Commvault: Fiscal 1Q20 Financial Results

(in $ million)	1Q19	1Q20	Growth
Revenue	176.2	162.2	*-8%*
Net income (loss)	(8.6)	(6.8)

Commvault Systems, Inc. announced its financial results for the first quarter ended June 30, 2019.

“During the quarter we made substantial progress in our efforts to simplify and improve execution,” said Sanjay Mirchandani,president and CEO. “Our foundation is solid and we now have the senior leadership team in place. I’m excited about the recent appointments of Riccardo, Sandra, and Ranga who will strengthen our revenue, customer success, and product agendas. The recent launch of our partner advantage program is a stellar example of how our focus on simplicity and execution will benefit partners and customers. I am confident that the journey we are on, and the changes we are making, will lead the company back to growth.”

Total revenues for 1FQ20 were $162.2 million, a decrease of 8% Y/Y and 11% Q/Q. Total repeatable revenue was $114.1 million, a decrease of 2% Y/Y.

Subscription and utility annual contract value (ACV) grew 66% Y/Y to approximately $106 million.

Software and products revenue was $63.7 million, a decrease of 15% Y/Y, and 21% Q/Q.

Services revenue in the quarter was $98.5 million, a decrease of 3% Y/Y and 2% Q/Q.

On a GAAP basis, loss from operations was $6.7 million for the first quarter compard to $6.8 million in the prior year.

The first quarter GAAP results in FY20 and FY19 included $7.4 million and $11.4 million, respectively, of expenses related to a non-routine shareholder matter and restructuring. These expenses have been excluded from our non-GAAP results. Non-GAAP EBIT was $15.5 million in the quarter compared to $22.8 million in the prior year.

For 1FQ20, Commvault reported GAAP net loss of $6.8 million, or $0.15 per diluted share. Non-GAAP net income for the quarter was $12.7 million, or $0.27 per diluted share.

Operating cash flow totaled $31.1 million for 1FQ20 compared to $24.8 million in 4FQ19.

Total cash and short-term investments were $451.1 million as of June 30, 2019 compared to $458.3 million as of March 31, 2019.

During the first quarter of fiscal 2020, the company repurchased approximately 830,000 shares of its common stock for $40.0 million.

Comments

The former champion of the storage software industry is in bad shape since several quarters and up to now, Sanjay Mirchandani, president and CEO since 6 months and new executives recently hired didn't change the situation.

He stated: "We're not pleased with our 1Q results." But adding: "We have been committed and optimistic about our return to predictable growth."

His strategy to expedite faster growth is built around three priorities: simplification, innovation and execution."

Sales were down 2% Q/Q for the former quarter. Here it's worth. $162 million sales is lowest figure since at least two years and below the $168-$172 million expected. Company also records its highest loss for at least the same two years.

Performance in the Americas was the primary reason for the yearly decline.

Last quarter, customers were managing more than 500PB in the cloud with Commvault. This has now grown to 600PB and has doubled in the past year.

The vendor announced a new SaaS offering that will be available to pay customers in mid-August with initial launch during 3Q in USA.

Revenue from enterprise software deals defined as deals over $100,000, represented 62% of software and products revenue for the quarter. Revenues from these transactions was down 11% Y/Y, however average enterprise deal size was approximately $298,000 during the quarter, up 23% over the prior year.

The firm considers 70% of 1Q20 revenue to be repeatable in nature.

This time no figures were given for the outlook for next quarter, the company only stating only that "we currently expect 2Q20 software revenue to be flat to slightly up from 1Q20. We also expect that services revenue will be flat."

Last quarter our comment was: "Firm's goal is to achieve revenue growth in FY20 and FY21 of at least 9%, stated the firm at the end of former three-month period. It will be extremely difficult to achieve." Same conclusion can be also apply now.