EX-99.1 2 q1fy24pressrelease.htm EX-99.1 Document
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Investor Relations Contact:    
Michael J. Melnyk, CFA
732-870-4581
mmelnyk@commvault.com


Commvault Announces Fiscal 2024 First Quarter Financial Results


Tinton Falls, N.J. – August 1, 2023 – Commvault [Nasdaq: CVLT] today announced its financial results for the fiscal first quarter ended June 30, 2023.

“We’re off to a solid start to our fiscal year, highlighted by accelerated subscription revenue momentum and continued operating discipline," said Sanjay Mirchandani, President and CEO. "We’re excited about the opportunity ahead and remain committed to helping our customers manage the shifting demands of an ever-changing data protection market.”

Fiscal 2024 First Quarter Highlights -
•Total revenues were $198.2 million, flat year over year
•Total ARR1 grew to $686 million, up 15% year over year
•Subscription revenue was $97.3 million, up 11% year over year
•Subscription ARR1 grew to $500 million, up 32% year over year
•Income from operations (EBIT) was $18.5 million, an operating margin of 9.3%
•Non-GAAP EBIT2 was $43.5 million, an operating margin of 22.0%
•Operating cash flow increased 74% year over year to $39.0 million, with free cash flow2 of $37.9 million
•First quarter share repurchases were $51 million, or approximately 779,000 shares of common stock










Financial Outlook for Second Quarter and Full Year Fiscal 2024 -
We are providing the following guidance for the second quarter of fiscal year 2024:
•Total revenues are expected to be between $193 million and $197 million
•Subscription revenues are expected to be between $95 million and $99 million
•Non-GAAP operating margin2 is expected to be approximately 20.0%

We are reconfirming the following guidance for the full fiscal year 2024:
•Total ARR1 is expected to grow 13% year over year
•Total revenues are expected to be between $805 million and $815 million
•Subscription revenues are expected to be between $420 million and $430 million
•Non-GAAP operating margin2 is expected to grow between 50 to 100 basis points year over year
•Free cash flow2 is expected to be approximately $170 million
The above statements are based on the incorporation of actual first quarter results and current targets. These statements are forward looking and made pursuant to the safe harbor provisions discussed in detail below. We do not undertake any obligation to update these forward-looking statements. Actual results may differ materially from anticipated results.

Conference Call Information
Commvault will host a conference call today, August 1, 2023 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results. The live webcast and call dial-in numbers can be accessed by registering under the "Events" section of Commvault's website. An archived webcast of this conference call will also be available following the call.

About Commvault
Commvault (NASDAQ: CVLT) is a global leader in cloud data protection. Our industry-leading platform redefines the next generation of data protection as the only solution with comprehensive data protection, proactive data defense, advanced ransomware protection, and a single view across all your data. This lets you secure, defend, and recover your data, applications, and production workloads – on-premises, in the cloud, over SaaS, or spread across hybrid and multi-cloud environments. The result is early warning of attacks, active defense to reduce the impact of intrusion, and rapid, accurate recovery of your data. Simply put, Commvault is data, protected. For over 25 years, more than 100,000 organizations have relied on Commvault to keep their data secure and ready to drive business growth. Learn more at Commvault.com or follow us at @Commvault.


Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item IA. Risk Factors" in our annual report on Form 10-K and "Item 1A. Risk Factors" in our most recent quarterly report on Form 10-Q. Statements regarding Commvault’s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements.


1 Annualized Recurring Revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes the following contract types: subscription (including term licenses, SaaS and utility software), maintenance contracts related to perpetual licenses, other extended maintenance contracts (enterprise support), and managed services. It excludes any element of the arrangement that is not expected to recur, primarily perpetual licenses and most professional services. Subscription ARR includes only term licenses, SaaS and utility software arrangements. Contracts are annualized by dividing the total contract value by the number of days in the contract term, then multiplying by 365.

ARR should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. Management believes that reviewing this metric, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault's recurring revenue streams versus prior periods.

2 A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
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Revenue Overview
($ in thousands)
Q1'23Q2'23Q3'23Q4'23Q1'24
Revenue Summary:
Subscription$87,628 $78,239 $87,380 $94,537 $97,290 
Perpetual license17,798 19,831 19,728 17,561 13,155 
Customer support81,317 77,996 77,665 77,335 76,915 
Other services11,238 11,991 10,301 14,045 10,790 
Total revenues$197,981 $188,057 $195,074 $203,478 $198,150 

Q1'23Q2'23Q3'23Q4'23Q1'24
Y/Y Growth:
Subscription67 %50 %13 %9 %11 %
Perpetual license(45)%(28)%(30)%(25)%(26)%
Customer support(9)%(11)%(10)%(9)%(5)%
Other services19 %12 %(8)%28 %(4)%
Total revenues8 %6 %(4)%(1)%— %

Constant Currency
($ in thousands)

The constant currency impact is calculated using the average foreign exchange rates from the prior year period and applying these rates to foreign-denominated revenues in the current corresponding period. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations. The non-GAAP financial measures presented in this press release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
SubscriptionPerpetual LicenseCustomer SupportOther ServicesTotal
Q1'23 Revenue As Reported (GAAP)$87,628$17,798$81,317$11,238$197,981
Q1'24 Revenue As Reported (GAAP)$97,290$13,155$76,915$10,790$198,150
% Change Y/Y (GAAP)11 %(26)%(5)%(4)%— %
Constant Currency Impact$538$168$440$59$1,205
% Change Y/Y Constant Currency12 %(25)%(5)%(3)%1 %

Revenue by Geography1
($ in thousands)

Q1'23Q2'23Q3'23Q4'23Q1'24
RevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y Growth
Americas$122,609 10 %$116,191 11 %$108,107 (9)%$122,337 (1)%$122,124 — %
International75,372 4 %71,866 (2)%86,967 3 %81,141 (1)%76,026 1 %
Total revenues$197,981 8 %$188,057 6 %$195,074 (4)%$203,478 (1)%$198,150 — %

1 Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia, and China.
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Total ARR and Subscription ARR1
($ in millions)
chart-50cfb364b65141988b8.jpg chart-cb7bfd3c0d764e44a7f.jpg

Income from Operations (EBIT)
•Income from operations (EBIT) was $18.5 million, a 9.3% operating margin
•Non-GAAP EBIT2 was $43.5 million, a 22.0% operating margin

GAAP and Non-GAAP Net Income2
•GAAP net income was $12.6 million, or $0.28 per diluted share
•Non-GAAP net income2 was $32.5 million, or $0.72 per diluted share

Cash Summary and Share Repurchases
•Cash flow from operations was $39.0 million in the first quarter
•As of June 30, 2023, ending cash and cash equivalents was approximately $274.6 million
•During the first quarter, Commvault repurchased $51.0 million, or 779,000 shares, of common stock at an average share price of approximately $65.54 per share


1 An explanation of ARR and subscription ARR is included within footnote 1 on page 2.

2 A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
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Table I

Commvault Systems, Inc.

Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,
 20232022
Revenues:
Subscription$97,290 $87,628 
Perpetual license13,155 17,798 
Customer support76,915 81,317 
Other services10,790 11,238 
Total revenues198,150 197,981 
Cost of revenues:
Subscription12,363 10,985 
Perpetual license412 626 
Customer support14,957 15,033 
Other services7,818 7,113 
Total cost of revenues35,550 33,757 
Gross margin162,600 164,224 
Operating expenses:
Sales and marketing84,127 84,919 
Research and development31,431 40,113 
General and administrative26,959 26,976 
Restructuring — 2,132 
Depreciation and amortization1,603 2,635 
Total operating expenses144,120 156,775 
Income from operations18,480 7,449 
Interest income780 261 
Interest expense(96)(105)
Other income (expense), net341 (389)
Income before income taxes19,505 7,216 
Income tax expense6,876 3,705 
Net income$12,629 $3,511 
Net income per common share:
Basic$0.29 $0.08 
Diluted$0.28 $0.08 
Weighted average common shares outstanding:
Basic44,057 44,743 
Diluted44,975 45,865 





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Table II

Commvault Systems, Inc.

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 June 30,March 31,
 20232023
ASSETS
Current assets:
Cash and cash equivalents$274,589 $287,778 
Trade accounts receivable, net176,512 210,441 
Assets held for sale38,680 38,680 
Other current assets18,654 14,015 
Total current assets508,435 550,914 
Property and equipment, net8,209 8,287 
Operating lease assets11,268 11,784 
Deferred commissions cost58,848 59,612 
Intangible assets, net1,979 2,292 
Goodwill127,780 127,780 
Other assets25,213 21,905 
Total assets$741,732 $782,574 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$284 $108 
Accrued liabilities78,089 97,888 
Current portion of operating lease liabilities4,763 4,518 
Deferred revenue302,629 307,562 
Total current liabilities385,765 410,076 
Deferred revenue, less current portion172,219 174,393 
Deferred tax liabilities, net519 134 
Long-term operating lease liabilities7,584 8,260 
Other liabilities3,629 3,613 
Total stockholders’ equity172,016 186,098 
Total liabilities and stockholders’ equity$741,732 $782,574 







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Table III
Commvault Systems, Inc.

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Three Months Ended June 30,
 20232022
Cash flows from operating activities
Net income$12,629 $3,511 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization1,632 2,977 
Noncash stock-based compensation23,724 31,095 
Noncash change in fair value of equity securities(341)389 
Amortization of deferred commissions cost6,319 5,314 
Changes in operating assets and liabilities:
Trade accounts receivable, net28,057 9,389 
Operating lease assets and liabilities, net72 (283)
Other current assets and Other assets(1,393)(2,710)
Deferred commissions cost(5,600)(6,652)
Accounts payable178 482 
Accrued liabilities(19,530)(31,366)
Deferred revenue(7,213)10,258 
Other liabilities503 29 
Net cash provided by operating activities39,037 22,433 
Cash flows from investing activities
Purchase of property and equipment(1,147)(867)
Purchase of equity securities(312)(1,015)
Net cash used in investing activities(1,459)(1,882)
Cash flows from financing activities
Repurchase of common stock(51,030)(18,923)
Proceeds from stock-based compensation plans1,201 687 
Payment of debt issuance costs— (63)
Net cash used in financing activities(49,829)(18,299)
Effects of exchange rate — changes in cash(938)(11,046)
Net decrease in cash and cash equivalents(13,189)(8,794)
Cash and cash equivalents at beginning of period287,778 267,507 
Cash and cash equivalents at end of period$274,589 $258,713 

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Table IV
    
Commvault Systems, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures and Other Financial Information
(In thousands, except per share data)
(Unaudited)
Three Months Ended June 30,
20232022
Non-GAAP financial measures and reconciliation:
GAAP income from operations$18,480 $7,449 
Noncash stock-based compensation123,724 29,808 
FICA and payroll tax expense related to stock-based compensation21,014 910 
Restructuring3— 2,132 
Amortization of intangible assets4314 314 
Non-GAAP income from operations$43,532 $40,613 
GAAP net income$12,629 $3,511 
Noncash stock-based compensation1
23,724 29,808 
FICA and payroll tax expense related to stock-based compensation2
1,014 910 
Restructuring3
— 2,132 
Amortization of intangible assets4
314 314 
Non-GAAP provision for income taxes adjustment5(5,154)(7,198)
Non-GAAP net income$32,527 $29,477 
Diluted weighted average shares outstanding44,97545,865
Non-GAAP diluted earnings per share$0.72 $0.64 

Three Months Ended June 30,
20232022
Non-GAAP free cash flow reconciliation:
GAAP cash provided by operating activities$39,037 $22,433 
Purchase of property and equipment(1,147)(867)
Non-GAAP free cash flow$37,890 $21,566 

1 Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan, exclusive of stock-based compensation expense related to Commvault's restructuring activities described below in footnote 3. Refer below for the classification of stock-based compensation expense.

2 Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in-the-money stock options or vest in restricted stock awards.

3 These restructuring charges relate primarily to severance and related costs associated with headcount reductions and stock-based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plan.

4 Represents noncash amortization of intangible assets.

5 The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of 27%.
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Use of Non-GAAP Financial Measures

Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations (EBIT), non-GAAP income from operations margin, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP free cash flow, annualized recurring revenue (ARR) and subscription ARR. This financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Commvault believes these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP financial measures, in evaluating Commvault’s ongoing operational performance. Commvault believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault’s industry, many of which present similar non-GAAP financial measures to the investment community. Commvault has also provided its revenues on a constant currency basis. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.

All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are included in this press release.

Non-GAAP income from operations and non-GAAP income from operations margin. These non-GAAP financial measures exclude noncash stock-based compensation charges and additional Federal Insurance Contribution Act (FICA) and related payroll tax expense incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards. Commvault has also excluded restructuring costs and noncash amortization of intangible assets from its non-GAAP results. These expenses are further discussed in Table IV. Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault’s core operating results over multiple periods. When evaluating the performance of Commvault’s operating results and developing short- and long-term plans, Commvault does not consider such expenses.

Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans. Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on stock option exercises and vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault’s operating results and those of other companies.

There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin. The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature. Noncash
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stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault’s operating results. In addition, noncash stock-based compensation is an important part of Commvault’s employees’ compensation and can have a significant impact on their performance. The following table presents the stock-based compensation expense included in cost of revenues, sales and marketing, research and development and general and administrative ($ in thousands):

 
Three Months Ended June 30,
20232022
Cost of revenues$1,690 $1,243 
Sales and marketing9,704 11,393 
Research and development5,347 9,241 
General and administrative6,983 7,931 
Stock-based compensation expense
$23,724 $29,808 

The components that Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures. Due to the limitations related to the use of non-GAAP measures, Commvault’s management assists investors by providing a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Commvault's management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.

Non-GAAP net income and non-GAAP diluted earnings per share (EPS). In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporates a non-GAAP effective tax rate of 27%.

Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income. For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages. Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over time, Commvault believes its GAAP and cash tax rates will align.

Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault’s use of non-GAAP net income and non-GAAP diluted EPS.

Non-GAAP free cash flow. Commvault defines this non-GAAP financial measure as net cash provided by operating activities less purchases of property and equipment. Commvault considers non-GAAP free cash flow a useful metric for Commvault management and its investors in evaluating Commvault's ability to generate cash from its business operations. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault’s use of non-GAAP free cash flow.
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