CommVault: Fiscal 3Q14 Financial Results

(in US$ million)	3Q13	3Q14	9 mo. 13	9 mo. 14
Revenues	128.1	153.3	357.6	429.5
*Growth*		20%		*20%*
Net income (loss)	12.2	17.6	36.2	48.4

CommVault Sytems, Inc. announced its financial results for the third quarter ended December 31, 2013.

N. Robert Hammer, CommVault’s chairman, president and CEO stated: “We achieved solid third quarter financial performance which was highlighted by record results in quarterly revenues of $153.3 million, non-GAAP operating income of $42.5 million and non-GAAP EPS of $0.54. Our year-over-year software revenue growth of 20% was driven by increased demand and brand recognition of our Simpana 10 software suite, an all-time high volume of enterprise deals (transactions greater than $100,000) and continued execution from our global operations. We are consistently gaining market share and delivering solid revenue and earnings growth. We will continue to invest in our enterprise selling capabilities and expand our distribution and market reach throughout the remainder of fiscal 2014 and into fiscal 2015.”

Total revenues for the third quarter of fiscal 2014 were $153.3 million, an increase of 20% over the third quarter of fiscal 2013 and an increase of 8% sequentially.

Software revenue in the third quarter of fiscal 2014 was $79.2 million, an increase of 20% year-over-year and 12% over the second quarter.

Services revenue in the third quarter of fiscal 2014 was $74.0 million, an increase of 19% year-over-year and 4% sequentially.

On a GAAP basis, income from operations (EBIT) was $27.7 million for the third quarter, a 37% increase from the $20.2 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 42% to $42.5 million in the third quarter of fiscal 2014 compared to $29.8 million in the third quarter of the prior year. On a sequential basis, non-GAAP income from operations (EBIT) increased 12% in the third quarter of fiscal 2014.

For the third quarter of fiscal 2014, CommVault reported net income of $17.6 million, an increase of $5.4 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 42% to $26.9 million, or $0.54 per diluted share, from $19.0 million, or $0.39 per diluted share, in the same period of the prior year.

Operating cash flow totaled $30.2 million for the third quarter of fiscal 2014 which was an increase of $2.7 million compared to the third quarter of fiscal 2013.

Total cash and short-term investments were $500.5 million as of December 31, 2013 compared to $435.9 million as of March 31, 2013.

There were no share repurchases during the third quarter of fiscal 2014, which still leaves $150.0 million remaining in the existing repurchase plan available through March 31, 2015.”

Recent Business Highlights:

On December 19, 2013, it announced an expansion of its long-standing OEM partnership with HDS to provide the industry’s most advanced data protection and recovery solutions to enterprises and IT-as-a-service providers. New, deeper integration of the Hitachi Data Protection Suite, powered by CommVault, with Hitachi Virtual Storage Platform (VSP) and Unified Storage VM systems helps increase storage efficiency and automates backup and recovery for application, file systems and hypervisor platforms.
On November 21, 2013, it announced Info-Tech Research Group recognized CommVault as a Champion in Content and Email Archiving in its latest Vendor Landscape Report. This industry report recognizes outstanding vendors in the technology marketplace based on an assessment of the strength of their offerings and their ability to deliver excellent value to customers.
On November 13, 2013, CommVault announced that it has been positioned in the Leaders quadrant of Gartner Inc.’s Magic Quadrant for Enterprise Information Archiving.

Comments

Neil Robert Hammer, chairman, CEO and president:
"For 2015, we believe we will be able to achieve solid double-digit revenue and EBIT growth.
"We are a provider of data-related solutions to approximately 150 managed service and cloud providers around the globe. These providers serve hundreds of thousands of customers worldwide. We estimate those providers manage more than 50 petabytes of data with the Simpana software platform.
"Many of the global cloud providers have adopted CommVault Simpana as a foundation for their data management offering, including Rackspace, Atos Origin, British Telecom, EarthLink, Expedient, Hosting.com, IT-Lifeline, Layered Tech, Onyx Managed Services, Peak10, PCM, Roheir [ph] and Microsoft.
"In the next few quarters, we will launch additional new products on the Simpana 10 platform including leading-edge solutions for advanced replication and recovery features; health care; operations management, including infrastructure analytics; enhanced business analytics capability; advanced mobile file-sharing; leading-edge, next-generation products for SharePoint and exchange archiving; and solutions for database archiving."

Brian Carolan, CFO:
"Capacity-based license sales represented 77% of our Q3 software revenue, which was slightly down from 80% in Q2 FY '14 and up from 72% in the prior year period. We anticipate that capacity-based licenses will continue to account for the majority of our software revenue despite quarter-to-quarter fluctuations.
"For the quarter, software revenues derived from indirect distribution channels increased 19% over the prior year period and represented 85% of software revenue. Our direct revenue represented the balance and increased 31% over the prior year period. Please remember, most sizable deals are driven by our direct sales force even though they are transacted through the channel.
"Software revenue from enterprise deals, which we define as deals over $100,000 in software revenue in a given quarter, increased by 24% over the prior year period and 18% sequentially. "Enterprise deals represented approximately 61% of software revenue. The number of enterprise deals increased 14% year-over-year and 22% sequentially.
"Our average enterprise deal size was approximately $284,000 during Q3 '14 compared to $260,000 in the prior year period and $295,000 in Q2 FY '14. Software revenue from non-enterprise deals increased 14% over the prior year period and 4% sequentially.
"For the quarter, revenue from U.S. operations generated 55% of total revenues, resulting in a 13% year-over-year increase, while revenue from international operations generated the balance, resulting in a 29% year-over-year increase.
"For the quarter, revenue transacted through Arrow was approximately 30% of total revenue, growing 31% year-over-year and 2% sequentially. We added approximately 400 new customers in the quarter, bringing our historical customer count to approximately 19,500 customers.
"Sales through our Dell relationships accounted for approximately 11% of total revenues for the quarter. Total quarterly Dell revenues were down 28% year-over-year and 38% sequentially.
"We expect to see Dell revenue further decline below 10% of total revenues over the next few quarters.
"We added 40 net employees in fiscal Q3 and ended the quarter with 1,936 employees."