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Commvault Announces Fiscal 2019 Second Quarter Financial Results
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-- Continued strong growth of repeatable revenues, up 22% Y-o-Y --
-- Subscription and Utility Annual Contract Value (ACV) Grew over 90% Y-o-Y to $76 million --
-- Significant Y-o-Y improvement in earnings and cash flows from Commvault Advance initiatives --

TINTON FALLS, N.J., Oct. 30, 2018 /PRNewswire/ --

Second Quarter Highlights Include:



Second quarter

GAAP Results:



Revenues


$169.1 million

Income from Operations (EBIT)


$1.0 million

EBIT Margin


0.6%

Diluted Earnings Per Share


$0.02




Non-GAAP Results:



Income from Operations (EBIT)


$25.1 million

EBIT Margin


14.8%

Diluted Earnings Per Share


$0.40

Commvault [NASDAQ: CVLT] today announced its financial results for the second quarter ended September 30, 2018. 

Commvault is the global leader in enterprise backup, recovery, archive and the cloud (PRNewsFoto/Commvault) (PRNewsfoto/Commvault)

N. Robert Hammer, Commvault's Chairman, President and CEO stated, "During the quarter, we completed the majority of the operational initiatives of our Commvault Advance transformation. Our second quarter financial results partly reflect the temporary disruption from the implementation of these changes. These in-quarter actions were critical to implement our transformation strategy and, as a result, most of the major changes have now been completed and our entire company is focused on go-forward execution.  The actions we took to align our cost structure were evidenced in the 61% year-over-year growth in Non-GAAP operating income."  Hammer added, "Now that the foundation of Commvault Advance is largely in place, we believe we are seeing increased momentum as our channel strategy, go-to-market initiatives and alliance partnerships are starting to show positive traction."     

Total revenues for the second quarter of fiscal 2019 were $169.1 million, an increase of 1% year-over-year, and a decrease of 4% sequentially.  Software and products revenue was $69.5 million, a decrease of 3% year-over-year, and 7% sequentially. Subscription software and product revenue comprised a record 43% of total software and products revenue, an increase of 136% year-over-year.  Subscription and utility annual contract value (ACV) grew over 90% year-over-year to approximately $76 million.  See Table IV for information and explanations of ACV.

Services revenue in the quarter was $99.6 million, an increase of 4% year-over-year and a decrease of 2% sequentially.

On a GAAP basis, income from operations (EBIT) was $1.0 million for the second quarter compared to a loss of $4.7 million in the prior year.  These second quarter GAAP results in fiscal 2019 included $6.1 million of expenses related to a non-routine shareholder matter, a litigation settlement and restructuring.  These expenses have been excluded from our non-GAAP results and are further discussed in Table IV. Non-GAAP EBIT was $25.1 million in the quarter compared to $15.6 million in the prior year, an increase of 61%.

For the second quarter of fiscal 2019, Commvault reported a GAAP net income of $0.9 million, or $0.02 per diluted share. Non-GAAP net income for the quarter was $19.1 million, or $0.40 per diluted share.

Operating cash flow totaled $17.8 million for the second quarter of fiscal 2019 compared to $9.7 million in the prior year quarter.  Total cash and short-term investments were $484.1 million as of September 30, 2018 compared to $462.4 million as of March 31, 2018. 

During the second quarter of fiscal 2019, Commvault repurchased approximately 201,000 shares of its common stock totaling $13.3 million. On October 18, 2018, the Board of Directors authorized an increase to the repurchase program so that $200 million was available for ongoing repurchases and they extended the expiration date of the program to March 31, 2020.

A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release.  An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."

Recent Business Highlights

Innovation on Display at Commvault GO in Nashville

Aligned with the key foundational emphasis of Commvault Advance – to keep the company's innovation front and center – Commvault successfully delivered another sold-out customer event at Commvault GO earlier this month.  The event showcased innovation with announcements made possible by the Commvault Advance initiatives on product and go-to-market organizational focus.  Announcements included:

"In summary, the announcements and information shared with IDC at Commvault GO left us feeling positive about Commvault's progress," said Archana Venkatraman, Research Manager, and Phil Goodwin, Research Director, Storage Systems and Software, IDC – a leading industry analyst firm.  "In conversations with IDC, many of Commvault's customers iterated the benefit of simplification, consolidation, and analytics that the platform offers.  What differentiates Commvault is that its commitment and focus across multiple geographies including Europe and Asia are on par with its North American focus. This was evident in Commvault's strategies around European regulations such as GDPR and its cognizance of Ali cloud and Asian regulatory dynamics. The vendor's frank discussion about its strategic direction, combined with ongoing commitment to its new product architecture and pricing, and the potential of new products like Commvault Complete Backup and Recovery as a Service, were all positive developments," he said.  "Looking forward, Commvault's ability to slowly increase its indirect and partner-driven sales revenue, combined with its ability to gain share in the mid-market, will be important, quantitative signs of success. In conclusion, GO 2018 presented us with a self-assured and driven Commvault. If the vendor maintains this drive with its developers, customers, and regional teams, Commvault will be able to scale its business to new levels." The analyst comments are part of a comprehensive IDC Perspective, entitled "Commvault GO 2018 Highlights."

"Commvault GO reinforced the power of partnership and how true tech industry leaders don't just deliver you the technology you need to realize your business objectives," said Barry Hubbard, Senior Director of Global Infrastructure at TiVo. "They work with you to understand these business objectives, and invest time and resources in helping you determine how to best use both their own technology and other technologies to realize these objectives. That's what Commvault has done with TiVo. By collaborating with us on our strategic initiatives, we have been able to determine how we can better activate our data so we can provide our customers with information they can use to build even more meaningful relationships with their audiences."

Customer Business Validates Commvault Value Proposition

Commvault today also announced a list of new and existing customers who had purchased products and/or services from Commvault during its fiscal second quarter, across many industry segments and geographies from around the world:

Ace Hardware Corporation
B. Riley
Banner Bank
BriteSky
Cisco Systems Inc.
City of Kent
Cork County Council
Essilor
Fnz Ltd.
Gaylord Hospital
Hunter Douglas
International Christian Hospital
JFK Medical Center
L.L. Bean, Inc.
Medical College of Wisconsin
Metropolitan Atlanta Rapid Transit Authority
Milliken & Company
Mitchell International
Neixar Systems
Haitian International
Ningbo International Logistics Development Company Ltd.
Parkland Fuel Corporation
PresiCarre Corporation
Rochester Regional Health
Sony Network Communications, Inc.
Swinerton Incorporated
Synthos Group S.A.
U.S. Dept. of Commerce
US Army
US Department of the Treasury
WEG
Western Maryland Health System
WINOV Solucoes em Tecnologia SA

Use of Non-GAAP Financial Measures
Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations, non-GAAP income from operations margin, non-GAAP net income, and non-GAAP diluted earnings per share.  This selected financial information has not been prepared in accordance with GAAP.  Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions.  In addition, Commvault believes these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP financial measures, in evaluating Commvault's ongoing operational performance.  Commvault believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault's industry, many of which present similar non-GAAP financial measures to the investment community.  Commvault has also provided software and products, services and total revenues on a constant currency basis. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.  Finally, Commvault has provided free cash flow, which Commvault uses to measure the amount of cash flow the business is generating after capital expenditures. 

All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are provided in Table IV included in this press release.

Non-GAAP income from operations and non-GAAP income from operations margin.  These non-GAAP financial measures exclude noncash stock-based compensation charges and additional FICA and related payroll tax expense incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards.  In fiscal 2019 Commvault also excluded restructuring, costs related to a non-routine shareholder matter and costs associated with a non-routine legal settlement from its non-GAAP results.  These expenses are further discussed in Table IV.  Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault's core operating results over multiple periods.  When evaluating the performance of Commvault's operating results and developing short and long term plans, Commvault does not consider such expenses.  Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans.  In addition, because of the varying available valuation methodologies, subjective assumptions such as volatility, which are outside of Commvault's control and the variety of awards that companies can issue, Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on stock option exercises and vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault's operating results and those of other companies. 

There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin.  The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature.  Noncash stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault's operating results.  In addition, noncash stock-based compensation is an important part of Commvault's employees' compensation and can have a significant impact on their performance.  Lastly, the components Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures.  

Commvault's management generally compensates for limitations described above related to the use of non-GAAP financial measures by providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, Commvault management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.

Non-GAAP net income and non-GAAP diluted EPS.  Non-GAAP net income excludes noncash stock-based compensation, the additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards.  In fiscal 2019 Commvault also excluded restructuring, costs related to a non-routine shareholder matter and costs associated with a non-routine legal settlement from its non-GAAP results.  These expenses are further discussed in Table IV.  In addition, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 27% in fiscal 2019 and 37% in fiscal 2018. 

Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income.  For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages.  Estimated cash taxes for fiscal 2018 were approximately $6 million.  Estimated cash taxes for fiscal 2019 are expected to be $10 million and relate primarily to Commvault's international operations.  Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over time, Commvault believes its GAAP and cash tax rates will align. Commvault measured itself to non-GAAP tax rates of 37% in fiscal 2018 and will measure itself to a non-GAAP tax rate of 27% in fiscal 2019.  The reduction in the rate is the result of U.S. corporate tax reform.

Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault's use of non-GAAP net income and non-GAAP EPS.

Conference Call Information
Commvault will host a conference call today, October 30, 2018, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss its financial results.  To access this call, dial 844-742-4247 (domestic) or 661-378-9470 (international).  The live webcast, which will include slides that will be discussed as part of Commvault's prepared remarks on the results of its recent operating review, can be accessed under the "Events" section of Commvault's website. An archived webcast of this conference call will also be available following the call.

About Commvault

Commvault is a recognized global leader in enterprise backup, recovery, and data management across any hybrid environment. Commvault's converged data management solution redefines what backup means for the progressive enterprise through solutions that protect, manage and use their most critical asset — their data. Commvault software, solutions and services are available from the company and through a global ecosystem of trusted partners. Commvault employs more than 2,500 highly-skilled individuals across markets worldwide, is publicly traded on NASDAQ (CVLT), and is headquartered in Tinton Falls, New Jersey in the United States. To learn more about Commvault visit www.commvault.com

Safe Harbor Statement

This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others.  For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item IA. Risk Factors" in our annual report in Form 10-K and "Item 1A. Risk Factors" in our most recent quarter report in Form 10-Q. Statements regarding Commvault's beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Actual results may differ materially from anticipated results.  Commvault does not undertake to update its forward-looking statements.  The development and timing of any product release as well as any of its features or functionality remain at our sole discretion.

1999-2018 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the "C hexagon" logo, Commvault Systems, Solving Forward, SIM, Singular Information Management, Simpana, Commvault OnePass, Commvault Galaxy, Commvault Edge, Unified Data Management, QiNetix, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, Recovery Director, CommServe, CommCell, IntelliSnap, ROMS, APSS, CommvaultGO, CommValue, Commvault HyperScale, ScaleProtect, Commvault Activate, Commvault Orchestrate, Commvault Complete are trademarks or registered trademarks of Commvault Systems, Inc. All other third party brands, products, service names, trademarks, or registered service marks are the property of and used to identify the products or services of their respective owners. All specifications are subject to change without notice.

 

Table I

Commvault Systems, Inc.


Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)



Three Months Ended
September 30,


Six Months Ended
September 30,


2018


2017


2018


2017

Revenues:








Software and products

$

69,504


$

72,020


$

144,554


$

146,781

Services

99,574


96,120


200,701


187,331

Total revenues

169,078


168,140


345,255


334,112

Cost of revenues:








Software and products

5,049


1,086


9,169


1,891

Services

21,824


22,181


45,310


43,037

Total cost of revenues

26,873


23,267


54,479


44,928

Gross margin

142,205


144,873


290,776


289,184

Operating expenses:








Sales and marketing

89,494


100,595


187,110


200,504

Research and development

24,507


22,925


49,301


45,470

General and administrative

24,004


23,620


46,546


47,471

Restructuring

494



8,389


Depreciation and amortization

2,700


2,388


5,233


4,755

Total operating expenses

141,199


149,528


296,579


298,200

Income (loss) from operations

1,006


(4,655)


(5,803)


(9,016)

Interest income

1,148


539


2,039


972

Interest expense


(234)



(466)

Equity in loss of affiliate


(162)



(123)

Income (loss) before income taxes

2,154


(4,512)


(3,764)


(8,633)

Income tax expense (benefit)

1,263


(3,502)


3,912


(7,339)

Net income (loss)

$

891


$

(1,010)


$

(7,676)


$

(1,294)

Net income (loss) per common share:








Basic

$

0.02


$

(0.02)


$

(0.17)


$

(0.03)

Diluted

$

0.02


$

(0.02)


$

(0.17)


$

(0.03)

Weighted average common shares outstanding:








Basic

45,880


45,598


45,666


45,364

Diluted

47,798


45,598


45,666


45,364









 

 

Table II

Commvault Systems, Inc.


Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)




September 30,


March 31,



2018


2018

ASSETS

Current assets:





Cash and cash equivalents


$

353,181


$

330,784

Short-term investments


130,919


131,637

Trade accounts receivable


137,338


162,119

Other current assets


21,034


22,248

Total current assets


642,472


646,788






Property and equipment, net


126,292


128,612

Deferred commissions cost


32,290


33,092

Other assets


8,981


10,150

Total assets


$

810,035


$

818,642






LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:





Accounts payable


$

349


$

761

Accrued liabilities


71,431


82,299

Deferred revenue


223,192


241,113

Total current liabilities


294,972


324,173






Deferred revenue, less current portion


92,514


84,661

Deferred tax liabilities, net


2,304


2,430

Other liabilities


3,100


3,314






Total stockholders' equity


417,145


404,064

Total liabilities and stockholders' equity


$

810,035


$

818,642

 

 

Table III

Commvault Systems, Inc.


Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months Ended

September 30,


Six Months Ended
September 30,


2018


2017


2018


2017

Cash flows from operating activities








Net income (loss)

$

891


$

(1,010)


$

(7,676)


$

(1,294)

Adjustments to reconcile net loss to net cash provided by
operating activities:








Depreciation and amortization

3,013


2,795


6,072


5,567

Noncash stock-based compensation

17,750


19,821


35,754


39,385

Deferred income taxes

(168)


(1,459)


(273)


(2,789)

Equity in loss of affiliate


162



123

Amortization of deferred commissions cost

4,301


3,738


8,916


8,339

Changes in operating assets and liabilities:








Trade accounts receivable

12,823


1,342


21,495


12,439

Other current assets and Other assets

1,965


(3,553)


4,884


(12,778)

Deferred commissions cost

(3,824)


(3,904)


(8,866)


(7,514)

Accounts payable

(6)


(268)


(382)


60

Accrued liabilities

(11,798)


(8,033)


(13,736)


(19,109)

Deferred revenue

(7,094)


(5)


(3,796)


7,413

Other liabilities

(93)


59


138


(224)

Net cash provided by operating activities

17,760


9,685


42,530


29,618

Cash flows from investing activities








Purchase of short-term investments

(54,267)


(33,102)


(65,519)


(77,174)

Proceeds from maturity of short-term investments

33,102


33,310


66,237


66,609

Purchase of property and equipment

(477)


(1,160)


(3,998)


(2,634)

Net cash used in investing activities

(21,642)


(952)


(3,280)


(13,199)

Cash flows from financing activities








Repurchase of common stock

(13,288)


(11,259)


(38,303)


(11,259)

Proceeds from stock-based compensation plans

16,228


11,165


29,626


16,735

Net cash provided by (used in) financing activities

2,940


(94)


(8,677)


5,476

Effects of exchange rate — changes in cash

2,211


5,170


(8,176)


11,945

Net increase in cash and cash equivalents

1,269


13,809


22,397


33,840

Cash and cash equivalents at beginning of period

351,912


349,522


330,784


329,491

Cash and cash equivalents at end of period

$

353,181


$

363,331


$

353,181


$

363,331









 

 

Table IV

Commvault Systems, Inc.


Reconciliation of GAAP to Non-GAAP Financial Measures and Other Financial Information

(In thousands, except per share data)

(Unaudited)



Three Months Ended
September 30,


Six Months Ended
September 30,


2018


2017


2018


2017

Non-GAAP financial measures and reconciliation:








GAAP income (loss) from operations

$

1,006


$

(4,655)


$

(5,803)


$

(9,016)

Noncash stock-based compensation (1)

17,446


19,821


34,540


39,385

FICA and payroll tax expense related to stock-based compensation (2)

520


440


1,603


1,093

Restructuring (3)

494



8,389


Non-routine shareholder matters (4)

4,206



7,755


Litigation settlement (5)

1,400



1,400


Non-GAAP income from operations

$

25,072


$

15,606


$

47,884


$

31,462









GAAP net income (loss)

$

891


$

(1,010)


$

(7,676)


$

(1,294)

Noncash stock-based compensation (1)

17,446


19,821


34,540


39,385

FICA and payroll tax expense related to stock-based compensation (2)

520


440


1,603


1,093

Restructuring (3)

494



8,389


Non-routine shareholder matters (4)

4,206



7,755


Litigation settlement (5)

1,400



1,400


Equity in loss of affiliate (6)


162



123

Non-GAAP provision for income taxes adjustment (7)

(5,816)


(9,389)


(9,567)


(19,167)

Non-GAAP net income

$

19,141


$

10,024


$

36,444


$

20,140









Diluted weighted average shares outstanding (8)

47,798


48,186


47,770


47,888

Non-GAAP diluted net income per share

$

0.40


$

0.21


$

0.76


$

0.42

 

 


Three Months Ended
September 30,


Six Months Ended
September 30,


2018


2017


2018


2017

Subscription and Utility Software and Related Support Services

$

34,370


$

14,396


$

63,440


$

34,704

Recurring Support and Services

85,969


84,384


173,447


163,881

Total repeatable revenue

$

120,339


$

98,780


$

236,887


$

198,585

Percentage of Total Revenues


71

%



59

%



69

%



59

%









Perpetual software and product revenue

$

39,766


$

59,440


$

89,366


$

116,596

Other professional services

8,973


9,920


19,002


18,931

Total non-repeatable revenue

$

48,739


$

69,360


$

108,368


$

135,527

Percentage of Total Revenues


29

%



41

%



31

%



41

%









Total Revenue (9)

$

169,078


$

168,140


$

345,255


$

334,112

















 

 


Measures at period ending ($000s)


March 31,
2017


June 30,
2017


September 30,
2017


December 31,
2017


March 31,
2018


June 30,
2018


September 30,
2018

Subscription and Utility
Annual Contract Value
(10)

$

30,000


$

38,000


$

39,000


$

43,000


$

54,000


$

64,000


$

76,000






















 


Three Months Ended September 30, 2018


Americas

EMEA

APAC

Total

Software and Products Revenue

$

41,376

$

17,526

$

10,602

$

69,504

Customer Support Revenue

59,675

20,443

9,489

89,607

Professional Services

5,489

2,705

1,773

9,967

Total Revenue

$

106,540

$

40,674

$

21,864

$

169,078

 


Three Months Ended September 30, 2017


Americas

EMEA

APAC

Total

Software and Products Revenue

$

40,704

$

21,049

$

10,267

$

72,020

Customer Support Revenue

58,205

18,625

8,947

85,777

Professional Services

5,965

2,759

1,619

10,343

Total Revenue

$

104,874

$

42,433

$

20,833

$

168,140

 


Six Months Ended September 30, 2018


Americas

EMEA

APAC

Total

Software and Products Revenue

$

83,492

$

39,551

$

21,511

$

144,554

Customer Support Revenue

120,101

40,802

19,110

180,013

Professional Services

11,274

5,931

3,483

20,688

Total Revenue

$

214,867

$

86,284

$

44,104

$

345,255

 


Six Months Ended September 30, 2017


Americas

EMEA

APAC

Total

Software and Products Revenue

$

80,715

$

44,821

$

21,245

$

146,781

Customer Support Revenue

114,394

35,736

17,537

167,667

Professional Services

10,826

5,304

3,534

19,664

Total Revenue

$

205,935

$

85,861

$

42,316

$

334,112

 

 



Three Months Ended September 30, 2018


Six Months Ended
September 30, 2018



Sequential


Year Over Year


Year Over Year

Non-GAAP software and products revenue reconciliation







  GAAP software and products revenue


$

69,504


$

69,504


$

144,554

      Adjustment for currency impact


718


1,289


85

Non-GAAP software and products revenue on a constant currency basis (11)


$

70,222


$

70,793


$

144,639










Three Months Ended September 30, 2018


Six Months Ended
September 30, 2018



Sequential


Year Over Year


Year Over Year

Non-GAAP services revenue reconciliation







  GAAP services revenue


$

99,574


$

99,574


$

200,701

      Adjustment for currency impact


1,147


1,325


(508)

Non-GAAP services revenue on a constant currency basis (11)


$

100,721


$

100,899


$

200,193










Three Months Ended September 30, 2018


Six Months Ended
September 30, 2018



Sequential


Year Over Year


Year Over Year

Non-GAAP total revenue reconciliation







  GAAP total revenues


$

169,078


$

169,078


$

345,255

      Adjustment for currency impact


1,865


2,614


(423)

Non-GAAP total revenues on a constant currency basis (11)


$

170,943


$

171,692


$

344,832

 

 


Three Months Ended
September 30,


Six Months Ended
September 30,


2018


2017


2018


2017









Non-GAAP free cash flow reconciliation:








Net cash provided by operating activities

$

17,760


$

9,685


$

42,530


$

29,618

Purchase of property and equipment

(477)


(1,160)


(3,998)


(2,634)

Purchases for corporate campus headquarters (12)



1,855


Non-GAAP free cash flow

$

17,283


$

8,525


$

40,387


$

26,984

 

Footnotes - Adjustments

1.

Represents noncash stock-based compensation charges associated with stock options, restricted stock units granted and our Employee Stock Purchase Plan.  Those amounts are represented as follows:




Three Months Ended
September 30,


Six Months Ended
September 30,


2018


2017


2018


2017

Cost of services revenue

$

756


$

751


$

1,512


$

1,502

Sales and marketing

9,071


8,984


18,595


18,424

Research and development

2,274


2,070


4,489


4,140

General and administrative

5,345


8,016


9,944


15,319

Stock-based compensation expense

$

17,446


$

19,821


$

34,540


$

39,385






In the three and six months ended September 30, 2018, the table above excludes $304 and $1,214, respectively, of stock-based compensation expense related to the Company's restructuring activities described below in footnote 3.



2.

Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards.



3.

In fiscal 2019 Commvault initiated a restructuring plan to increase efficiency in its sales, marketing and distribution functions as well as reduce costs across all functional areas.  These restructuring charges relate primarily to severance and related costs associated with headcount reductions.  Restructuring includes $304 and $1,214 of stock-based compensation for the three and six months ended September 30, 2018, respectively, related to modifications of awards granted to former employees.  Management believes, when used as a supplement to GAAP results, that the exclusion of these charges will better help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.



4.

During fiscal 2019 Commvault incurred costs related to a non-routine shareholder matter.  The costs are for professional fees related to the settlement agreement with the shareholder and consulting fees incurred with the operational review which was agreed to as part of the settlement. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will better help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.



5.

During the second quarter of fiscal 2019 Commvault incurred costs related to a litigation settlement. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.



6.

Represents Commvault's share of income or loss from its investment in Laitek, Inc.



7.

The provision for income taxes is adjusted to reflect Commvault's estimated non-GAAP effective tax rate of 27% in fiscal 2019 and 37% in fiscal 2018.



8.

For GAAP purposes the potentially dilutive impact of options and shares associated with our stock-based compensation programs were excluded from the calculation of GAAP loss per share in certain periods ended September 30, 2018 and 2017 because they would have been anti-dilutive.  For purposes of non-GAAP income per share the impact of dilutive options and shares has been included.  



9.

This table includes the following financial metric that is derived from Commvault's GAAP recognized revenue:




Subscription and Utility Software and Related Support Services - The amounts included on this line include a) non-cancellable term-based, or subscription, licenses (inclusive of both recognized software and recognized maintenance and support revenues) that expire at the end of the contractual term; and b) "pay-as-you-go" utility arrangements based on product usage (inclusive of both recognized software and maintenance and support revenues) that are structured with no guaranteed minimums.  The amount includes both Software and Products Revenue and Services Revenue.   




Recurring Support and Services - The amounts included on this line consist primarily of maintenance and support revenues associated with the sale of perpetual software arrangements.  This revenue is included in Services Revenue on Commvault's Consolidated Statement of Operations.  




Perpetual Software and Product Revenues - The amounts included on this line are primarily associated with the sale of perpetual software transactions.  These revenues are included in Software and Products Revenue on Commvault's Consolidated Statement of Operations.  




Other Professional Services - The amounts included on this line are primarily revenues associated with Commvault's installation and consultation services.  These revenue are included in Services Revenue on Commvault's Consolidated Statement of Operations.  




Management believes that also reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the repeatable nature of certain revenue amounts and trends as compared to prior periods.  




Note that nearly all of Commvault's software and product revenue is related to solutions that are run in the customer's environment.  Commvault currently does not have material revenue related to hosted, or software as a solution products.  As a result, as required under ASC 606, substantially all of Commvault's software and product revenue is recognized at a point in time, when it is delivered to the customer, and not ratably over the course of a contractual period.  This is the case for both perpetual software licenses and subscription software licenses.  



10.

This table includes the Subscription and Utility Annual Contract Value (ACV) metric that is comprised of:




a.  

 Subscription ACV - the annualized equivalent of the total contract value (both software and related support services) of all non-cancellable subscription agreements.  Over the past six quarters, the weighted average contract length of subscription agreements has been approximately three years.  The total contract value includes all active contracts at the end of each fiscal quarter.




b.  

Utility ACV - "pay-as-you-go" utility arrangements based on product usage (inclusive of both software and related support services) that are structured with no guaranteed minimums.  The amounts included in Utility ACV have been annualized based on the actual reported quarterly amount in the most recent fiscal quarter.




Management believes that reviewing this ACV metric, in addition to our GAAP results, helps investors and financial analysts understand the value of arrangements that may potentially result in future revenues. Commvault believes this metric normalizes the variations in contractual length among our subscription and utility transactions and will help investors and analysts to track Commvault's transition to more potentially repeatable revenue streams.



11.

Revenues on a constant currency basis are calculated using the average foreign exchange rates from a previous period and applying these rates to foreign-denominated revenues in the corresponding period of fiscal 2019. The difference between revenue calculated based on these foreign exchange rates and revenues calculated in accordance with GAAP is listed as Adjustment for currency impact in the table above.



12.

In the first quarter of fiscal 2019 Commvault made a purchase of land adjacent to its global corporate headquarters.  Due to the non-routine nature of this transaction, the amount has been adjusted from the calculation of non-GAAP free cash flow.

 

 

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SOURCE Commvault

Investor Relations Contact: Michael Picariello, Commvault, 732-728-5380, ir@commvault.com; Media Relations Contact: Leo Tignini, Commvault, 732-728-5378, ltignini@commvault.com