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Zix Acquires CloudAlly for $30M; Converges Email Security and Cloud Backup

Zix has acquired CloudAlly for approximately $30 million. The deal sets the stage for MSPs (managed IT service providers) to converge Microsoft 365 email security, cloud backup and disaster recovery (BDR) services.

This is M&A deal 456 that MSSP Alert and sister site ChannelE2E have covered so far in 2020. See the full M&A deal list here.

CloudAlly, founded in 2011, offers GDPR- and HIPAA-compliant BDR solutions for Microsoft Office 365, Google Workspace (formerly G Suite), SharePoint, OneDrive, Salesforce, Box and Dropbox. CloudAlly expects to generate roughly $8 million in annual recurring revenue for 2020.

Zix has M&A experience. The company in 2019 acquired AppRiver, and has since leveraged AppRiver’s strong ecosystem of MSPs and Microsoft Office 365 partners.

Zix Acquires CloudAlly: CEO David Wagner’s Perspectives

David Wagner, CEO, Zix

During the Zix Q3 earnings call on November 9, CEO David Wagner shared more details about the CloudAlly deal. He stated:

“At a high level, CloudAlly expands our product suite into Microsoft Office 365 backup and recovery. Filling a growing demand from AppRiver’s MSP channel as well as Zix’s value-added reseller and direct sales channels. Like Zix, CloudAlly is a channel first provider serving more than 5000 customers and 250,000 unique users globally, collectively served by 600 MSP partners. Our two companies have highly complementary and synergistic go-to-market motions and end markets with virtually no overlap in our MSP partner base. Most importantly, our combination with CloudAlly will enable us to directly address and capitalize on the growing Cloud backup and recovery market, which is expected to reach more than $3 billion annually by 2025 according to industry analysts.”

In addition to the Microsoft Office 365 opportunity, CloudAlly has solutions today for Google Workspace, Salesforce, Box and Dropbox, Wagner noted.

Zix Acquires CloudAlly: Financial Details and Competition

For the fiscal year ending December 31, 2020, CloudAlly is projected to generate $8 million in ARR (annual recurring revenue), CFO David Rockvam said during the earnings call. Moreover, CloudAlly will generate an EBITDA run rate of $500,000 per quarter by the end of 2020, Rockvam added.

At a buyout price of roughly $30 million, quick math suggests the CloudAlly acquisition was valued at 15X CloudAlly’s annual EBITDA run rate for the end of 2020.

Meanwhile, the deal reinforces growing synergies between cloud backup, disaster recovery, data protection and cybersecurity technologies. For instance:

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