Tuesday, January 11, 2011

IPO-bound GlassHouse fueled by Citrix investment

By Galen Moore

GlassHouse Technologies Inc. this morning announced it has taken a strategic investment from Citrix Systems Inc. (Nasdaq: CTXS). Terms of the deal were not disclosed, but the Ft. Lauderdale, Fla.-based computer virtualization heavyweight will take an advisory seat on GlassHouse’s board. In a press release, GlassHouse CEO Mark Shirman called Citrix “our top premier partner in virtualization technologies.”

GlassHouse is in registration for an IPO. The company, a venture-backed information technology (IT) services company founded in 2001 and based in Framingham, filed papers with the U.S. Securities and Exchange Commission (SEC) in February, with a $75 million figure on the cover.  It was the second time in IPO registration for GlassHouse, which filed in December 2007, only to withdraw in March 2009 as the IPO window closed.

The company’s latest financing was a $10 million Series F in December 2008, which brought GlassHouse’s total financing north of $60 million, according to published reports. Venture backers include Kodiak Venture Partners of Waltham, Sigma Partners of Boston, GrandBanks Capital of Newton, and Paladin Capital Group of Washington, D.C. Past strategic investors include Dell Inc. (Nasdaq: DELL) and Cisco Systems Inc. (Nasdaq: CSCO).

Analyst Jeff Hine of Enterprise Strategy Group said the investment should be viewed more as a strategic deal than a financial one.

For Citrix, it’s a go-to-market strategy. GlassHouse, with a reputation for excellence in serving companies looking to virtualize, provides Citrix a window into their markets, he said. “They look at a company like GlassHouse and they say we haven’t cracked this yet, but we know they can help.”

For GlassHouse, it’s a vote of confidence in the company’s IPO prospects – or in a possible acquisition by a larger company, Hine said. “If someone like Citrix is going to invest in them at this stage, they’ve got to have been given assurances that this is all going to work out – that there’s a plan in place to get public or get acquired and that investment’s going to be taken care of.”

In its SEC filing, GlassHouse reported a narrowing net loss of $7.4 million on $89.5 million in 2009 revenue. In 2008, the company had reported net losses of $23.3 million. In the first quarter of 2010, the latest for which the company has reported financials, top line grew modestly – to $22.9 million from $22.2 million in the year-before period.