CommVault: Fiscal 3Q09 Financial Results

     
CommVault Systems, Inc. announced its financial results for the third quarter ended December 31, 2008.

Total revenues in the third quarter of fiscal 2009 were $60.1 million, an increase of 19% over the third quarter of fiscal 2008 and a decrease of 5% over the prior quarter. Software revenue in the third quarter of fiscal 2009 was $31.3 million, up 16% year-over-year and down 11% sequentially. Services revenue in the third quarter of fiscal 2009 was $28.7 million, up 23% year-over-year and 2% sequentially.

Income from operations (EBIT) was $6.1 million for the third quarter, a 2% decrease from $6.3 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 5% to $9.1 million in the third quarter of fiscal 2009 compared to $8.6 million in the third quarter of the prior year.

For the third quarter of fiscal 2009, CommVault reported net income of $3.9 million, a decrease of $4.3 million compared to the same period of the prior year. GAAP net income for the prior year quarter includes a tax benefit primarily due to the reversal of deferred tax valuation allowances in certain international jurisdictions. Non-GAAP net income decreased 5% to $6.6 million in the third quarter of fiscal 2009 compared to $6.9 million in the third quarter of the prior year. Non-GAAP diluted earnings per share was $0.15 for both the third quarter of fiscal 2009 and 2008.

N. Robert Hammer, CommVault’s chairman, president and CEO, stated: “We achieved 19% year-over-year growth in total revenues. This is not a growth rate we were happy with especially since our underlying business and pipeline growth is strong. The major issue that negatively impacted our reported results was big deal slippage. The outlook for our business continues to be good and we are really excited about the announced introduction of Simpana 8. Specifically, on January 26, 2009, we announced the launch of our next generation software release, the CommVault Simpana 8 software suite. CommVault Simpana 8 will enable our customers to reduce costs and improve operating efficiencies. We believe it will enable us to further strengthen our position in the data and information management market to sustain our track record of innovation and double digit growth.”

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

• Total revenues in the range of $241 million to $245 million.
• Non-GAAP gross margin of approximately 87.2%.
• Non-GAAP income from operations (EBIT) margin of 14.2% to 15.2%.
• Non-GAAP diluted EPS in the range of $0.57 per share to $0.62 per share using an effective tax rate of approximately 30% and a weighted average diluted share count of approximately 43.8 million to 44.2 million. The weighted average diluted share count does not take into consideration any additional share repurchases during the fourth quarter of fiscal 2009.
•  An actual cash tax rate in the range of 10% to 15%.

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 $0.17 per share to $0.19 per share of noncash stock-based compensation charges, net of non-GAAP income tax benefits of approximately $0.08 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 $8.4 million for the third quarter of fiscal 2009 compared to $13.1 million in the third quarter of fiscal 2008. Total cash and cash equivalents as of December 31, 2008 were $100.8 million.

During the third quarter of fiscal 2009, CommVault repurchased 489,833 shares of common stock under its share repurchase plan with a total cost of approximately $4.8 million. As of February 4, 2009, CommVault has repurchased $40.2 million of common stock (2,853,305 shares) out of the $80.0 million in total that is authorized under its stock repurchase program. As a result, CommVault may repurchase an additional $39.8 million of its common stock through July 31, 2009.

Recent Business Highlights:

• On January 26, 2009, CommVault launched the Simpana 8 software suite. Simpana 8 is the largest software release in CommVault’s history and includes advances in recovery management, data reduction, virtual server protection and content organization. Built on the industry’s only truly singular, unified platform, Simpana 8 can meet a broad spectrum of customer’s discovery and recovery management requirements and eliminate the need for a myriad of point level products.
• On December 9, 2008, CommVault announced that it is teaming with CaseCentral to promote a comprehensive eDiscovery solution that streamlines, automates and minimizes the risk and cost associated with discovery requests.
• On November 12, 2008, CommVault announced support for the Microsoft Windows Essential Business Server 2008 and Small Business Server 2008 platforms.