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CommVault Announces First Quarter Fiscal 2012 Financial Results
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CommVault Reports Record Quarterly Revenues of $91.5 million

OCEANPORT, N.J., Aug. 2, 2011 /PRNewswire via COMTEX/ --

CommVault (NASDAQ: CVLT) today announced its financial results for the first quarter ended June 30, 2011.

First Quarter Fiscal 2012 Highlights Include:




First Quarter

GAAP Results:



Revenues


$91.5 million

Income from Operations (EBIT)


$10.0 million

EBIT Margin


10.9%

Diluted Earnings Per Share


$0.15




Non-GAAP Results:



Income from Operations (EBIT)


$15.2 million

EBIT Margin


16.6%

Diluted Earnings Per Share


$0.21





N. Robert Hammer, CommVault's chairman, president and CEO stated, "We began fiscal year 2012 with an excellent first quarter which was highlighted by revenue growth of 38%, non-GAAP EBIT growth of 100% and operating cash flow growth of 95% over the same period a year ago. Our 38% growth in total revenues was driven by another quarter of record enterprise software deals (transactions greater than $100,000) and improved results across all geographies. Our first quarter results continue to validate the strategic relevance of our Simpana 9 data and information management software platform and our ability to penetrate large enterprise accounts. We were also successful in making substantial investments to position the company for longer term growth while delivering solid year over year improved profitability.

Total revenues for the first quarter of fiscal 2012 were $91.5 million, an increase of 38% over the first quarter of fiscal 2011 and an increase of 2% over the prior quarter. Software revenue in the first quarter of fiscal 2012 was $43.8 million, an increase of 55% year-over-year and remained relatively flat sequentially. Services revenue in the first quarter of fiscal 2012 was $47.7 million, increases of 26% year-over-year and 5% sequentially.

Income from operations (EBIT) was $10.0 million for the first quarter, a173% increase from $3.7 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 100% to $15.2 million in the first quarter of fiscal 2012 compared to $7.6 million in the first quarter of the prior year. On a sequential basis, Non-GAAP income from operations (EBIT) decreased 12% in the first quarter of fiscal 2012.

For the first quarter of fiscal 2012, CommVault reported net income of $7.0 million, an increase of $3.5 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 94% to $9.8 million, or $0.21 per diluted share, from $5.1 million, or $0.11 per diluted share, in the same period of the prior year.

Operating cash flow totaled $31.1 million for the first quarter of fiscal 2012 compared to $15.9 million in the first quarter of fiscal 2011. Total cash and short-term investments were $254.2 million as of June 30, 2011 compared to $218.3 million as of March 31, 2011.

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:

  • On July 5, 2011, CommVault announced it had won the 2011 Microsoft Server Platform Partner of the Year Award. CommVault was honored among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.
  • On May 31, 2011, CommVault announced that it had entered into a global OEM agreement with NetApp under which NetApp will integrate elements of CommVault's industry leading Simpana® 9 software with NetApp SnapShot(TM) and replication technology, under the NetApp SnapProtect® brand.
  • On May 26, 2011, CommVault announced that it its Simpana® 9 software had been named the winner of the Backup and Recovery category in the Best of TechEd 2011 awards program produced by Penton Media's Windows IT Pro, SQL Server Magazine, DevPro Connections and SharePoint Pro.

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 provide 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.

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. 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 outside 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 and 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, which are discussed above, as well as applies a non-GAAP effective tax rate of 36% in fiscal 2012 and 34% in fiscal 2011.

CommVault anticipates that in any given quarter its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rate for the first quarter of fiscal 2012 was 31% and the GAAP tax rate for the first quarter of fiscal 2011 was 7%. On an annual basis, the GAAP tax rate over the past five fiscal years was 42% for fiscal 2011, 43% for fiscal 2010, 44% for fiscal 2009, 23% for fiscal 2008 and (241%) for fiscal 2007. In addition, CommVault's cash tax rate has been significantly lower than its GAAP tax rate for the past three fiscal years. The cash tax rate over the past three fiscal years is estimated to be 11% for fiscal 2011, approximately 10% for fiscal 2010 and approximately 13% for fiscal 2009. CommVault expects that its cash tax rate will remain lower than its GAAP tax rate in fiscal 2012. 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.

CommVault measured itself to non-GAAP tax rates of 34% in fiscal 2011 and 36% in fiscal 2012. CommVault believes that the use of a non-GAAP tax rate is a useful measure as it allows management and investors to compare its operating results on a more consistent basis over the multiple periods presented in its earnings release without the impact of significant variations in the tax rate as more fully described above. It is also more reflective of the increase in the cash tax rate as it approaches the GAAP tax rate over the next one to two fiscal years. Non-GAAP EPS is derived from non-GAAP net income divided by the weighted average shares outstanding on a fully diluted basis.

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, August 2, 2011, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss its financial results. To access this call, dial 866-578-5784(domestic) or 617-213-8056 (international).Investors can also access the webcast by visiting http://us.lrd.yahoo.com/_ylt=AjHVqEx.DyUqzm6AScuEtBPjba9_/SIG=152ku4t8c/**http%3A/cts.businesswire.com/ct/CT%3Fid=smartlink%26url=http%253A%252F%252Fwww.commvault.com%26esheet=6006916%26lan=en_US%26anchor=www.commvault.com%26index=2. The live webcast and replay will be hosted under "Investor Events" located under the "Investor Relations" section of the website. An archived webcast of this conference call will also be available following the call.

About CommVault

A singular vision - a belief in a better way to address current and future data and information management needs - guides CommVault in the development of Singular Information Management® solutions for high-performance data protection, universal availability and simplified management of data on complex storage networks. CommVault's exclusive single-platform architecture gives companies unprecedented control over data growth, costs and risk. CommVault's Simpana® software modules were designed to work together seamlessly from the ground up, sharing a single code and common function set, to deliver superlative Data Backup, Archive, Replication, Search and Resource Management capabilities. More companies every day join those who have discovered the unparalleled efficiency, performance, reliability, and control only CommVault can offer. Information about CommVault is available at http://www.commvault.com/. CommVault's corporate headquarters is located in Oceanport, New Jersey in the United States.

Safe Harbor Statement

This press release contains 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 and others. 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.

CommVault, CommVault and logo, the "CV" logo, CommVault Systems, Solving Forward, SIM, Singular Information Management, Simpana, CommVault Galaxy, Unified Data Management, QiNetix, Quick Recovery, QR, CommNet, Farline, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, Recovery Director, CommServe, CommCell, SnapProtect, ROMS 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 Income

(In thousands, except per share data)

(Unaudited)



Three Months Ended

June 30,


2011


2010







Revenues:






Software

$

43,801


$

28,295

Services


47,726



38,005

Total revenues


91,527



66,300







Cost of revenues:






Software


617



556

Services


11,426



8,964

Total cost of revenues


12,043



9,520







Gross margin


79,484



56,780







Operating expenses:






Sales and marketing


49,758



35,826

Research and development


9,271



8,640

General and administrative


9,417



7,749

Depreciation and amortization


1,025



895







Income from operations


10,013



3,670

Interest expense


(26)



(27)

Interest income


165



119







Income before income taxes


10,152



3,762

Income tax expense


3,113



264







Net income

$

7,039


$

3,498







Net income per common share:






Basic

$

0.16


$

0.08

Diluted

$

0.15


$

0.08







Weighted average common shares outstanding:






Basic


44,171



43,168

Diluted


47,268



46,098








Table II

CommVault Systems, Inc.


Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)



June 30,


March 31,


2011


2011





Assets




Current assets:




Cash and cash equivalents

$ 251,011


$ 217,170

Short-term investments

3,146


1,150

Trade accounts receivable, net

59,789


73,891

Prepaid expenses and other current assets

9,811


8,476

Deferred tax assets, net

12,527


12,043

Total current assets

336,284


312,730





Deferred tax assets, net

21,610


21,736

Property and equipment, net

6,859


6,400

Other assets

2,126


1,633

Total assets

$ 366,879


$ 342,499





Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$ 2,191


$ 1,658

Accrued liabilities

34,487


33,475

Deferred revenue

103,071


98,217

Total current liabilities

139,749


133,350





Deferred revenue, less current portion

15,036


14,695

Other liabilities

6,707


6,324





Total stockholders' equity

205,387


188,130

Total liabilities and stockholders' equity

$ 366,879


$ 342,499


Table III

CommVault Systems, Inc.


Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months Ended
June 30,


2011


2010







Cash flows from operating activities






Net income

$

7,039


$

3,498

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






Depreciation and amortization


1,063



923

Noncash stock-based compensation


4,451



3,585

Excess tax benefits from stock-based compensation


(1,602)



(554)

Deferred income taxes


(1,491)



(448)







Changes in operating assets and liabilities:






Trade accounts receivable


14,487



11,372

Prepaid expenses and other current assets


(1,312)



(2,071)

Other assets


(473)



(254)

Accounts payable


527



880

Accrued liabilities


3,532



(1,707)

Deferred revenue


4,516



1,735

Other liabilities


356



(1,040)

Net cash provided by operating activities


31,093



15,919







Cash flows from investing activities






Purchase of short term investments


(3,146)



(2,501)

Proceeds from maturity of short-term investments


1,150



--

Purchase of property and equipment


(1,518)



(773)

Net cash used in investing activities


(3,514)



(3,274)







Cash flows from financing activities






Repurchase of common stock


--



(12,905)

Proceeds from the exercise of stock options


4,202



4,409

Excess tax benefits from stock-based compensation


1,602



554

Net cash provided by (used in) financing activities


5,804



(7,942)







Effects of exchange rate -- changes in cash


458



(1,331)







Net increase in cash and cash equivalents


33,841



3,372

Cash and cash equivalents at beginning of period


217,170



169,518







Cash and cash equivalents at end of period

$

251,011


$

172,890














Table IV

CommVault Systems, Inc.


Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)



Three Months Ended

June 30,


2011


2010







Non-GAAP financial measures and reconciliation:






GAAP income from operations

$

10,013


$

3,670

Noncash stock-based compensation (1)


4,451



3,585

FICA expense on stock option exercises and vesting on restricted stock awards (2)


750



341

Non-GAAP income from operations

$

15,214


$

7,596







GAAP net income

$

7,039


$

3,498

Noncash stock-based compensation (1)


4,451



3,585

FICA expense on stock option exercises and vesting on restricted stock awards (2)


750



341

Non-GAAP provision for income taxes adjustment (3)


(2,414)



(2,350)

Non-GAAP net income

$

9,826


$

5,074







Diluted weighted average shares outstanding


47,268



46,098







Non-GAAP diluted net income per share

$

0.21


$

0.11



Footnotes - Adjustments


(1) Represents noncash stock-based compensation charges associated with stock options and restricted stock units

granted as follows:




Three Months Ended June 30,


2011


2010





Cost of services revenue

$ 102


$ 101

Sales and marketing

2,093


1,599

Research and development

475


407

General and administrative

1,781


1,478

Stock-based compensation expense

$ 4,451


$ 3,585


(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) The provision for income taxes is adjusted to reflect CommVault's estimated non-GAAP effective tax rate of

approximately 36% in fiscal 2012 and 34% in fiscal 2011.


SOURCE CommVault