Carbonite CEO: Happy To Go Public Despite Slash In IPO Price


Cloud storage provider Carbonite's IPO on Thursday raised just over half of what it had been expecting, but its CEO said the rise in share prices on its first day as a public company, and the fact that it could go public at all given recent stock market gyrations, was still good news for the company.

Carbonite, the Boston-based provider of online backup solutions for consumer and SMB customers, on Wednesday priced its IPO (initial public offering) at $10 per share, making its IPO worth a total of $62.5 million.

That's a big step down from the $106 million the company had originally expected to raise a couple of weeks ago.

However, near the end of the Thursday trading day, shares of Carbonite, trading with the symbol "CARB," was up about 28 percent to $12.80 per share.

Given the roller coaster ride stocks have been experiencing since late July, the fact that Carbonite could pull off an IPO was itself a victory. Up to 10 companies had been planning their IPO for this week, but Carbonite is the only one to successfully complete it.

It also represents a victory of sorts compared to its competition, which includes a wide range of relative startups as well as some long-established vendors who have moved into the market, said David Friend, Carbonite CEO who founded the company six years ago this month after he received a call from his daughter at college who lost a term paper due to a hard drive failure.

"So here we are, six years later, the fastest growing company in this space and, needless to say, the only one to manage to go public," Friend said during a Thursday press conference.

Carbonite is currently protecting 1.1 million customers worldwide, Friend said. The funds raised from the IPO will be used to continue expanding internationally and for strategic acquisitions.

"And of course all the publicity of being a public company will help drive subscriber interest," he said.

During the question-and-answer portion of the press conference, Friend said Carbonite never considered postponing the IPO, and that he was not concerned about how the company's share prices did on opening day. "I'm more concerned about the price going forward," he said.

Friend said that Carbonite in June launched a version of its cloud storage service specifically for small businesses after noticing from a survey conducted last year that 300,000 such businesses were using its consumer service to protect their data.

The new Carbonite Business service provides unlimited storage capacity for all the PCs in a small business for a flat fee of $229 per company per year, compared to the $59 per year individual consumers pay.

That new Carbonite Business service includes a channel strategy, Friend said. "Because the business owners are hearing about us on TV (advertisements), we're getting a lot of traffic from MSPs telling us their clients are interested," he said.

Carbonite is not really set up to handle small business accounts directly, he said.

Carbonite said in its SEC filing for the IPO that it has been a money-losing operation in an extremely competitive industry.

The company wrote in the filing that it has an accumulated deficit of $87.9 million, and has yet to achieve a positive cash flow its operations. In the meantime, it is continuing to invest in its operations, including a significant investment in relocating its customer service operations from India to Maine in the U.S.

Next: Tough Competition To Overcome