Virtustream Nears $100 Million Revenue, Plans IPO in YearJack Clark
Virtustream Inc., a five-year-old company that makes software for businesses to run older applications alongside new ones, plans to file for an initial public offering within a year.
The Bethesda, Maryland-based company is on track to generate about $100 million in annual revenue by the end of 2014, Chief Executive Officer Rodney Rogers said in an interview. Virtustream makes money by charging a subscription fee for its software and selling services based on its technology, which lets companies easily run software from companies such as SAP SE on modern cloud-computing infrastructure. Virtustream hasn’t yet hired bankers for an IPO, Rogers added.
“Becoming a public company can create an efficient means to access capital to scale the business,” Rogers wrote in an e-mail. “We can build a very large and profitable company on the intellectual property we’ve built to date, and the IP we will continue to advance.”‘
Virtustream is considering an IPO even as many of its contemporaries have sold themselves. Hewlett-Packard Co. bought cloud startup Eucalyptus Systems Inc. for less than $100 million earlier this year, while Cisco Systems Inc. acquired cloud company, Metacloud Inc., in September. EMC Corp. purchased Cloudscaling Group Inc. for less than $50 million last month.
In contrast, Virtustream anticipates it will be profitable by the end of this year and doesn’t need to raise more money, Rogers said in an interview. The company has collected $119 million in funding to date from Intel Capital, Columbia Capital, SAP and others. The company has about 300 employees.
Virtustream was founded in 2009 by Rogers and Kevin Reid, who also hold the CEO title and is chief technology officer. The company first made money by consulting, then started selling its technology as a service before offering it as standalone software.
The company sells to large businesses and the public sector, such as the U.S. Department of Transportation and the British Transport Police. Other customers include Intel Corp., International Business Machines Corp. and Allied Irish Banks Plc. The company also rents computing infrastructure via the Internet, competing with larger providers like Amazon.com Inc., Microsoft Corp. and Google Inc.