Commvault: Fiscal 2Q20 Financial Results

(in $ million)	2Q19	2Q20	6 mo. 19	6 mo. 20
Revenue	169.1	167.6	345.3	329.8
*Growth*		-1%		*-4%*
Net income (loss)	0.9	(7.1)	(7.7)	(13.9)

Commvault Systems, Inc. announced its financial results for the second quarter ended September 30, 2019.

“While we still have more to do, I’m pleased with the ongoing progress we’ve made over the last quarter,” said Sanjay Mirchandani, president and CEO. “We are improving our execution, closed our first major acquisition, and successfully launched a new enterprise-grade software-as-a-service offering. Additionally, earlier this month we hosted nearly 2,000 attendees at another successful Commvault GO conference. We look forward to carrying this momentum into the second half of our fiscal year.”

Total revenues for 2FQ20 were $167.6 million, a decrease of 1% Y/Y and an increase of 3% Q/Q. Total repeatable revenue was $121.8 million, an increase of 1% Y/Y and 7% sequentially. Subscription and utility annual contract value (ACV) grew 59% Y/Y to approximately $121 million.

Software and products revenue was $68.6 million, a decrease of 1% Y/Y, and an increase of 8% sequentially.

Services revenue in the quarter was $99.0 million, a decrease of 1% Y/Y and flat Q/Q.

On a GAAP basis, loss from operations was $8.2 million for 2FQ20 compared to income of $1.0 million in 2FQ19. The second quarter GAAP results in FY20 included $18.5 million of expenses related to a non-routine shareholder matter, restructuring and costs related to the acquisition of Hedvig, Inc. Non-GAAP EBIT was $24.8 million in the quarter compared to $25.1 million in the prior year.

For 2FQ20, Commvault reported GAAP net loss of $7.1 million, or $0.16 per diluted share. Non-GAAP net income for the quarter was $19.2 million, or $0.42 per diluted share.

Operating cash flow totaled $24.0 million for 2FQ20 compared to $17.8 million in 2FQ19. Total cash and short-term investments were $475.2 million as of September 30, 2019 compared to $458.3 million as of March 31, 2019.

Comments

Despite lower revenue and increased losses, the company delivered results above expectations for both sales and operating margins.

Recently excellent acquisition of Hedvig and Metallic product could help to revigorate the storage software firm.

Revenue from enterprise software deals over $100,000 represented 64% of software and products revenue for the quarter. Revenue from these transactions was down 3% Y/Y and up 12% Q/Q.

Average enterprise deal size was approximately $328,000 during the quarter, up 15% Y/Y and 10% Q/Q.

Approximately 73% of 2FQ20 total revenue are repeatable. This represents a 200 basis point improvement from the prior fiscal year. These repeatable revenue streams which were up approximately 1% Y/Y continue to outperform our non repeatable revenue.

Largest region, the Americas, increased double-digits sequentially with growth primarily driven by large deals. EMEA performed well with revenue flat sequentially and growing 22% Y/Y. APAC grew 2% sequentially and increased 7% Y/Y.

3FQ20 consensus forecast for approximately $73 million of software and products revenue is within firm's expected range. This includes a nominal contribution from Hedvig.

Services revenue should be up modestly sequentially, also in line with current consensus expectationsgrowing to $121 million, up 60% Y/Y and up 14% Q/Q.

Weighted average subscription contract length is approximately 3 years. In FY21, Commvault expects to start seeing a meaningful impact of the renewals of the subscription agreements that it sold in FY18, which was its first year of adoption of ASC-606 and when it started focusing on more repeatable software and services revenue streams.