CommVault Announces Third Quarter Fiscal 2008 Financial Results

February 5, 2008

Third Quarter Fiscal 2008 Highlights Include:

  • Revenues of $50.3 million
  • Non-GAAP EBIT of $8.6 million and Non-GAAP EBIT Margin of 17.1%
  • GAAP EBIT of $6.3 million and GAAP EBIT Margin of 12.5%
  • Non-GAAP Diluted Earnings Per Share of $0.15
  • GAAP Diluted Earnings Per Share of $0.18

OCEANPORT, N.J.--(BUSINESS WIRE)--Feb. 5, 2008--CommVault(R) (NASDAQ:CVLT) today announced its financial results for the third fiscal quarter ended December 31, 2007.

N. Robert Hammer, CommVault's chairman, president and CEO, stated, "We had another record quarter as we continue to make progress in achieving our long-term strategic objectives. We made excellent progress in the quarter of increasing our market penetration related to both our emerging products as well as our core backup products. We will continue to make the necessary investment in product development, support and distribution to ensure that we remain a leading innovator of information management technologies and services."

Total revenues in the third quarter of fiscal 2008 were a record $50.3 million, an increase of 31% over the third quarter of fiscal 2007 and 6% over the prior quarter. Software revenue in the third quarter of fiscal 2008 was $27.0 million, up 28% year-over-year and 2% sequentially. Services revenue in the third quarter of fiscal 2008 was $23.3 million, up 36% year-over-year and 12% sequentially.

Non-GAAP income from operations (EBIT) increased 51% to $8.6 million in the third quarter of fiscal 2008 compared to $5.7 million in the third quarter of the prior year. EBIT determined in accordance with GAAP was $6.3 million for the third quarter, a 48% increase from $4.2 million in the same period of the prior year.

For the third quarter of fiscal 2008, non-GAAP net income increased 49% to $6.9 million, or $0.15 per diluted share, from $4.6 million or $0.10 per diluted share in the same period of the prior year. CommVault reported GAAP net income for the quarter of $8.2 million, an increase of $3.6 million compared to the same period of the prior year. GAAP net income for the quarter includes a tax benefit of $0.9 million primarily due to the reversal of deferred tax valuation allowances in certain international jurisdictions.

Operating cash flow totaled $13.1 million for the third quarter of fiscal 2008. Total cash and cash equivalents as of December 31, 2007 were $95.1 million.

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:

    --  Consistent with its investment strategy, CommVault announced
        its first software as a service product, Remote Operations
        Management Service ("ROMS"). ROMS is an innovative,
        subscription software-as-a-service ("SaaS") offering. It is a
        web-based integrated support automation system that provides
        customers with overnight, weekend and holiday monitoring.
        Through a user-friendly, intuitive web dashboard, users can
        access and track real-time alert, trend and storage usage
        reports anytime, anywhere. CommVault believes that ROMS will
        help broaden its leadership position in providing
        highly-differentiated, world-class support to its customers.

    --  CommVault has entered into a collaborative reseller agreement
        with Sun Microsystems, Inc., which will allow CommVault to
        broaden it distribution reach and provide customers with
        advanced data management solutions for enterprise computing
        environments. Sun will distribute on a world-wide basis the
        CommVault Simpana(TM) 7.0 data and information management
        software suite for companies running on Sun Microsystems
        64-bit server and storage systems.

    --  CommVault's Board of Directors approved a share repurchase
        program authorizing the repurchase of up to $40 million of its
        common stock over the next 12 months.

    Fiscal 2008 Guidance

For the fiscal year ending March 31, 2008, CommVault currently expects:

    --  Total revenues in the range of $195 million to $196 million.

    --  Non-GAAP gross margins of 86.0% to 86.3%.

    --  Non-GAAP operating income margins of 16.7% to 17.0%.

    --  Non-GAAP diluted EPS in the range of $0.56 per share to $0.58
        per share using an effective tax rate of approximately 28% and
        a weighted average diluted share count of approximately 45.5
        million to 46.0 million.

    --  An actual cash tax rate will be approximately 10% based on
        current assumptions.

The non-GAAP gross margin percentages above exclude approximately $0.2 million related to noncash stock-based compensation charges. The non-GAAP diluted EPS guidance excludes approximately $0.12 per share to $0.14 per share of noncash stock-based compensation charges, net of non-GAAP income tax benefits of approximately $0.05 per share, and any additional FICA expense that will be incurred by CommVault when employees exercise in the money stock options.

Use of Non-GAAP Financial Measures

CommVault has provided in this press release selected financial information that has not been prepared in accordance with GAAP. CommVault uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, when used as a supplement to GAAP 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.

The non-GAAP financial results discussed above excludes noncash stock-based compensation charges, additional FICA expense incurred by CommVault when employees exercise in the money stock options and accretion of preferred stock dividends. In addition, the non-GAAP financial results apply an effective tax rate of 28% in fiscal 2008 and 25% starting in the second quarter of fiscal 2007, which resulted in an estimated effective tax rate of approximately 20% for fiscal 2007.

Non-GAAP financial measures should not be considered in isolation from, or 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.

Conference Call Information

CommVault will host a conference call today, February 5, 2008, at 5:00 p.m. EST to discuss its financial results. To access this call, dial 800-591-6942 (domestic) or 617-614-4909 (international). Additionally, a live web cast of the conference call will be hosted under "Webcasts and Presentations" located under the "Investor Relations" section on CommVault's Web site www.commvault.com.

An archived web cast of this conference call will also be available on the "Investor Relations" section of CommVault's Web site, www.commvault.com.

About CommVault

A singular vision - a belief in a better way to address current and future data management needs - guides CommVault in the development of Singular Information Management(R) 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(TM) software suite of products was designed to work together seamlessly from the ground up, sharing a single code and common function set, to deliver superlative Data Protection, 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 www.commvault.com. CommVault's corporate headquarters is located in Oceanport, New Jersey in the United States. (cvlt-f)

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.

(C)1999-2008 CommVault Systems, Inc. All rights reserved. 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, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, Recovery Director, CommServe, and CommCell, 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   Nine Months Ended
                                 December 31,         December 31,
                              ------------------- --------------------
                                   2007     2006      2007       2006
                              --------- --------- --------- ----------

Revenues:
Software                       $ 26,994 $ 21,132  $ 77,630  $  60,180
Services                         23,304   17,198    64,063     48,310
                              --------- --------- --------- ----------
Total revenues                   50,298   38,330   141,693    108,490

Cost of revenues:
Software                            648      528     1,651      1,191
Services                          6,315    5,102    17,775     14,459
                              --------- --------- --------- ----------
Total cost of revenues            6,963    5,630    19,426     15,650
                              --------- --------- --------- ----------
Gross margin                     43,335   32,700   122,267     92,840

Operating expenses:
Sales and marketing              23,420   17,379    67,735     48,958
Research and development          6,818    5,851    19,944     17,369
General and administrative        6,010    4,470    17,266     13,734
Depreciation and amortization       795      753     2,217      1,832
                              --------- --------- --------- ----------
Income from operations            6,292    4,247    15,105     10,947

Interest expense                     --     (167)     (114)      (184)
Interest income                     998      665     2,701      1,865
                              --------- --------- --------- ----------
Income before income taxes        7,290    4,745    17,692     12,628

Income tax benefit (expense)        908     (111)   (3,077)      (222)
                              --------- --------- --------- ----------

Net income                        8,198    4,634    14,615     12,406

Less: accretion of preferred
 stock dividends                     --       --        --     (2,818)
Less: accretion of fair value
 of preferred stock
upon conversion                      --       --        --   (102,745)
                              --------- --------- --------- ----------
Net income (loss) attributable
 to common stockholders        $  8,198 $  4,634  $ 14,615  $ (93,157)
                              ========= ========= ========= ==========

Net income (loss) attributable
 to common stockholders per
 share:
Basic                          $   0.19 $   0.11  $   0.34  $   (3.44)
                              ========= ========= ========= ==========
Diluted                        $   0.18 $   0.10  $   0.32  $   (3.44)
                              ========= ========= ========= ==========

Weighted average shares used
 in computing per share
 amounts:
Basic                            43,518   41,676    42,991     27,052
                              ========= ========= ========= ==========
Diluted                          46,136   46,164    45,593     27,052
                              ========= ========= ========= ==========
                                                             Table II

                       CommVault Systems, Inc.

                Condensed Consolidated Balance Sheets
                           (In thousands)
                             (Unaudited)

                                             December 31,  March 31,
                                                 2007         2007
                                             ------------- ----------

Assets
Current assets:
 Cash and cash equivalents                        $ 95,108   $ 65,001
 Trade accounts receivable, net                     33,786     22,044
 Prepaid expenses and other current assets           3,685      3,657
 Deferred tax assets                                 9,618      9,616
                                             ------------- ----------
Total current assets                               142,197    100,318

Deferred tax assets, net                            45,550     42,543
Property and equipment, net                          5,492      4,624
Other assets                                           851        554
                                             ------------- ----------
Total assets                                      $194,090   $148,039
                                             ============= ==========

Liabilities and stockholders' equity
Current liabilities:
 Accounts payable                                 $  1,672   $  1,500
 Accrued liabilities                                19,039     20,215
 Term loan                                               -      7,500
 Deferred revenue                                   46,237     36,214
                                             ------------- ----------
Total current liabilities                           66,948     65,429

Deferred revenue, less current portion               6,130      4,284
Other liabilities                                    6,323          4

Total stockholders' equity                         114,689     78,322
                                             ------------- ----------
Total liabilities and stockholders' equity        $194,090   $148,039
                                             ============= ==========
                                                             Table III

                       CommVault Systems, Inc.

                Consolidated Statements of Cash Flows
                            (In thousands)
                             (Unaudited)

                                                   Nine Months Ended
                                                      December 31,
                                                  --------------------
                                                    2007       2006
                                                  --------- ----------

Cash flows from operating activities
Net income                                        $ 14,615  $  12,406
Adjustments to reconcile net income to net cash
 provided by operating activities:
Depreciation and amortization                        2,326      2,045
 Noncash stock-based compensation                    6,233      4,326
 Excess tax benefits from stock-based
  compensation                                      (4,497)        --
 Deferred income taxes                              (3,647)        --

 Changes in operating assets and liabilities:
Accounts receivable                                (10,935)    (3,499)
  Prepaid expenses and other current assets            313       (323)
  Other assets                                        (182)      (160)
  Accounts payable                                     122       (316)
  Accrued liabilities                                8,239      3,442
  Deferred revenue and other liabilities            10,807      4,588
                                                  --------- ----------
Net cash provided by operating activities           23,394     22,509

Cash flows from investing activities
Purchase of property and equipment                  (3,083)    (3,148)
                                                  --------- ----------
Net cash used in investing activities               (3,083)    (3,148)

Cash flows from financing activities
Proceeds from the exercise of stock options          8,108        343
Net proceeds from follow-on public offering of
 common stock                                        4,315         --
Excess tax benefits from stock-based compensation    4,497         --
Repayments on term loan                             (7,500)    (6,250)
Proceeds from term loan                                 --     15,000
Payments to Series A through E preferred
 stockholders upon conversion to common stock           --   (101,833)
Net proceeds from initial public offering and
 concurrent private placement                           --     82,242
                                                  --------- ----------
Net cash provided by (used in) financing
 activities                                          9,420    (10,498)

Effects of exchange rate -- changes in cash            376       (408)
                                                  --------- ----------

Net increase in cash and cash equivalents           30,107      8,455
Cash and cash equivalents at beginning of period    65,001     48,039
                                                  --------- ----------

Cash and cash equivalents at end of period        $ 95,108  $  56,494
                                                  ========= ==========
                                                              Table IV

                       CommVault Systems, Inc.

        Reconciliation of GAAP to Non-GAAP Financial Measures
                (In thousands, except per share data)
                             (Unaudited)

                                 Three Months Ended Nine Months Ended
                                    December 31,       December 31,
                                 ------------------ ------------------
                                    2007     2006     2007     2006
                                 --------- -------- -------- ---------
Non-GAAP financial measures and
 reconciliation:
 GAAP income from operations      $ 6,292  $ 4,247  $15,105  $ 10,947
  Noncash stock-based
   compensation (1)                 2,207    1,445    6,233     4,326
     FICA expense on stock option
exercises (2)                         112       --      504        --
                                 --------- -------- -------- ---------
 Non-GAAP income from operations  $ 8,611  $ 5,692  $21,842  $ 15,273
                                 ========= ======== ======== =========

 GAAP net income (loss)
  attributable to common
  stockholders                    $ 8,198  $ 4,634  $14,615  $(93,157)
   Noncash stock-based
    compensation (1)                2,207    1,445    6,233     4,326
   FICA expense on stock option
exercises (2)                         112       --      504        --
   Accretion of preferred stock
dividends (3)                          --       --       --     2,818
   Accretion of fair value of
    preferred stock upon
    conversion (4)                     --       --       --   102,745
   Non-GAAP provision for income
    taxes adjustment (5)           (3,598)  (1,437)  (3,763)   (2,866)
                                 --------- -------- -------- ---------
 Non-GAAP net income attributable
  to common stockholders          $ 6,919  $ 4,642  $17,589  $ 13,866
                                 ========= ======== ======== =========

 GAAP diluted weighted average
  shares outstanding               46,136   46,164   45,593    27,052
    Conversion of Series A
     through E preferred stock         --       --       --     4,122
  Conversion of Series AA, BB and
   CC preferred stock                  --       --       --     6,305
   Dilutive effect of stock
    options and warrants               --       --       --     3,713
                                 --------- -------- -------- ---------
 Non-GAAP diluted weighted
  average shares outstanding       46,136   46,164   45,593    41,192
                                 ========= ======== ======== =========

 Non-GAAP diluted net income per
  share                           $  0.15  $  0.10  $  0.39  $   0.34
                                 ========= ======== ======== =========

Footnotes - Adjustments

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


                                Three Months Ended  Nine Months Ended
                                   December 31,       December 31,
                                ------------------ ------------------
                                      2007   2006       2007    2006
                                ----------- ------ ---------- -------

Cost of services revenue            $    44 $   24    $   119 $    75
Sales and marketing                   1,073    701      2,990   1,978
Research and development                304    182        884     564
General and administrative              786    538      2,240   1,709
                                ----------- ------ ---------- -------
Total noncash stock-based
compensation expense                $ 2,207 $1,445    $ 6,233 $ 4,326
                                =========== ====== ========== =======

(2) Represents additional FICA expenses incurred by CommVault when employees exercise in the money stock options.

(3) Represents accretion of preferred stock dividends due on CommVault's Series A through E cumulative redeemable convertible preferred stock prior to its conversion to common stock on September 27, 2006.

(4) Represents accretion of fair value of Series A through E cumulative redeemable convertible preferred stock upon conversion to common stock on September 27, 2006.

(5) The provision for income taxes is adjusted to reflect CommVault's estimated non-GAAP effective tax rate of approximately 28% in fiscal 2008 and 25% starting in the second quarter of fiscal 2007 which resulted in an estimated effective tax rate of approximately 20% for fiscal 2007.

CONTACT: CommVault
Investor Relations:
Michael Picariello, 732-728-5380
ir@commvault.com

SOURCE: CommVault