Zix Adds Backup And Recovery To Arsenal With CloudAlly Buy

Zix has expanded its product suite into Microsoft Office 365 backup with the purchase of cloud-based data backup and recovery provider CloudAlly.

The Dallas-based email security provider said its acquisition of Raanana, Israel-based CloudAlly will also help customers protect Google Workspace, SharePoint, OneDrive, Salesforce, Dropbox and Box with secure backup and recovery from any point-in-time with unlimited data retention. Zix will pay up to $30 million in cash for CloudAlly, according to a filing with the U.S. Securities and Exchange Commission.

“With CloudAlly, we can now directly address the growing demand we’ve seen from partners, customers and prospects alike for an enterprise-grade cloud backup offering with a best-in-class solution,” Zix CEO David Wagner said in a statement.

[Related: Zix Aims To Solve ‘Biggest Challenges’ With Microsoft 365 For Partners]

CloudAlly was founded in 2011, employs 44 people, hasn’t received any outside funding and is projected to generate $8 million in annual recurring revenue for the year ending Dec. 31, 2020, according to LinkedIn and Crunchbase. Zix executives weren’t immediately available for additional comment.

The company serves more than 5,000 customers and 250,000 users through 600 Managed Service Provider (MSP) partners, according to Zix. There is no overlap between the MSP partner bases of Zix and CloudAlly, the company said.

Zix’s board authorized granting up to 400,000 restricted shares of company stock to each of 16 CloudAlly employees that were hired in connection with the acquisition. These shares will vest based on a combination of the passage of time as well as Zix’s achievement of certain financial performance metrics, according to the company.

“We’re extremely excited to join forces with Zix at this time and feel that our industry leading cloud backup service will be a complementary and valuable addition to their recently announced Secure Cloud Platform, an integrated suite of productivity, security and compliance services,” CloudAlly CEO Avinoam Katz said in a statement.

Zix’s stock is up $0.34 (4.82 percent) to $7.40 in after-hours trading. The company also announced Monday afternoon that sales for the quarter ended Sept. 30 increased 15 percent to $54.8 million while net loss attributable to common shareholders improved to $3 million, or $0.05 per share, better than a net loss attributable to common shareholders of $3.7 million, or $0.07 per share, the year prior.

“Beyond the direct benefits from an operational standpoint, our acquisition of CloudAlly should also be highly accretive from a financial standpoint,” Zix CFO Dave Rockvam said in a statement. “Its 100% subscription business and favorable profitability profile provide us with predictable adjusted EBITDA and cash flow to augment our already-robust financial base.”

The CloudAlly acquisition should help Zix mitigate concerns around ransomware while positioning the company for profitable growth, higher attach rates and scaled customer retention, according to Wagner. The deal also enables Zix to enter the cloud backup and recovery market, which MarketsandMarkets said is a $1.3 billion space growing at 25 percent.

This is Zix’s first acquisition since its massive $275 million purchase of email and web security stalwart AppRiver in January 2019. All told, Zix has bought eight companies since being founded in 1998, according to Crunchbase.