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–Overachieves on revenue and non-GAAP earnings expectations–
–Positioned the highest on execution and furthest on vision as a Leader in Gartner’s 2016 Magic Quadrant for Data Center Backup and Recovery Software–
First Quarter Highlights Include:
(Download Financial Tables) – http://goo.gl/snmN0s
Tinton Falls, N.J. – July 26, 2016 – /BackupReview.info/ — Commvault [NASDAQ: CVLT] today announced its financial results for the first quarter ended June 30, 2016.
N. Robert Hammer, Commvault’s Chairman, President and CEO stated, “We began fiscal year 2017 with a solid first quarter, highlighted by year-over-year software revenue growth of 13% and significant year-over-year improvement in operating performance. We are also pleased that Gartner has positioned Commvault as a Leader in the Magic Quadrant for Data Center Backup and Recovery for a sixth consecutive year. We believe placement in the new Magic Quadrant validates our strategy to help companies manage and protect their data, and to flexibly adopt new technologies, in particular the cloud. The move to the cloud continues to be a major factor contributing to our continued business momentum as our software solutions help customers solve critical challenges as they migrate to the cloud or deploy big data storage infrastructures. We expect that these factors, combined with continued successful market adoption of software solutions based on the new Commvault Data Platform and associated services, will drive our fiscal 2017 revenue growth objectives.”
Total revenues for the first quarter of fiscal 2017 were $152.4 million, an increase of 10% year-over-year, and 11% on a year-over-year constant currency basis. Software revenue was $63.9 million, an increase of 13% year-over-year, and up 15% on a year-over-year constant currency basis. Services revenue in the quarter was $88.5 million, an increase of 7% year-over-year, and 8% on a year-over-year constant currency basis.
On a GAAP basis, loss from operations (EBIT) was $2.5 million for the first quarter compared to a loss of $6.3 million in the prior year. Non-GAAP EBIT increased 62% to $15.0 million in the quarter compared to $9.3 million in the prior year.
For the first quarter of fiscal 2017, Commvault reported a GAAP net loss of $2.0 million, or a $0.05 loss per diluted share. Non-GAAP net income for the quarter was $9.5 million, or $0.21 per diluted share, versus $0.12 per diluted share in the first quarter of fiscal 2016.
Operating cash flow totaled $24.0 million for the first quarter of fiscal 2017. Total cash and short-term investments were $410.2 million as of June 30, 2016 compared to $387.2 million as of March 31, 2016. During the quarter, there were no borrowings against the revolving credit facility or repurchases of Commvault’s shares. As of July 26, 2016, there is $93.1 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) 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
All of 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)
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, 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, 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. Commvault has also excluded its share of earnings from its equity method investment. In addition, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 37% in fiscal 2017 and fiscal 2016.
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 was 37% for fiscal 2014 and 34% for fiscal 2015. The GAAP tax rates for fiscal 2016 and the first quarter of fiscal 2017 are not meaningful percentages due to the dollar amount of GAAP pre-tax income. From a cash tax perspective, the cash tax rate is estimated to be 18% for fiscal 2014 and 26% for fiscal 2015. For the same reason as the GAAP tax rates, the estimated cash tax rates for fiscal 2016 and the first quarter of fiscal 2017 are not meaningful percentages. Estimated cash taxes to be paid for both fiscal 2016 and 2017 are expected to be less than $5 million. 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. Over the next few years, Commvault believes its GAAP and cash tax rates will align.
Commvault measured itself to non-GAAP tax rates of 37% in fiscal 2016 and will continue to measure itself to a non-GAAP tax rate of 37% in fiscal 2017. 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. 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
 Gartner, Magic Quadrant for Data Center Backup and Recovery Software, Dave Russell, Pushan Rinnen, Robert Rhame, June 2016
About the Magic Quadrant
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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