CommVault: Fiscal 1Q09 Financial Results

CommVault announced its financial results for the first quarter ended June 30, 2008.

Total revenues in the first quarter of fiscal 2009 were $55.0 million, an increase of 25% over the first quarter of fiscal 2008 and a decrease of 3% over the prior quarter. Software revenue in the first quarter of fiscal 2009 was $27.7 million, up 15% year-over-year and down 12% sequentially. Services revenue in the first quarter of fiscal 2009 was $27.3 million, up 37% year-over-year and 8% sequentially.

Income from operations (EBIT) was $4.5 million for the first quarter, an 8% increase from $4.2 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 16% to $7.2 million in the first quarter of fiscal 2009 compared to $6.2 million in the first quarter of the prior year.

For the first quarter of fiscal 2009, CommVault reported net income of $3.5 million, an increase of $0.5 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 9% to $5.5 million, or $0.12 per diluted share, from $5.0 million, or $0.11 per diluted share, in the same period of the prior year.

N. Robert Hammer, CommVault’s chairman, president and CEO stated: “The biggest issue that negatively impacted the quarter was the timing of deal flow with several large deals moving into the second quarter. Our quarterly results were not affected by the macro economic climate. Even with a few large deals falling into the second quarter, our overall sales funnel has increased significantly. As a result of the underlying strength of our business, we are raising our guidance for fiscal 2009.”

For the quarter ending September 30, 2008,
CommVault currently expects:

• Total revenues of approximately $63 million.
• Non-GAAP gross margin of approximately 87.0%.
• Non-GAAP income from operations (EBIT) margin of approximately 16.5%.
• Non-GAAP diluted EPS of approximately $0.17 using an effective tax rate of approximately 30% and a weighted average diluted share count of approximately 44.6 million. The weighted average diluted share count does not take into consideration any share repurchases during the second quarter of fiscal 2009.

The non-GAAP gross margin percentages above exclude approximately $0.1 million related to noncash stock-based compensation charges. The non-GAAP diluted EPS guidance excludes approximately $0.04 per share of noncash stock-based compensation charges, net of non-GAAP income tax benefits of approximately $0.02 per share, and any additional FICA expense that will be incurred by CommVault when employees exercise in the money stock options or vest in restricted stock awards.

Due to the uncertainties in the equity markets and the macro economic environment, CommVault will provide quarterly guidance for the remainder of this fiscal year. When conditions become more stable, CommVault will re-evaluate its position on providing quarterly guidance.

For the fiscal year ending March 31, 2009, CommVault currently expects:

• Total revenues of approximately $250 million.
• Non-GAAP gross margin of approximately 86.7%.
• Non-GAAP income from operations (EBIT) margin of approximately 18%.
• Non-GAAP diluted EPS in the range of $0.72 per share to $0.74 per share using an effective tax rate of approximately 30% and a weighted average diluted share count of approximately 44.5 million to 45.5 million. The weighted average diluted share count does not take into consideration any additional share repurchases during the remainder of fiscal 2009.
• An actual cash tax rate in the low teens based on current assumptions.

The non-GAAP gross margin percentages above exclude approximately $0.3 million related to noncash stock-based compensation charges. The non-GAAP diluted EPS guidance excludes approximately $0.16 per share to $0.18 per share of noncash stock-based compensation charges, net of non-GAAP income tax benefits of approximately $0.07 per share, and any additional FICA expense that will be incurred by CommVault when employees exercise in the money stock options or vest in restricted stock awards.

Operating cash flow totaled $14.1 million for the first quarter of fiscal 2009 compared to $5.8 million in the first quarter of fiscal 2008. Total cash and cash equivalents as of June 30, 2008 were $98.2 million.

During the first quarter of fiscal 2009, CommVault repurchased 683,775 shares of common stock under its share repurchase plan with a total cost of approximately $11.4 million, of which $7.8 million was paid as of June 30, 2008.

On July 31, 2008, the Board of Directors authorized a $40.0 million increase to the existing stock repurchase program. To date, CommVault has repurchased $26.4 million of common stock out of the $80.0 million in total that is now authorized under its stock repurchase program. As a result, CommVault may repurchase an additional $53.6 million of its common stock over the next twelve months. In addition, on July 9, 2008, CommVault entered into a credit facility in which it can borrow up to $40.0 million over the next twelve months, which it may use for future share repurchases.