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CommVault Announces Third Quarter Fiscal 2013 Financial Results

January 30, 2013

OCEANPORT, N.J., Jan. 30, 2013 /PRNewswire/ –

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    Third Quarter Fiscal 2013 Highlights Include:

                                                  Third Quarter
                                                  -------------
    GAAP Results:
    Revenues                                              $128.1 million
    Income from Operations (EBIT)                          $20.2 million
    EBIT Margin                                                     15.8%
    Diluted Earnings Per Share                                     $0.25

    Non-GAAP Results:
    Income from Operations (EBIT)                          $29.8 million
    EBIT Margin                                                     23.3%
    Diluted Earnings Per Share                                     $0.39

CommVault (NASDAQ: CVLT) announced today its financial results for the third quarter ended December 31, 2012.

N. Robert Hammer, CommVault’s chairman, president and CEO stated, “We achieved excellent third quarter financial performance which was highlighted by record results in quarterly revenues of $128.1 million, non-GAAP operating income of $29.8 million and non-GAAP EPS of $0.39. Our year-over-year software revenue growth of 28% was driven by an all-time high volume of enterprise deals (transactions greater than $100,000) and outstanding execution from all of our major geographic operations. During the third quarter, we continued to make significant investments to position the company for long term growth while still delivering record non-GAAP operating profits. We are in an excellent position to continue to accelerate our pace of innovation in our addressable markets to provide unique value to our customers, while continuing to deliver above market financial results on a consistent basis.”

Total revenues for the third quarter of fiscal 2013 were $128.1 million, an increase of 24% over the third quarter of fiscal 2012 and an increase of 8% over the prior quarter. Software revenue in the third quarter of fiscal 2013 was $65.9 million, an increase of 28% year-over-year and an increase of 11% sequentially. Services revenue in the third quarter of fiscal 2013 was $62.2 million, an increase of 19% year-over-year and 6% sequentially.

Income from operations (EBIT) was $20.2 million for the third quarter, a 64% increase from $12.3 million in the same period of the prior year. On a sequential basis, income from operations (EBIT) decreased 10% in the third quarter of fiscal 2013. Non-GAAP income from operations (EBIT) increased 52% to $29.8 million in the third quarter of fiscal 2013 compared to $19.6 million in the third quarter of the prior year. On a sequential basis, Non-GAAP income from operations (EBIT) increased 3% in the third quarter of fiscal 2013.

For the third quarter of fiscal 2013, CommVault reported net income of $12.2 million, an increase of $5.0 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 50% to $19.0 million, or $0.39 per diluted share, from $12.7 million, or $0.27 per diluted share, in the same period of the prior year.

Operating cash flow totaled $27.5 million for the third quarter of fiscal 2013 compared to $27.7 million in the third quarter of fiscal 2012. Total cash and short-term investments were $397.2 million as of December 31, 2012 compared to $300.2 million as of March 31, 2012. There were no share repurchases during the third quarter of fiscal 2013, which still leaves $102.8 million remaining in the existing repurchase plan available through March 31, 2014.

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:

  • On January 16, 2013, CommVault announced that its Simpana® 9 data and information management software has received the Certificate of Networthiness (CoN) from the U.S. Army Network Enterprise Technology Command.
  • On November 15, 2012, CommVault announced its CommVault® Simpana® 9 software will ship with the new Dell PowerVault DL2300 appliance to deliver new levels of integrated, scalable and simplified data protection to safeguard information for medium-to-large, distributed organizations.
  • On October 29, 2012, CommVault introduced Simpana® IntelliSnap(TM) Recovery Manager, the industry’s first standalone software product for automating snapshot management and application-aware recovery across multiple storage arrays and physical or virtual servers.

Use of Non-GAAP Financial Measures

CommVault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations, non-GAAP income from operations margin, non-GAAP net income and non-GAAP diluted earnings per share. This selected 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 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.

These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to, 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 FICA and related payroll tax expense incurred by CommVault when employees exercise in the money stock options or vest in restricted stock awards. 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. In addition, because of the varying available valuation methodologies, subjective assumptions such as volatility outside CommVault’s control and the variety of awards that companies can issue, 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 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. Lastly, the components 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.

CommVault’s management generally compensates for limitations described above related to the use of non-GAAP financial measures by providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, CommVault 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 EPS. Non-GAAP net income excludes noncash stock-based compensation and the additional FICA and related payroll tax expenses 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 37% in fiscal 2013 and 36% in fiscal 2012.

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 nine months ended December 31, 2012 was 39% and the GAAP tax rate for the nine months ended December 31, 2011 was 38%. On an annual basis, the GAAP tax rate over the past six fiscal years was 36% for fiscal 2012, 42% for fiscal 2011, 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 is estimated to be approximately 14% for fiscal 2012, approximately 11% for fiscal 2011, and approximately 10% for fiscal 2010. Also, the cash tax rate for fiscal 2013 is estimated to be in the range of 14% – 18%. CommVault expects that its cash tax rate will remain lower than its GAAP tax rate for the remainder of fiscal 2013 and into fiscal 2014. 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 believes that the use of a non-GAAP tax rate is a useful measure as it allows management and investors to compare its operating results on a more consistent basis over the multiple periods presented in its earnings release without the impact of significant variations in the tax rate as more fully described above. It is also more reflective of the increase in the cash tax rate as it approaches the GAAP tax rate over the next one to two fiscal years. Non-GAAP EPS is derived from non-GAAP net income divided by the weighted average shares outstanding on a fully diluted basis.

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 EPS.

Conference Call Information

CommVault will host a conference call today, January 30, 2013, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss its financial results. To access this call, dial 888-895-5479 (domestic) or 847-619-6250 (international). Investors can also access the webcast by visiting www.commvault.com. The live webcast and replay will be hosted under “Investor Events” located under the “Investor Relations” section of the website. An archived webcast of this conference call will also be available following the call.

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® 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® 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.

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 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.

©1999-2013 CommVault Systems, Inc. All rights reserved. CommVault, CommVault and logo, the “CV” logo, CommVault Systems, Solving Forward, SIM, Singular Information Management, Simpana, Simpana OnePass, CommVault Galaxy, Unified Data Management, QiNetix, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, Recovery Director, CommServe, CommCell, IntelliSnap, ROMS, and CommValue 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 Income
                                              (In thousands, except per share data)
                                                           (Unaudited)

                                     Three Months Ended                             Nine Months Ended
                                        December 31,                                  December 31,
                                        ------------                                  ------------
                                   2012                 2011                   2012                  2011
                                   ----                 ----                   ----                  ----

    Revenues:
    Software                               $65,909                          $51,421                       $179,363         $143,047
    Services                                62,238                           52,219                        178,213          149,578
                                            ------                           ------                        -------          -------
    Total revenues                         128,147                          103,640                        357,576          292,625

    Cost of revenues:
    Software                                   776                              795                          2,098            2,051
    Services                                15,687                           12,815                         44,998           36,676
                                            ------                           ------                         ------           ------
    Total cost of revenues                  16,463                           13,610                         47,096           38,727
                                            ------                           ------                         ------           ------

    Gross margin                           111,684                           90,030                        310,480          253,898

    Operating expenses:
    Sales and marketing                     64,547                           56,142                        176,634          157,124
    Research and development                12,367                           10,087                         34,749           28,949
    General and administrative              13,317                           10,361                         36,568           29,167
    Depreciation and amortization            1,226                            1,120                          3,533            3,244
                                             -----                            -----                          -----            -----

    Income from operations                  20,227                           12,320                         58,996           35,414

    Interest expense                  -                               (4)                               -            (57)
    Interest income                            299                              190                            796              513
                                               ---                              ---                            ---              ---

    Income before income taxes              20,526                           12,506                         59,792           35,870

    Income tax expense                       8,326                            5,346                         23,568           13,772
                                             -----                            -----                         ------           ------

    Net income                             $12,200                           $7,160                        $36,224          $22,098
                                           =======                           ======                        =======          =======

    Net income per common share:
    Basic                                    $0.27                            $0.16                          $0.80            $0.50
                                             =====                            =====                          =====            =====
    Diluted                                  $0.25                            $0.15                          $0.75            $0.47
                                             =====                            =====                          =====            =====

    Weighted average common shares
     outstanding:
    Basic                                   45,738                           43,834                         45,203           43,981
                                            ======                           ======                         ======           ======
    Diluted                                 48,564                           46,791                         47,999           47,003
                                            ======                           ======                         ======           ======

                                                                         Table II
                                CommVault Systems, Inc.

                         Condensed Consolidated Balance Sheets
                                    (In thousands)
                                      (Unaudited)

                                           December 31,           March 31,
                                                   2012                2012
                                                   ----

    Assets
    Current assets:
    Cash and cash
     equivalents                                         $395,298                 $297,088
    Short-term investments                                  1,948                    3,146
    Trade accounts receivable,
     net                                                   71,415                   67,793
    Prepaid expenses and other
     current assets                                        15,260                   12,606
    Deferred tax assets, net                               13,921                   14,717
                                                           ------                   ------
    Total current assets                                  497,842                  395,350

    Deferred tax assets, net                               22,546                   23,861
    Property and equipment, net                            11,151                    9,137
    Other assets                                            6,875                    4,340
    Total assets                                         $538,414                 $432,688
                                                         ========                 ========

    Liabilities and
     stockholders' equity
    Current liabilities:
    Accounts payable                                       $2,692                   $1,847
    Accrued liabilities                                    46,537                   45,888
    Deferred revenue                                      134,884                  125,314
                                                          -------                  -------
    Total current liabilities                             184,113                  173,049

    Deferred revenue, less
     current portion                                       26,737                   22,059
    Other liabilities                                       7,899                    7,596

    Total stockholders' equity                            319,665                  229,984
                                                          -------                  -------
    Total liabilities
     and stockholders'
     equity                                              $538,414                 $432,688
                                                         ========                 ========

                                                                          Table III
                               CommVault Systems, Inc.

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

                                                   Nine Months Ended
                                                     December 31,
                                                     ------------
                                                2012                 2011
                                                ----

    Cash flows from
     operating
     activities
    Net
     income                                             $36,224                      $22,098
    Adjustments to
     reconcile net
     income to net cash
     provided by
     operating
     activities:
    Depreciation and
     amortization                                         3,605                        3,349
    Noncash stock-
     based compensation                                  21,061                       15,044
    Excess tax benefits
     from stock-based
     compensation                                       (18,114)                      (7,026)
    Deferred income
     taxes                                                2,113                         (365)

    Changes in
     operating assets
     and liabilities:
    Trade accounts
     receivable                                          (3,435)                       7,720
    Prepaid expenses
     and other current
     assets                                              (2,648)                      (1,811)
    Other assets                                         (1,593)                      (3,195)
    Accounts payable                                        835                        1,197
    Accrued liabilities                                  17,511                       11,423
    Deferred revenue                                     13,950                       20,227
    Other liabilities                                       293                        1,222
                                                            ---                        -----
    Net cash provided
     by operating
     activities                                          69,802                       69,883

    Cash flows from
     investing
     activities
    Purchase of short-
     term investments                                    (1,948)                      (3,146)
    Proceeds from
     maturity of short-
     term investments                                     3,146                        1,150
    Purchase of
     property and
     equipment                                           (5,606)                      (4,417)
                                                         ------                       ------
    Net cash used in
     investing
     activities                                          (4,408)                      (6,413)

    Cash flows from
     financing
     activities
    Repurchase of
     common stock                                  -                      (45,639)
    Proceeds from the
     exercise of stock
     options                                             14,077                       14,014
    Excess tax benefits
     from stock-based
     compensation                                        18,114                        7,026
                                                         ------                        -----
    Net cash provided
     by (used in)
     financing
     activities                                          32,191                      (24,599)

    Effects of exchange
     rate -changes in
     cash                                                   625                       (2,035)
                                                            ---                       ------

    Net increase in
     cash and cash
     equivalents                                         98,210                       36,836
    Cash and cash
     equivalents at
     beginning of
     period                                             297,088                      217,170
                                                        -------                      -------

    Cash and
     cash
     equivalents
     at end
     of
     period                                            $395,298                     $254,006
                                                       ========                     ========

                                                                                                                                                      Table IV
                                                                   CommVault Systems, Inc.

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

                                                                                                                        Nine Months Ended
                                                                                        Three Months Ended                 December 31,
                                                                                           December 31,
                                                                                           ------------
                                                                                       2012                2011    2012                 2011
                                                                                       ----                ----    ----                 ----

    Non-GAAP financial measures and reconciliation:
    GAAP income from operations                                                               $20,227           $12,320                      $58,996           $35,414
    Noncash stock-based compensation (1)                                                        8,984             6,229                       21,061            15,044
    FICA and related payroll tax expense on
    stock option exercises and vesting on
    restricted stock awards (2)                                                                   623             1,096                        1,245             2,098
                                                                                                  ---             -----                        -----             -----
    Non-GAAP income from operations                                                           $29,834           $19,645                      $81,302           $52,556
                                                                                              =======           =======                      =======           =======

    GAAP net income                                                                           $12,200            $7,160                      $36,224           $22,098
    Noncash stock-based compensation (1)                                                        8,984             6,229                       21,061            15,044
    FICA and related payroll tax expense on
    stock option exercises and vesting on
    restricted stock awards (2)                                                                   623             1,096                        1,245             2,098
    Non-GAAP provision for income taxes
    adjustment (3)                                                                             (2,823)           (1,793)                      (6,808)           (5,312)
                                                                                               ------            ------                       ------            ------
    Non-GAAP net income                                                                       $18,984           $12,692                      $51,722           $33,928
                                                                                              =======           =======                      =======           =======

    Diluted weighted average shares outstanding                                                48,564            46,791                       47,999            47,003
                                                                                               ======            ======                       ======            ======

    Non-GAAP diluted net income per share                                                       $0.39             $0.27                        $1.08             $0.72
                                                                                                =====             =====                        =====             =====

    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,
                                               ------------                           ------------
                                           2012             2011               2012               2011
                                           ----             ----               ----               ----

    Cost of services
     revenue                                       $280                        $134                        $659                         $335
    Sales and marketing                           4,169                       2,867                       9,591                        7,126
    Research and development                        852                         644                       2,114                        1,561
    General and administrative                    3,683                       2,584                       8,697                        6,022
                                                  -----                       -----                       -----                        -----
    Stock-based
     compensation
     expense                                     $8,984                      $6,229                     $21,061                      $15,044
                                                 ======                      ======                     =======                      =======

    (2) 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.

    (3) The provision for income taxes is adjusted to reflect CommVault's estimated non-GAAP effective tax rate of approximately 37% in fiscal 2013 and
     36% in fiscal 2012.

SOURCE CommVault


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