Commvault Announces Fiscal 2023 First Quarter Financial Results
--- First quarter software and product revenue up 13% year over year; 17% constant currency ---
--- Total recurring revenue up 20% year over year; 25% constant currency ---
--- Annualized recurring revenue (ARR) up 12% year over year; 16% constant currency ---
First quarter |
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GAAP Results: |
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Revenues |
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Income from Operations (EBIT) |
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EBIT Margin |
3.8 % |
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Diluted Earnings Per Share |
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Non-GAAP Results: |
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Income from Operations (EBIT) |
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EBIT Margin |
20.5 % |
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Diluted Earnings Per Share |
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"We delivered another quarter of solid results, highlighted by double digit constant currency revenue growth," said
Total revenues for the first quarter of fiscal 2023 were
Annualized recurring revenue (ARR), which is the annualized value of all active
Software and products revenue was
Larger deal revenue represented 75% of our software and products revenue in the three months ended
Services revenue in the quarter was
On a GAAP basis, income from operations (EBIT) was
Operating cash flow totaled
During the first quarter of fiscal 2023,
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
All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, 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 Federal Insurance Contribution Act (FICA) and related payroll tax expense incurred by
Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees,
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
Due to the limitations related to the use of non-GAAP measures,
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 incorporates a non-GAAP effective tax rate of 27%.
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About
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
©1999-2022
Table I |
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Consolidated Statements of Operations |
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(In thousands, except per share data) |
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(Unaudited) |
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Three Months Ended |
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2022 |
2021 |
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Revenues: |
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Software and products |
$ 92,436 |
$ 82,162 |
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Services |
105,545 |
101,259 |
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Total revenues |
197,981 |
183,421 |
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Cost of revenues: |
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Software and products |
4,900 |
2,306 |
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Services |
28,857 |
22,969 |
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Total cost of revenues |
33,757 |
25,275 |
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Gross margin |
164,224 |
158,146 |
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Operating expenses: |
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Sales and marketing |
84,919 |
76,361 |
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Research and development |
40,113 |
36,135 |
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General and administrative |
26,976 |
26,429 |
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Restructuring |
2,132 |
1,446 |
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Depreciation and amortization |
2,635 |
2,281 |
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Total operating expenses |
156,775 |
142,652 |
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Income from operations |
7,449 |
15,494 |
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Interest income |
261 |
134 |
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Interest expense |
(105) |
— |
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Other expense, net |
(389) |
— |
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Income before income taxes |
7,216 |
15,628 |
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Income tax expense |
3,705 |
1,731 |
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Net income |
$ 3,511 |
$ 13,897 |
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Net income per common share: |
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Basic |
$ 0.08 |
$ 0.30 |
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Diluted |
$ 0.08 |
$ 0.29 |
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Weighted average common shares outstanding: |
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Basic |
44,743 |
46,180 |
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Diluted |
45,865 |
48,167 |
Table II |
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Consolidated Balance Sheets |
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(In thousands) |
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(Unaudited) |
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2022 |
2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 258,713 |
$ 267,507 |
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Trade accounts receivable, net |
181,535 |
194,238 |
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Other current assets |
24,785 |
22,336 |
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Total current assets |
465,033 |
484,081 |
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Property and equipment, net |
104,599 |
106,513 |
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Operating lease assets |
13,136 |
14,921 |
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Deferred commissions cost |
52,767 |
52,974 |
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Intangible assets, net |
3,229 |
3,542 |
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127,780 |
127,780 |
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Other assets |
26,179 |
26,269 |
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Total assets |
$ 792,723 |
$ 816,080 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
$ 884 |
$ 432 |
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Accrued liabilities |
86,397 |
121,837 |
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Current portion of operating lease liabilities |
4,113 |
4,778 |
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Deferred revenue |
264,527 |
267,017 |
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Total current liabilities |
355,921 |
394,064 |
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Deferred revenue, less current portion |
151,950 |
150,180 |
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Deferred tax liabilities, net |
799 |
808 |
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Long-term operating lease liabilities |
9,801 |
11,270 |
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Other liabilities |
3,768 |
3,929 |
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Total stockholders' equity |
270,484 |
255,829 |
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Total liabilities and stockholders' equity |
$ 792,723 |
$ 816,080 |
Table III |
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Consolidated Statements of Cash Flows |
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(In thousands) |
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(Unaudited) |
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Three Months Ended |
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2022 |
2021 |
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Cash flows from operating activities |
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Net income |
$ 3,511 |
$ 13,897 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
2,977 |
2,593 |
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Noncash stock-based compensation |
31,095 |
21,811 |
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Noncash change in fair value of equity securities |
389 |
— |
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Amortization of deferred commissions cost |
5,314 |
4,166 |
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Changes in operating assets and liabilities: |
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Trade accounts receivable, net |
9,389 |
34,054 |
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Operating lease assets and liabilities, net |
(283) |
(153) |
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Other current assets and Other assets |
(2,710) |
(7,594) |
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Deferred commissions cost |
(6,652) |
(5,941) |
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Accounts payable |
482 |
(241) |
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Accrued liabilities |
(31,366) |
(26,067) |
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Deferred revenue |
10,258 |
669 |
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Other liabilities |
29 |
17 |
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Net cash provided by operating activities |
22,433 |
37,211 |
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Cash flows from investing activities |
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Purchase of property and equipment |
(867) |
(1,442) |
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Purchase of equity securities |
(1,015) |
— |
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Net cash used in investing activities |
(1,882) |
(1,442) |
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Cash flows from financing activities |
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Repurchase of common stock |
(18,923) |
(90,048) |
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Proceeds from stock-based compensation plans |
687 |
15,435 |
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Payment of debt issuance costs |
(63) |
— |
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Net cash used in financing activities |
(18,299) |
(74,613) |
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Effects of exchange rate — changes in cash |
(11,046) |
756 |
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Net decrease in cash and cash equivalents |
(8,794) |
(38,088) |
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Cash and cash equivalents at beginning of period |
267,507 |
397,237 |
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Cash and cash equivalents at end of period |
$ 258,713 |
$ 359,149 |
Table IV |
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Reconciliation of GAAP to Non-GAAP Financial Measures and Other Financial Information |
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(In thousands, except per share data) |
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(Unaudited) |
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Three Months Ended |
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2022 |
2021 |
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Non-GAAP financial measures and reconciliation: |
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GAAP income from operations |
$ 7,449 |
$ 15,494 |
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Noncash stock-based compensation (1) |
29,808 |
21,689 |
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FICA and payroll tax expense related to stock-based compensation (2) |
910 |
963 |
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Restructuring (3) |
2,132 |
1,446 |
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Amortization of intangible assets (4) |
314 |
— |
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— |
1,406 |
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Non-GAAP income from operations |
$ 40,613 |
$ 40,998 |
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GAAP net income |
$ 3,511 |
$ 13,897 |
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Noncash stock-based compensation (1) |
29,808 |
21,689 |
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FICA and payroll tax expense related to stock-based compensation (2) |
910 |
963 |
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Restructuring (3) |
2,132 |
1,446 |
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Amortization of intangible assets (4) |
314 |
— |
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— |
1,406 |
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Non-GAAP provision for income taxes adjustment (6) |
(7,198) |
(9,375) |
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Non-GAAP net income |
$ 29,477 |
$ 30,026 |
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Diluted weighted average shares outstanding |
45,865 |
48,167 |
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Non-GAAP diluted earnings per share |
$ 0.64 |
$ 0.62 |
Three Months Ended |
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2022 |
2021 |
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Subscription software and products revenue |
$ 74,638 |
$ 49,518 |
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Perpetual software and products revenue |
17,798 |
32,644 |
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Total software and products revenue |
$ 92,436 |
$ 82,162 |
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Subscription as a % of total software and products revenue |
81 % |
60 % |
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Three Months Ended |
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2022 |
2021 |
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Subscription software and products revenue |
$ 74,638 |
$ 49,518 |
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Recurring support and services revenue |
96,182 |
92,650 |
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Total recurring revenue |
$ 170,820 |
$ 142,168 |
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Percentage of total revenues |
86 % |
78 % |
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Perpetual software and products revenue |
$ 17,798 |
$ 32,644 |
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Non-recurring services revenue |
9,363 |
8,609 |
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Total non-recurring revenue |
$ 27,161 |
$ 41,253 |
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Percentage of total revenues |
14 % |
22 % |
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Total Revenue (7) |
$ 197,981 |
$ 183,421 |
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Measures at period ending |
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Annualized Recurring Revenue (8) |
$ 532,849 |
$ 583,254 |
$ 594,485 |
Three Months Ended |
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International (10) |
Total |
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Software and Products Revenue |
$ 59,680 |
$ 32,756 |
$ 92,436 |
Customer Support Revenue |
48,031 |
33,286 |
81,317 |
Other Services Revenue |
14,898 |
9,330 |
24,228 |
Total Revenue |
$ 122,609 |
$ 75,372 |
$ 197,981 |
Three Months Ended |
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International (10) |
Total |
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Software and Products Revenue |
$ 51,787 |
$ 30,375 |
$ 82,162 |
Customer Support Revenue |
51,874 |
37,095 |
88,969 |
Other Services Revenue |
7,310 |
4,980 |
12,290 |
Total Revenue |
$ 110,971 |
$ 72,450 |
$ 183,421 |
Three Months Ended |
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Sequential |
Year Over Year |
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Non-GAAP software and products revenue reconciliation |
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GAAP software and products revenue |
$ 92,436 |
$ 92,436 |
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Adjustment for currency impact |
1,577 |
3,860 |
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Non-GAAP software and products revenue on a constant currency basis (11) |
$ 94,013 |
$ 96,296 |
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Three Months Ended |
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Sequential |
Year Over Year |
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Non-GAAP services revenue reconciliation |
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GAAP services revenue |
$ 105,545 |
$ 105,545 |
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Adjustment for currency impact |
2,123 |
4,851 |
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Non-GAAP services revenue on a constant currency basis (11) |
$ 107,668 |
$ 110,396 |
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Three Months Ended |
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Sequential |
Year Over Year |
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Non-GAAP total revenue reconciliation |
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GAAP total revenues |
$ 197,981 |
$ 197,981 |
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Adjustment for currency impact |
3,700 |
8,711 |
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Non-GAAP total revenues on a constant currency basis (11) |
$ 201,681 |
$ 206,692 |
Footnotes - Adjustments
(1) |
Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan. Those amounts are represented as follows: |
Three Months Ended |
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2022 |
2021 |
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Cost of services revenue |
$ 1,243 |
$ 1,185 |
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Sales and marketing |
11,393 |
7,308 |
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Research and development |
9,241 |
7,185 |
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General and administrative |
7,931 |
6,011 |
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Stock-based compensation expense |
$ 29,808 |
$ 21,689 |
The table above excludes stock-based compensation expense related to the Company's restructuring activities described below in |
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(2) |
Represents additional FICA and related payroll tax expenses incurred by |
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(3) |
In recent fiscal years, |
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(4) |
Represents noncash amortization of intangible assets. |
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(5) |
In connection with the acquisition of |
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(6) |
The provision for income taxes is adjusted to reflect |
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(7) |
This table includes the following financial metrics that are derived from |
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Subscription software and products revenue - The amounts included on this line include the software and product portion of a) non- |
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Perpetual software and products revenue - The amounts included on this line are primarily associated with revenue from the sale of |
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Recurring support and services revenue - The amounts included on this line consist primarily of maintenance and support revenues |
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Non-recurring services revenue - The amounts included on this line are primarily revenues associated with |
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Management believes that reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the |
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Note that nearly all of |
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(8) |
Annualized Recurring Revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting |
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ARR should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined |
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(9) |
The change in foreign exchange rates from |
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(10) |
Beginning in fiscal 2023, |
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(11) |
Revenues on a constant currency basis are calculated using the average foreign exchange rates from a previous period and applying |
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SOURCE
Investor Relations Contact: Michael J. Melnyk, CFA, 732-870-4581, mmelnyk@commvault.com; Media Relations Contact: Miranda Foster, 732-728-5378, mfoster@commvault.com