EX-99.1 2 q3fy24pressrelease.htm EX-99.1 Document
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Investor Relations Contact:    
Michael J. Melnyk, CFA
732-870-4581
mmelnyk@commvault.com


Commvault Announces Fiscal 2024 Third Quarter Financial Results


Tinton Falls, N.J. – January 30, 2024 – Commvault [Nasdaq: CVLT] today announced its financial results for the fiscal third quarter ended December 31, 2023.

“This was one of the strongest quarters in our history with double digit ARR and revenue growth, and robust free cash flow generation,” said Sanjay Mirchandani, President and CEO. “As enterprises face non-stop cyberattacks and threats, the introduction of our new Commvault Cloud platform gives our customers groundbreaking strategies to stay resilient and also positions us for accelerated growth in fiscal year 2025.”

Fiscal 2024 Third Quarter Highlights -
•Total revenues were $216.8 million, up 11% year over year
•Total ARR1 grew to $752 million, up 17% year over year
•Subscription revenue was $114.2 million, up 31% year over year
•Subscription ARR1 grew to $571 million, up 29% year over year
•Income from operations (EBIT) was $21.1 million, an operating margin of 9.7%
•Non-GAAP EBIT2 was $46.7 million, an operating margin of 21.5%
•Operating cash flow was $44.4 million, with free cash flow2 of $42.6 million
•Third quarter share repurchases were $51.3 million, or approximately 711,000 shares of common stock











Notes are contained on the last page of this Press Release.
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Financial Outlook for Fourth Quarter and Full Year Fiscal 2024 -
We are providing the following guidance for the fourth quarter of fiscal year 2024:
•Total revenues are expected to be between $210 million and $214 million
•Subscription revenue is expected to be between $111 million and $115 million
•Non-GAAP operating margin2 is expected to be between 20% to 21%

We are providing the following updated guidance for the full fiscal year 2024:
•Total revenues are expected to be between $826 million and $830 million
•Total ARR1 is expected to grow 15% year over year
•Subscription revenue is expected to be between $420 million and $424 million
•Subscription ARR1 is expected to grow 25% year over year
•Non-GAAP operating margin2 is expected to grow between 50 to 100 basis points year over year
•Free cash flow2 is expected to be approximately $170 million
The above statements are based on the incorporation of actual third quarter results and current targets. These statements are forward looking and made pursuant to the safe harbor provisions discussed in detail below. We do not undertake any obligation to update these forward-looking statements. Actual results may differ materially from anticipated results.

Conference Call Information
Commvault will host a conference call today, January 30, 2024 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results. The live webcast and call dial-in numbers can be accessed by registering 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 (NASDAQ: CVLT) is the gold standard in cyber resilience, helping more than 100,000 organizations to uncover, take action, and rapidly recover from cyberattacks—keeping data safe and businesses resilient and moving forward. Today, Commvault offers the only cyber resilience platform that combines the best data security and rapid recovery at enterprise scale across any workload, anywhere with advanced AI-driven automation—at the lowest TCO.


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 on Form 10-K and "Item 1A. Risk Factors" in our most recent quarterly report on 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.









Notes are contained on the last page of this Press Release.
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Revenue Overview
($ in thousands)
Q3'23Q4'23Q1'24Q2'24Q3'24
Revenue Summary:
Subscription$87,380 $94,537 $97,290 $97,757 $114,247 
Perpetual license19,728 17,561 13,155 14,388 14,874 
Customer support77,665 77,335 76,915 77,019 76,812 
Other services10,301 14,045 10,790 11,833 10,875 
Total revenues$195,074 $203,478 $198,150 $200,997 $216,808 

Q3'23Q4'23Q1'24Q2'24Q3'24
Y/Y Growth:
Subscription13 %9 %11 %25 %31 %
Perpetual license(30)%(25)%(26)%(27)%(25)%
Customer support(10)%(9)%(5)%(1)%(1)%
Other services(8)%28 %(4)%(1)%6 %
Total revenues(4)%(1)%— %7 %11 %

Constant Currency
($ in thousands)

The constant currency impact is calculated using the average foreign exchange rates from the prior year period and applying these rates to foreign-denominated revenues in the current corresponding period. 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. The non-GAAP financial measures presented in this press release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
SubscriptionPerpetual licenseCustomer supportOther servicesTotal
Q3'23 Revenue As Reported (GAAP)
$87,380$19,728$77,665$10,301$195,074
Q3'24 Revenue As Reported (GAAP)
$114,247$14,874$76,812$10,875$216,808
% Change Y/Y (GAAP)31 %(25)%(1)%6 %11 %
Constant Currency Impact$(1,061)$(221)$(1,068)$(87)$(2,437)
% Change Y/Y Constant Currency30 %(26)%(2)%5 %10 %

Revenues by Geography
($ in thousands)

Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia, and China.
Q3'23Q4'23Q1'24Q2'24Q3'24
RevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y Growth
Americas$108,107 (9)%$122,337 (1)%$122,124 — %$120,300 4 %$125,052 16 %
International86,967 3 %81,141 (1)%76,026 1 %80,697 12 %91,756 6 %
Total revenues$195,074 (4)%$203,478 (1)%$198,150 — %$200,997 7 %$216,808 11 %

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Total ARR and Subscription ARR1
($ in thousands)

Q3'23Q4'23Q1'24Q2'24Q3'24
Total ARR1
$640,731 $668,411 $686,028 $711,462 $752,480 
Subscription ARR1
$442,684 $477,085 $499,580 $529,590 $571,125 

Income from Operations (EBIT)
•Income from operations (EBIT) was $21.1 million, an operating margin of 9.7%
•Non-GAAP EBIT2 was $46.7 million, an operating margin of 21.5%

GAAP and Non-GAAP Net Income2
•GAAP net income was $17.1 million, or $0.38 per diluted share
•Non-GAAP net income2 was $35.0 million, or $0.78 per diluted share

Cash Summary and Share Repurchases
•Cash flow from operations was $44.4 million in the third quarter
•As of December 31, 2023, ending cash and cash equivalents was approximately $284.3 million
•During the third quarter, Commvault repurchased $51.3 million, or approximately 711,000 shares, of common stock at an average share price of approximately $72.13 per share






















Notes are contained on the last page of this Press Release.
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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,
 2023202220232022
Revenues:
Subscription$114,247 $87,380 $309,294 $253,247 
Perpetual license14,874 19,728 42,417 57,357 
Customer support76,812 77,665 230,746 236,978 
Other services10,875 10,301 33,498 33,530 
Total revenues216,808 195,074 615,955 581,112 
Cost of revenues:
Subscription15,914 11,682 42,920 31,560 
Perpetual license798 638 1,852 1,920 
Customer support15,091 14,611 44,946 45,067 
Other services7,258 7,607 22,746 22,050 
Total cost of revenues39,061 34,538 112,464 100,597 
Gross margin177,747 160,536 503,491 480,515 
Operating expenses:
Sales and marketing91,697 87,343 260,536 253,561 
Research and development34,392 32,505 97,084 109,671 
General and administrative29,098 23,983 84,059 76,512 
Restructuring — 9,228 — 11,360 
Depreciation and amortization1,509 2,459 4,647 7,631 
Total operating expenses156,696 155,518 446,326 458,735 
Income from operations21,051 5,018 57,165 21,780 
Interest income1,381 364 3,530 916 
Interest expense(103)(105)(311)(315)
Other income (expense), net(13)123 174 (112)
Income before income taxes22,316 5,400 60,558 22,269 
Income tax expense5,176 5,710 17,772 14,550 
Net income (loss)$17,140 $(310)$42,786 $7,719 
Net income (loss) per common share:
Basic$0.39 $(0.01)$0.97 $0.17 
Diluted$0.38 $(0.01)$0.95 $0.17 
Weighted average common shares outstanding:
Basic43,862 44,712 43,956 44,738 
Diluted44,799 44,712 45,020 45,810 






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Table II
Commvault Systems, Inc.

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 December 31,March 31,
 20232023
ASSETS
Current assets:
Cash and cash equivalents$284,310 $287,778 
Trade accounts receivable, net223,710 210,441 
Assets held for sale38,680 38,680 
Other current assets19,834 14,015 
Total current assets566,534 550,914 
Property and equipment, net7,933 8,287 
Operating lease assets11,693 11,784 
Deferred commissions cost61,128 59,612 
Intangible assets, net1,354 2,292 
Goodwill127,780 127,780 
Other assets27,652 21,905 
Total assets$804,074 $782,574 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$214 $108 
Accrued liabilities101,913 97,888 
Current portion of operating lease liabilities5,178 4,518 
Deferred revenue325,500 307,562 
Total current liabilities432,805 410,076 
Deferred revenue, less current portion184,251 174,393 
Deferred tax liabilities, net736 134 
Long-term operating lease liabilities7,946 8,260 
Other liabilities3,733 3,613 
Total stockholders’ equity174,603 186,098 
Total liabilities and stockholders’ equity$804,074 $782,574 







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Table III
Commvault Systems, Inc.

Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Three Months Ended December 31,Nine Months Ended December 31,
 2023202220232022
Cash flows from operating activities
Net income (loss)$17,140 $(310)$42,786 $7,719 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization1,538 2,801 4,734 8,656 
Noncash stock-based compensation24,602 24,645 71,941 81,067 
Noncash change in fair value of equity securities13 (122)(174)112 
Amortization of deferred commissions cost6,795 5,777 19,544 16,533 
Changes in operating assets and liabilities:
Trade accounts receivable, net(28,921)(33,642)(20,676)(17,779)
Operating lease assets and liabilities, net354 120 419 (61)
Other current assets and Other assets5,802 3,443 1,970 2,982 
Deferred commissions cost(7,980)(9,646)(20,541)(22,663)
Accounts payable76 262 108 49 
Accrued liabilities4,815 11,501 852 (17,103)
Deferred revenue20,697 25,343 22,443 41,807 
Other liabilities(492)6 407 1,136 
Net cash provided by operating activities44,439 30,178 123,813 102,455 
Cash flows from investing activities
Purchase of property and equipment(1,814)(805)(3,227)(2,186)
Purchase of equity securities(490)(168)(1,062)(1,961)
Net cash used in investing activities(2,304)(973)(4,289)(4,147)
Cash flows from financing activities
Repurchase of common stock(51,298)(31,344)(133,655)(90,131)
Proceeds from stock-based compensation plans1,385 1,933 7,753 9,292 
Payment of debt issuance costs— — — (63)
Net cash used in financing activities(49,913)(29,411)(125,902)(80,902)
Effects of exchange rate — changes in cash8,801 11,190 2,910 (11,444)
Net increase (decrease) in cash and cash equivalents1,023 10,984 (3,468)5,962 
Cash and cash equivalents at beginning of period283,287 262,485 287,778 267,507 
Cash and cash equivalents at end of period$284,310 $273,469 $284,310 $273,469 

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Table IV
Commvault Systems, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Non-GAAP financial measures and reconciliation:
GAAP income from operations$21,051 $5,018 $57,165 $21,780 
Noncash stock-based compensation3
24,602 23,626 71,941 78,761 
FICA and payroll tax expense related to stock-based compensation4
727 327 2,212 1,662 
Restructuring5
— 9,228 — 11,360 
Amortization of intangible assets6
312 312 938 938 
Non-GAAP income from operations$46,692 $38,511 $132,256 $114,501 
GAAP net income (loss)$17,140 $(310)$42,786 $7,719 
Noncash stock-based compensation3
24,602 23,626 71,941 78,761 
FICA and payroll tax expense related to stock-based compensation4
727 327 2,212 1,662 
Restructuring5
— 9,228 — 11,360 
Amortization of intangible assets6
312 312 938 938 
Non-GAAP provision for income taxes adjustment7
(7,772)(4,791)(18,853)(16,497)
Non-GAAP net income$35,009 $28,392 $99,024 $83,943 
Diluted weighted average shares outstanding44,79945,68145,02045,810
Non-GAAP diluted earnings per share$0.78 $0.62 $2.20 $1.83 



Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Non-GAAP free cash flow reconciliation:
GAAP cash provided by operating activities$44,439 $30,178 $123,813 $102,455 
Purchase of property and equipment(1,814)(805)(3,227)(2,186)
Non-GAAP free cash flow$42,625 $29,373 $120,586 $100,269 










Notes are contained on the last page of this Press Release.
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Use of Non-GAAP Financial Measures
Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations (EBIT), non-GAAP income from operations margin, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP free cash flow, annualized recurring revenue (ARR) and subscription ARR. This 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 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 its 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, 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 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 Commvault when employees exercise in the money stock options or vest in restricted stock awards. Commvault has also excluded restructuring costs and noncash amortization of intangible assets 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.

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
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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. The following table presents the stock-based compensation expense included in cost of revenues, sales and marketing, research and development and general and administrative ($ in thousands):

 
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Cost of revenues$1,935 $1,383 $5,224 $3,852 
Sales and marketing10,189 10,479 29,834 32,037 
Research and development5,451 5,988 16,183 23,022 
General and administrative7,027 5,776 20,700 19,850 
Stock-based compensation expense
$24,602 $23,626 $71,941 $78,761 

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. Due to the limitations related to the use of non-GAAP measures, Commvault’s management assists investors by providing a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Commvault's 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 incorporates 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 diluted EPS.

Non-GAAP free cash flow. Commvault defines this non-GAAP financial measure as net cash provided by operating activities less purchases of property and equipment. Commvault considers non-GAAP free cash flow a useful metric for Commvault management and its investors in evaluating Commvault's ability to generate cash from its business operations. 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 free cash flow.

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Notes
1.Annualized Recurring Revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes the following contract types: subscription (including term licenses, SaaS and utility software), maintenance contracts related to perpetual licenses, other extended maintenance contracts (enterprise support), and managed services. It excludes any element of the arrangement that is not expected to recur, primarily perpetual licenses and most professional services. Subscription ARR includes only term licenses, SaaS and utility software arrangements. Contracts are annualized by dividing the total contract value by the number of days in the contract term, then multiplying by 365.
ARR should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. Management believes that reviewing this metric, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault's recurring revenue streams presented on an annualized basis.

2.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 under the heading “Use of Non-GAAP Financial Measures.”

3.Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan, exclusive of stock-based compensation expense related to Commvault's restructuring activities described below in note 5.

4.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.

5.These restructuring charges relate primarily to severance and related costs associated with headcount reductions and stock-based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plan.

6.Represents noncash amortization of intangible assets.

7.The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of 27%.
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