q2 2016 earnings call today, Ali described how the EVault buyout has triggered new partner, cloud and appliance-related sales.

Already, the Carbonite and EVault go-to-market teams in Europe are integrated, and the EVault-branded products and services are starting to reach the Carbonite partner base in North America, Ali said.

Goodbye Carbonite Appliances, Hello EVault Appliances

Next up, the company will abandon a Carbonite-branded appliance, and plans to replace it with an EVault-branded appliance in the second half of 2016, Ali revealed.

“All of our appliances will be branded EVault but they will be sold through the traditional Carbonite channel,” Ali added. “We have thousands of very, very small partners that sell to very small businesses. This is not traditionally where the EVault appliances are sold.”

The strategy represents a channel renaissance of sorts for Carbonite, which built a channel under former CEO David Friend but was looking to make a major step forward when Ali succeeded Friend in December 2014.

Carbonite Exceeds Conservative Goals

On the one hand, Carbonite had conservative expectations for the channel and the EVault buyout in recent months. But on the other hand, “We have seen is a better reaction from the teams in terms of execution, especially on the go-to-market side and a better reaction from our partners,” said CFO Anthony Folger. “I think we have made a renewed commitment to the channel. And I think there has been some giveback there. We have seen really good performance from the channel better than we expected.”

Still, the EVault buyout and associated partner program moves have required careful talent management. When Carbonite acquired EVault, there were roughly 150 EVault employees who were not included in the transition, Folger revealed.

Instead, Carbonite did bring over small teams who manage inside sales, channel sales renewals and sales engineers. “I think the teams both in terms of how they’ve operated and how they’ve integrated, and how they supported our partners have been performing better than we expected,” said Folger. “So it’s encouraging. I think we want to work our way through the second half of the year before we start to declare victory or talk about acceleration, but it’s certainly encouraging thus far.”

Armed with EVault, Carbonite is starting to win five-figure deals from large MSPs in the midmarket, compared to more traditional $2,000 deals from the classic Carbonite business, Ali added. “And so, with these larger deals, [partners are] more interested, we’re interested, and we have the broad portfolio now to support these larger transactions. So, we are getting more mind share and we’re clearly getting more inbound deals coming from them.”

For its Q2 2016, Carbonite revenue was $53.4 million, up 57 percent year over year. The revenue figure beat Wall Street’s forecast by nearly $10 million.

Midmarket Competition

Numerous business continuity, cloud backup and storage companies are striving to engage MSPs in the small business market. Carbonite has been a player in that sector for multiple years, but never really achieved market dominance in that sector.

A handful of players are now pivoting more toward the midmarket. Carbonite is hoping the EVault buyout allows it to grab the higher ground before SMB rivals can march upward and get a foothold in the sector.

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