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– Company overachieves on both revenue and earnings expectations –
– Software Revenue of $71.4 million; up 24% sequentially –
– Next Generation Commvault Data Platform resonating with customers and partners –
Third Quarter Highlights Include:
( Download Financial Tables - http://goo.gl/7WY8UJ )
TINTON FALLS, NJ – Jan. 27, 2016 – /BackupReview.info/ — Commvault [NASDAQ: CVLT] today announced its financial results for the third quarter ended December 31, 2015.
“We achieved excellent third quarter financial performance which was highlighted by quarterly revenues of $155.7 million, non-GAAP operating income of $21.0 million and non-GAAP diluted EPS of $0.28,” said N. Robert Hammer, Commvault’s Chairman, President and CEO. “Our sequential software revenue growth of 24% was the result of outstanding execution in the Americas and EMEA driven by strong enterprise transaction close rates. Our quarterly financial results validate the continued successful implementation of our transformation initiatives; our industry leading technology and services, particularly those that enable customers to manage the transition to the cloud; and our ability to take advantage of increased uncertainties in the competitive landscape. We believe we are in an excellent position to capitalize on the unique opportunities in front of us, including increasing our market share in our core data protection and management business, expanding our cloud-based offerings, and accelerating our move into certain vertical markets.” Hammer added, “Our next generation Commvault Data Platform launched during the quarter aligns very well with the structural changes in the market, is receiving positive response from customers and partners, and will serve as one of the key foundations for growth in fiscal 2017.”
Total revenues for the third quarter of fiscal 2016 were $155.7 million, an increase of 11% sequentially, 2% year-over-year, and 6% on a year-over-year constant currency basis. Software revenue was $71.4 million, an increase of 24% sequentially, flat year-over-year, and up 4% on a year-over-year constant currency basis. Services revenue in the quarter was $84.3 million, an increase of 1% sequentially, 4% year-over-year, and 9% on a year-over-year constant currency basis.
On a GAAP basis, income from operations (EBIT) was $3.5 million for the third quarter compared to a loss of $4.6 million in the prior quarter. Non-GAAP EBIT increased to $21.0 million, or 93%, in the quarter compared to $10.9 million in the second quarter of fiscal 2016.
For the third quarter of fiscal 2016, Commvault reported GAAP net income of $4.9 million. Non-GAAP net income for the quarter was $13.2 million, or $0.28 per diluted share, versus $0.15 per diluted share in the second quarter of fiscal 2016.
During the quarter, Commvault made an equity investment in Laitek, Inc., a pioneer in rapid data migration and storage services for healthcare picture archiving and communication system (PACS) replacements. By combining Laitek’s data migration expertise with Commvault’s healthcare data protection and information management capabilities, hospitals will be able to take back control of their clinical data, managing and protecting it for the long term. The investment will be accounted for using the equity method.
Operating cash flow totaled $15.8 million for the third quarter of fiscal 2016. Total cash and short-term investments were $401.1 million as of December 31, 2015 compared to $387.6 million as of March 31, 2015. During the quarter, there were no borrowings against the revolving credit facility. Since December 31, 2015, Commvault has repurchased approximately $14.8 million common stock (476,967 shares) under its share repurchase program. As of January 27, 2016, there is $135.2 million available under the share repurchase program that currently expires on March 31, 2017.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV (download financial tables – http://goo.gl/7WY8UJ). An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.
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/7WY8UJ ).
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. In fiscal 2015, Commvault also excluded certain expenses related to its planned move into a new corporate campus headquarters. 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, which are outside of 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, and in fiscal 2015 certain expenses related to the planned move into a new corporate campus headquarters. 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
©1999-2016 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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