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Commvault Announces Fiscal 2020 Third Quarter Financial Results
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TINTON FALLS, N.J., Jan. 29, 2020 /PRNewswire/ --

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

Third quarter highlights include:



Third quarter

GAAP Results:



Revenues


$176.4 million

Loss from Operations


$(0.5) million

Operating Margin


(0.3)%

Diluted Loss Per Share


$(0.01)




Non-GAAP Results:



Income from Operations (EBIT)


$28.9 million

EBIT Margin


16.4%

Diluted Earnings Per Share


$0.47

Commvault [NASDAQ: CVLT] today announced its financial results for the third quarter ended December 31, 2019.

"I am pleased to report that we again delivered results above expectations and that we did it while refreshing our data management portfolio, launching our new SaaS offering, Metallic, and integrating Hedvig, our first major acquisition," said Sanjay Mirchandani, Commvault's President and CEO.  "Our ability to achieve these results is a direct reflection of the progress we are making on the simplification, innovation and execution priorities we established at the start of the fiscal year. These priorities will be the foundation for our return to growth."

Total revenues for the third quarter of fiscal 2020 were $176.4 million, a decrease of 4% year over year and an increase of 5% sequentially.  Total repeatable revenue was $123.4 million, an increase of 2% year over year and 1% sequentially.  Subscription and utility annual contract value (ACV) grew 56% year over year to approximately $140.0 million.

Software and products revenue was $76.6 million, a decrease of 9% year over year, and an increase of 12% sequentially.

Services revenue in the quarter was $99.7 million, flat year over year and an increase of 1% sequentially.

On a GAAP basis, loss from operations was $0.5 million for the third quarter compared to income of $10.4 million in the prior year.  The third quarter GAAP results in fiscal 2020 included $4.4 million of transactions expenses associated with the acquisition of Hedvig, Inc. ("Hedvig"), $2.8 million of amortization related to the intangible assets recognized in the acquisition of Hedvig and a portion of the additional compensation expenses related to the retained employees of Hedvig. These expenses have been excluded from our non-GAAP results and are further discussed in Table IV.  Non-GAAP EBIT was $28.9 million in the quarter compared to $33.1 million in the prior year.

For the third quarter of fiscal 2020, Commvault reported GAAP net loss of $0.7 million, or $0.01 per diluted share. Non-GAAP net income for the quarter was $21.7 million, or $0.47 per diluted share.

Operating cash flow totaled $0.9 million for the third quarter of fiscal 2020 compared to $31.1 million in the prior year quarter.  Operating cash flow in the third quarter of fiscal 2020 included approximately $5.0 million of payments related to Hedvig transaction costs and approximately $8.0 million of severance payments related to recent restructuring actions.  Total cash, restricted cash, and short-term investments were $345.0 million as of December 31, 2019 compared to $458.3 million as of March 31, 2019.

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."

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, non-GAAP diluted earnings per share and subscription and utility annual contract value (ACV).  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 that 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.

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, as well as restructuring costs and costs related to a non-routine shareholder matter.  In fiscal 2020, Commvault also excluded transaction costs related to the acquisition of Hedvig, the noncash amortization of intangible assets and certain costs related to key employees of Hedvig 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.  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.

Amortization of intangible assets and transaction costs related to business combinations result from mergers and acquisitions. Expense for the amortization of intangible assets is a noncash item.  Commvault believes the exclusion of this amortization expense provides for a useful comparison of operating results to prior periods and to other companies. Business combinations result in non-routine operating expenses which would not otherwise have been incurred in the normal course of business operations. The exclusion of acquisition related expenses allows for financial results that are more indicative of continuing operations and provides for a useful comparison of Commvault's operating results to prior periods and to 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 that 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 the 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 earnings per share (EPS).  In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 27%.

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. 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 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, January 29, 2020, 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 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 the recognized leader in data backup and recovery. 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 2,300 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.

©1999-2020 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the "C hexagon" logo, Commvault Systems, Commvault HyperScale, ScaleProtect, Commvault OnePass, Unified Data Management, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, APSS, Commvault Edge, Commvault GO, Commvault Advantage, Commvault Complete, Commvault Activate, Commvault Orchestrate, Commvault Command Center, Hedvig, Universal Data Plane, the "Cube" logo, Metallic, the "M Wave" logo, and CommValue 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
December 31,


Nine Months Ended
December 31,


2019


2018


2019


2018

Revenues:








Software and products

$

76,631



$

84,515



$

208,900



$

229,069


Services

99,720



99,760



297,236



300,461


Total revenues

176,351



184,275



506,136



529,530


Cost of revenues:








Software and products

8,077



6,093



22,938



15,262


Services

22,446



22,760



67,546



68,070


Total cost of revenues

30,523



28,853



90,484



83,332


Gross margin

145,828



155,422



415,652



446,198


Operating expenses:








Sales and marketing

84,563



94,392



252,908



281,502


Research and development

30,503



22,005



77,310



69,751


General and administrative

23,864



20,900



71,124



69,001


Restructuring

2,021



4,953



18,951



13,342


Depreciation and amortization

5,356



2,728



10,681



7,961


Total operating expenses

146,307



144,978



430,974



441,557


Income (loss) from operations

(479)



10,444



(15,322)



4,641


Interest income

786



1,721



4,270



3,760


Income (loss) before income taxes

307



12,165



(11,052)



8,401


Income tax expense (benefit)

957



(1,235)



3,528



2,677


Net income (loss)

$

(650)



$

13,400



$

(14,580)



$

5,724


Net income (loss) per common share:








Basic

$

(0.01)



$

0.29



$

(0.32)



$

0.12


Diluted

$

(0.01)



$

0.28



$

(0.32)



$

0.12


Weighted average common shares outstanding:








Basic

46,028



46,074



45,586



45,803


Diluted

46,028



47,357



45,586



47,674


 

Table II


Commvault Systems, Inc.


Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)




December 31,


March 31,



2019


2019

ASSETS

Current assets:





Cash and cash equivalents


$

272,025



$

327,992


Restricted cash


8,000




Short-term investments


64,988



130,338


Trade accounts receivable


161,626



176,836


Other current assets


18,774



19,836


Total current assets


525,413



655,002







Property and equipment, net


115,972



122,716


Operating lease assets


15,248




Deferred commissions cost


31,990



33,619


Intangible assets, net


49,175




Goodwill


112,435




Other assets


12,335



11,116


Total assets


$

862,568



$

822,453







LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:





Accounts payable


$

1,069



$

2,186


Accrued liabilities


89,474



85,721


Current portion of operating lease liabilities


7,730




Deferred revenue


235,513



238,439


Total current liabilities


333,786



326,346







Deferred revenue, less current portion


97,730



99,257


Deferred tax liabilities, net


1,726



2,594


Long-term operating lease liabilities


9,223




Other liabilities


2,470



2,953







Total stockholders' equity


417,633



391,303


Total liabilities and stockholders' equity


$

862,568



$

822,453


 

Table III


Commvault Systems, Inc.


Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2019


2018


2019


2018

Cash flows from operating activities








Net income (loss)

$

(650)



$

13,400



$

(14,580)



$

5,724


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








Depreciation and amortization

5,564



3,040



11,618



9,112


Noncash stock-based compensation

18,974



15,832



48,581



51,586


Deferred income taxes



123





(150)


Amortization of deferred commissions cost

4,420



4,090



13,150



13,006


Impairment of operating lease assets

145





2,195




Changes in operating assets and liabilities:








Trade accounts receivable

(32,890)



(39,413)



12,735



(17,918)


Operating lease assets and liabilities, net

(554)





(512)




Other current assets and Other assets

7,382



5,541



5,586



10,425


Deferred commissions cost

(4,390)



(4,899)



(11,352)



(13,765)


Accounts payable

(1,301)



1,019



(1,726)



637


Accrued liabilities

(1,003)



19,081



(2,018)



5,345


Deferred revenue

5,817



13,164



(6,262)



9,368


Other liabilities

(625)



86



(1,407)



224


Net cash provided by operating activities

889



31,064



56,008



73,594


Cash flows from investing activities








Purchase of short-term investments



(32,631)



(32,800)



(98,150)


Proceeds from maturity of short-term investments

32,631



33,006



98,150



99,243


Business combination, net of cash acquired

(157,495)





(157,495)




Purchase of property and equipment

(454)



(1,106)



(1,911)



(5,104)


Net cash used in investing activities

(125,318)



(731)



(94,056)



(4,011)


Cash flows from financing activities








Repurchase of common stock



(54,380)



(40,026)



(92,683)


Proceeds from stock-based compensation plans

24,619



3,203



30,944



32,829


Net cash provided by (used in) financing activities

24,619



(51,177)



(9,082)



(59,854)


Effects of exchange rate — changes in cash

2,210



(4,939)



(837)



(13,115)


Net decrease in cash, cash equivalents and restricted cash

(97,600)



(25,783)



(47,967)



(3,386)


Cash, cash equivalents and restricted cash at beginning of period

377,625



353,181



327,992



330,784


Cash, cash equivalents and restricted cash at end of period

$

280,025



$

327,398



$

280,025



$

327,398


 

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
December 31,


Nine Months Ended
December 31,


2019


2018


2019


2018

Non-GAAP financial measures and reconciliation:








GAAP income (loss) from operations

$

(479)



$

10,444



$

(15,322)



$

4,641


Noncash stock-based compensation (1)

18,265



15,564



46,899



50,104


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

550



781



1,190



2,384


Restructuring (3)

2,021



4,953



18,951



13,342


Non-routine shareholder matters (4)



1,358



7,628



9,113


Acquisition costs (5)

4,356





5,639




Amortization of intangible assets (6)

2,825





2,825




Hedvig deferred payments (7)

1,406





1,406




Litigation settlement (8)







1,400


Non-GAAP income from operations

$

28,944



$

33,100



$

69,216



$

80,984










GAAP net income (loss)

$

(650)



$

13,400



$

(14,580)



$

5,724


Noncash stock-based compensation (1)

18,265



15,564



46,899



50,104


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

550



781



1,190



2,384


Restructuring (3)

2,021



4,953



18,951



13,342


Non-routine shareholder matters (4)



1,358



7,628



9,113


Acquisition costs (5)

4,356





5,639




Amortization of intangible assets (6)

2,825





2,825




Hedvig deferred payments (7)

1,406





1,406




Litigation settlement (8)







1,400


Non-GAAP provision for income taxes adjustment (9)

(7,069)



(10,637)



(16,313)



(20,204)


Non-GAAP net income

$

21,704



$

25,419



$

53,645



$

61,863










Diluted weighted average shares outstanding (10)

46,598



47,357



46,272



47,674


Non-GAAP diluted net income per share

$

0.47



$

0.54



$

1.16



$

1.30


 


Three Months Ended
December 31,


Nine Months Ended
December 31,


2019


2018


2019


2018

Subscription and Utility Software and Related Support Services

$

42,802



$

37,425



$

115,496



$

100,865


Recurring Support and Services

80,641



83,614



243,858



257,061


Total repeatable revenue

$

123,443



$

121,039



$

359,354



$

357,926


Percentage of Total Revenues

70%


66%


71%


68%









Perpetual software and product revenue

$

44,882



$

53,232



$

122,851



$

142,598


Other professional services

8,026



10,004



23,931



29,006


Total non-repeatable revenue

$

52,908



$

63,236



$

146,782



$

171,604


Percentage of Total Revenues

30%


34%


29%


32%









Total Revenue (11)

$

176,351



$

184,275



$

506,136



$

529,530


 



Measures at period ending ($000s)



December 31,
2018


March 31,
2019


December 31,
2019

Subscription and Utility Annual Contract Value (12)


$

90,000



$

105,000



$

140,000


 


Three Months Ended December 31, 2019


Americas

EMEA

APAC

Total

Software and Products Revenue

$

40,291


$

29,107


$

7,233


$

76,631


Customer Support Revenue

57,856


22,237


10,438


90,531


Professional Services

4,883


2,673


1,633


9,189


Total Revenue

$

103,030


$

54,017


$

19,304


$

176,351


 


Three Months Ended December 31, 2018


Americas

EMEA

APAC

Total

Software and Products Revenue

$

41,798


$

31,073


$

11,644


$

84,515


Customer Support Revenue

58,575


20,597


9,669


88,841


Professional Services

6,193


3,014


1,712


10,919


Total Revenue

$

106,566


$

54,684


$

23,025


$

184,275


 


Nine Months Ended December 31, 2019


Americas

EMEA

APAC

Total

Software and Products Revenue

$

107,375


$

71,922


$

29,603


$

208,900


Customer Support Revenue

173,450


65,810


30,756


270,016


Professional Services

14,179


8,035


5,006


27,220


Total Revenue

$

295,004


$

145,767


$

65,365


$

506,136


 


Nine Months Ended December 31, 2018


Americas

EMEA

APAC

Total

Software and Products Revenue

$

125,290


$

70,624


$

33,155


$

229,069


Customer Support Revenue

178,676


61,399


28,779


268,854


Professional Services

17,467


8,945


5,195


31,607


Total Revenue

$

321,433


$

140,968


$

67,129


$

529,530


 



Three Months Ended December
31, 2019


Nine Months Ended
December 31, 2019



Sequential


Year Over Year


Year Over Year

Non-GAAP software and products revenue reconciliation







  GAAP software and products revenue


$

76,631



$

76,631



$

208,900


      Adjustment for currency impact


(469)



405



3,396


Non-GAAP software and products revenue on a constant currency basis (13)


$

76,162



$

77,036



$

212,296











Three Months Ended December
31, 2019


Nine Months Ended
December 31, 2019



Sequential


Year Over Year


Year Over Year

Non-GAAP services revenue reconciliation







  GAAP services revenue


$

99,720



$

99,720



$

297,236


      Adjustment for currency impact


(199)



787



4,759


Non-GAAP services revenue on a constant currency basis (13)


$

99,521



$

100,507



$

301,995











Three Months Ended December
31, 2019


Nine Months Ended
December 31, 2019



Sequential


Year Over Year


Year Over Year

Non-GAAP total revenue reconciliation







  GAAP total revenues


$

176,351



$

176,351



$

506,136


      Adjustment for currency impact


(668)



1,192



8,155


Non-GAAP total revenues on a constant currency basis (13)


$

175,683



$

177,543



$

514,291


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
December 31,


Nine Months Ended
December 31,


2019


2018


2019


2018

Cost of services revenue

$

635



$

705



$

2,023



$

2,217


Sales and marketing

9,128



8,395



24,133



26,990


Research and development

5,222



2,058



9,226



6,547


General and administrative

3,280



4,406



11,517



14,350


Stock-based compensation expense

$

18,265



$

15,564



$

46,899



$

50,104


 


The table above excludes stock-based compensation expense related to the Company's restructuring activities described below in footnote three.




(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, as well as the closure of offices.  Restructuring includes stock-based compensation 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 help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.




(4)

During fiscal 2019 and 2020 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 and third quarters of fiscal 2020, Commvault incurred costs related to the acquisition of Hedvig, Inc.  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 noncash amortization of intangible assets.




(7)

In connection with the acquisition of Hedvig Inc., certain Hedvig shareholders will receive cash payments for the 30 months following the date of acquisition, contingent on their continued employment with Commvault.  While these payments are proportionate to these shareholders' ownership of Hedvig, under GAAP they are accounted for as compensation expense within Research and development expenses over the course of the 30 month service period.  Management believes, when used as a supplement to GAAP results, that the exclusion of these non-routine expenses will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.




(8)

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.




(9)

The provision for income taxes is adjusted to reflect Commvault's estimated non-GAAP effective tax rate of 27%.




(10)

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 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.




(11)

This table includes the following financial metrics that are 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 revenue from the sale of perpetual software licenses.  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 revenues 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.




(12)

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. In recent fiscal periods, 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.




(13)

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 2020. 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.

 

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SOURCE Commvault

Investor Relations Contact: Michael J. Melnyk, CFA, 732-870-4581, mmelnyk@commvault.com; Media Relations Contact: Miranda Foster, 732-728-5378, mfoster@commvault.com