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Commvault Announces Fiscal 2020 Second Quarter Financial Results

Investor Relations Contact:
Michael J. Melnyk, CFA
732-870-4581
mmelnyk@commvault.com

Second Quarter Highlights Include:

GAAP Results: Second Quarter
Revenues 167.6 million
Loss from Operations $(8.2) million
Operating Margin (4.9)%
Diluted Loss Per Share $(0.16)
Non-GAAP Results:
Income from Operations (EBIT) $24.8 million
EBIT Margin 14.8%
Diluted Earnings Per Share $0.42

Tinton Falls, N.J. – October 29, 2019
Commvault [NASDAQ: CVLT] today announced its financial results for the second
quarter ended September 30, 2019.

“While we still have more to do, I’m pleased
with the ongoing progress we’ve made over the last quarter,” said Sanjay
Mirchandani, Commvault’s President and CEO. “We are improving our execution,
closed our first major acquisition, and successfully launched a new
enterprise-grade software-as-a-service offering. Additionally, earlier this
month we hosted nearly 2,000 attendees at another successful Commvault GO
conference. We look forward to carrying this momentum into the second half of our
fiscal year.”

Total
revenues for the second quarter of fiscal 2020 were $167.6 million, a decrease
of 1% year over year and an increase of 3% sequentially.  Total repeatable revenue was $121.8 million,
an increase of 1% year over year and 7% sequentially.  Subscription and utility annual contract
value (ACV) grew 59% year over year to approximately $121 million.

Software
and products revenue was $68.6 million, a decrease of 1% year over year, and an
increase of 8% sequentially.

Services revenue in the quarter was $99.0
million, a decrease of 1% year over year and flat sequentially.

On a GAAP basis, loss from operations was $8.2
million for the second quarter compared to income of $1.0 million in the prior
year.  The second quarter GAAP results in
fiscal 2020 included $18.5 million of expenses related to a non-routine
shareholder matter, restructuring and costs related to the acquisition of
Hedvig, Inc. These expenses have been excluded from our non-GAAP results and
are further discussed in Table IV. 
Non-GAAP EBIT was $24.8 million in the quarter compared to $25.1 million
in the prior year.

For the second quarter of fiscal 2020, Commvault
reported GAAP net loss of $7.1 million, or $0.16 per diluted share. Non-GAAP
net income for the quarter was $19.2 million, or $0.42 per diluted share.

Operating cash flow totaled $24.0 million for
the second quarter of fiscal 2020 compared to $17.8 million in the prior year
quarter.  Total cash and short-term
investments were $475.2 million as of September 30, 2019 compared to
$458.3 million as of March 31, 2019.

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.”

Use of Non-GAAP Financial Measures

Commvault has provided in this press release the
following non-GAAP financial measures: non-GAAP income from operations,
non-GAAP income from operations margin, non-GAAP net income, non-GAAP diluted
earnings per share and subscription and utility annual contract value
(ACV).  This selected 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 that 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 software and products, services and total
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 or superior to, 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 provided in Table IV included in this press release.

(Download Financial Tables).

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 FICA
and related payroll tax expense incurred by Commvault when employees exercise
in the money stock options or vest in restricted stock awards.  In fiscal 2019 and 2020, Commvault also
excluded restructuring and costs related to a non-routine shareholder matter
from its non-GAAP results.  In the second
quarter of fiscal 2020, Commvault also excluded costs related to the
acquisition of Hedvig, Inc. 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 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.  Lastly, 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.

Commvault’s management generally compensates for the limitations described above related to the use of non-GAAP financial measures by providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, Commvault 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).
  Non-GAAP
net income excludes noncash stock-based compensation, and the additional FICA
and related payroll tax expenses incurred by Commvault when employees exercise
in the money stock options or vest in restricted stock awards.  In fiscal 2019 and 2020 Commvault also
excluded restructuring and costs related to a non-routine shareholder matter
from its non-GAAP results.  Also excluded
from non-GAAP results are the costs related to the acquisition of Hedvig,
Inc.  These expenses are further discussed
in Table IV.  In addition, non-GAAP net
income and non-GAAP diluted EPS incorporate 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 EPS.

Conference Call Information

Commvault will host a conference call today, October 29, 2019, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss its financial results.  To access this call, dial 844-742-4247 (domestic) or 661-378-9470 (international).  The live webcast can be accessed 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 is the recognized leader in data
backup and recovery. Commvault’s converged data management solution redefines
what backup means for the progressive enterprise through solutions that
protect, manage and use their most critical asset — their data. Commvault
software, solutions and services are available from the company and through a
global ecosystem of trusted partners. Commvault employs more than 2,300
highly-skilled individuals across markets worldwide, is publicly traded on
NASDAQ (CVLT), and is headquartered in Tinton Falls, New Jersey in the United
States. To learn more about Commvault visit www.commvault.com

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 in Form 10-K and “Item 1A. Risk
Factors” in our most recent quarter report in 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. The development
and timing of any product release as well as any of its features or
functionality remain at our sole discretion.

©1999-2019 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the “C hexagon” logo, Commvault Systems, Commvault HyperScale, ScaleProtect, Commvault OnePass, Unified Data Management, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, APSS, Commvault Edge, Commvault GO, Commvault Advantage, Commvault Complete, Commvault Activate, Commvault Orchestrate, Commvault Command Center, Hedvig, Universal Data Plane, the “Cube” logo, Metallic, the “M Wave” logo, and CommValue are trademarks or registered trademarks of Commvault Systems, Inc. All other third party brands, products, service names, trademarks, or registered service marks are the property of and used to identify the products or services of their respective owners. All specifications are subject to change without notice.

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