Commvault Announces Fiscal 2020 Third Quarter Financial Results

January 29, 2020
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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