CVLT - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Commvault Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I’d now like to introduce your host for today’s conference Mr. Picariello. Michael begin. may you Sir,

Michael Picariello

Al morning. Thanks quarter call for second Officer. Executive in Bob Brian Officer; Carolan, Chief for earnings call. dialing Financial Officer; Chief XXXX and the Chairman, today Chief With Operating Hammer, and our President Good Bunte, me are on

Securities number factors, projections Before difficulties, statements may Safe uncertainties, and question-and-answer expectations, may future statements the Actual development, session related our and during of we services, Reform competitive results end Act are to of regarding such general include call, and materially as statements inherent this conditions. of to current products delays Harbor pursuant manufacturing, the the of XXXX to that I’d the everyone due like call, to risks forward-looking marketing, or future expectations. provisions at including sale statements, economic including differ financial Private begin, the and these relate a Litigation All the in remind based made of in regarding and performance. made intentions and on the are and that our plans, beliefs, software

and and on SEC conference other the undertakes filings other see circumstance. For under this the XX-K press update in in site. our these responsibility uncertainties of in XX-Q, and business, report Web call our Form most please cautionary in and in The release in and and a Annual our Report the discussion affecting our information contained Factors Form in Risk to contained no statement risks our in our recent any quarterly Company

product its or and at sole functionality, features any well development as as the release, addition, discretion. timing remain our of any In of

is also will call, was release release financial the furnished provide to filing. available results. has Relations Web this as been earnings wire conference on we Our On and site. The Investor issued an over press X-K also our earlier SEC last today services the press non-GAAP

a rates fourth the new revenue the we prior adopted stated a standard call, in results that rules. growth Brian's quarter reminder, new the in standard and just the ASC as note revenue adopted the in XXX Please on in we As as using we're basis X, on new Commvault remarks periods XXXX. first April quarter, comparable

Our adoption was adjusted basis prior been the financial have to new done over rules. compile on with and a periods retrospective statements our

on call our As non-GAAP a between a percentages in results result, the is press reconciliation conference IV and be our Table posted call. release on I'll on found being An measures the will Bob CEO President, is This Web will available now growth call basis. and replay our and webcast over archive discuss the site webcast. are following A on recorded we and of accompanying GAAP be today Hammer. the can site. comparable Web today’s to the being turn for

Bob Hammer

that many believe unable and quarter. the close majority in of software these QX. which days will several were to QX were the we last right of a close number Michael, with and and thanks and saying put, financial there joining am of our by Thanks, I FYXX six just QX results. quarter were I that start second by figure the until We of forecasted call. for end earnings deals, deals up our being fiscal good disappointed the will Simply everyone, seven morning,

tied QX poor deals to fact, large execution have closed. on Americas. in the already results In are sales some The primarily

HyperScale the includes Appliance. HyperScale large a resell enterprise key that have our made launch contrast Our QX strategic with vulnerability Cisco new with deals. the for Commvault the quarter quarterly software results were and reduce of both -- on both in last potential to to Commvault have progress initiatives agreement accelerate excellent to stark This our and we combined growth

QX briefly financial me summarize Let year-over-year our results.

up was EPS revenues $X.XX revenues per share. Software X%, were X.X%, were up was margin Total EBIT X%.

close enterprise than quarter lower impacted rates on by large Our deals, adversely Americas. particularly was second expected in the

As upon additional inflow steady many competitive seven large to which risks we and deals was close importantly come six rate theme their with with no we're and an not have specific a The figure quarters, of currently due discussed complexity reliant and for to low consistent due increasing timing. was losses.

items in action underway already fiscal issues occurred that specific execution are that have QX. the to address We

business, able strength reselling FY our I that strategic support Appliance enterprise And start with are Cisco UCS of other these the our at the in on than continued announced marquee XXXX On on later that Commvault in expected of under year-over-year services in the HyperScale early several progress partners. relaunched software good and provide past, scale aimed channel half opportunities first on to FYXX. Cisco UCS will open-up the we well-positioned and of the Particularly enterprise We the and completion are to we to also November excellent this elaborate are in was Commvault a FYXX, a performed significant -- quarter fiscal leverage HyperScale-out through Services initiatives, we offerings key started with stated also distribution expect side, be growth better cloud fourth the and second and Commvault initiatives pleased and for in as foundation new providing midmarket in of positively shipments number channel our which positive with major with the earlier will this These saw with the Cisco Commvault lined believe, Appliance we name. Cisco, impact call. in made to and morning. with with in we financial both growth will we the the growth. midmarket. and hardware distribution results combined wins. EMEA, our make believe solution storage partners Cisco revenue for I'm initiative. strategic -- reseller up which we accelerating the agreement key in a protect be with on market the

We Street Commvault quadrant Solutions. In positioned released in validation the named from Gartner and furthest technology the strong complete backup Commvault Forrester on Quadrant for imply Leaders revenue recently on Commvault's third-party be have Commvault and XX% Data leadership vision. address Gartner evaluation the September, is our will Backup current revenues as FYXX for our analysts can Solutions. Commvault found Web consecutive reports $XXX FYXX and financial consensus a of now Magic QX is August, in site. the leading market year a million FYXX recovery. two of Data or position Forrester of industry's growth. Forrester. total been believe positioned In This Wave Both has and Resiliency Recovery leader in the I approaching the completeness Leaders, Among the seventh Gartner Center current This QX would the year-over-year for positioned outlook. total Gartner's We in reasonable. Leader

should believe and enhancements to revenues the also solutions our impact newer We in quarter. begin third positively

We full in growth expect be percentage digits. services range high to in in the revenue double-digit and more single full-year software growth the to call. Brian the year be later details provide low will

key revenue and partner advantage Microsoft, lead take to opportunities resources HyperScale partnerships, top and to growth. the with Microsoft, and drive channel believe resources We productivity Appliance and the and of partners. Appliances allocation overall and and are Commvault allocating support tied Cisco expanding We that to our including line ultimately full our to key help Cisco, will improved existing of development pipeline

near-term in the EBIT FYXX expansion. will However, this our margin limit

points. the Given our XX will margins results prudently XX to basis now and QX to continue we invest, need expand to FYXX believe

are strong fundamentals strategic to have and face the While still improved, success our we critical challenges. opportunity

bringing new aggressive requiring powerful interfaces. new segments, into market lumpy objectives partners the deals pricing risk on initiatives, -- have of -- We're deals. growth products, also which $XXX,XXX more execution closure to come near-term quarterly with steady These and a and close occurred as dependent all in new rates to in to We're $X us enterprise moving and million complex market models. to ability because rates new revenue achieve These risk. channel our a price many and flow deal Large of good QX. programs. is is and their of simplified This timing. new plus complexity earnings user services, execute implied strategic with due Our rates have series to large new remain

We situation market. to rich the be in in an opportunity continue

in jeopardizing our However, without objectives, a achieve market order to objectives, ability technology invest to our objectives, we our FYXX prudently to need and critical achieve innovation growth go balanced software to objectives. our earnings more

and with have journey from to release to success Our a growth number the accounts with and a of data to of of platform in the release products service mitigate strategic of distribution cyber to significant large for channel QX, potential the an in cloud two, with gain plan. amount primarily FYXX the lots on and which parts two begin is remaining solutions the and game Commvault new improved recover The partners. for provider enterprise services impact based attack. and Bottom-line, our the there share to leverage will and moving a

we FYXX key results to second our last contrast and much progress and QX to In both to strategic made better on beyond. vulnerability have to half a potential FYXX growth quarterly deals. quarter reduce excellent large foundation the expect of that high and We solidify have initiatives the for stark were summary, accelerate in

our which in revenues. strengthen large the accelerate provide a distribution QX leverage, midmarket ability to for to compliment stronger Specifically, quarterly our risk. that as can to the solutions QX initiatives growth to channel, initiatives revenue both for more easier in force also enterprises These sales minimize and strategic and our and sell well midmarket we stream penetrate in as enterprise provide launched are much designed

growth to As ability a accelerate our we believe fundamentally has revenue improved. license result,

by margins and our maintenance to is improve and accelerating overall increase now growth Additionally, ability aided revenues. growth operating

Our this foundation fiscal FYXX. the call I half with the solidify better to over the now all to validate in is financial year performance much of second objective turn Brian. for and will now this

Brian Carolan

XX% of year-over-year up from $XXX,XXX sequentially. X% $XX X% were these enterprise sequentially. deals quarter, highlights transactions Revenue reported and and I over fiscal will increased revenue. revenue in revenues financial was represented Revenue good deals, revenue the second down from define representing increase an XXXX. now of X% year of million, software software X% over of Bob, and year-over-year. morning, cover some period we QX total as million, for a everyone. X% in which Thanks, prior the $XXX We given software quarter which

Our basis, year-over-year revenue in was respectively services Americas EMEA year-over-year respectively, split year-over-year Total quarter. offset the in was of and and of XX% $XXX,XXX X% $XX.X average increase revenue down the up X%. XX% XX% geographic approximately increase for while XX% a total XX%, by a and APAC software revenue was From were driven quarter deals. maintenance The by quarter. The approximately and QX perspective, software an year-over-year of primarily increased On a EMEA, the driven in revenue XX%, decline to and growth during XX%, in number X% by This the represented was enterprise revenue X% XX% for deal services size APAC and ASP increase X% rates. million, renewal sequentially. strong for growth mix was Americas, services.

reminder, historically maintenance customer represented a total software to approximately XX% support services has of consists that revenue As our updates and revenue. of XX%

Moving on to models. pricing our

shifts as 'XX the in capacity quarter, licenses anticipate in software per from platform will in of from decline on revenue traditional standalone that model. our sales revenue XX% was traditional continue to approximately We During pricing basis. 'XX. QX software of sets This and capacity license based is QX terabyte solution XX% license down a our to sold XX% up

FYXX based resonate subscription introduced with models continue pricing Our and traction to gain in customers.

more deals around more we these of when July metrics during we dollar call, the provide As significant, will subscriptions. becomes volume our noted

year-over-year. in XX gross share income to were the X,XXX a million quarter, operating for margins, for income the QX $XX.X XX.X diluted the operating Net employees. XX.X% approximately on margin. net $XX Operating in quarter average quarter X% margins $X.XX Total up EPS expenses operating were count $XXX.X added and Gross quarter, margins was shares. million approximately of fiscal employees on was moving Now or quarter. million ending were the approximately the approximately expenses, million. EBIT for with for X.X% resulting based and of weighted EBIT We

remainder the me for FYXX. Let now our touch on outlook of

total we would reasonable. XX% As FYXX growth. the year-over-year consensus is $XXX imply for or approaching stated, and revenues QX revenue street Bob believe This million total FYXX QX

in expectation QX. software growth single in year-over-year growth Our is to the and grow in mid-teens QX high in year-over-year growth sequentially to revenue deliver with accelerating to continue QX. and is digits Services QX expected

QX EBIT in QX expansion we As to XX% full-year approximately XX the the a EBIT XX%, points. be growth result basis resulting and of approximately expect margin to in margin second XX approximately of margin revenue to half, be

Let rate share count. briefly and me comment tax now on

use We approximates our of rate a will tax which rate. FYXX, to anticipated continue XX% tax non-GAAP for longer-term

any shares. will be to are potential any anticipate passed. following and should tax that reform Please and expire share average of We We weighted that be that lives six their million for legislation senior outstanding FYXX diluted XX have adjustments executives the XXX,XXX next options our therefore closely end approximately will reach we'll note make months. will XX in million approximately certain XX year count the necessary stock

stock options to be their will We prior expect that expiration. of exercised all these

Now moving on balance sheet to and our cash flows.

is was million, located XX, short-term the investments September approximately approximately XX% our outside cash and balance which of As U.S. $XXX of

expire Free which in we approximately cash of from XX% $XX.XX define shares program extend on as that was our have During stock have million, which our million less of million year-over-year. we approximately remaining the flow it operations per flow repurchase repurchased average approximately expenditures share. we will at common down XXX,XXX $XX.X an cash currently cost QX $XXX under was $X.X unless We XX, share as 'XX, approximately XXXX March or we past. capital

full-year has years. expect exceed free fiscal to to flow the three non-GAAP it as prior continue cash FYXX We EBIT in

is deferred million, over As the of an X% of balance period approximately XX% which prior our revenue $XXX XXXX, and September XX, was sequentially. year increase

our is revenue of services not All software revenue revenue. deferred

in growth of percentage the sequential For FYXX, to expect range. remainder deferred the single-digit mid we increase revenue

we FYXX, a double result, the of to low end deferred year-over-year growth revenue the in expect be at As digits.

The outstanding $X.X receivables balance our million is up the receivables We've unbilled in or from the was in unbilled invoiced unbilled quarter, be sales XX from included year. months. includes the will the balance of At of our days, calculation. majority DSO days XX, For XX which the days receivables. DSO XX prior our next approximately receivables vast September

calls, under rules, As noted situations, we advance revenue our certain in revenue invoicing on required customer. in are to earnings our prior recognize new the of

likely reminder, or revenue best or align As all we not our upfront cases. flow to may and a this goal is in the determine, to over practical their DSO. prudent while cash our it interests for time, call receivable the I to note Bob. it an back balance receivable Bob? on commitment it If collecting result turn for customer cash partner and now our will time Please unbilled is unbilled in in that be impact over by pay a will over balance sheet. grow will will

Bob Hammer

SaaS, minutes to our launching critical services and midmarket, our and this based storage solutions. market success And providing you, use lastly assuming our spend cyber record share provide a you a regarding secondary high Thank enterprise to are alliance -- threat already fiscal QX, significant platform. release enterprise our private. few details our cases on Commvault of company to include: major will new and HyperScale-out new midmarket. strategy for the opportunities continued both Appliance based which lastly, details with with be including all for our to threat The have the to HyperScale help Brian. both our year, product momentum. released on including in of helping I’d hit and innovations data and and HyperScale mitigation Cisco new the the with will service of management for expanded and we some expand which business strategy business journey that balance launched Commvault a product the the services Increase outcomes have like with volume build attack; and offerings now elements some Commvault of increased the QX been a enhancements upon and this year. public and recovery with and Commvault reiterating solutions Appliance, and that technology, cyber analytic Commvault broaden and on HyperScale open-up their the data in customers alliances the These cyber cloud, in and drive to I'll fiscal number of and our

HyperScale HyperScale best start choose HyperScale enterprises. data software. storage these HyperScale to true of scale-out for across is to Commvault protect platform with HyperScale Computer, Commvault software from models to and Commvault customers storage program technologies and operations receive in solutions cost, elasticity, hardware capacity higher Hat technology. software, Lenovo, it the and approach Commvault any going cloud with in technology to environment, and from also complexity including In services the infrastructure IT ROI, first provide defined looking and arrays, with meets and configuration the competitive Commvault easier type Dell most to to distribute. and of grade the accelerating cloud of range validated want and The has Commvault their Red of to Cisco, scale-out from two make management greater leverages companies, IT the manage move technology including Commvault's makes positioned of technology It the HyperScale hybrid securely environments. simplified hardware infrastructure agility, HyperScale integrate this the for offerings Commvault configurations. hybrid the robust uniquely built-in Micro private workloads seamlessly designs reducing away the Commvault a integrator needs Let and initial their Commvault's to HyperScale set support of customer cloud, technology and largest participants, includes complemented also provider software one be Customers In to storage and Commvault infrastructure Commvault HPE, This move functionality, bring and mimic built in needs, solutions lower the enterprises is integrate cost, are enterprise to of and practice hypervisors, technologies providing lower customers to protection of full solutions. operating organizations by of the large industry-leading data for Fujitsu, to EMC. technology tailored support public HyperScale can midmarket consumption They're enables helps to leading HyperScale software. the ways. makes to the applications enterprises They market manage looking and us cloud. IT data -- value. data consume legacy Huawei, me public foundation. secondary dynamic solutions software with configurations Appliance solutions hardware on-premise. to diverse adding modernize or relation HyperScale while storage transform any Through sizes easier Super environments, infrastructures from and and security cloud scalability, and cloud. on-premise operating internal scale their centers. like their them to simple and platform solution our and This and to offering, technology In Commvault and virtualization, a data sell powerful. environments a and economics

offers with with data Cisco earlier them software allows a an The on I announced HyperScale is more customers alliance protection is We with unique Commvault HyperScale recently expect network. through Cisco with new Now program these the let which is first publicly a solution publicly and HyperScale was channel which offering, partners resell for architecture is branded Appliance that with Cisco pricelist into was and alliance of formal to UCS. from software teams Commvault offering combining Commvault, entered all-in-one to Cisco Cisco offerings uniquely Appliance the protection me Commvault announcement The from the Cisco October announced unique our this storage. extensive and our Cisco, to XX. data available is Commvault discuss software. Scale The on secondary as hardware new sales solution Protect on move partnership hardware strategic come. reference a morning. Today's Commvault's Cisco

future is take Our integration is in manage, of The platform is software Appliance resale terabytes and Appliance foundation enables a add needs deploy, the Appliance customers channel. less and and backend Commvault the than sold primarily software also entry target I’d disruptive of market hardware the enterprises. a HyperScale HyperScale through other data and our to and released that through released made like features We storage This midmarket license HyperScale burden. progress modules device software to and advantage the technology will protection as is Commvault The an for believe be point including new that -- other platform the scale additional reduces FYXX, general enables data data platform integrated or either upgrades. Commvault to of larger the be available integrated key easy have their services modularity been with full in to a customers offerings the now fully as midmarket that Appliance XXX simple and serve also to fully the includes to expand. Commvault discuss enhancements. products the will Commvault and in we've data in Commvault the will as in

cloud We management solutions. focus our to data continue on

to quarters the and Over last several data the management Commvault in our ensure enhancements a have of platform protection. data number we cloud introduced significant lead to

are high demanding This customers environments. to orchestration protection our of copies their the a of those private cloud, Commvault management legacy and all to of requires and data environments. different degree automation seamless, data consolidated public cloud easy holistic provide platform in Specifically, of SaaS, data across traditional and data

any such sole and EU's Regulations. well new as its Please any timing General or comply over functionality and platform at regulations our greatly note with the features data development of effectively In against our release, much cyber like to addition, ransomware been quarters the new to attacks, last data help deal several on as of product Data has companies or Commvault Protection discretion. the ransomware GDPR more remain the as enhanced --

I about everyone Conference. Commvault remind I our to Before GO annual want close,

in key the HyperScale to other our addition second FYXX. product In of half technology, planning we're announcements

the results made in We and very that been GO Customer which found X partnerships key GO about Convention registrations both Commvault annual were on our QX closing, our Web to deals. committed vulnerability strong. and in our Gaylord these site. on In Information potential quarter & partnerships to National will Harbor Conference, the mitigate excellent high quarterly our have to ecosystem Commvault we in be growth Hotel Washington at contrast last highlight Center through have is scheduled DC. stark at X progress accelerate can November strategic large initiatives

launched initiatives in Specifically, competitive and strengthen sales significantly the designed QX are have The solutions that and we leverage. QX strategic are position, in market we strategic for force, to opportunities, easier our distribution and new improved channel our new open-up launched sell. partners to

enable provide will partners to our midmarket they revenues. enterprise revenue Importantly, channel our to compliment a stream stronger

to As revenue a through result, through accelerate ability force sales fundamentally our we improved. has believe license our -- growth productivity sales force

aided growth ability and improve to margins revenues. maintenance by accelerating our Additionally, now is increase operating in growth overall

Our the I objective the now Michael? better Michael. fiscal is history. We strategic to this position believe our all and and financial of the strongest solidify to second turn the performance validate foundation half with will competitive this is for in back call FYXX. in in now year much the over company

Michael Picariello

. we please Operator, Thanks, questions? for open Bob. can the line

Operator

first Our Joel comes Instructions] [Operator Fishbein from BTIG. with question

Your line now open. is

Joel Fishbein

have Good ones. quick I a of couple morning, just gentlemen.

you there pause to of is wanted know you Obviously, was about the lot Bob you announcements of to today much have some new First was a the of out cycle? if new related purchases? how push those in product front do think thought what and

Bob Hammer

the it out massive in there deals to have that due to the some there, may pricing that but we're pause launching was there. new a amount due was these think confusion to market product we delayed move don't as some product was I models cycle. of new don’t I right the think There

Joel Fishbein

Okay.

is, Second -- that you competition. the give to follow-up the doing? steps related wasn't you number the bit it on Can then you're -- was one, think fix two about -- call color to didn't taking what some to gives a talked Number us execution you is it that what more And the doing on little you you issues. issues. that you're confidence what competitive mentioned some

Bob Hammer

the -- to deal -- and through big dependent better -- our the easy will Cisco. though always isolated reduce I the we And current but all those tangled through more we close vast misses company, wanted enterprise end in mitigate distribution bread-and-butter, on doing. is a were of clearly the balance to midmarket to the competition. getting all accounts accounts been will -- And close Americas which lot we and or so market-leading them both quarter. the in the that enterprise to and again misquote strategic with the vast, the dependency we're a we give a process And that wanted we’ve was provide compelling distribution that get Even to of partner we’re isolated those things pushed many in quarter this ways up which in the with gone channel couple get is by our numbers, that. trying big the we to are in technical to mean partners Strategically, have something pushed. execution, execution. for majority few this leverage majority pricing. nothing So, did sell, launches through the -- to APAC. nothing on win, like working vast competition. everyone have and we’ve give of teams get that of their because in extremely I in do Regard new our key the companies do were year remain should to this and in working last of with Americas Many the the this, years of fiscal reasons find and one designed that QX sales we're key hit to region something like would

they’re two, strengthen these Joel, summary, we're it So, mainly move I making in of one distribution call leverage. in the related of competitive the And market, our, that making we're are moves to company. the related strengthen but to to issues, many some weaknesses to

So is the quarter, this last disappointing for stumbles the strategic is and me. few disappointing which thing about all extremely the just our to at nailed days that we initiatives

Joel Fishbein

Okay. Thank you very much.

Operator

Abhey from comes Lamba [Operator Mizuho next with Our question Securities. Instructions]

Your line open. now is

Abhey Lamba

additional Bob, place a versus changes are didn’t Yes, the put give thank high strategy rest the on that on little in in market in close. of stuff deals any you’ve those any some year? thanks quarter that the degree seeing, for of us you. Can you more that you color confidence giving last your for have still color you do thematic or

Bob Hammer

we deals I no sign stuck missed. off, don’t any was that guidance There -- that was It's the theme discussion required pushed. this theme. it no of there. here. or is see more the There deals in got rhyme There

the only Abhey dependent are here -- and but kind when that the that, theme deals our why to mitigate there I broadened that's things strategy roadshows, you these we're accelerate have we the is -- for of risk in to really the is growth, tied large to want these on future. to think that risk and

I up a on a was forward. teams, thing what fast products the is mean these our channel the funnel on major teams, is the lot on marquee I disappointment the customers So, getting quarter surprising our did partner product we of, and to that massive in seeing call, going job teams HyperScale. we won And we're an -- awesome our other market. take there that

we then quarter, all us. and encouraging disappointing all is to which we the miss of stumble that's So and

I than we miss now, fact that the products these strategically market take better to and were guys doesn't because now you away were did quarter. the feel the but that in that So, motion I when from on here, are

Abhey Lamba

you on for speakers]. a What Got are it. [multiple assuming quick And follow-up that.

Bob Hammer

comment you. going is for Al to Abhey,

Abhey Lamba

sorry. Oh, I’m

Al Bunte

Yes.

deals, cloud we capabilities a is, boomerang good, cloud the environments we cloud in think which technology extremely feel so-called effect. quarter on effect, doing have saw Bob's in one, driven boomerang well follow-up new Just Again really that’s you on-prem. so-called I but and bringing strategically is now multi the back We're comments. what the and

that I couple would So entire the that one. Abhey. extremely a things a new We're our across cyber Those and without they and our to and capabilities two customers data are obviously those things environment in new just in on several organization with warning we're They or new readiness large HyperScale geographical center. an working add They’re going measures the well-positioned. nature of is disasters. and changing what's come market, of providing becoming functions now two Point there malicious. with come Point attack. versus of

Bob Hammer

are points, those thanks. Al. good yes, Yes, really

Abhey Lamba

you. Yes, thank

quick fiscal it guidance get the the and me. a and on for to close Just assumptions that’s rate QX to QX 'XX follow-up for

Bob Hammer

When On a we need to have good rates QX, still will deals. and as those maybe large we need really our that lot. somewhat -- QX, on close Abhey, close -- don’t you we mitigated get

new Let's with launch we products. of do the these see how

Let clear me in need we still solid QX. close everybody, good be to rates

but we have funnel of We to close deals, a need large them. big

Abhey Lamba

you. Thank Okay.

Operator

Our Ader next Blair. Jason question comes William with from

Your line now open. is

Jason Ader

Appliance? are the then, product? relative partners when And manage Commvault against Cisco that channel of competing same for you Bob, branded Yes, guess, potential how to looks the type I should thank you. first, have What on product, Cisco Appliance deal we the guess do sort was there interesting. conflict pretty that impact announced now which from I with particular the you with you Commvault of that channels expect have

Bob Hammer

The deals, competing. Cisco's UCS a enterprise or so apples because with be product. they’re a the I POC less they terabytes. and UCS a deals, as oranges, the installations enterprise, actually our Appliance It's if accelerate the big customer already. that And -- so with enterprise use deploy used XXX than to are some the Cisco's not anything of product. Commvault midmarket Cisco can Well, mean, ScaleProtect appliance Appliance to is that want a we’ve seeing we're seen for and evidence already. Cisco the HyperScale actually and

see any on channel call. by so job there. your conflict good channel you And all check, mean, way, a good … don’t I did the I So, at Jason,

Jason Ader

Thank you.

Bob Hammer

it you Unfortunately, right, called right?

Jason Ader

clearly business I to I you hard game to know branded and reality guys I makes as to you the than HyperScale branded, the luck deals, Do the think mitigate I with guys that try forward. change Appliance, large to the the you your Appliance a the go good be volatility around so working appliance think will a time? bigger can plan Well, with that over tell and to sense think you try to you’re contributor I Yes. Commvault frustration of a mean, Cisco lot and

Bob Hammer

remote have both running and over they we've so use in potential the have the and where certain are they appliance, company, Commvault in think it, want The will the are it run. the to the I are -- or it's -- will but since appliance probably I But products. change use there the anything -- mean, new outweigh that dominate. memory. to the each use will we've customers game the done, leave are there all they we enterprise lots where HyperScale both complement recent HyperScale high very I potential offices cases these in large done -- there of launches this way, it enterprises, a want other we’ve standpoint cases from in long just things been simple highest of plug Commvault big

and dig topic and of the that doing combination things for many we're with cyber out priority cloud -- the issue in a helped with becoming on we’ve as attack. number all enterprises, cyber is mentioned the and a this under one enterprises So Al from

in we So, cyber platform are the of the mitigating terms good and enterprises with our both know from recovering attacks. how

plans, and have quite in those miss number. consistent is we that what confident stream. like key sales hit a not combinations I us more would of growth in earnings have -- to solid aggressive we and and good things [ph] a and on numbers like this quarter them be improved It's have really are issue and our put delivering am productivity here so really we not lot an So powerful a will and

Jason Ader

data not to think on to right follow-up, in is market comes quick quick for the managed provider one follow-up now Al, sort Bob when talked and of data. cloud data? separation are idea with your customers do Where it rely -- And one you. to not of you have the this about cloud the basically understanding church protect state to cloud of managed

Al Bunte

particularly think, … I

Jason Ader

first -- along? we the further first-inning is or thing in are it is are The we

Al Bunte

World we clear. very No, It's enterprises Series. I with a becoming -- that's think in are

will, probably etcetera, robust those clear some AWS even protection it's and with pile with of need SaaS amazing at of that’s enterprises that level, is of type cloud of a are a there's and and recognition think two just number just beyond applications, you I here one, partners data simple is a is, second or not a a you coming working if toolset, third like not Microsoft our But point is the everyone Jason. that almost realizing Point solution, solutions point level that kind have but sustainable. inning.

keep broad a this You little native infrastructure in more holistic at bit can't throwing issue. toolsets

third your think awareness picking inning, the second I probably to it's up dramatically, particularly, but point so that's accounts. is and enterprise And with

Bob Hammer

expertise way know Yes, they mean, our be proven and it's pretty good and they've isn't their partner that partnership really its programmatic well a they with protected that the accounts very a those of make generally well in protected well are but in to big us sure protected to with is, where I are validated with I know working accounts their of disaster. data, terms of it where for closely case Microsoft. well a really in -- loss

analytics. we clear is So, those that's those, the that are in going about be next expanding. And really of come can wave partnerships to

capabilities key GO. talk had we provides that platform learning are number and an we at working business to outstanding platform Our in as analytics foundation of machine the we partners which as a well, regard about will enhancers for and with

Operator

DiFucci comes question from John next our And with Jefferies.

is line open. Your now

John DiFucci

you on may large Thank which were is large to heard pricing, said that unnatural deals last things in call irrational. even regards of the some the Bob, described very incumbents be doing you. with we

have commentary about And maintain competitors you your This quarter sales last what, incumbent around do more but quarter? the if if have, of they anything, pricing own can these is execution, that? practices your

Bob Hammer

missed, deals slips you look Well, anything the do -- they accounts have, nothing to that had none had of when at we've but those that with that.

do quarterly yes, the a a not behavior, but I’m the says I the serious. free, I we slip. I’m give mean at for there's is that end free. mean, So, you for for our day mean, somebody cause if And free wasn’t -- that mean, cost of to going see I I free. this

cyber, management So, let deal with and manage one those DR stuff are because comment that get on piece the you for the and the data to it, in on the free weak. top data pretty cloud of us portability the solutions is, ability free okay, and

So and we've EMC EMC with been XX for particular from for dealing Dell free example, from, from years. in

So want the Xif key -- play is bundle their and what’s is, but use leverage. you to say that that is and --

Al Bunte

and discount. Bundle

Bob Hammer

with different it? discount. that issue? deal Is we're to an Yes, bundle in Yes. Yes. But and have Do not we a world.

not prop money value prop win. what the end our is, not really As the customers we somebody can there we versus solution. day, of long to value in clear our like If then going on at that we're are our as articulate and we say that’s

I we with out will The issues are there, and insignificant, relatively them. so other -- it can deal call

more this So, kind talked it's balanced these stream I mean, something is far. of that a enterprise issue mitigate -- balanced more terms revenue -- building to about we a like in in not and of major leverage more the terms and occurred things distribution midmarket just between that’s of the Commvault in getting in

John DiFucci

continue note also Okay. that accolades and technology And the your if field independent press from your just hear research I and you that through not we to products, in discussions. might follow think but firms I about to then, release,

than strategic place initiatives, it's like are you have unclear in some talk improve -- done you've sales partnerships but strategic believe to okay, seems you that's you well it I it us to what good, it that is, said, all execution. put me place about So things think you’ve you which things more But the sounds like really things going there if were and already initiatives, issues. as like it if to other execution for in now

Bob Hammer

beyond Yes, that …

John DiFucci

[multiple any to speakers]. there where mean, I changes

Bob Hammer

the understand And doesn’t force, up. have did going and support. know that force and is best they’ve to in screw in U.S the we But disappointing many new they’re is, last quarter. really restructured teams sales well I’m be is, sales American best execution how been get but and of there … just in the good generally U.S yes, team and what what’s pricing particular, the technology, really our blunt can we the services I don’t being we we changes, that sales more the articulate lot of best have the I and have

and it quarter-on-quarter, Some and the really good pure its in we Americas the it know we execution vulnerable six teams I say on and basic and the it someone that a those putting foundation easier my providing agility so point large accounts did you’re start a could miss row deals quarter you’re them to easier quarters clear we haven't you doing and a -- we bigger where giving regions for dropped I cyber help but and ability in we’re and things make how to of and a depending not management secondary funnel this big is more you storage execution the these through and and to get if on have that to leverage is a for distribution did more execution, adding strategic. to platform had don’t in outstanding ball. mitigate get and the cloud when you’re things. make But recover the become data and few attack, teams there had from these and to are we you’re it ability into you’re to through all -- -- the

it our distributors you’re to just out. it's easier for get the making teams story So and

know screwed else can I it. of They say I up. End how So, story. don’t

Operator

Our next Alex Capital question comes KeyBanc from Markets. Kurtz with

Your line is now open.

Alex Kurtz

Hey, guys.

going put quarter half, of second large the not Why into just consensus forward on depending risk here? just here Bob, create on reset the it deals number that again again what not So why down here. -- into Why looking kind take the QX?

what that? was So thinking around your

Bob Hammer

down thinking increases in significant got it's deal it bit, big by pretty offset the -- Internally quite we we’ve did It's a robust take because revenue. services was a that funnel.

about got multimillions, did still issue that deals these down bigger of funnel lot a with going mean QX, risk and just mean, to So it's point a them it say are margin, million this the we've zero, got And when you’re but of not them I your last close some in at reduction the and what -- degree because to the of deal we quarter they happened the dollar and at deals dependent. a talking zero, deals no, -- would deals which will we’re same have because the quarter. the take in, deals, we plans to the due to large in some our a we're of shipping it's on going fact weeks I it we’re know it’s with relative -- less we've and in margin slipped appliances is that’s some the here and got we're enterprise. we we’re momentum in us in closing and are start to dealing in dealing we $XXX,XXX internal or slightly the helping HyperScale, because funnel we've couple that the large risk

that investing have opportunities of of to -- operating us revenues take flat, took but advantage So, the in the we and launched our here. that because make down front are we're product we -- we margins these sure we get

the it's fair point. a point. mean, understand I So,

Alex Kurtz

a really what move historically. consensus or guys where just especially the and just understand you versus mean, of all of historically to is question large risk large so single-digit during model of have I for you done that guys higher fiscal aren't here, limited give these In a customers, year. that point 'XX And strategic full-year we deals the of on looking where into last license kind portion that going work -- not think going through large a there's and manage then kind a you away you’re you’re considering why just really just high estimate, the consensus the to at which I you problems growth we deals view where exclude solving kind

Bob Hammer

Appliance us will we Well, it turned we is that we get quarters gives had going. didn’t -- a look since It six and of with luxury once it the number. miss we've

ball quarter, customers Just end we trying they’re to many the quarter was the some talk before this four good until confusion. many it out and about too looked customers. alternatives, we pricing Guys given some hit and really the it. when this [indiscernible] pitching confused off just the of And too figure days of fell just dropping

an an was just and is So that element. That’s the it element. element only

this your we some ago, a years So, of number we -- XX before miss. point our issue didn’t is we than before XX -- had We understand quarters I different which we and XX, understand that had this.

So do track a we get risks have do opportunity as those understand on and we I what point really we're we go into to and like now. to we we your to where that trying mitigated to as an FYXX here that think

Alex Kurtz

you. Thank

Operator

question JMP comes Securities. next with from Greg Our McDowell

open. now is line Your

Greg McDowell

same you specifically want points in I now previously margin yet Great. ago, the bps you in to margin about talking expecting basis in XXX mentioned operating revenue focus operating the largely you’re months as Thank XX only margin the XX very were expecting to expansion. change you expectation, as and on were July because three expansion you’re much. and in

could expense you versus exactly changed months what from structure hoping So standpoint on I ago? Thanks. expand was three has just

Bob Hammer

Nothing structure has standpoint. changed the expense from

actually internal miss, we’ve and reduced our put fundamentally mitigated it. to projections higher after situation. fact, In What’s it license a different us in that is and and changed revenues the attached it

launches. So internal geared our was new the which way issue. that's to plan the product by fundamental and It's all these relative focused

and put cyber in but that place and the doing. dropped we So the in there the other structure that launch QX. these Appliance these QX, things the as And we're and all QX and ball for all we we HyperScale products is structure in

you it And that color. reason. want is other Brian you If out, give the can net to some

Brian Carolan

to that and in in QX. hopefully With Bob. we fruition achieve targeting on, numbers second to to half that's the will But it didn't were philosophy we're our think spot is and internally objectives. I these prudently respect invest continue No, that investment higher come

Greg McDowell

Great. Thanks.

Bob Hammer

that FYXX. couple opportunities revenue work growth take total here really big And acceleration not investment of expansion. years is sales critical concurrently both with have and when And for by operating market of advantage can't productivity, the way that you just margin of

game that’s our plan. So,

Operator

comes Jaffray. next Andrew Our Piper with from Nowinski question

Your line is now open.

Andrew Nowinski

Thanks.

So past had sales increasing of you and the when productivity. some also execution sales in had attrition of issues, levels in you these the declines

within just and you to at can your So us you’re on sales or levels, capacity give productivity where attrition an sales U.S? regard update the also with

Bob Hammer

competitive had the and of are our We're the rates of sales low, is in low. were attrition growth other off on number a new is curve numbers. whole ways And to our happened significant teams last time as a product their hit now. landscape. what side attrition we know cycle their accelerate that meaning you all-time our We��ve near we given and So change

So capacity we’ve in the the got field today.

we the with with with with that expanding align channel have align Cisco to align and to of the moved an partners partnership some capacity our partnership Now on Microsoft. to Appliance

So the whole to refresh it's a very time do last different situation, but -- new sales we had U.S force product reorganize a and etcetera.

in our that basically are achieve. those in they those there selectively are are hand. we’re to the teams with on things those make -- what need U.S executing not we're areas and now some that sure to focused that, So, clearly Concurrent achieve

Andrew Nowinski

[indiscernible] in are doing some which is Okay, like no well. in pushed, but that I segment midmarket I also know thanks. pretty the increase there then, said losses competitive is And deals large vendors you in you cited think where weakness the

the that making midmarket launched but I the So, new Appliance midmarket, weakness? guess, that that any in that of some or to changes to incentives you you address capacity mitigate pressure are should other sales in sales

Bob Hammer

to new are the and to didn’t there's are other are about big applicable have products That and can talk a -- ones, but that it's of in dev/ be the we've those we the or it about sold and will whole cyber, be earnings and there's we we in about, -- of talk test. that as drawn new call. series to talk with series enterprise in the because mean and and a can Those potential are got don’t -- these talking we we I a Appliance products the sold are at but have talk little in on midmarket whole related -- I want that midmarket both they in talk products and midmarket. enterprise both GO, products whether bit, I my separately

others of its -- that I series help mentioned, growth. provide the not two -- is there whole should I just that just midmarket a So

Andrew Nowinski

All right. guys. Thanks,

Operator

from comes question Wells with Fargo. Aaron next Rakers Our

Your now open. is line

your is phone mute, unmute. If please on

Michael Picariello

just will we Operator, on. move

Operator

Our from Partners. next with Srini Summit comes Nandury Redstone question

open. Your line now is

Srini Nandury

taking gentlemen. just to All the question, for back last my the right. years. you three I’m Thank going strategy

your loss in less to strategies products. a years, means you at you changed three it on How relying make of making of deals. was understand company closing with If in Two be trying something look to quarters the bundles large unbundle strategy to the easier the quarter. solution, one going people last and reliance of small This seem consume row large deals over customers the the the of it on the the respect change for to on? out? sales the in is with to how push the deals deals traction to solution I’m has sales with business? are Is incentivized a

Bob Hammer

I No, Al let will I Al mean, and I will think speak speak.

growing a point will our them of a products it the release number put midmarket product our topped ago those off, of to have numbers our some a in I -- midmarket, on and those clip, think think is products to needed -- I to had but we I growth. well a, the bring, call there a to growing, the channels products reasonable are but substantial for accelerate done the product of part rate -- services at growth more they’re of products the into years mix hit those momentum relatively -- versus basis and today. we is relative But few

it's it another so to wasn't weren't And -- to just this … Al, that. is accelerate you at generation if those the time, that successful want

Al Bunte

speak. around providers think That space here as is that we've hidden I the that's focuses our for kind us so and times in of only been said strategy and I I well. service a numbers add would many that’s midmarket Yes, Bob, thing well said, good to in the gives

Srini Nandury

you. Thank

Operator

question from Street Eric Lake Capital. Martinuzzi next with comes Our

Your line is open. now

Eric Martinuzzi

and back If was up I that had -- a we obviously the -- traditional which different we be progression But Yes, the throughout FYXX, last back would the of just we a to implied guide. in wondering impacted a be year, of revenue services are address to services a QX was the services FYXX I bit little issues QX kind revenue a QX from wanted it up a FYXX. from QX? are where in progression go to would because

Brian Carolan

back hi. sequential of yes, here. Eric, Yes. say, trajectory. a I Brian upward we Its would Carolan on are kind

made programmatic years. of couple especially 'XX been quarters changes several got the pricing and now in we we’ve for many talking last the half to of fiscal terms think I about this the over through we of as of get back

in We will a starting start and to see resurgence the seeing line are services that. we

Eric Martinuzzi

Okay. Thank you.

Operator

And our next question Wells from comes Rakers Fargo. with Aaron

Your open. now line is

Aaron Rakers

try seeing SMB to multiple for curious tiers if products. or I the the solution? secondary early storage, industry I'll just or building how you HyperScale characterize as and funnel size to to guys. from Thanks, about what for you're I’m those pipeline type the would of albeit your those moves midmarket. wanted sizes I that or consolidating deal the that deal again ask earlier. apologize opportunity strong Yes. market regard talked with here. outside a the just And lot you’ve about of

Bob Hammer

this, open I'll So Aaron.

ago, months couple [indiscernible] right. is this of our surprise, For a

of large, a funnel today deals. utilizing part was we by I receptivity I scale-out very these the not number for to benefits want capabilities So, will Appliance, you, names We way were big for product validated -- it I high, whole to for will is had closing describe the surprisingly the encouraging been and with amount our HyperScale, of big -- you secondary working in, the a of concept shoe. the and product a them, it. about so describe we say in thought We’ve the that deals the on call I figure part works quarter number infrastructure right been launched relatively I And launched beta only was of senior really would in that of I the this on the of discussing that on easy think and partnership enhances and it it really storage management The customers, the our it's of but deals seven and early with been recognized is the that that. call is I Cisco deals us and out that year. last we’ve HyperScale

maybe a for bit little So, Al, you want more to Aaron. add

Al Bunte

it targeted that of along been will think tested overall, I've Bob and I two will to the the be company is the I it months Aaron, be go the well also go a and with as XXX three roughly six call, interplay a can of remember appliance that’s vendors because But think we should solutions. appliance, thing we adding is terabyte larger sorted a our limit that one is Cisco and we're but your it's as or is I choice. HyperScale would yes, lot exact software. to play good solution personally be about above primary a it And larger that about midmarket will Bob choice the said our limit in both same here, hardware is been on terabytes add, are everybody will this or for using between And Bob remember other arguing offices, of here. said seven said. wrong, Yes, upper be there you them, as remote again because piece there and what then and for called primarily and has software XX goes a determine start probably thing but most to the

using different hardware there. just environments it's out So

Bob Hammer

cloud a seamless. is storage really giving through cloud is migration cloud to play, secondary because The you point, are It's that of customer easy given economics -- which them you're platform also that The public using a from very the high Al's have in cloud rate platform. to agility, utilization public same the move for we are us. data, move to in matter Because we and ability don’t Azure, manage HyperScale we way we our example structure seamless structure. Azure -- really doesn't are AWS, we the are to to the Google, not that completely Azure,

up to functionality So use term of put can want don't the our use there. our -- the we we platform, move. have if structure to to don't but HyperScale We have you our

marquee and and they choose have partners. to we’ve for going their is a a So, very their and easy got great sales them. there, who user we're hardware do they’re reputation has alignment. we and Cisco that gives it I makes massive with it's server But and lot one good a because this, more a reason customer mean, play footprint benefits for certified a because the the force Cisco good help flexibility user, off-brand real good had they that’s channels using at got the out to to utilize us,

and So cloud. of choice gives in gives to complete them to structures agility the it other vendor also move the customer

Al Bunte

channel well. As gives choices them as the well as

here, own to the can As are other guys roll the their know Aaron, on Bob when kind want just the in key no these said. in said, as And of on if they lock Bob etcetera, they they back have but options ones come thing end. is big hardware

on no particular with geometry. So all of these talked can is environments a be lock intermix, other. that particular or work vendor we’ve about, in each all There a

Bob Hammer

a with aligns another also they enterprises cyber. them crazy as and to it key products with point And dozen deal and like compliance and driving try with different dealing that objective big GDPR are their things of environments rationalize

really well environments trying this aligned with is simplify to they’re their and those objectives. So

Aaron Rakers

you. Thank Okay.

Operator

Ladies participation for further I’m the time and conference. conclude you today’s This in program. does showing gentlemen, This thank no questions. your

day. You great a may Everyone disconnect. have now

Commvault Systems (CVLT) 24 Oct 172018 Q2 Earnings call transcript