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Carbonite Seeks CEO Amid Security Momentum, Data Protection Challenges

Mohamad Ali
Mohamad Ali, CEO, IDG
Steve Munford, chairman and interim CEO, Carbonite

Carbonite CEO Mohamad Ali has stepped down from the data protection and cybersecurity company to join IDG as CEO. Carbonite chairman Steve Munford has been named interim CEO.

The data protection company has hired an executive search firm to find Carbonite's next CEO. Although Munford is the former CEO of Sophos (2005-2012), he is not a candidate for the permanent CEO position, Carbonite said.

Before departing, Ali described a strategy that would allow security and data protection systems to work hand-in-hand, blocking malware whenever possible, and instantly recovering any infected systems wherever possible. He left Carbonite on good terms, earning thank you's from executives during an earnings call on July 25.

Looking ahead, Carbonite will seek to accelerate the integration and cross-selling activities between the core data protection and newly acquired security business, Munford said during the earnings call.

Carbonite Earnings Results: Security Momentum, Data Protection Challenges

Still, Carbonite's latest quarterly earnings results revealed some business challenges. Overall, it sounds like the company's security business (i.e., Webroot) continues to build strong relationships with MSPs (managed IT services providers). However, Carbonite's data protection, backup and disaster recovery (BDR) business appears to need some fine-tuning.

In a prepared statement, Munford said:

“Our security software business performed well during the quarter, however, we continued to experience challenges in parts of our data protection business. We remain committed to capitalizing on the opportunity of combining data protection and security, while we improve the effectiveness of our go-to-market efforts and deliver on our profitability targets.”

Anthony Folger, CFO, Carbonite

On the enterprise side, the endpoint security business -- and associated MSP channel -- is  growing "well into the double digits, north of 20 percent," CFO Anthony Folger said on an earnings call on July 25. Moreover, Webroot's  profitability contribution at Carbonite is "running pretty much where we expect it, maybe slightly ahead," he added.

Drilling deeper into the data protection issues, Folger during the earnings call said:

"So what happened? Well, in the second quarter, we experienced challenges in our data protection business related to products and go-to-market effectiveness. Towards the end of the quarter, we determined that the virtual server edition of our server backup product was not at the level of quality that customers have come to expect from Carbonite."

That particular virtual server offering, launched in Q3 of 2018, is no longer expected to contribute to Carbonite's near-term growth expectations, Folger said.

Carbonite plans to regroup and return to market with a new virtual server offering -- but that plan is still being evaluated. "As we look at the business and we're winding back, we are reevaluating exactly what we want to do there and that decision could change," Folger conceded. But he also stressed that the company has additional server products in the market right now.

Update - July 30, 2019: Carbonite continues to provide data protection for virtual machines via the company's existing data protection platform and will continue to offer VM backup capabilities, exclusive of the specific VME scenario, a spokesperson said for the company.

Carbonite: Webroot Acquisition, Executive Updates and Earnings

Carbonite completed the $618.5 million Webroot acquisition in March 2019. More recently, Carbonite hired Citrix Systems veteran Craig Stilwell as Chief Revenue Officer, and promoted Webroot veteran Charlie Tomeo to VP of channel sales for the entire Carbonite portfolio.

LinkedIn: Charlie Tomeo, VP of channel sales, Carbonite
Craig Stilwell, EVP, SMB, OpenText

During the earnings call, Munford said:

"Craig has two decades of experience building and leading high-performing teams in channel sales and marketing roles at Citrix."

And he added about Tomeo:

"Charlie has been instrumental to the longtime growth of this and success of the MSP channel at Webroot. And I'm looking forward to seeing the impact he can have on the channel of the combined company."

For its second quarter of 2019, Carbonite announced.

  • Revenue of $121.5 million increased 56 percent year-over-year; and
  • a net loss of $11.3 million, compared to net loss of $5.7 million in 2018.

Non-gap earnings exceeded Wall Street's expectations, but GAAP earnings and revenues missed expectations. The perceived misses coupled with the CEO change pressured Carbonite's stock. Shares fell about 16 percent after-hours on Thursday, July 25.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.