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– Company delivers on revenue expectations and overachieves on earnings –
– Generates substantial growth in sales pipeline inflow, setting stage for second half of fiscal 2016 –
– Momentum boosted with successful launch of next generation solution portfolio –
– Announces $34.6 million of share repurchases and increases authorization to $150 million –
Second Quarter Highlights Include:
(Download Financial Tables) — http://goo.gl/gfLHhu
Tinton Falls, N.J. – October 27, 2015 — /BackupReview.info/ — Commvault [NASDAQ: CVLT] today announced its financial results for the second quarter ended September 30, 2015.
“I’m pleased to report that in the fiscal second quarter we executed well relative to expectations, delivering sequential growth in revenue and non-GAAP EBIT,” said N. Robert Hammer, Commvault’s Chairman, President and CEO. “Solid execution across the business, combined with careful management of expenses, enabled us to achieve better than expected non-GAAP earnings per share. Strong efforts by our field organizations and positive reactions to our transformational initiatives contributed to substantial growth in sales pipeline inflow. We believe that this momentum combined with our Commvault Nextprogram have helped strengthen our competitive position, increased our available market, and made it easier for partners to sell and for customers to buy Commvault solutions. While we still have a lot of work to do to achieve our long term goals, we have increased confidence in our ability to achieve our financial objectives for the second half of fiscal 2016. In addition, we have remained opportunistic, repurchasing $34.6 million of our common stock since our last earnings call.”
Hammer added, “Our momentum is further supported by the successful launch of our next generation solutions portfolio, which fundamentally redefines the data protection, archive and cloud data markets. For customers, the new Commvault Data Platform makes it possible to better manage the challenges of disruption, whether they are seeking to move data to the cloud, manage data in the cloud, provide secure access to data, consume new technology to replace legacy systems, move from closed proprietary systems to open, and/or assure a sound, holistic data management strategy to gain more value and business insight in the midst of unprecedented market change and consolidation.”
“We also take note that Joe Eazor, CEO of EarthLink Holdings, has joined the Commvault Board of Directors,” said Hammer. “Joe is a technology and software industry veteran with substantial strategic planning, sales and operations experience at some of the most innovative tech companies in the world. We welcome his fresh perspective that we believe will contribute to Commvault’s performance and stockholder returns.”
Total revenues for the second quarter of fiscal 2016 were $140.7 million, up 1% sequentially, down 7% compared to the second quarter of the prior fiscal year, and down 1% on a year-over-year constant currency basis. Software revenue was $57.6 million, an increase of 2% sequentially, a decrease of 17% year-over-year, and down 12% on a year-over-year constant currency basis. Services revenue in the second quarter of fiscal 2016 was $83.2 million, an increase of 2% year-over-year and 1% sequentially. On a constant currency basis, services revenue in the second quarter of fiscal 2016 increased 8% year-over-year.
On a GAAP basis, loss from operations (EBIT) was $4.6 million for the second quarter compared to a loss of $6.3 million in the prior quarter. Non-GAAP income from operations (EBIT) increased to $10.9 million, or 17%, in the second quarter of fiscal 2016 compared to $9.3 million in the first quarter of fiscal 2016.
For the second quarter of fiscal 2016, Commvault reported a net loss of $9.2 million. Non-GAAP net income for the quarter was $6.8 million, or $0.15 per diluted share, versus $0.12 in the first quarter of fiscal 2016.
Since Commvault’s first fiscal quarter earnings conference call on July 28, 2015, Commvault has repurchased $34.6 million of common stock (965,000 shares) under its share repurchase program. On October 22, 2015, the Board of Directors extended the expiration date of the share repurchase program to March 31, 2017 and authorized an increase to the existing share repurchase program so that $150.0 million is now available.
Operating cash flow totaled $9.6 million for the second quarter of fiscal 2016. Total cash and short-term investments were $400.0 million as of September 30, 2015 compared to $387.6 million as of March 31, 2015. During the quarter there were no borrowings against the revolving credit facility.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV. Download Financial Tables An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.” — http://goo.gl/gfLHhu
Recent Business Highlights:
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. (Download Financial Tables) — http://goo.gl/gfLHhu
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. 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. In addition, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 37% in fiscal 2016 and fiscal 2015.
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. On an annual basis, the GAAP tax rate over the past three fiscal years was 34% for fiscal 2015, 37% for fiscal 2014 and 35% for fiscal 2013. Commvault’s cash tax rate has been lower than its GAAP tax rate in recent fiscal years. The cash tax rate over the past three fiscal years is estimated to be 26% for fiscal 2015, 18% for fiscal 2014, and 12% for fiscal 2013. Cash taxes paid in fiscal 2016 are projected to be less compared to fiscal 2015 and 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 measured itself to non-GAAP tax rates of 37% in fiscal 2015 and will continue to measure itself to a non-GAAP tax rate of 37% in fiscal 2016. 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. Over the long term Commvault expects its cash tax rate to align with the non-GAAP tax rate. 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
Safe Harbor Statement
©1999-2015 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the “C hexagon” logo, Commvault Systems, Solving Forward, SIM, Singular Information Management, OnePass, Commvault Galaxy, Unified Data Management, QiNetix, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, ROMS, Commvault Edge, 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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