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Total Revenue of $134.4 million, up 21% year over year
First Quarter Fiscal 2014 Highlights Include:
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OCEANPORT, N.J. — July 30, 2013 – CommVault [NASDAQ: CVLT] today announced its financial results for the first quarter ended June 30, 2013.
N. Robert Hammer, CommVault’s chairman, president and CEO stated, “We began fiscal year 2014 with a solid first quarter, which was highlighted by year-over-year revenue growth of 21% and Non-GAAP operating income growth of 38%. Our year-over-year revenue growth of 21% was driven by continued demand for our Simpana 10 data and information management software platform and excellent results from our services organization. Our first quarter revenue and earnings performance continues to validate our market leadership and technological innovation combined with our operating discipline.”
Total revenues for the first quarter of fiscal 2014 were $134.4 million, an increase of 21% over the first quarter of fiscal 2013 and a decrease of 3% over the prior quarter. Software revenue in the first quarter of fiscal 2014 was $65.3 million, an increase of 20% year-over-year and a decrease of 9% sequentially. Services revenue in the first quarter of fiscal 2014 was $69.1 million, increases of 21% year-over-year and 5% sequentially.
Income from operations (EBIT) was $21.4 million for the first quarter, a 30% increase from $16.4 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased 38% to $31.3 million in the first quarter of fiscal 2014 compared to $22.6 million in the first quarter of the prior year. On a sequential basis, non-GAAP income from operations (EBIT) decreased 1% in the first quarter of fiscal 2014.
For the first quarter of fiscal 2014, CommVault reported net income of $13.5 million, an increase of $3.3 million compared to the same period of the prior year. Non-GAAP net income for the quarter increased 38% to $19.9 million, or $0.40 per diluted share, from $14.4 million, or $0.30 per diluted share, in the same period of the prior year.
Operating cash flow totaled $24.6 million for the first quarter of fiscal 2014 compared to $17.9 million in the first quarter of fiscal 2013. Total cash and short-term investments were $458.8 million as of June 30, 2013 compared to $435.9 million as of March 31, 2013. There were no share repurchases during the first quarter of fiscal 2014, 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 Highlight:
Use of Non-GAAP Financial Measures
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 2014 and fiscal 2013.
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 three months ended June 30, 2013 was 38% and the GAAP tax rate for the three months ended June 30, 2012 was 39%. On an annual basis, the GAAP tax rate over the past six fiscal years was 35% for fiscal 2013, 36% for fiscal 2012, 42% for fiscal 2011, 43% for fiscal 2010, 44% for fiscal 2009, and 23% for fiscal 2008. In addition, CommVault’s cash tax rate has been significantly lower than its GAAP tax rate in recent fiscal years. The cash tax rate over the prior three fiscal years is estimated to be approximately 12% for fiscal 2013, approximately 14% for fiscal 2012 and approximately 11% for fiscal 2011. Also, the cash tax rate for the three months ended June 30, 2013 is estimated to be approximately 18%. CommVault expects that its cash tax rate will remain lower than its GAAP tax rate through fiscal 2014 and into fiscal 2015. 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 non-GAAP tax rates of 37% in fiscal 2013 and anticipates that it will continue to measure itself to a non-GAAP tax rate of 37% through fiscal 2014. 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.
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About the Magic Quadrant
Safe Harbor Statement
©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, CommVault Edge, 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.
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1Forrester Research, Inc., “The Forrester Wave™: Enterprise Backup and Recovery Software, Q2 2013,” by Rachel Dines, with Stephanie Balaouras and Jessica McKee, June 28, 2013
2Gartner Inc., “Magic Quadrant: Enterprise Backup/Recovery Software,” by Dave Russell, Pushan Rinnen, June 5, 2013
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