This week, Masergy announced that they are joining the SASE space. Their offering is a combination of their Fortinet SD-WAN box aligned with Unified Threat Detection and Response and their proprietary AI networking components. SASE as a category is less than a year old. The term, coined by Gartner is an acronym for Secure Access Service Edge (SASE). The ultimate goal of this technology addresses the continuing convergence of traditional network services and security. One former executive is quoted as saying, “You can’t have a network discussion without having a security discussion.”
What makes Masergy’s approach unique is their industry leading SLAs and their approach as a Managed Services Provider. “Managed SD-WAN Secure portfolio is another leap forward in allowing companies to better control their destiny as they modernise their IT infrastructures,” said Chris MacFarland, chairman and CEO. Ultimately, Masergy (a visionary in Gartners Networking Quadrant) anticipates fully autonomous networking.
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In January, GTT announced the incorporation of Fortinet Secure SD-WAN services. This was in addition to already having offerings from VMware (VeloCloud) and SilverPeak Unity EdgeConnect. at the time, Todd Kiehn stated, “Fortinet has been a long-standing partner of GTT, delivering network firewall solutions as a core aspect of GTT’s managed security portfolio.”
Diving deeper it appears that the acquisition of interoute gave them access to the aforementioned Silver Peak solutions. Interoute, one of the largest network providers in the EMEA region was a very large (if not the largest) acquisition made by GTT in 2018. The $2 Billion cash transaction expanded GTT’s coverage area broadly. It also gave them innovations as Interoute was seen as the only competitor to perennial networking innovation organization Masergy in Gartner’s Network Magic Quadrant. GTT has since fallen back into the niche category.
Reclaim old glory?
GTT Stock Performance
Now the Silver Peak solution is available in the Americas. It will be interesting to see if they can move the needle and reclaim growth and take market share. The SD-WAN space has become increasingly convoluted and we’ve been bullish on massive consolidation even during and post-pandemic. It is important to note that GTT has a variety of debt obligations that come full circle in the coming years and the general performance outlook is down short, mid, and long term from the Commodity Channel Index. In fact, since mid 2018 (shortly after the Interoute acquisition) GTT’s stock has been on a steady decline from $56 dollars per share to around $9 dollars a share.
Americas Expansion
IDC anticipates enterprise SD-WAN services to grow over 25% per year through 2023 in the Americas Region. GTT uses this metric as a key reason for their SD-WAN / Silver Peak addition stating, “The addition of Silver Peak Unity EdgeConnect expands GTT’s managed SD-WAN offering in the Americas and offers enterprises an attractive technology option to meet their specific network bandwidth and applications requirements,” stated Ghassan Abdo, research vice president, worldwide telecom at IDC. “GTT’s managed SD-WAN service allows enterprises to focus critical IT personnel on core business operational activity and provides substantial value-add in the management of complex network integrations, as well as helping conserve scarce capital resources.”
Has GTT Turned the Corner?
On May 8th 2020, GTT announced their financials for Q1 2020. It is interesting that while their YoY revenue was down 5%, their QoQ performance was up marginally. Given the beginnings of the pandemic, uncertainty and distractions, this may actually be a positive sign. Additionally, while EBITDA has decreased, their cash flow increased 37% QoQ and 157% YoY and their CAPEX decreased nearly half a % point as a percent of revenue.
The biggest concern with this announcement is can GTT provide a consistent reliable user experience across 3 of the top SD-WAN Services available today. If they can succeed in this area, they may be poised to seize the market as our society continues its digital transformation revolution.
Trusted SD-WAN Advisors
SDWAN Rankings exists to help you find the best solutions to help with your networking needs. Organizations selecting SD-WAN providers often rely on the partner community as trusted advisors to help select these networking technologies. We can help you select a partner that will help you through vendor selection at no cost. ever. If you’d like an introduction to SD-WAN vendors or partners, let us know.
