September 26, 2022

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Commvault Announces Fiscal 2021 Third Quarter Financial Results

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TINTON FALLS, N.J., Jan. 27, 2021 /PRNewswire/ —














Third quarter highlights include:

Third quarter

GAAP Results:

Revenues

$188.0 million

Income from Operations (EBIT)

$2.7 million

EBIT Margin

1.4%

Diluted Earnings Per Share

$0.03

Non-GAAP Results:

Income from Operations (EBIT)

$37.3 million

EBIT Margin

19.8%

Diluted Earnings Per Share

$0.57

Commvault [NASDAQ: CVLT] today announced its financial results for the third quarter ended December 31, 2020.

“The strategic moves we made over the past two years are delivering results,” said Sanjay Mirchandani, President and CEO, Commvault. “We have simplified how we do business, dramatically improved our execution, and are innovating faster than ever.”

Total revenues for the third quarter of fiscal 2021 were $188.0 million, an increase of 7% year over year. Total recurring revenue was $140.0 million, an increase of 13% year over year.

Annualized recurring revenue (ARR), which is the annualized value of all active Commvault recurring revenue streams at the end of the reporting period, was $507.2 million as of December 31, 2020, up 11% from December 31, 2019.

Software and products revenue was $88.6 million, an increase of 16% year over year. The year over year increase in software and products revenue was driven by a 19% increase in revenue from larger deals (deals greater than $0.1 million in software and products revenue).

Larger deal revenue represented 68% of our software and products revenue in the three months ended December 31, 2020. The number of larger deal revenue transactions increased 3% year over year to 187 deals for the three months ended December 31, 2020. The average dollar amount of larger deal revenue transactions was approximately $322,000, representing a 15% increase from the prior year quarter.

Services revenue in the quarter was $99.4 million, flat year over year.

On a GAAP basis, income from operations (EBIT) was $2.7 million for the third quarter compared to a loss of $0.5 million in the prior year. Non-GAAP EBIT was $37.3 million in the quarter compared to $28.9 million in the prior year.

Operating cash flow totaled $17.0 million for the third quarter of fiscal 2021 compared to $0.9 million in the prior year quarter. Total cash and short-term investments were $388.4 million as of December 31, 2020 compared to $339.7 million as of March 31, 2020.

During the third quarter of fiscal 2021, Commvault repurchased 700,694 shares of its common stock totaling $33.1 million at an average price of approximately $47.28 per share. An update on our capital allocation policy will be provided on our investor day conference call.

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.”

Use of Non-GAAP Financial Measures

Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations, non-GAAP income from operations margin, non-GAAP net income, non-GAAP diluted earnings per share and annualized recurring revenue (ARR). This selected financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Commvault believes these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP financial measures, in evaluating Commvault’s ongoing operational performance. Commvault believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault’s industry, many of which present similar non-GAAP financial measures to the investment community. Commvault has also provided software and products, services and total revenues on a constant currency basis. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.

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 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 as well as restructuring costs. In fiscal 2020, Commvault also excluded costs related to a non-routine shareholder matter. Commvault has also excluded the noncash amortization and impairment of intangible assets and certain costs related to key employees of Hedvig from its non-GAAP results. These expenses are further discussed in Table IV. 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. 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.

Amortization and impairment charges of intangible assets are noncash items. Commvault believes the exclusion of these expenses provide for a useful comparison of operating results to prior periods and to 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 that 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 the 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 earnings per share (EPS). In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporates a non-GAAP effective tax rate of 27%.

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 rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income. For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages. 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 time, Commvault believes its GAAP and cash tax rates will align.

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
Commvault will host its FutureReady Investor Event today, January 27, 2021 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to discuss quarterly results, its long-term vision and strategy and provide a multi-year business outlook. Investors can register and access the live webcast by visiting the event site on Commvault’s website. The meeting will include a slide presentation and participants are encouraged to view the presentation via webcast at the event site.

About Commvault
Commvault is the recognized leader in data backup and recovery. Commvault’s converged data management solution redefines what backup means for the progressive enterprise through solutions that protect, manage and use their most critical asset — their data. Commvault software, solutions and services are available from the company and through a global ecosystem of trusted partners. Commvault employs more than 2,600 highly-skilled individuals across markets worldwide, is publicly traded on NASDAQ (CVLT), and is headquartered in Tinton Falls, New Jersey in the United States. To learn more about Commvault visit www.commvault.com

Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault’s business, see “Item IA. Risk Factors” in our annual report in Form 10-K and “Item 1A. Risk Factors” in our most recent quarter report in Form 10-Q. Statements regarding Commvault’s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements. The development and timing of any product release as well as any of its features or functionality remain at our sole discretion.

©1999-2021 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the “C hexagon” logo, Commvault Systems, Commvault HyperScale, ScaleProtect, Commvault OnePass, Unified Data Management, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, APSS, Commvault Edge, Commvault GO, Commvault Advantage, Commvault Complete, Commvault Activate, Commvault Orchestrate, Commvault Command Center, Hedvig, Universal Data Plane, the “Cube” logo, Metallic, the “M Wave” logo, Be Ready 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.


































Table I

Commvault Systems, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Revenues:

Software and products

$

88,625

$

76,631

$

237,488

$

208,900

Services

99,367

99,720

294,643

297,236

Total revenues

187,992

176,351

532,131

506,136

Cost of revenues:

Software and products

6,916

8,077

20,666

22,938

Services

21,496

22,446

59,096

67,546

Total cost of revenues

28,412

30,523

79,762

90,484

Gross margin

159,580

145,828

452,369

415,652

Operating expenses:

Sales and marketing

84,542

84,563

245,287

252,908

Research and development

35,727

30,503

97,824

77,310

General and administrative

22,702

23,864

69,009

71,124

Restructuring

11,618

2,021

19,709

18,951

Impairment of intangible assets

40,700

Depreciation and amortization

2,323

5,356

12,441

10,681

Total operating expenses

156,912

146,307

484,970

430,974

Income (loss) from operations

2,668

(479)

(32,601)

(15,322)

Interest income

167

786

759

4,270

Income (loss) before income taxes

2,835

307

(31,842)

(11,052)

Income tax expense

1,162

957

5,373

3,528

Net income (loss)

$

1,673

$

(650)

$

(37,215)

$

(14,580)

Net income (loss) per common share:

Basic

$

0.04

$

(0.01)

$

(0.80)

$

(0.32)

Diluted

$

0.03

$

(0.01)

$

(0.80)

$

(0.32)

Weighted average common shares outstanding:

Basic

47,013

46,028

46,575

45,586

Diluted

48,013

46,028

46,575

45,586






































Table II

Commvault Systems, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

December 31,

March 31,

2020

2020

ASSETS

Current assets:

Cash and cash equivalents

$

377,569

$

288,082

Restricted cash

8,000

Short-term investments

10,845

43,645

Trade accounts receivable, net

190,651

146,990

Other current assets

27,570

26,969

Total current assets

606,635

513,686

Property and equipment, net

113,079

114,519

Operating lease assets

23,709

15,009

Deferred commissions cost

35,306

31,394

Intangible assets, net

46,350

Goodwill

112,435

112,435

Other assets

14,415

11,683

Total assets

$

905,579

$

845,076

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$

622

$

307

Accrued liabilities

102,924

87,051

Current portion of operating lease liabilities

8,346

7,699

Deferred revenue

247,544

233,497

Total current liabilities

359,436

328,554

Deferred revenue, less current portion

108,280

92,723

Deferred tax liabilities, net

807

849

Long-term operating lease liabilities

17,561

8,808

Other liabilities

5,424

2,238

Total stockholders’ equity

414,071

411,904

Total liabilities and stockholders’ equity

$

905,579

$

845,076






































Table III

Commvault Systems, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Cash flows from operating activities

Net income (loss)

$

1,673

$

(650)

$

(37,215)

$

(14,580)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation and amortization

2,636

5,564

13,379

11,618

Noncash stock-based compensation

22,037

18,974

61,572

48,581

Impairment of intangible assets

40,700

Amortization of deferred commissions cost

4,221

4,420

13,747

13,150

Impairment of operating lease assets

612

145

1,304

2,195

Changes in operating assets and liabilities:

Trade accounts receivable, net

(42,607)

(32,890)

(38,970)

12,735

Operating lease assets and liabilities, net

89

(554)

(719)

(512)

Other current assets and Other assets

(3,027)

7,382

6,955

5,586

Deferred commissions cost

(5,981)

(4,390)

(15,946)

(11,352)

Accounts payable

340

(1,301)

273

(1,726)

Accrued liabilities

17,635

(1,003)

484

(2,018)

Deferred revenue

20,941

5,817

10,719

(6,262)

Other liabilities

(1,564)

(625)

2,964

(1,407)

Net cash provided by operating activities

17,005

889

59,247

56,008

Cash flows from investing activities

Purchase of short-term investments

(32,800)

Proceeds from maturity of short-term investments

32,631

32,800

98,150

Business combination, net of cash acquired

(157,495)

(157,495)

Purchase of property and equipment, net

(2,332)

(454)

(5,994)

(1,911)

Net cash provided by (used in) investing activities

(2,332)

(125,318)

26,806

(94,056)

Cash flows from financing activities

Repurchase of common stock

(33,132)

(33,132)

(40,026)

Proceeds from stock-based compensation plans

1,732

24,619

7,003

30,944

Net cash provided by (used in) financing activities

(31,400)

24,619

(26,129)

(9,082)

Effects of exchange rate — changes in cash

11,143

2,210

21,563

(837)

Net increase (decrease) in cash, cash equivalents and restricted cash

(5,584)

(97,600)

81,487

(47,967)

Cash, cash equivalents and restricted cash at beginning of period

383,153

377,625

296,082

327,992

Cash, cash equivalents and restricted cash at end of period

$

377,569

$

280,025

$

377,569

$

280,025























































Table IV

Commvault Systems, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures and Other Financial Information

(In thousands, except per share data)

(Unaudited)

Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Non-GAAP financial measures and reconciliation:

GAAP income (loss) from operations

$

2,668

$

(479)

$

(32,601)

$

(15,322)

Noncash stock-based compensation (1)

20,883

18,265

59,714

46,899

FICA and payroll tax expense related to stock-based compensation (2)

724

550

1,244

1,190

Restructuring (3)

11,618

2,021

19,709

18,951

Non-routine shareholder matters (4)

7,628

Amortization of intangible assets (5)

2,825

5,650

2,825

Hedvig deferred payments (6)

1,406

1,406

4,218

1,406

Acquisition costs (7)

4,356

5,639

Impairment of intangible assets (8)

40,700

Non-GAAP income from operations

$

37,299

$

28,944

$

98,634

$

69,216

GAAP net income (loss)

$

1,673

$

(650)

$

(37,215)

$

(14,580)

Noncash stock-based compensation (1)

20,883

18,265

59,714

46,899

FICA and payroll tax expense related to stock-based compensation (2)

724

550

1,244

1,190

Restructuring (3)

11,618

2,021

19,709

18,951

Non-routine shareholder matters (4)

7,628

Amortization of intangible assets (5)

2,825

5,650

2,825

Hedvig deferred payments (6)

1,406

1,406

4,218

1,406

Acquisition costs (7)

4,356

5,639

Impairment of intangible assets (8)

40,700

Non-GAAP provision for income taxes adjustment (9)

(8,955)

(7,069)

(21,464)

(16,313)

Non-GAAP net income

$

27,349

$

21,704

$

72,556

$

53,645

Diluted weighted average shares outstanding

48,013

46,598

47,281

46,272

Non-GAAP diluted earnings per share

$

0.57

$

0.47

$

1.53

$

1.16

Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Subscription software and products revenue

$

48,650

$

31,749

$

138,239

$

86,049

Perpetual software and products revenue

39,975

44,882

99,249

122,851

Total software and products revenue

$

88,625

$

76,631

$

237,488

$

208,900

Subscription as a % of total software and products revenue

55%

41%

58%

41%

Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Subscription software and products revenue

$

48,650

$

31,749

$

138,239

$

86,049

Recurring support and services revenue

91,375

91,694

271,966

273,305

Total recurring revenue

$

140,025

$

123,443

$

410,205

$

359,354

Percentage of total revenues

74%

70%

77%

71%

Perpetual software and products revenue

$

39,975

$

44,882

$

99,249

$

122,851

Non-recurring services revenue

7,992

8,026

22,677

23,931

Total non-recurring revenue

$

47,967

$

52,908

$

121,926

$

146,782

Percentage of total revenues

26%

30%

23%

29%

Total Revenue (10)

$

187,992

$

176,351

$

532,131

$

506,136






Measures at period ending ($000s)

December 31, 2019

March 31, 2020

December 31, 2020

Annualized Recurring Revenue (11)

$

458,683

$

451,667

$

507,242






























Three Months Ended December 31, 2020

Americas

EMEA

APJ

Total

Software and Products Revenue

$

43,636

$

33,374

$

11,615

$

88,625

Customer Support Revenue

53,488

25,808

10,386

89,682

Other Services Revenue

5,031

3,332

1,322

9,685

Total Revenue

$

102,155

$

62,514

$

23,323

$

187,992

Three Months Ended December 31, 2019

Americas

EMEA

APJ

Total

Software and Products Revenue

$

40,291

$

29,107

$

7,233

$

76,631

Customer Support Revenue

57,856

22,237

10,438

90,531

Other Services Revenue

4,883

2,673

1,633

9,189

Total Revenue

$

103,030

$

54,017

$

19,304

$

176,351

Nine Months Ended December 31, 2020

Americas

EMEA

APJ

Total

Software and Products Revenue

$

133,522

$

74,232

$

29,734

$

237,488

Customer Support Revenue

162,903

74,029

30,840

267,772

Other Services Revenue

13,938

8,971

3,962

26,871

Total Revenue

$

310,363

$

157,232

$

64,536

$

532,131

Nine Months Ended December 31, 2019

Americas

EMEA

APJ

Total

Software and Products Revenue

$

107,375

$

71,922

$

29,603

$

208,900

Customer Support Revenue

173,450

65,810

30,756

270,016

Other Services Revenue

14,179

8,035

5,006

27,220

Total Revenue

$

295,004

$

145,767

$

65,365

$

506,136





















Three Months Ended
December 31, 2020

Nine Months Ended
December 31, 2020

Sequential

Year Over Year

Year Over Year

Non-GAAP software and products revenue reconciliation

GAAP software and products revenue

$

88,625

$

88,625

$

237,488

Adjustment for currency impact

(1,404)

(2,822)

(3,531)

Non-GAAP software and products revenue on a constant currency basis (12)

$

87,221

$

85,803

$

233,957

Three Months Ended
December 31, 2020

Nine Months Ended
December 31, 2020

Sequential

Year Over Year

Year Over Year

Non-GAAP services revenue reconciliation

GAAP services revenue

$

99,367

$

99,367

$

294,643

Adjustment for currency impact

(1,054)

(2,459)

(2,884)

Non-GAAP services revenue on a constant currency basis (12)

$

98,313

$

96,908

$

291,759

Three Months Ended
December 31, 2020

Nine Months Ended
December 31, 2020

Sequential

Year Over Year

Year Over Year

Non-GAAP total revenue reconciliation

GAAP total revenues

$

187,992

$

187,992

$

532,131

Adjustment for currency impact

(2,458)

(5,281)

(6,415)

Non-GAAP total revenues on a constant currency basis (12)

$

185,534

$

182,711

$

525,716





Footnotes – Adjustments

(1)

Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan. Those amounts are represented as follows:








Three Months Ended
December 31,

Nine Months Ended
December 31,

2020

2019

2020

2019

Cost of services revenue

$

945

$

635

$

2,351

$

2,023

Sales and marketing

9,714

9,128

25,906

24,133

Research and development

6,203

5,222

17,722

9,226

General and administrative

4,021

3,280

13,735

11,517

Stock-based compensation expense

$

20,883

$

18,265

$

59,714

$

46,899







































The table above excludes stock-based compensation expense related to the Company’s restructuring activities described below in footnote three.

(2)

Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards.

(3)

In recent fiscal years, Commvault initiated restructuring plans to increase efficiency in its sales, marketing and distribution functions as well as reduce costs across all functional areas. These restructuring charges relate primarily to severance and related costs associated with headcount reductions, as well as the closure of offices. Restructuring includes stock-based compensation related to modifications of awards granted to former employees. Management believes, when used as a supplement to GAAP results, that the exclusion of these charges will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to prior periods.

(4)

During fiscal 2020, Commvault incurred costs related to a non-routine shareholder matter. The costs are for professional fees related to the settlement agreement with the shareholder and consulting fees incurred with the operational review which was agreed to as part of the settlement. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will better help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to prior periods.

(5)

Represents noncash amortization of intangible assets. Amortization of intangible assets may fluctuate in amount and frequency and Management considers this to be outside of Commvault’s normal operating results.

(6)

In connection with the acquisition of Hedvig Inc., certain Hedvig shareholders will receive cash payments for the 30 months following the date of acquisition, subject to their continued employment with Commvault. While these payments are proportionate to these shareholders’ ownership of Hedvig, under GAAP they are accounted for as compensation expense within Research and development expenses over the course of the 30 month service period. Management believes, when used as a supplement to GAAP results, that the exclusion of these non-routine expenses will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to prior periods.

(7)

During the second quarter of fiscal 2020, Commvault incurred costs related to the acquisition of Hedvig, Inc. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to other periods.

(8)

In the second quarter of fiscal 2021, Commvault recorded an impairment charge of its acquired intangible assets. These non-cash charges are not representative of ongoing costs to the business and are not expected to recur. As a result, these charges are being excluded to provide investors with a more comparable measure of costs associated with ongoing operations.

(9)

The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of 27%.

(10)

This table includes the following financial metrics that are derived from Commvault’s GAAP recognized revenue:

Subscription software and products revenue – The amounts included on this line include the software and product portion of a) non-cancellable term-based, or subscription, licenses that expire at the end of the contractual term; and b) “pay-as-you-go” utility arrangements based on product usage that are structured with no guaranteed minimums. These revenues are included in Software and Products Revenue on Commvault’s Consolidated Statement of Operations.

Perpetual software and products revenue – The amounts included on this line are primarily associated with revenue from the sale of perpetual software licenses. These revenues are included in Software and Products Revenue on Commvault’s Consolidated Statement of Operations.

Recurring support and services revenue – The amounts included on this line consist primarily of maintenance and support revenues associated with the sale of both subscription and perpetual software arrangements. This revenue is included in Services Revenue on Commvault’s Consolidated Statement of Operations. This line also includes revenue from software-as-a-service arrangements.

Non-recurring services revenue – The amounts included on this line are primarily revenues associated with Commvault’s installation and consultation services. These revenues are included in Services Revenue on Commvault’s Consolidated Statement of Operations.

Management believes that reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the recurring nature of certain revenue amounts and trends as compared to prior periods.

Note that nearly all of Commvault’s software and product revenue is related to solutions that are run in the customer’s environment. Commvault currently does not have material revenue related to hosted, or software as a solution products. As a result, as required under ASC 606, substantially all of Commvault’s software and product revenue is recognized at a point in time, when it is delivered to the customer, and not ratably over the course of a contractual period. This is the case for both perpetual software licenses and subscription software licenses. Metallic, Commvault’s software-as-a-service offering is recognized over time as services revenue.

(11)

Annualized Recurring Revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes the following contract types: subscription agreements (including utility), maintenance contracts related to perpetual licenses, other extended maintenance contracts (enterprise support), managed services, and Metallic. It excludes any element of the deal arrangement that is not expected to recur, primarily perpetual licenses and most professional services. Contracts will be annualized by dividing the total contract value by the number of days in the contract term, then multiplying by 365.

ARR should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. Management believes that reviewing this metric, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault’s recurring revenue streams versus prior periods.

(12)

Revenues on a constant currency basis are calculated using the average foreign exchange rates from a previous period and applying these rates to foreign-denominated revenues in the corresponding period of fiscal 2021. The difference between revenue calculated based on these foreign exchange rates and revenues calculated in accordance with GAAP is listed as Adjustment for currency impact in the table above.

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SOURCE Commvault

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