CVLT - Earnings call transcript Q1 2019

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

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 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 conference maybe recorded. I would now like to introduce your host for today's conference, Michael Picariello, Director of Investor Relations. begin. may you Sir,

Michael Picariello

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

projections Before statements may question-and-answer future statements the session and during we end to regarding include call, this of that I'd everyone like call, forward-looking at including statements, including financial begin, the remind made in performance. the

number All relate expectations of pursuant our or based expectations. provisions Litigation and to Actual intentions safe general are sale services our of factors, made as and economic inherent Securities uncertainties, delays of of related on the statements results manufacturing, difficulties competitive such are software may Reform current these that and differ XXXX beliefs, marketing a Act the Private regarding plans, and the conditions. the to risks development, in and and to of harbor products future materially due

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

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

conference been X-K to and we new adopted over on press the is filing. the non-GAAP Investor also on On it X, release be reconciliation XXX in press website. and SEC was Commvault revenue also services in April and financial wire earnings can this an posted release website. issued results. earlier between Relations XXXX. press our accompanying found our release call, available The as measures provide IV today standard The furnished the ASC non-GAAP has GAAP the Table the will Our

basis, rules. Our adoption was new been in done prior the periods adjusted a financial have comply to on with our statements so all retrospective

being the growth basis a the All discuss call. references new our our call products webcast archive P&L. webcast. or recorded President, percentages I today also software a As software Hammer. inclusive dollar and in the An our This today's disclosed conference is in CEO we now website on call revenue of percentages results are following turn will of on Bob and and amounts will available using to result, be is revenues both are for being to comparable the replay as the for will rules. over

Bob Hammer

first discuss fiscal quarter product our Mike. we Thanks, and On initiatives our call, Advance, ongoing updates two today’s morning will board our on recent everyone. results search. our and new CEO comments operational simplified offerings, appointments on new Commvault provide called Good our

financial Let now our summarize QX briefly me results.

implemented XXXX Commvault in operating our XXX basis year-over-year. product prior up of Advance revenues all year-over-year. able or $X.XX quarter year-over-year. was the year-over-year, overachieve we within highlights was functional up in to per to $X.XX points framework the versus X% margin across initiative. Total a several including areas and year. up Software our costs XX% EBIT flat the had XX.X%, EBIT was We objectives were QX reduction were margin share income operating in we were revenues EPS due that

year XX% with make excellent of a subscription represented XX% based which to progress the revenues, software pricing approximately QX. prior products and models, continue of QX up We our

cloud flows momentum of prior Operating X.Xx $XX.X an services year-over-year. revenues with in cash had good growth over of continuing customers the all had subscription good the putting quarter terabytes approximately the year. We is into deals. the which to XX% cloud managing had up For time over year-over-year. million, we number We XXX data and XX%

During XXX,XXX available our of the have stock. million for approximately currently XX year. XXXX authorized We fiscal through and million end quarter, shares our approximately $XX common or ongoing repurchased the approximately we repurchases FY of

During solution global service. quarter, we the as will IBM a new both with announced IBM managed Services. software a Resiliency partnership as Services offer a Resiliency and

Let Advance. me update you on Commvault now

year. is three driving improved reminder, objectives: covers a simplifying plan primary Commvault the consistent developed was company-wide fiscal Advance more revenue and transformational improving a As game profitability. Commvault that last business, Advance growth

changes products, of Commvault as substantial making distribution and well I pricing Advance as to making Phase executed messaging, have reductions. substantial We cost

the market targeted effort midmarket our shifted sales XXXX. structures And about our our dramatically the improved from made we XXXX. mentioned due protection data is enhancements position powerful, QX reduced our sales to our Commvault points it'll We improve and Complete also functional simplification is in XX our while costs Commvault portion to Complete resources machine objectives under margins we and material Commvault and We including earlier, supporting basis in XXXX a restructuring of XXXX progress major to sales simplified simplified reduction brand. as six. up more a of And a operating talk channel routes new early XXX distribution, we the by messaging partner overhaul I'll enhance the quoting industry. QX turn the review our margin specifically to and and our and in sales. in partners intelligence pricing including convergence QX processes. ordering all Advance later solutions of aided One, operating of of Complete QX marketing and the strategic Let's distribution Commvault major in to across with and overachieved a functions. led were Commvault call enterprise. Complete is year-over-year. SKUs in products, separate artificial and position We a our direct learning. the solution This upgrade through on core an organizational completed most areas

partners HP, AWS. of position with to We strategic key addition addition are and with Resiliency and partners partnerships strengthening IBM and Microsoft Services alliance with in our bolstering our Cisco,

to to more the of and cost is of announce leading we progress end pricing quarter board's of alliances. are deliver addition, these operating aligned firm our substantial broadening working done our better, additional in initiatives. enhancements. existing work revenue with the now team much have and by in still executive the engaged and We we The have to reductions third-party Phase what have into to additional a growth made we our II improvements translate engaged predictable with margins expect implementing consulting in do We we Commvault operating and direction entire committee, Under initiatives. some Advance

leading update new the firm board CEO search who CEO. me committee have and search actively Let briefly on you our identifying retained for a of has in May search been interviewing our candidates. The

Directors. Bejar an Moran We experience continue future deep have week, We and to years industry to you technology Commvault's transition announced and Martha drive continue ensure the Board transformation Let accelerate Bob the our I leader the of Charles strong on "Chuck" operational and now I of the to this addition will of and expertise strategic timetable drive no appointment a shareholder value. service Kurimsky we of to involved contributions to we positioned success profitability last executive leadership make am as Martha will Together sure growth and board. for many recent I Martha Geday. process FY’XX initiatives like and skills, Board outlook. the personally Chuck further am of me updates of to be team, to a a and address fully the are update changes thank oversee announcement. smooth Armando company's finding we board Directors. Chuck and Armando also bring at with of and time to our and this to to nor with plan I the would ongoing significant confident Bob will Chuck and succeed With Martha well company's Commvault. and supportive

We updated $XXX Total revenue our to to transform Advance up our Commvault million with are These as being are million we or outlook range prudent year-over-year. approximately of FY’XX total year-over-year. as revenue well the or the FX as of revenue X% estimates in the business to result X% $XXX be up continue $XXX expect total quarter to million revenues second expected be headwinds for initiatives. a more current with revenue

XX.X prior and on the We approximately expect be FY’XX margin full percentage to % percentage will the detailed FY’XX improvement is and margin over provide QX XX.X%, approximately XXX basis XXXX which to color year. Brian QX EBIT year EBIT be outlook. point the

dramatically governance, channel data in the business the strategic released and new of accounts data growth appliances to Success later based earlier call. Software for primarily and our Platform talk machine for becoming we more leading optimized to for upon detection our support data share our and finally, more customers mitigate and cloud improving much help analytics with source by And the partners, as gain analytics. growth Data artificial cloud of journey for Commvault and midmarket an cyberattack introduction Commvault offering implying which feedback. on Appliance was disaster and FY’XX initial protection, Our the solutions the highly enterprise, simplified the Complete, intrusion recovery and management. a migration for HyperScale recover see Commvault to very including to in positive is pricing offerings in the aided this automated Three, large and offerings about mediation. intelligence month and with the Solutions, success and HyperScale product and simplified I'll as our from learning foundation and

that strong is and still challenges. our a our execute While note effort. has improved, and major to critical face Advance strategic fundamentals ability Commvault to transformation we It restructuring important is are

disruption to making tide are risk execution. its carries which business, changes and We the fundamental to

of to upon have As which risk seven complexity come currently are many for and their large quarters, steady with we six additional due a we inflow deals, and figure reliant timing. discussed

the on term. deal also large we rates lumpy, these particularly our rates close to deals, need remain in While likely near will improve closure

transition subscription a While effect we near-term progress This with we to has license the impacted continue happy are making on revenue growth. have pricing, with revenue. are it dampening will negatively

path the financial on are We performance the the to on sustainable improving company.

with been progress marketing framework reduction by sales aspects broadening relationships, our Commvault position, competitive line, good expanding distribution company reorganizing driving and cost all technology and Advance our and making our We efficiencies. of the strengthening across have product

technological do leadership product As I industry. adverse strategy. go in we Phase to we impact expect position an the maintaining Advance, to development initiatives We have on our II these on not remain Phase operational Commvault focused at our through

a to and call We Brian. our now to are Brian? to the necessary turn on adjustments growth. with while objective making the of achieving putting us business sustainable will path the over I intent also on margin our revenue focused long-term XX%

Brian Carolan

increase of financial Thanks, some would QX the currency I million, will total cover Bob a basis, over quarter first been software year-over-year. rates. $XXX.X an $X.X revenue highlights using prior-year X% products million, and prior now everyone. FX XXXX. $XX.X of revenue were good been total quarter million constant fiscal for of sequential was the million representing revenues On revenue period. morning, prior sequential software a FX higher approximately $X.X On constant using reported quarter currency and and approximately have We QX basis, have would which products higher flat rates.

XX% pricing resonate continuing products to Subscription-based models with QX. and of software in subscription revenue are Our approximately customers. pricing represented

Software models consists XX% pay-as-you-go such sales and as are arrangements. This and products committed revenue both subscription from of subscription-based utility as type often well year-over-year. multi-year up

in XXX, are legacy we and recognized arrangement continued the on rules. revenue a and time was software sale the as amount under arrangements, generally case time recognition the products to reminder, hand, be not over committed. they required over revenue of to under the generally full other Utility ASC not recognize generally of period as from committed a a As subscription are

XX% SaaS, services our revenue other sales QX repeatable would last you of combine from be estimate subscription models approximately in in our revenue communicated total from of is full managed expect license of that services such up revenue our When call. to This consider with in we year maintenance, and and software our to prior a We FYXXXX. to streams our approximately earnings we subscription-based XX% nature. pricing as repeatable as increase on total FYXXXX products percentage XX% XX% our

revenue year-over-year. XX% repeatable Our was up

The We Revenue in product of as of XX-plus given are enterprise these to revenue was our down revenue on in we enterprise revenue year-over-year. within XX% percent defined such years. software repeatable deals, over from the track which $XXX,XXX next transactions of year-over-year. to XX% deals increased two quarter, a Revenue achieve from and transactions represented revenue. goal X% one number

and respectively. geographic transition to over recognized year-over-year opportunity Our was perspective, being agreement. up EMEA quarter. software software products licensing Americas, From to XX% average maintenance annual data certain our fiscal revenue of enterprise heard been enterprise renewal impacted XX% to In models. transition for anticipated increase software particular was split allocated in from X% services flat we XX% have during a new quarter being agreements, revenue, the revenue of deal we very and Total quarter. rates. and X% arrangement higher than being revenue, high and customers solution. legacy and related our We've does The period and size were list committed million, revenue the subscription offered and In perpetual an subscription the $XXX,XXX customers to for currency reception is result a revenue services that growth mix APAC services to down their less Deals licenses would basis, respectively than was these subscription approximately $XXX,XXX have an multi-year initial and as On versus represented consumption-based of product FX The APAC On some services. using a QX subscription management the originally and during over majority support software these sequential for is a situations, year. vast transitioning were approximately for such XX% a by EMEA better transitions customers revenue their prior of is constant on pricing Maintenance XX% entirely $XXX a up maintenance $XXX,XXX revenue X% it prerequisites XX%, customer prior sequentially. in was the products which and recognized with existing year-over-year existing of quarter subscription QX. and in was basis, and Americas XX% many the time. approximately

our of sequentially is transitions expectation fiscal the year. remainder the it decline will such However, that during

so be existing demands models continued several that in over our more discussing to the quarters which easier customers strategic sense think market our solutions. streams, only existing for We we makes aligns value now. subscription-licensing software customer and also repeatable Commvault transition are and Commvault. customers when being And believe from makes customers to current it and move get for their for will and to for also determining, which to This do products long thoughtful models. transition with should We revenue eligible more been supports we've transitioning the subscription-based the term, both we

on of XX.X% the moving royalties margins, included products is in the HyperScale related operating to and the expenses Now our of Gross appliances solutions hardware software software EBIT cost HyperScale revenue. margin. gross to third-party margins for were quarter. cost cost and of and our The to related

beginning from gross of XXX the and of and quarter our sales were for sequentially. employees, million the Total ramp, We these solutions or margin down expenses X% As the will ended $XXX with down percentage X% year-over-year continue the approximately appliances to non-GAAP employees X,XXX approximately quarter, operating decline. X% quarter.

we in as last in headcount a fiscal reduce increase functional across to and call $X.X to marketing million charges our In well this April, on associated incurred XXXX, areas. restructuring, restructuring costs our efficiency QX, related As of distribution we plan FY as and initiated related reductions. during connection severance with all to functions noted sales, earnings with cost

professional costs the operational $X.X fees same third-party agreement the incurred associated of We Elliott fees shareholder settlement Management with and also such related non-routine for matters. to settlement These costs with are related agreement. million to consultant

quarter resulting on million or for XX.X a million. was diluted, costs shares. $XX.X the in was count for We of Net the $X.XX and of our EBIT income share operating average EPS excluded $XX.X non-GAAP million XX.X% approximately margins have based from weighted Operating were income results. these quarter approximately

anticipate a will reminder, tax a XXXX for our forma tax the during FY We XX% to XX%. that income as rate We rates. result align believe lowered quarter, pro As we XX% of beyond. and and long-term to forma rate income from U.S. XX% we will reform, a pro GAAP tax tax our use cash that

QX Let XXXX year me XXXX about now talk outlook. the FY full and

to second $XXX quarter be to year-over-year. million $XXX the previously expected revenue As we X% million total million, or up are approximately expect be XXXX in X% to Total or of $XXX up Bob revenues FY year-over-year. stated, range

elements in majority vast the the Advance such there element the place, transformational certain is Commvault of of risk the of in associated While execution of are particularly a near term. with initiatives,

improved XXXX, HyperScale initiatives margin expect particularly help Appliance, driven revenues right in by third-party such efficiencies will like second believe simpler leverage drivers working half half our acceleration margins software also a we with the identify fiscal and drive combined second DR actively of We cost expectations margin top key and which the Commvault providers operational of for and are will and of partners long-term, and in FY operational expansion as line operating drive We've additional structure to top or operating FY service with our channel beyond. Complete. alliance our both the progress with and packaging few partnerships, will distribution pricing year. moments. advanced These line made excellent higher the our our of efficiency address in near and areas sizing EBIT in XXXX with consultants I

of year. despite the that up products $XX slightly software will current This X% revenue is approximately be and consensus We the recent street QX expect U.S. dollar. million, above prior the over strengthening estimates

We expect revenue be will in services flat QX. sequentially

services at new existing maintenance software anticipated than is revenue customers rate. transitioning arrangements sequential to subscription being support growth near-term licensing some their better by stated, committed a annual previously impacted As cost

the with margins. position operating sustainable to our As our Advance for growth call, implementing we on last improved company earnings initiatives Commvault communicated are long-term

including sustainable to operating made We EBIT margin approximately we FY objective half our QX, still second structure phase to a to XXXX was the of which than Advance in our efficiencies to of overall product XX-plus X% achieve of rightsizing our company’s in of in reduction. by the and believe to and that goals. sales in marketing is XX% higher quarter, cost are and to personnel combined improvements to X% realignment margin progress are in percent QX and the These and the achieve salesforce original market expectation on of initiatives trajectory changes cost workforce designed routes and with XX% Our stated go-to-market Commvault pricing packaging programs. productivity headcount these reductions achieve and XXXX. drive surpass immediate support long-term tied our a or first of good We’ve of cost approximately the on reducing

Our objective objectives, growth is leverage XXXX. that manner to margin impact operating this do but not software will will a our FY in provide in

insights. consultant. with us As previously stated, validate to actively outside we deep Based Commvault are work have our strategy our analysis, metrics and a leading industry the performed consultants benchmarking date, helped engaged on Advance through

work prior EBIT progress call. over basis XX.X% earnings margin XXX point call. This to be prior year-over-year We’ll full continuing last in We’re is efficiencies. increase consultants which our basis communicated point expect improvement additional as our point an year. operating percentage is updates approximately year the FY to improvement operating on and improvement XXX XX.X%, a on revenue margins with have of a the approximately to to opportunities the during from expectations margin XXX and basis We now QX our October identify our percentage XXXX be earnings further EBIT growth for our XXXX

full XXXX hardware, to anticipated impact Commvault include percentage the expectations As our will approximately EBIT to share to software approximately our by million XXXX and related basis integrated that for our million We our points impact diluted, software adversely average be XX.X FY HyperScale points by royalties points. a HyperScale that FY third-party margin with margin XX XX year basis shares. basis gross will offering XX reminder, count weighted percentage and XXX our our Appliance of approximately margin anticipate

our balance flows. cash on moving to Now sheet and

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

and opportunities to tax tax identify of We a portion both repatriate with in regulations. manner U.S. accordance foreign are cash working actively consultants foreign with and cost-efficient balances our our to in a

expect have earnings October our We call. an during to update

During have March shares stock $XX expenditures, We cash approximately QX approximately or XXXX, operations, which $XX.XX million currently our share less cash through at $XX.X million from $XX we define cost common capital flow, flow of XXXX. XX, per approximately repurchased was repurchase program year-over-year. share. our was as which approximately an Free XXX,XXX remaining under of XX% up we million, average

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

that our All revenue customers. been to revenue of invoiced deferred services has is

to After in deferred range. revenue We in full increase we to year low-single expect current expect QX, deferred digit mid-single considering XXXX growth digits. be the fiscal sequential FX growth revenue rates, percentage now the

days, and outstanding from which For the sales was days year up is prior from quarter, our day sequentially. DSO or XX XX the XX days

to QX approximately accounts DSO days of our receivable. unbilled XX an XX unfavorable day Our includes related impact

will QX, this During The recognized XX over committed of our from that I been time. majority the March Bob. unbilled back turn receivable over was vast my Bob? revenue call remarks, but flat concludes million. to $XX.X paid approximately subscription balance That now and will prepared or has be balance represents

Bob Hammer

requirements and companies Thank all industry recovery We which the Software and applauded favorable transformation both customers of business to simplified analysts customers, new with automated center that backup simplified growth. protection key of with Commvault data help under driving make simplification trends converged we partners. to components to week’s HyperScale discover complete they to governance insights and [indiscernible] offerings of powerful changes very in you, few sizes, redefine will key of imperatives. powerfully simple Advance key Commvault Last pricing minutes and address products our simplification -- fact [indiscernible] on: our aligning the accelerate and regarding of converged These data management radically packaging the designed four offerings four week market. the second, our for announcement these top They from on first, product offerings. our line new Brian. a Two help spend now last business I announcement from and and and recovery, discovery, classification, and of data and data drive to comply management engines combined the value the extract and Commvault efficiencies enterprise. across appliances, right will file data migration Commvault acting deliver the insights data is data disaster better efficient analysis and are: to Activate, privacy fully detecting reporting be regulations extend with to scale-out accountability like and on able storage. designed using reveal business and analytics GDPR, to and Customers for risk efficiency, by orchestrate Commvault and data actioning.

whether simplified with sell. these Combined and partners functions. the interface with deliver to our an than these interface for mean usability easier powerful figure pricing outcome use built infrastructure. a software have out best note which way for experience, new that Commvault Data boarding, recovery our cloud SLA buy modern Commvault product than and We we will customers of of the a more foundation and dash product for improved before like a SLA and new packaging, Platform. all enables a products have to or users on-premise Please user ever example, or to can are of products are options automates that licensing on dial-in a This dramatically XXX user customers

altered or need will Our and dynamically and tune operations. Commvault include auto optimize be for can intelligence capabilities, the to performance Software if artificial now and software operations analyze products reprioritized, new and example, patterns auto

the to to AWS data and cloud advantage leading seamlessly and particular in continue than competitive work in with Azure. Commvault cloud, the Lastly, the be Solutions offering, we sight offerings of protection lose delivering cloud. our more workloads let’s XX-plus not

rapidly driver move data competitive from Commvault advantage Our ability between to, protecting workloads customers a business. is of a and to the remains clouds enable to key and while the

hardware databases, high minutes or this offering buy, progressive replication product customers user market protection delivered Commvault and to solution. file features versus Commvault true one machines needs in services Complete, manage in product that more infrastructure. traditional easy-to-use has virtual of Commvault simply endpoints, with Within want snapshot file, name of solid well unveiled support, SaaS, the is hinder easy available the deploying third-party all from & back a available Backup much are I across the products we naturally of interface. simple cloud enterprises. locations most broad use applications, essentially Telesnap to In products features powerful mid-summer. avoid enterprise to fully transformational on that would progress. plan, includes of now storage side mailboxes and pitfalls and defined May one a for reporting software in powerful in with Those making be recovering cyberattack manage. solutions Commvault we have management that we increased competitive for synchronization machines, expensive and multiple The were Complete contrast, programs as accident are data. we Commvault sharing. and requirements. enabling one strategic partners the meets simplified to as backup spend a products, Commvault easily report management, obtain with Complete. by I rich infrastructure include of and Now can a data Those has administration all possible environments, again Commvault data committed Commvault are manage. With and solutions available product. again multiple having helps to a underway redefined and to With or few disconnected add-ons. that today, once when protection Complete I eliminates and management Complete that am Recovery, data, complexity or more coverage is converged competitors from regulatory demanding no by must use point any appliances use within in meeting that different than add-on been data bar the And data best public for HyperScale once and It’s our and on companies and Advance implement set differentiated It secondary procure, multiple-point customers -- to pleased optional closing, silos and recovery is what the our Complete. all other one our product, Software set, is the match be virtual most for include backup clouds to offering feature other previously modern support to that and and Commvault extended one on-premise or of install

overall competitive and us our more sets financial is which up in pricing the Commvault sustainable significantly performance. and are of well that improved Advance, positioning, and packaging We for goal

we improving also quarter earnings first making progress our that in are results Our rapid are operating validation good margins.

sustainable the operating near-term to as initiative. We company our assumes to execute lower rates This back are executing revenue plan margins. plan XX-plus advanced through we get a growth

enable However, us we foundation will believe build a sustained to growth. higher revenue long-term for it

Our technology business position solid. core opportunity and strategy, remains

strategic take these near-term making cost aspects summary, are of reductions assets the we particularly progress in all to the to financial have and improve opportunities. company good efficiencies, We of we In driving across and sales need advantage performance marketing. that by

our the Michael. We position, and distribution. competitive our are to will technology simplifying pricing, now I strengthening and turn expanding over also products call and enhancing

Michael Picariello

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

Operator

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

Your line is now open.

Joel Fishbein

the of on – margin and real then really fast quick the a that? just deal you things how over And long-term just you have said, wanted appreciate what just a what Brian, I some on because, you’re Bob, seem what have I the for guys guys guidance then environment Bob, clarify just new be and to what EBIT wanted clarification. you all clarification had helpful. then I EBITDA given quick, Thanks. to you to Next with are margins are I like, from detail update before that Good down, on operating get I but and the competitive for to I growing get you’re with be midterm looks – offerings, really pretty an and current going you morning, up and positioned again, wanted Gen rates particularly, That’d these just gentlemen. XXXX I for the to to there. Brian are giving just all referring think going I the one

Bob Hammer

hit don’t why the got I backwards. think Brian you that margin? EBIT he

Brian Carolan

question. Thanks for Brian. Yes. Joel, it’s your

expecting XXX operating were year-over-year a the basis on improvement margins. prior point the think we I for call, full earnings year

XXX that basis improvement increasing to now point a We’re year-over-year.

Joel Fishbein

much. so Thank you Great.

Bob Hammer

the in to in gains and are And Cohesity the competitive making Rubrik market. like solid the regard clearly positioning, guys good

we’ve Joel, is what been work, seeing more much competing worth sales the On with solid we’re our in appliance solution a a side narrow plus of this this really a on seeing – that, we who have. working uptick of year’s than and flip have we’re is like that companies and

are that some major announced, seeing partners. distribution really We’re some

We put lot first initiatives good more far focus resources so strategic Now Commvault from their distribution the moving and position distribution. we’re a distribution. as into on in seeing commitment as

all strengthening product, existing distribution in well really this to line a of product’s place appliances, start expectation. Complete, in base. partnerships, cost much as new partnerships turn the more in lower-cost on top to operating good quoting, simplification that through solid the – enough have there Our see a restructuring efficient I on out the Commvault simplified get it’s we Once think this our a reasonable of resonating we messaging is and quarter

initiative, long It is the now we Advance Commvault the pieces this quite the basically started this are ago. table chips execution. time on just is now. – on are All table. the pure All a So

I now the Technically, on going things think we’re we’re doing. new position well distribution. strengthening swinging the machine we’re to was learning pole some AI, relative upstarts, these technologically. to and we’re – taking start it hard And

elements internally, many, opportunity, is as sale just going to now right now. is we’re all in this So up are high that because how place it’s the

Joel Fishbein

so you Thank much. Great.

Operator

Jaffray. with Andrew Nowinski And from you. question Thank comes our next Piper

open. Your now line is

Andrew Nowinski

right, need Maybe quarter the you’re and making the competition reported know scared making, the growth follow-up similar in and prudent the thanks. more but Veeam guidance I XX% it’s as given guidance now on X% he’s Rubrik quick but acknowledged your growth to a revenue changes progress, appreciate just suggests until about All just here. be I June you and total Commvault. scale a at

in compete inroads growth? enterprise revenue making be he is they the could that space And you So on in? your pressure

Bob Hammer

pricing, whole up really head need that's And all why leadership we now of we're lose that any distribution. share. not head more are don't We our think on and products, which technological the when we been picking I companies don't when hard those there. strengthening – much market of on we're We really these simplified mean we all lose have the and if competitors the us. competitors But to the I there we've being pressure is are is put have elements, these working reach we to getting. distribution,

transformation I think massive. for keep mind but on the we're going – line, we're to company drive really a everybody is through confident on call, where we are we're as top this bottom both in and

this we've of In several and company putting together fact, this been quarters aspect every now. for

and go the you're roles a in and you you're middle expanding to people of disruption partnership of your hundreds different within you're that around engagement, when different and moving company period all functions and that we're we're So together. But prudent we plan that fundamentally, this it. and a feel executing together until feel we good we comes really about just and put plan through on of being

Andrew Nowinski

maintenance than a a And your percentage services for creating maintenance the your therefore Bob. sort subscriptions your in less and headwind then are solutions the clarification, quick growth as of subscription-based you're plans what's Okay, revenue? revenue, any as perpetual what line? just total impact and as services increase of for charging to for I guess,

Brian Carolan

Andy, when been a traditional about subscription do like-for-like now, pricing that it's communicating basis, we've a delta arrangement of Brian we quarters for perpetual, here. on a it's is a there few now compared there Yes that, Yes, a XX%. to

$X million we the headwind, line $X.X attached well. that and the recognizable So is especially software to what of arrangement to the in-period over as revenue is and software it about a life does the create maintenance near-term then think of gets on and products recognized of million

Operator

comes with next Blair. from Ader And William Thank you. our Jason question

line is Your open. now

Jason Ader

I when customer an you that idea? one because guys. the a software on are the but understand multi-year so for just deferred existing mechanics, Bob. Thanks, have amount perpetual one rateable now I of you maintenance Brian, near-term boosts subscription, that's the for Is lower? is to move Brian, it reduces saying

Brian Carolan

that Yes, the is idea.

I here. we strategic thoughtful being and all, a are this, spend of minute just on mean, to first So

new So we're updated a multi-year commitment being expand from trying actually with Commvault customer's footprint to identify for perspective, ends their arrangement from also the spend it our them customers approach these getting generally also a their more licensing to And with that and from value it makes makes sense easier to getting do annual the this with they're for. From customer. as an with are up the three-year us pricing. we customers, and perspective, well this

of arrangement So And aligns move revenue. just of long-term more with entering to we're kind with more repeatable a also it our them. continued into

to three accelerate question, and is maintenance over worth revenue does this software your of and year's answer to that into products of and the in-period So revenue to life arrangement. goes revenue revenue attached recognized the deferred yes, that gets the

and a a over resulting lowering revenue of actually the time. selling there deferred term impact increases So commitment near it'll time. get over recognized because it in of is It three-year a you're then

Jason Ader

difference that And customer? there is specific a annual in the for spend

Brian Carolan

certain basis, and increase we're on an that is, lower. and footprint opportunity one-size-fits-all is as like-to-like a question. certain use things There would there up-sell to kind arrangements to answer being all their of customers. going be opportunity a an this are there it is But not There equal, customers into where to

Jason Ader

Okay.

get a multi-year that's So annually more the commitment, off? you trade you get less revenue but of

Brian Carolan

Correct.

Bob Hammer

saying, where component he's there before. new are is, wasn't there to a what revenue yes, circumstances think some there's but I that that up-sell stream Jason,

Jason Ader

Brian, in in-period And in the software QX? what Okay. on dollar then was the impact

Brian Carolan

about traditional this customers, for side of it of associated a transitions kind is and $X.X subscription maintenance in-period So terms with recognizable software perpetual of million sales, headwind our products the was subscription here revenue. in

Jason Ader

from was the where you shift move a positive the shift but impact perpetual So customer subscription, from was to a the to that subscription?

Brian Carolan

disclose saying not we're that that, we didn't number. Yes,

Jason Ader

you it not was the fact Okay. But out – it I pointed insignificant. it it it sounds mean sounds that like like was

Brian Carolan

insignificant. was not It Correct.

Jason Ader

right. all Okay,

about us in there, some Bob, beyond anything and I the terms you any making just number I think get progress can give of you of for customers commentary? metrics that. HyperScale the qualitative or you're of talked And then

Bob Hammer

No, a to we at for and three our combination of out I will have that significant a HyperScale the look just we’ll appliances quarters, growth. next say if top-line top-line acceleration, impact going

Jason Ader

material that say? It’s to then is [ph], fair not yet

Bob Hammer

sale Well, it or a drag the stand-alone appliance we not with it, would HyperScale in is yet. additional drags those be include the question, as because the deals, so no. answer If not do answer typically, material software

Jason Ader

luck. Okay. Thanks guys. Good

Operator

And comes Kurtz our next KeyBanc Alex you. with question Thank Capital. from

Your now line is open.

Alex Kurtz

Couple questions guys. of quick here. Thanks

Just up revenue to impact on follow question. Jason’s

March So for with Brian, number million $X Is the the the $X.X number? quarter. consistent that million you the gave is apples-to-apple

Brian Carolan

is. it Yes,

Alex Kurtz

way help bridge impact on the the subscription about from a think change change much get point annualized A when And from annual guidance, you us point to to like we revenue guidance? prior there, on the to much is the Is Okay. FX, guidance basis? the how the can simple B an there in how

Brian Carolan

Yes.

other about move the headwind it’s I half-and-half the think continued – half. as to well these is having as between subscription FX our transitions the

Alex Kurtz

Okay.

Fiscal So demand of the impact no is kind guide, or there se? change per to XXXX

Brian Carolan

No.

Alex Kurtz

from providers. just it’s market too months business? of Street, Bob, the demand given be just $XXX be could $XXX goal an from I that inside of that of there’s over think just is time a over been past on HyperScale, seen kind the but this, Okay. in maybe we’ve And that other adoption Or product business appliance it kind this – the obviously kind could million million just and franchise a in for plus is the there The the you’re this discussions Is next XX say? and to as still early this sale

Bob Hammer

No, that would better in… be that be Could no, a would be expectation. reasonable

Alex Kurtz

refocusing that. me, And discussion been seems we Bob, different thanks just changes and last to you now about kind looking sales for in it What’s it’s the recurring the what differently like you go now? the the on hear couple through the Or about of outside years. as just company the of thinking question guys with for org? sales From when of kind distribution, last the doing organization,

Bob Hammer

probably look started as have primarily are – you if And products. ago midmarket – was call it the Well, with, we’ll – it. company think some year lot I the company approach probably we to to that strategy and a at more balanced enterprise-focused this half from I

simplify had user a it adding its So had by platform simplified we done as we’re done. which knew started things its to like UI itself HyperScale functionality, and the we’ve we with experience, appliances Significantly first way. and and but really we

have align for years. strong last So that in to support but place. route-to-market is these the so and XX% to disruptive, in the partners functionality that resources we’ve and that, here to this guys so XX round the change if support – there of put from a the the that is all is we’re you you can have of it’s that the strategic pricing, the you mid-market did numbers, for partners particularly – moving over messaging, added the the once every company we’ve support mid-market, it’s and that’s operated for now about we And feedback the addition distribution enterprise, now at you really and all this this. and in the And everybody time strategy, once, significant way and salesman week all Americas,

gone it’s different prudent pretty to fundamentally on before, ever we’ve anything a little we’ve we’re through guidance So being significant done and here as disruption. just our

it’s all whole changes, structure chain, structural we’re And so it’s within not just the that distribution changes leadership making here. that

a next working a for base. on messaging terms XX in at in? think do our quarter a products, So feel product pricing was it’s simplification, table. Commvault stronger want best-in-class from here the all that Al, to anybody the all probably simplification, terms, the you’ll than things it’s least what the over and now of, jump start driven now reaction distribution to with And again again, and seeing we’ve including of simplification, from better we about much the good you different this and And it’s with channel you they’re months. a on find if so And support else all strategy in – just been and it our it’s I we talking really partners

Al Bunte

to only the business a with do us. other and we’ve I done add thing is easier would Bob I to improvements process making of it think lot

system solutions, all than our dramatically been better can been much of How instance, products, have how historically very quoting things – out has very we for can response again time improved those figure with dealing So much we there. figure we a a improved. were

Alex Kurtz

Al. Thank appreciate guys. you. Thanks I

Operator

you. Thank

Rakers from comes with Wells question next Aaron Our Fargo.

Your line is now open.

Aaron Rakers

questions Thanks. couple of as well. Yeah. A

was plan your of the operational timeframe. July Just on transition last XX% completed by efforts, alignment engagements, headcount the have to it sounds of going kind back to quarter; partner-facing it’s like that your

like attrition? percentage headcount update quick that, just and or you’ve by how reductions there curious how a looks And to your overachieved seen kind two points. So of you and have unwanted about in I it what any addition you’re I’m of managing follow-up.

Bob Hammer

complete. we’re So, There’ll done Those four particularly, and but doing, changes that Aaron, be with XX% are things what I’d we is right on few say target probably said. a we’re essentially other has have going to in by you just we’re to occurred Aaron, the change, you’re some manage And make way. the biggest change Americas have when the attrition. attrition, And it. going to regarding

settle far, well-received are some you’ll making so So think our I well compelling this diligence really being just quarter if it’s been as that teams, as find there. customers, distribution down. through sales changes our next the Aaron. do out we’re and get But We’ve things you by teams to our or and due got internal manageable,

Aaron Rakers

I it and you’re that that still top Okay. EBIT can of that to last call. of the it like But next on when the I sounds quarter, on margin operating thought outlined XX% and a exiting that outperformance will Phase from that on to at be that, of year. that maybe like path, And provided range look II the the kind you’ve appreciate to the guidance there just following saw conference XX% is this appears you guiding be commentary this quarterly

– bit, why of thinking operational be to possible little realignment efforts? about another could realignment how should next that, I bar? think with of come, you of to just And not conservative the we leg push So, a phase operational I’m a efforts on kind that’s

Bob Hammer

correctly, thinking you’re it’s exactly think I execution. just

big you of early whatever rightsizing about us up and want, extremely of the coming think you if out think QX, was sets rest for I year. that really really an the step we’re

if us well. think it, very that the comments of up that, it’s pure – as improvement us heard prior All you we the I key board on dramatic what’s possible – turn of to mentioned, to in is put the top could quite we cost we to have and the the terms If things the – all now, some all of ones, additional now we surprise side, through going now, you may But the on a do much that some place company. And sales – are now right the the product and people. it’s is I’m efficiently execute I distribution that some sure see in on from and with that of some this of think put big reduction potentially to – now, overachieve we’re now up I pretty – on just you’ll pieces it’s don’t execution. it’s and

Aaron Rakers

does when new, to obviously that relationship IBM start matter? thing, quick Final Okay.

Bob Hammer

now tell this I it’s at pretty be a on been internally you what other the could conservative doing. that wouldn’t it things ground Well, it point, on substantial, like, that and on looks read but we’ve some of the I read we’ve lot into yet. can been

are see momentum increase. of so in in starting starting we’ll next And the able we about up other be that talk some some We’re that really market to talked earnings about call. to to partnerships tick haven’t

one partners are of in to community, number who in I which So moving partnerships are really those think distribution strategic about us. moving feeling the we Commvault, be – are a the going there standpoint, to for major additional from help into position, and is number summary VAR good provide us a

Aaron Rakers

Okay. Thank you.

Operator

comes our Jefferies. DiFucci next John question And Thank with from you.

Your line open. is now

John DiFucci

Brian maybe, Thank Bob. then you. for question for a follow-up a have I and

going questions it who business, more when And or plus the you’re about? for just that’s what seeing but sure what to I had that mean mean fifth, maintenance the license I’m subscription when I if quite I that, customers, took think. maintenance existing first I talking this just you this you subscription, not you and to could you’re clarify four versus I you topic transition to on to guess are be subscription if of new transitioning mean be purchases to the transition, that think, called guess with word Brian, and is, So, you has this use is part first it maintenance?

Brian Carolan

Brian. John, its Hi,

a existing software here, a to maintenance that customers maintenance Now committed this support of attached subscription modern be just is new is with which clear cost arrangement, includes with transitioning licensing arrangement subscription-based top contract that. on a Commvault to pricing and annual multi-year their to modern multi-year

John DiFucci

Okay.

to of understand all implied that to transition, because that, about when subscription to Is as to it to moving be pricing. that. less that implying, it going grow, just of going flat you're this have recognize odd maintenance that existing you So you're seems odd going But pricing you as and it's implies guidance, is it seems you're where a subscriptions that transition to me of talking get subscription XXX, maintenance it I sort of license, than ASC kind some not which that gave I just accurate? upfront

Brian Carolan

our subscription the portion software expect of our that that's revenue increase in No. FYXX what point of products on to last from to communicated this accurate, and from to in not call. our our XX% that It's revenue that is estimate increase from and we XX% I I repeatable was FYXX communicated and we earnings said also streams going up prior XX%

John DiFucci

would which have than have So should this have – transition positive a otherwise have positive line on includes didn't impact so should a subscription it should if this been you should this transition? impact have higher the this maintenance, be this line, services

Brian Carolan

converting to It respect it'll be the maintenance a maintenance impact positive have – with maintenance, products this revenue at should different, is some in-period software of We're and on right? to…

John DiFucci

Understand.

Now get it. You know I what?

Brian Carolan

asked you question just glad for I'm clarification. problem No the

John DiFucci

it just of it's Okay, it so now and will go some I be license redistribution, line got because maintenance now, what some there's in a of and going remain, up in product that. of subscription, to was some will

that. about Sorry

the of in think lately direct sort is the sort seen people selling, it requires for of the sales a just sure question what are focused of channel and I lot heard all on now channel? focused the a that due to of focus see sometimes I'm set people, talked success successful going and you're weren't it's, lot – your this guys Second the haven't Bob, a you work? expect and on of redistribution success when this, questions channel it's one, I different on direct that call given to and Because wonder why and that the how asking channel, people if we results field, to in a we've to they not skill they're

Bob Hammer

a question. That's good really

is, of answer of was the company the So in weaknesses complexity. our one the distribution,

is deal which we the starting to to platform, big and midmarket with by like with into so even with awesome for just But on in to if simplify have this capabilities had deal us. a a deal you having analytics regulatory, So SKU that the that cyber, to you enterprise, the when swing way product platform the has difficult to helps you. particularly we're proven get complex this you

It's a that's So more years two rewrite, all we for ours example. pull it experience and these to all a but that had the simplified done. took UI are of offering, us much to into strength for

you provide clearly on cloud, the point, our now Al's support, think quick the like to could everything I which now put complete, cetera, a tie you'll best it'll talk really So and something channel to – is simplified we message to et pricing and market, else. quotes which the and and product and capability fast is that in take partner, it,

help that you this where a help and sell channel have it. can to you is product partners to those easily – resource put now now sell So that channel it drive partners they on

we'll that I the there made to but really may think moves point some it's quickly. reasonable be out expectation those sort work that and we majority won't, that your will a of that

John DiFucci

to anyone sales, still anyway I does it's I to. is would a hard that it blame compelling the product has past argue it Okay. Thanks. in of sort Commvault and where just fallen just Listen, that's the but don’t seems – but and vision, execution I world class don’t think seem and

Bob Hammer

clarify. everybody, poor. this sales are There been for Well, company pockets where has me of let execution just

and distribution place, to your can but blame there's once you now. have you So go place sales in products no

pretty all It's some it. execution quarter issue, only these and There well are hadn't. after in in So sales that well. doing teams you're our there APAC across who've completely And the and Americas better. you additional is and just that's get separate our we're like consistently addressing issue done there some an teams going are and right. are a lots spite of are that's quarter now to add execute of teams strengths of EMEA that weakness and sales

John DiFucci

talked just you I've And go, Okay. listen, and but then you said I let EMEA enough that

Bob Hammer

does just I’m to but know, I underneath, it do. allow

John DiFucci

Thank you, overtime.

Okay. Thank you.

Operator

Lake Thank you. And Martinuzzi our Eric comes with question next Street. from

Your now line open. is

Eric Martinuzzi

FY plan. repurchase Or coincidental? that think of of million the thinking a million what in the got, tied said, It between I you've the business. near Was just on out cash intend to the of tied QX but that flow it’s Hey, out, around is kind I've don't like that, and $XX question that outstanding is XXXX, you a you kind of $XX got it’s looks intent purchased the by the here. I the of question buyback here end accident, know and if kind

Bob Hammer

on to if several an for – And solution-neutral but pretty the had policy. consistent the buybacks, you is strategy years think company with did options I that and we've keeping and RSUs. last tied what that been doing within prior always we've opportunistic framework we the of quarter

Eric Martinuzzi

Where count to the to I'm grants. quarter, XX suggest with guess maybe I the think that in thinking option XX.X the a or of not guided lot the XX.X now I repurchasing year year, we fiscal for would about finished And so you are million. not we million the share

Bob Hammer

that Yes, we repurchases don't guidance. into forecast

Eric Martinuzzi

Thanks. Okay.

Bob Hammer

Thank you.

Operator

Srini Summit with Nandury next our question Group. comes And Insights from

open. is line Your

Srini Nandury

and the some color Commvault out rolling to Can to existing you a new provide I When back you why that just is Thank sense subscription subscription say question. all and taking roll Bob, makes All selected mean? the to what not for you your out customers? pricing want for pricing you customer, go it to for little you customers pricing right. subscription bit. when does my

Bob Hammer

subscription. the from All quotes new

Now I'll Brian let it. take

Brian Carolan

two different paths Srini, there here. is

a new to very was with perpetual referring those was existing it's support call All customers period. specific and of annual on existing lead generally very customer I our Thank more and right. sub-portion strategic just pricing clear, targeting. with for customers you. new we're So we're the were with and customers, What subscription-based contracts and that maintenance thoughtful base

Operator

today’s in conclude and the you Q&A conference. thank Ladies gentlemen, for This participating session. concludes This today’s does program.

a Everyone You may all disconnect. have great day.

Commvault Systems (CVLT) 24 Jul 182019 Q1 Earnings call transcript