Cisco has been on an acquisition spree recently, buying nearly 20 companies since 2015. Today marks acquisition number 19 as they announce the purchase of cloud-based SD-WAN vendor Viptela for $610 million in cash.
Viptela was founded in 2012 and has raised more than $108 million with its most recent round of $75 million happening just last May. The company, based in San Jose, California, makes a software-defined wide area network delivered in the cloud. SD-WAN refers to a software-based network that enables companies to connect geographically dispersed offices via a private network.
The goal of Viptela is to simplify this process, making it easier to deploy and manage large networks of office branches. “Viptela’s technology is cloud-first, with a focus on simplicity and ease of deployment while simultaneously providing a rich set of capabilities and scale. These principles are what today’s customers demand,” says Scott Harrell, SVP of Product for the Cisco Enterprise Networking Group.
Cisco’s acquisitions over the past few years have been cloud-heavy, with Viptela being no exception. Last year, the company bought Jasper Technologies, a cloud-based Internet of Things platform, for $1.4 billion. This may seem like a hefty price, but the company has more than $70 billion in cash on hand, making these recent acquisitions just a drop in the bucket.
Viptela fits with the service-oriented focus of its recent purchases, allowing the company to make the transition from a pure network hardware business to a services revenue based subscription model.
“Together, Cisco and Viptela will be able to deliver next generation SD-WAN solutions to best serve all size and scale of customer needs, while accelerating Cisco’s transition to a recurring, software-based business model,” writes Rob Salvagno, VP of Corporate Business Development.
Subscriptions now represent almost 25% of the company’s $11.6 billion in quarterly revenue according to their most recent report in February. They also drove 51% growth, or $4 billion, in product deferred revenue related to recurring software and subscriptions, according to CEO Chuck Robbins. It is clear that Cisco wants to keep that trend in motion by purchasing additional services it can use to offset their shrinking hardware business.
The Viptela team will be joining Cisco’s Enterprise Routing team once the acquisition is complete, sometime in the second half of 2017.