–Fiscal 2019 repeatable revenues grow 14% over prior year–
–Quarterly operating cash flow increased 57% over prior year to $36.6 million–
–$40.0 million returned to shareholders in Q4 through share repurchases, bringing fiscal 2019 total to $132.7 million–
Fourth Quarter and Fiscal 2019 Highlights Include:
|Fourth Quarter||Fiscal 2019|
|Revenues||$181.4 million||$711.0 million|
|Income from Operations (EBIT)||$0.3 million||$4.9 million|
|Diluted Income (Loss) Per Share||($0.05)||$0.07|
|Income from Operations (EBIT)||$30.9 million||$111.9 million|
|Diluted Earnings Per Share||$0.51||$1.80|
TINTON FALLS, N.J. ‐ April 30, 2019 ‐ Commvault [NASDAQ: CVLT] today announced its financial results for the fourth quarter and fiscal year ended March 31, 2019.
“Commvault has implemented extensive operational and organizational changes over the past twelve months, which have enabled us to reduce costs, increase repeatable revenues and deliver significant year-over-year earnings growth. However, we have more work to do to ensure that Commvault reaches its full potential,” said Sanjay Mirchandani, Commvault’s President and CEO. “Since joining Commvault a few months ago, I’ve consistently heard from customers and partners that Commvault has the best technology to protect, manage and use data. Our record of innovation has, and will, continue to be core to our success. To better capture the market opportunity that our innovation creates, we are focused on simplifying our business and improving execution. Actions are underway in each of these areas, and our employees are energized about where Commvault is heading. I am confident we have the foundation necessary to drive increased levels of profitable growth and value creation.”
Total revenues for the fourth quarter of fiscal 2019 were $181.4 million, a decrease of 2% year-over-year and sequentially. Software and products revenue in the fourth quarter of fiscal 2019 was $80.8 million, a decrease of 3% year-over-year and 4% sequentially. Services revenue in the fourth quarter of fiscal 2019 was $100.6 million, a decrease of 1% year-over-year and an increase of 1% sequentially.
For the full fiscal year, total revenues were $711.0 million, an increase of 2% from fiscal 2018. Software and products revenue for the full fiscal year was $309.9 million, a decrease of 1% from fiscal 2018. Services revenue for the full fiscal year was $401.1 million, an increase of 3% from fiscal 2018.
On a GAAP basis, income from operations (EBIT) decreased to $0.3 million for the fourth quarter compared to $4.6 million in the same period of the prior year. Fourth quarter GAAP results include approximately $13.4 million of noncash expense for stock-based compensation modifications related to the transition of senior management. Non-GAAP income from operations (EBIT) increased to $30.9 million in the fourth quarter of fiscal 2019 compared to $22.5 million in the fourth quarter of the prior year, an increase of 37%.
On a GAAP basis, income from operations (EBIT) for the full fiscal year was $4.9 million. Non-GAAP income from operations (EBIT) increased 47% to $111.9 million in fiscal 2019 compared to $76.0 million in fiscal 2018.
For the fourth quarter of fiscal 2019, Commvault reported net loss of $2.2 million. Non-GAAP net income for the quarter increased to $23.9 million, or $0.51 per diluted share, from $14.5 million, or $0.31 per diluted share, in the same period of the prior year.
For the full fiscal year, Commvault reported net income of $3.6 million. Non-GAAP net income for the full fiscal year increased to $85.7 million, or $1.80 per diluted share, from $48.7 million, or $1.03 per diluted share, in fiscal 2018.
Operating cash flow totaled $36.6 million for the fourth quarter of fiscal 2019 compared to $23.3 million in the fourth quarter of fiscal 2018. For the full fiscal year, operating cash flow was $110.2 million, compared to $84.2 million for fiscal 2018. Total cash and short-term investments were $458.3 million as of March 31, 2019 compared to $462.4 million as of March 31, 2018.
During the fiscal fourth quarter, Commvault repurchased $40.0 million of common stock (611 thousand shares), bringing the fiscal 2019 total repurchases to $132.7 million (2.1 million shares). On April 18, 2019, Commvault’s Board of Directors increased the current share repurchase authorization that expires March 31, 2020, so that $200 million was available.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release (Download Financial Tables). 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 and non-GAAP diluted earnings per share. 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 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, 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. Finally, Commvault has provided free cash flow, which Commvault uses to measure the amount of cash flow the business is generating after capital expenditures.
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, Commvault also excluded restructuring, costs related to a non-routine shareholder matter and costs associated with a non-routine legal settlement 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. In addition, because of the varying available valuation methodologies, subjective assumptions such as volatility (which are outside of Commvault’s control), and the variety of awards that companies can issue, 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 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 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 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 Commvault also excluded restructuring, costs related to a non-routine shareholder matter and costs associated with a non-routine legal settlement from its non-GAAP results. 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% in fiscal 2019 and 37% in fiscal 2018.
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. Estimated cash taxes for fiscal 2019 were approximately $9 million. 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 measured itself to non-GAAP tax rates of 27% in fiscal 2019 and 37% in fiscal 2018. The reduction in the rate is the result of U.S. corporate tax reform. Commvault anticipates it will continue using a 27% non-GAAP tax rate in fiscal 2020.
Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same 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, April 30, 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). Investors can also access the audio version of the conference call by visiting www.commvault.com. An archived webcast of this conference call will also be available following the call.
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 2,500 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, Solving Forward, SIM, Singular Information Management, Commvault HyperScale, ScaleProtect, Commvault OnePass, Commvault Galaxy, Unified Data Management, QiNetix, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, ROMS, APSS, Commvault Edge, Commvault GO, Commvault Advantage, Commvault Complete, Commvault Activate, Commvault Orchestrate, 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.