CommVault: Fiscal 1Q15 Financial Results

(in $ million)	1Q14	1Q15	Growth
Software	65.3	72.1	10%
Services	69.1	80.6	17%
Total revenue	134.4	152.6	14%
Net income (loss)	13.4	12.7	-5%

CommVault Systems, Inc. announced its financial results for the first quarter ended June 30, 2014.

“We began fiscal year 2015 with a solid first quarter, which was highlighted by year-over-year revenue growth of 14% and year-over-year operating cash flow growth of 44%. Our year-over-year revenue growth was driven by a record percentage of enterprise software revenue (software transactions greater than $100,000), a record average enterprise deal size and solid results from our services organization,” said N. Robert Hammer, chairman, president and CEO.

“Given the many opportunities ahead of us, we will continue to aggressively invest for growth throughout the remainder of fiscal 2015, particularly in our enterprise selling capabilities, cloud business, distribution strategies as well as our increased pace of innovation. Our objective is to continue to deliver solid double digit revenue growth for fiscal 2015 and position CommVault for increased growth in fiscal 2016. Notably, we repurchased $105 million of our stock during the first quarter and also closed on a $250 million revolving credit facility,” Hammer concluded.

Total revenues for the first quarter of fiscal 2015 were $152.6 million, an increase of 14% over the first quarter of fiscal 2014 and a decrease of 3% sequentially. Software revenue in the first quarter of fiscal 2015 was $72.1 million, an increase of 10% year-over-year and a decrease of 9% sequentially. Services revenue in the first quarter of fiscal 2015 was $80.6 million, an increase of 17% year-over-year and 4% sequentially.

On a GAAP basis, income from operations (EBIT) was $18.2 million for the first quarter, a 15% decrease from the $21.4 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 5% to $33.0 million in the first quarter of fiscal 2015 compared to $31.3 million in the first quarter of the prior year. On a sequential basis, non-GAAP income from operations (EBIT) decreased 18% in the first quarter of fiscal 2015.

For the first quarter of fiscal 2015, CommVault reported net income of $12.7 million, a decrease of $0.7 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 5% to $20.9 million, or $0.44 per diluted share, from $19.9 million, or $0.40 per diluted share, in the same period of the prior year.

Operating cash flow totaled $35.4 million for the first quarter of fiscal 2015 which was an increase of $10.9 million, or 44%, compared to the first quarter of fiscal 2014. Total cash and short-term investments were $398.5 million as of June 30, 2014 compared to $482.7 million as of March 31, 2014.

During the first quarter of fiscal 2015, CommVault repurchased $105.1 million of common stock (2.1 million shares) under its share repurchase program. On July 24, 2014, the board of directors authorized a $105 million increase to the Company’s existing stock repurchase program and extended the expiration of the stock repurchase program to March 31, 2016. With the additional $105 million authorized by the board, there is $150.0 million remaining in the repurchase program.

On June 30, 2014 CommVault closed on a $250 million domestic revolving credit facility. The facility can be used for future share repurchases or for other general corporate purposes. Through July 29, 2014, it has not borrowed against this credit facility.

Recent Business Highlights:

On June 23, 2014, announced that for the fourth consecutive year it has been positioned in the Leaders quadrant of Gartner Inc.’s report, Magic Quadrant: Enterprise Backup Software and Integrated Appliances.
On June 16, 2014, announced it had won the 2014 Microsoft Server Platform Partner of the Year Award. CommVault was honored among a global field of top Microsoft Corp. partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.
On May 8, 2014, announced an extension of its 15-year relationship with Microsoft to provide new scalable solutions for managing and protecting data in Hyper-V virtual environments, managing workloads in Azure, and new integration for Exchange, Office 365, SharePoint, and SQL Server applications.

Comments

One of the most successful company in storage software since several years, CommVault saw revenue for the most recent quarter being up 3% Q/Q, 14% Y/Y.

The company had a strong quarter from enterprise deals (over $100,000) with sales increasing 27% yearly and 2% sequentially, and were 63% of 1Q15 license revenues versus 55% in 1Q14, but the number of these deals decreased 5% Y/Y and 30% Q/Q. Average enterprise deal size was $356,000 during the current quarter compared to $268,000 in the three-month period one year ago.
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For the quarter, software sales derived from indirect distribution channels decreased 6% over the prior-year period and represented 76% of software revenue. Direct revenue represented the balance and increased 141% over the prior-year period.

Revenue from U.S. operations generated 58% of total sales resulting in a 7% Y/Y increase, while revenue from international operations the balance, resulting in a 24% year-over-year increase. The comparison of the Y/Y growth in the Americas was negatively impacted in 1Q15 by the timing of recognition of several large deals in 1Q14.

CommVault added 350 new customers in the quarter. Historical customer count is now over 20,000.

Revenue transacted through its largest U.S. distributor Arrow was 33% of total revenue, growing 28% year-over-year and flat sequentially.

The software firm added 100 employees in 1Q15 total now reaching 2,073 people. This was up from 37 net new employee additions in the prior quarter. Most of the net new employees hired in 1Q15 are field facing sales and technical resources.

Next release of Simpana 10 in the next few weeks, called R2, will address enterprises and SMBs.

According to president, chairman and CEO Bob Hammer, "R2 introduced as new innovation, as well a simplified packaging, a new pricing that makes it easier for customers to acquire Simpana based solutions that solve specific issues. R2 expands the scope of Simpana from a data and information management solutions platform to now include a comprehensive management suite, which can be used in conjunction with Simpana or as a standalone function. The Simpana management suite will enable enterprises to manage all things related to the IT infrastructure, processes, mobile devices, and the cloud. The cloud lifecycle management solution which is a key new element of the suite provides capability to manage and automate key operations in data centers and public and private clouds. All of these innovations are wrapped up in an industry leading set of web-based, customizable operational monitoring and analytics tools, as well as custom workflows to automate complex operations and large on premise for cloud datacenters. Specifically, some of the new capabilities include cloud lifecycle management, standalone solutions for virtual machine management and email archiving, a standalone mobile solution with enhanced functionality, live native copy options, new security information and management, SEIM, healthcare solutions and the introduction of an appliance program. In the near future, we are planning to introduce additional R2 standalone solutions including disaster recovery, dev test, and cloud archiving."