Octopus Deploy reels in Codefresh for GitOps expertise

By joining forces in CI/CD and GitOps, the combined companies look to even the odds with bigger competitors, but this will be a daunting task, experts predict.

Octopus Deploy's acquisition of Codefresh this week will add GitOps and CI/CD expertise to its continuous deployment tools to help it stand up to much larger competitors.

Octopus Deploy's claim to fame is in continuous deployment, the process of automating the last step between development and production environments. Continuous deployment is an extension of continuous delivery, which is usually paired with continuous integration in DevOps pipelines, where Codefresh specializes. GitOps -- another area of expertise for Codefresh via an integration with open source Argo CD -- applies declarative automation to the deployment of code-based infrastructure resources, which maintains consistency between code version control repositories and the state of production environments.

Terms of the deal, which closed this week, were not disclosed. But an Octopus Deploy press release divulged some numbers relating to the size of the company post-merger and touting its strength among privately held DevOps vendors.

"The combined business positions Octopus Deploy as one of the largest privately held companies in the DevOps ecosystem," the press release read. "Focused exclusively on best-of-breed CD, it has more than 4,000 customers, over 270 employees, and over USD $60 [million] in annual revenue."

Still, the combined entity has a long way to go to catch up with the largest DevOps pipeline vendors such as GitHub Actions, Atlassian and GitLab, which also support GitOps. GitHub, acquired by Microsoft in 2018, reached a $1 billion annual recurring revenue in 2023, according to a Microsoft earnings call in October. GitLab, the most closely comparable publicly traded competitor to Octopus and Codefresh, has a market capitalization of more than $11 billion, according to Google Finance. Atlassian, which offers a broader set of workflow and service management tools that includes the Bitbucket code repository and Bitbucket Pipelines, has a market cap of more than $53 billion.

"[Octopus and Codefresh] are not at all close to that yet, but [the merger] is a step in that direction," said Larry Carvalho, an independent analyst at RobustCloud. "Separately, they're both doing well, but they can't grow."

An example of a GitOps pipeline.
Support for a GitOps approach to continuous delivery is among the specialties Codefresh brings to Octopus Deploy in the companies' merger this week.

DevOps M&A pros & cons

The overall macroeconomic climate in tech, in which venture capital investments have dropped since the height of the global COVID-19 pandemic, is a contributor to that lack of growth, which industry watchers have predicted will create an increase in M&A activity this year among vendors.

In the DevOps pipeline space, acquisitions this year have included Perforce's acquisition of DataOps player Delphix and's acquisition of Armory, which provided commercial support for the open source Spinnaker continuous deployment tool.

Such mergers preserve broader choices for enterprise IT organizations that want multi-cloud and hybrid cloud DevOps pipelines, Carvalho said.

"The differentiator between these companies and what cloud hyperscalers are providing is that they are cross-platform," Carvalho said. "People are saying, 'I want a one-stop shop' [for multi-cloud deployments.]"

Octopus Deploy is an Australian company, while Codefresh is based in San Francisco, potentially broadening the reach of Octopus in North America, Carvalho added. Octopus has already won some customers there, including Park 'N Fly, a travel services company in Atlanta, which moved back to Octopus Deploy to support its hybrid infrastructure after migrating some resources out of Microsoft Azure.

This merger is interesting in that it takes a common partner to many continuous delivery players [in Octopus Deploy] and marries it to a competitor, Codefresh.
Christopher CondoAnalyst, Forrester Research

Another potential upside of this deal is a broader set of contributors to open source projects such as Argo CD as vendor products grow, Carvalho said.

On the other hand, this combination has significant potential downsides from a competitive standpoint, said Christopher Condo, an analyst at Forrester Research.

"What's interesting is that most DevOps tool chains that start with a product like GitLab or GitHub, eventually hand off to a product like Octopus Deploy to perform the final infrastructure steps," Condo said. "So this merger is interesting in that it takes a common partner to many continuous delivery players [in Octopus Deploy] and marries it to a competitor, Codefresh."

In theory, this means that a combined product offering could provide advanced capabilities out of the box that aren't as easy to replicate with separate vendor tools, Condo said. Codefresh outscored larger CI/CD rivals in Forrester Wave's "Integrated Software Delivery Platforms" report, published in May 2023, but lagged in infrastructure automation where Octopus could fill in some gaps.

The combination of Octopus Deploy and Codefresh will be welcome for the vendors' existing users. But whether the combined company can break out beyond an existing niche remains to be seen, according to Condo.

"My main concern [is whether] this merger is too little, too late," Condo said. "Both companies are small, and larger rivals have had time to incorporate GitOps practices into their toolsets. So I am just not sure if it's going to make a big difference in the competitive landscape for DevOps tools."

Beth Pariseau, senior news writer for TechTarget Editorial, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out on X, formerly known as Twitter, @PariseauTT.

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