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8-K - FORM 8-K - COMMVAULT SYSTEMS INCd472556d8k.htm

Exhibit 99.1

 

LOGO

Investor Relations Contact:

Michael Picariello

CommVault

732-728-5380

ir@commvault.com

CommVault Announces Third Quarter Fiscal 2013 Financial Results

Record Revenue of $128.1 million, up 24% Year-Over-Year

GAAP EBIT of $20.2 million; GAAP EPS of $0.25

Record Non-GAAP EBIT of $29.8 million; Record Non-GAAP EPS of $0.39

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

OCEANPORT, N.J. – January 30, 2013 – 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™ 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
December 31,
    Nine Months Ended
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,
2012
     March 31,
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)

 

     Three Months Ended
December 31,
    Nine Months Ended
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
December 31,
     Nine Months Ended
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.