| Investor Relations Contact: |
| Michael J. Melnyk, CFA |
| 732-870-4581 |
| mmelnyk@commvault.com |
Third Quarter Highlights Include:
| GAAP Results: | Third Quarter |
| Revenues | $176.4 million |
| Loss from Operations | $(0.5) million |
| Operating Margin | (0.3)% |
| Diluted Loss Per Share | $(0.01) |
| Non-GAAP Results: | |
| Income from Operations (EBIT) | $28.9 million |
| EBIT Margin | 16.4% |
| Diluted Earnings Per Share | $0.47 |
Tinton Falls, N.J. – January 29, 2020 –
Commvault [NASDAQ: CVLT] today announced its financial results for the third
quarter ended December 31, 2019.
“I am pleased to report that we again delivered results above expectations and that we did it while refreshing our data management portfolio, launching our new SaaS offering, Metallic and integrating Hedvig, our first major acquisition,” said Sanjay Mirchandani, Commvault’s President and CEO. “Our ability to achieve these results is a direct reflection of the progress we are making on the simplification, innovation and execution priorities we established at the start of the fiscal year. These priorities will be the foundation for our return to growth.”
Total
revenues for the third quarter of fiscal 2020 were $176.4 million, a decrease
of 4% year over year and an increase of 5% sequentially. Total repeatable revenue was $123.4 million,
an increase of 2% year over year and 1% sequentially. Subscription and utility annual contract
value (ACV) grew 56% year over year to approximately $140.0 million.
Software
and products revenue was $76.6 million, a decrease of 9% year over year, and an
increase of 12% sequentially.
Services revenue in the quarter was $99.7
million, flat year over year and an increase of 1% sequentially.
On a GAAP basis, loss from operations was $0.5
million for the third quarter compared to income of $10.4 million in the prior
year. The third quarter GAAP results in
fiscal 2020 included $4.4 million of transactions expenses associated with the
acquisition of Hedvig, Inc. (“Hedvig”), $2.8 million of amortization
related to the intangible assets recognized in the acquisition of Hedvig and a
portion of the additional compensation expenses related to the retained
employees of Hedvig. These expenses have been excluded from our non-GAAP
results and are further discussed in Table IV.
Non-GAAP EBIT was $28.9 million in the quarter compared to $33.1 million
in the prior year.
For the third quarter of fiscal 2020, Commvault
reported GAAP net loss of $0.7 million, or $0.01 per diluted share. Non-GAAP
net income for the quarter was $21.7 million, or $0.47 per diluted share.
Operating cash flow totaled $0.9 million for the
third quarter of fiscal 2020 compared to $31.1 million in the prior year
quarter. Operating cash flow in the
third quarter of fiscal 2020 included approximately $5.0 million of payments
related to Hedvig transaction costs and approximately $8.0 million of severance
payments related to recent restructuring actions. Total cash, restricted cash, and short-term
investments were $345.0 million as of December 31, 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. (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, 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, as well as
restructuring costs and costs related to a non-routine shareholder matter. In fiscal 2020, Commvault also excluded
transaction costs related to the acquisition of Hedvig, the noncash amortization
of intangible assets and certain costs related to key employees of Hedvig 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.
Amortization of intangible assets and
transaction costs related to business combinations result from mergers and
acquisitions. Expense for the amortization of intangible assets is a noncash
item. Commvault believes the exclusion
of this amortization expense provides for a useful comparison of operating
results to prior periods and to other companies. Business combinations result in
non-routine operating expenses which would not otherwise have been incurred in
the normal course of business operations. The exclusion of acquisition related
expenses allows for financial results that are more indicative of continuing
operations and provides for a useful comparison of Commvault’s operating
results to prior periods and to 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). In
addition to the adjustments discussed in non-GAAP income from operations,
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, January 29, 2020, 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.
©1999-2020 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.
