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TINTON FALLS, NJ – January 28, 2015 — /BackupReview.info/ – CommVault [NASDAQ: CVLT] today announced its financial results for the third quarter ended December 31, 2014.
N. Robert Hammer, CommVault’s chairman, president and CEO stated, “We executed well relative to expectations going into the quarter and in the face of significant foreign exchange headwinds. We delivered $153.0 million in total revenue, which represents sequential quarterly growth. Our key standalone virtualization and cloud operations solutions sets that were priced and packaged for the mid-market segments received strong early market traction. We continue to remain steadfast to our objective of returning to strong revenue and earnings growth in the second half of next fiscal year. Tied to that objective, we made significant progress during the quarter on key initiatives including alignment of worldwide sales resources to our new standalone products’ go to market efforts; adding resources and focus to key channel partner relationships to increase penetration in both the SMB and enterprise segments; and, enhancing our Americas sales territory structure to drive higher productivity.”
Hammer added, “We also made very good progress on our next series of standalone products which are planned to launch in March as well as the development of our next generation data and information platform which will go into beta in the near future.”
Total revenues for the third quarter of fiscal 2015 were $153.0 million, which is flat compared to the third quarter of the prior fiscal year. Software revenue in the third quarter of fiscal 2015 was $71.7 million, a decrease of 9% year-over-year and an increase of 3% sequentially. Services revenue in the third quarter of fiscal 2015 was $81.3 million, an increase of 10% year-over-year and a decline of 1% sequentially.
On a GAAP basis, income from operations (EBIT) was $4.9 million for the third quarter compared to $27.7 million in the same period of the prior year. Non-GAAP income from operations (EBIT) decreased 40% to $25.3 million in the third quarter of fiscal 2015 compared to $42.5 million in the third quarter of the prior year. On a sequential basis, non-GAAP income from operations (EBIT) decreased 3% in the third quarter of fiscal 2015.
For the third quarter of fiscal 2015, CommVault reported net income of $3.1 million compared to $17.6 million in the same period of the prior year. Non-GAAP net income for the quarter decreased 41% to $15.9 million, or $0.34 per diluted share, from $26.9 million, or $0.54 per diluted share, in the same period of the prior year.
Operating cash flow totaled $20.2 million for the third quarter of fiscal 2015 which was a decrease of $9.9 million, or 33%, compared to the third quarter of fiscal 2014. Total cash and short-term investments were $364.9 million as of December 31, 2014 compared to $482.7 million as of March 31, 2014. During the third quarter there were no borrowings against the revolving credit facility.
In the third quarter of fiscal 2015, CommVault repurchased $50.0 million of common stock (1.03 million shares) under its share repurchase program. For the fiscal year to date, the Company has repurchased $155.1 million of common stock. As of January 28, 2015, there is $100.0 million remaining in the share repurchase program which expires on March 31, 2016.
In December 2014, CommVault completed its planned move to a new corporate headquarters facility located in Tinton Falls, NJ, which is owned outright. The Company’s fiscal 2015 third quarter GAAP results include $4.1 million of non-routine expenses related to this move consisting of a $3.1 million lease termination charge associated with the previous leased headquarters location, $0.6 million of accelerated depreciation on assets associated with the previous headquarters and $0.5 million of moving and related costs. These expenses have been excluded from the Company’s non-GAAP results.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release. (Download Financial Tables) An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
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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. (Download Financial Tables)
Non-GAAP income from operations and non-GAAP income from operations margin.
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.
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 rate for the nine months ended December 31, 2014 was 35% and the GAAP tax rate for the nine months ended December 31, 2013 was 36%. On an annual basis, the GAAP tax rate over the past three fiscal years was 37% for fiscal 2014, 35% for fiscal 2013 and 36% for fiscal 2012. 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 past three fiscal years is estimated to be 18% for fiscal 2014, 12% for fiscal 2013 and 14% for fiscal 2012. Also, the cash tax rate for fiscal 2015 is estimated to be in the range of 27% to 30%. CommVault expects that its cash tax rate will approach its annual GAAP tax rate over the next one to two fiscal years. 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 2014 and will continue to measure itself to a non-GAAP tax rate of 37% in fiscal 2015. 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 in 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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©1999-2015 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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