VMware Acquiring Cloud Analytics and Management Startup CloudHealth

[Updated and corrected, 5:13 p.m. See below.] VMware has agreed to acquire CloudHealth Technologies, a Boston-based company that VMware wants for its service that lets businesses analyze and manage the cost, usage, security, and performance of private and public cloud computing options.

Palo Alto, CA-based VMware (NYSE: VMW) didn’t disclose the terms of the deal. A source with knowledge of the deal told Xconomy the purchase price was $500 million and said it’s an all-cash deal. VMware expects the deal to close in its fiscal third quarter of 2018. By acquiring CloudHealth, VMware is targeting enterprise business customers that use multiple forms of cloud storage and processing, the company said in a news release. [Paragraph updated to add information about the purchase price and corrected to reflect the accurate closing date.]

CloudHealth emerged from stealth mode in 2013 to help businesses “plan their entire cloud ecosystem,” co-founder Dan Phillips, the former CEO of SilverBack Technologies (bought by Dell in 2007), told Xconomy at the time. CloudHealth helped customers figure out things like their cost per customer on different products, how to analyze customer data and billing, and how to develop reports to analyze IT trends. CloudHealth has more than 3,000 customers, including Yelp, Dow Jones, and Zendesk; it helps these customers manage cloud platforms such as Amazon Web Services, Microsoft Azure, and Google Cloud, VMware said.

After launching with a $4.5 million Series A funding round, CloudHealth added a $20 million Series B round in 2016, and another $46 million in May of last year. Its investors include Kleiner Perkins Caufield & Byers, Capital Partners, .406 Ventures, Sapphire Ventures, Sigma Prime Ventures, and Scale Venture Partners.

Phillips, who was the company’s founding CEO, handed over the reins of the business to Tom Axbey in September 2017. Axbey previously led Framingham, MA-based software maker Rave Mobile Safety.

VMware, meanwhile, was in the headlines earlier this year when Dell told securities regulators it was considering a public offering or a reverse merger with VMware, the publicly traded company of which Dell owns 81 percent. Dell announced plans in July to return to the public market by buying out a tracking stock that’s linked to VMware, DVMT, which was issued when Dell acquired storage giant EMC in 2016. Reuters reported a vote is expected in October.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

Trending on Xconomy