CommVault: Fiscal 1Q11 Financial Results

CommVault Systems, Inc. announced its final financial results for the first quarter ended June 30, 2010 which are consistent with the preliminary results announced on July 12, 2010.

N. Robert Hammer, CommVault’s chairman, president and CEO, stated: "Our results for the first quarter were very disappointing given the underlying strength of our business. Our second fiscal quarter is off to a good start and our global pipeline growth is accelerating. Our products and support services remain best in class, our partners and strategic relationships are the strongest that they have ever been and we have a staffed sales force that is capable of executing in the near term. We believe that we still have the opportunity to deliver solid revenue and earnings growth for fiscal 2011."

Total revenues for the first quarter of fiscal 2011 were $66.3 million, an increase of 10% over the first quarter of fiscal 2010 and a decrease of 10% over the prior quarter. Software revenue in the first quarter of fiscal 2011 was $28.3 million, decreases of 3% year-over-year and 23% sequentially. Services revenue in the first quarter of fiscal 2011 was $38.0 million, increases of 22% year-over-year and 3% sequentially.

Income from operations (EBIT) was $3.7 million for the first quarter of fiscal 2011 compared to $6.1 million in the same period of the prior year. Non-GAAP income from operations (EBIT) was $7.6 million in the first quarter of fiscal 2011 compared to $9.3 million in the first quarter of the prior year.

For the first quarter of fiscal 2011, CommVault reported net income of $3.5 million, an increase of $1.1 million compared to the same period of the prior year. Non-GAAP net income in the first quarter of fiscal 2011 was $5.1 million, or $0.11 per diluted share, compared to $6.4 million, or $0.15 per diluted share, in the same period of the prior year.

Operating cash flow totaled $15.9 million for the first quarter of fiscal 2011 compared to $13.0 million in the first quarter of fiscal 2010. Total cash and short-term investments were $180.4 million as of June 30, 2010 compared to $174.6 million as of March 31, 2010.

On July 29, 2010, the Board of Directors authorized a $40.0 million increase to the existing stock repurchase program and extended the expiration of the stock repurchase program to March 31, 2012. As of August 3, 2010, CommVault has repurchased $53.1 million of common stock (3.5 million shares) out of the $120.0 million in total that is now authorized under its share repurchase program. As a result, CommVault may repurchase the remaining $66.9 million of its common stock under the repurchase program through March 31, 2012.

Certain executive officers, Directors and employees of CommVault currently hold approximately 513,000 in-the-money stock options that will expire in the next 12 months. CommVault expects that all of these stock options will be exercised prior to their expiration.

Recent Business Highlights:

• On July 13, 2010, CommVault announced that its Simpana software is now VMware Ready for VMware vSphere 4.1, the latest release of the company’s virtualization platform, to further reinforce the benefits of virtualized environments, including reduced costs, improved hardware utilization and increased operational efficiencies.
• On June 15, 2010, CommVault announced that it earned top honors in the Storage Magazine / SearchStorage.com Quality Awards for enterprise-class backup and recovery software. This latest accolade marks the company’s fourth trip to the winner’s circle, with end-users giving CommVault Simpana software the highest scores in four of five rating categories, including product features, product reliability, technical support and sales-force competence.

Non-GAAP net income and non-GAAP diluted EPS. Non-GAAP net income excludes non cash stock-based compensation and the related additional FICA expense 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 34% in fiscal 2011 and 32% in fiscal 2010.

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 2011 was 7% and the GAAP tax rate for the first quarter of fiscal 2010 was 60%. On an annual basis, the GAAP tax rate over the past four fiscal years was 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 was 10% for fiscal 2010 and 13% for both fiscal 2009 and fiscal 2008. CommVault expects that its cash tax rate will remain lower than its GAAP tax rate for the next few years. 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 a non-GAAP tax rate of 32% in fiscal 2010 and will measure itself to a non-GAAP tax rate of 34% in fiscal 2011.