CVLT - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 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.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Officer Accounting Chief Merrill, at Commvault. Gary may you begin. Sir,

Gary Merrill

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

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

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

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

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

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

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

Bob Hammer

value Thanks, will update XXXX model Gary. call, FY third and Commvault our on results to XXXX Good we morning, fiscal quarter earnings today's shareholder third our Advance. quarter everyone, and fiscal transformation called On will discuss provide thank you we business for deliver our an call. joining

progress growth, sequential potential and to as that long XXXX new serve in as Commvault's business today's for As in software key a call and the the revenue and the business operating well we product short reacceleration has and momentum technical will good in to multiyear FY product earnings we growth; for improving for the term. reminder, carry earnings and year-over-year progress long-term our have position a costs; into and are: short-term we development The we revenue takeaways made in earnings Commvault made continued earnings lowering effort achieved sustainable continued Advance QX believe growth. growth have growth as and is strengthen both exciting position will foundation solid and strong improved revenue significant innovation

start me quarter revenue improvement significant which financial trend results, and third sequential our continued growth. year-over-year showed overview an of providing Let strong of earnings by our recent

Commvault or and fiscal year was XXXX. margin $XXX and million, XX%, versus were $X.XX XXXX $XX.X costs ending X% stock up EBIT million, a EBIT Software and revenues margin X% quarter year-over-year. income common year-over-year prior product XX% EPS XX was were $X.XX Total We sequentially of XX% nearly the to strongest in up our repurchased This our year-over-year. year-over-year. total sequentially X% points basis declined year-over-year. in per record, million. quarter up bringing XX.X revenues or XXX was up Operating June was our X% share XX% EBIT up operating million the year-over-year. since the

quarter, positive substantial we improvement the encompasses Commvault better year-over-year Advance which early field cost drove our of products drove earnings our enhancements models resources pricing. reallocation reduction significant solutions our in Commvault distribution field continued The growth. continued and executing of structure, with We to aligned validation the routes impact also is of During in licensing and productivity QX. QX believe Advance. of optimize to to combined performance

We channel field and marketing improvements also our shifted efforts. resources while making to strategic towards partners our supporting

we over Finally, Many leadership and with and changes and deployed the field these marketing partners in summer strengthened our fall. with sales positions roles. additions organizations of -- in the distribution our strategic were key

our that our and Software Backup quarter. the Hyperscale well resonating and funnel are and solution, Recovery hearing resulted and increased interest in customers now Commvault changes in pricing we during simplified also with Complete Appliances and made the and partners are solid distribution packaging, generating are particular growth We

by product and marketing by strategy Our impact of and supported the sales driven partner-led that core is in the Advance. Commvault is XX% software from increasing sequential improving enterprise growth momentum

and Let me simplified enhanced, product our expanded, about talk portfolio.

and sales our expanded, distinct results and for One our for has to plus which of customers our it and dramatically use simply install key making that Commvault simplified fully partners Dev/Test enhanced, recovery appliances powerful Backup protection is teams products HyperScale to customers Orchestrate and with is Software Advance Commvault it. the from to elements to and and of data and sell. contributed has converged data their is migration, Complete now combined which disaster Commvault which insights product Recovery, our business then scale-out and discover automated designed offers to Commvault making Commvault help four know easier extract and Commvault Activate storage, portfolio, which improved easier new offerings; data includes

good revenue continue FY growth product the to saw our expect XXXX. for provide from in foundation enhanced portfolio We momentum QX in QX we into a and product

shift talk Let with respect and our efforts me cost gears about efficiencies. to

to and and earnings deliver made operating year-to-date XXXX. our significant As in operating to I've structure enabled meaningful that our FY have margins QX improvements mentioned, cost has reductions previously us we to

third QX the optimize our quarter, down cost were During structure. we Year-over-year costs X%. continued further to operating

of our operating to XX% fiscal have year-over-year months the For a first cost in EBIT. improvement led XXXX, reductions nine

Commvault As framework now our not I a reminder, implemented development negatively our and address will product within aggressive our of impact FY Advance outlook. cost did QX the reductions were strategy. XXXX

with significant QX the We in improvement results. are financial our sequential pleased

also can sequential see strong and good opportunities inflow improved momentum, we business sales show earnings our our to We to continue of believe improved improvement. forecast teams. field continue We to from sales funnels,

our stage our transformation, remain near-term However, of we with given early outlook. conservative to the plan

XX.X% improvement year-over-year. now million, We up XXXX expect and the more approach as expect year. as margin will full fourth Carolan to basis color approximately or X% XX% percentage XXXX the approximately total a EBIT on also FY XXX be over prior well Brian point FY a $XXX few QX's margin minutes. provide outlook revenue the We quarter be EBIT percentage QX to year approximately to in

channel intelligence finally, HyperScale Solutions, with Data strategic learning for for while Platform and intrusion anticipated cloud growth automated Our and data product and disaster aided large fourth, XXXX and help to growth to improving leading upon migration optimized source QX our analytics; with cloud and in mid-market and Complete simplified combined as mitigate Software management becoming partners machine platform enterprise gain Appliance FY new the our to recovery an governance, protection solutions cyber them data attack data success and pricing. in a and Appliance share business solutions; based recover for is mediation; simplified their accounts and and to offerings with our with more offering from FY Commvault third, analytics primarily eDiscovery, much and and the of protection, our Commvault foundation Commvault journey support XXXX highly success artificial and the HyperScale

changes the being lots is of still of improving and carries done to work left and our our that fundamentals strong strategic ability critical we to We're is but fundamental While disruption to major effort. important which do, face now still context execution. making tailwinds. restructuring risk a that and are to is work has There's challenges. to the tied transformation within business, Commvault Advance improved, execute note It

additional While they in their with large we figure and seven are seeing an inflow risk due of the and complexity improvement deals, to six timing. come

the likely QX will license summary, lifetime our believe a ultimately Advance with progress closure a the particularly in but while value. are results past, deal transition higher result have on validation to we the we near-term And In in happy As to lastly, term. our transition rates making revenue. pricing of we large drives models, an have Commvault are continue effect communicated revenue, we the the will we strategy. remain This in subscription will dampening are early with headwind near lumpy believe

for QX improved and we and we have revenue continued performance a fiscal and into In foundation improved for addition, XXXX. we believe visibility earnings strong going have

I later call. We in in more have progress product discuss innovation development and also the on which made technology will in substantial detail

an Brian Before significant over the The search I of earnings for since a made on Board and turn call to CEO make the plan the me update -- future. we in our it our last to call briefly committee search let has near new process progress you announcement CEO.

information follow-on call I to the Brian. We on turn additional to over in today's here have call will or Q&A no the now Brian? share sessions.

Brian Carolan

and over defined products We both you morning prior deals total over Revenue XX% I'll which highlights for X%. such an up which number were XX% and of QX the now in year-over-year APAC increase X% as year deals on everyone. and financial software quarter period revenues third The Thank cover $XXX.X the basis. of some Bob X% were also representing good from million XXXX. fiscal we and increased and revenue respectively products of of enterprise good X% transactions was XX% products prior in would the of software software revenue saw revenue. resulted and a X% FX was and reported given from over QX. of EMEA represented which and transactions enterprise QX million have quarter these year-over-year revenue Revenue year revenue growth in a constant-currency rates over $XXXXXX Using up QX. improvement XX% from We $XX.X year-over-year. in year-over-year. up year-over-year XX%

the up is was Total The which average XX% as Gross and third-party our Our quarter, quarter, December quarter ended million. for our operating same was is of expenses size during down enterprise approximately employees, royalties the approximately for $XXXXXX of X% and the $XX.X approximately income related XX.X% cost the included million products in quarter. to cost with Solutions HyperScale year. were year-over-year QX, $XXX.X Appliances HyperScale the sequentially. were X% deal XXXX Software the of of hardware of in cost or software which to We approximately XXXX. the margins EBIT beginning margins approximately and revenue. resulting related down X% operating for the the were since fiscal quarter Operating the

$X.XX $XX.X million up million year-over-year. for mentioned, average was shares. on quarter EBIT a of based Bob diluted approximately count was As was XX.X Net XX% and weighted EPS income share the

will XX% XX a a XXXX, to as that income align We our forma pro FY tax that diluted long-term our will result and to of from tax share As our approximately We XX%. count FY during full cash million XXXX year U.S. lowered XX% weighted reform, shares. average we tax believe for rates. anticipate reminder, GAAP rate be

Let our touch and our continued subscription revenue. pricing more on me now shift repeatable to models

are October continued towards repeatable reminder, of These investors the our operating revenue our progress revenue contract earnings key progress track a streams. transition. more XXXX products to As revenue repeatable revenue our subscription helped demonstrate metrics and call, during and value and annual metrics two help growth we software which two introduced

historical we presented Additional these that we filed included detail this QX and background metrics. In amounts to our explanations additional related the included slide and metrics these regarding were morning, press on call. the in release

revenue. start repeatable me with Let

XX% of reminder, a streams would services. total are revenue in revenue primary nature. subscription As and We maintenance approximately QX software be repeatable our consider repeatable our to

been of compares our of driven recent Our XX% by streams growth growing excess Subscription products XX% revenue been our of repeatable in and has The QX. revenue in were to and models consistently XX% software in year-over-year QX, products in legacy which revenue of pricing subscription repeatable has last year. revenue. up pricing represented based software QX

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

Our is subscription and second ACV. utility the or metric contract value annual

mostly a as, contracts utility we to XX this growth metric data will pricing represents for visibility increased Commvault's drive defined transactions our transition value; metric and to subscription our contractual value we utility-based subscription annualized one annualized or normalizes subscription more subscription into usage new ACV revenue acquisition, expand As active as billings. believe that total this a utility repeatable well the value and provide the transition to expect is of streams. sell. of demonstrate ACV and plus metric a two revenue the the contracts We month customer also equivalent greater help pay-as-you-go active the we among or variations growth models and and will repeatable analysts upsell length and land potentially as opportunities. point track subscription investors This model, to

a to has it grown million than what was of more ago. $XX year QX, As ACV Xx

these initiatives, Commvault part selling next on focused grow years. go-to-market we subscription Advance highly is subscription several our our the to model over As significantly, licenses expect of ACV and primarily

Let me our now financial discuss outlook.

growth of a undertook XXX will strong margin that QX earlier, we $XXX $XXX over fourth revenue year. earnings to on we year-over-year million. point revenue the in million If our We based based outlook, revenue the cost-cutting FY approximately approximately see achieve XXXX. basis we expansion $XX.X discussed we of Bob As and approximately These now of expect of revenues XXXX margin fiscal initiatives prior believe QX expectations expect are continue improvement total in on XX.X%, resulting million. approximately EBIT a we quarter software

$X.X our the expense we estimate incremental which fiscal is versus QX. year as impacted million QX a As reset of by approximately reminder, taxes, payroll calendar U.S. of

typically we result higher cost term earnings teams sales our also laid in I of targets. QX a rates outlook. would higher QX have like to our call, We our longer longer commissions out also financial On address of as term in some of from being accelerators. earning our

XX% XX% fiscal Our goal achieve fiscal is at X% XXXX in in XXXX least to fiscal margins XXXX. XXXX of growth and revenue increasing and to while in

in we is we much While there believe do, towards XXXX work achieving to these progress made goals. good fiscal

gears shift Let to sheet me balance cash flows. and our now

international short-term As XXst, this million held of December of balance our cash $XXX in and investments was approximately $XXX was million. locations. balance

Our foreign is across than more spread XX countries. cash balance

so is While an or manner be to by possible our goal to U.S., the do foreign and return to laws much may back cash not be as as continue in efficient may able we regulations. limited economically to

flow as year was be operations majority from that the we believe However, flow X% concentrated to net approximately we do which in of the taking in will up expenditures cash was which million over U.S. we $XX defined flow cash cash prior period. capital Free steps are vast result the future less

deferred approximately year is $XXX invoiced As XXst, X% our was over was X%. period. deferred been revenue currency XXXX, to all basis, a has revenue is the that our million, constant of an which increase December revenue On balance customers. up revenue services prior Nearly of deferred of

me repurchases. update share you on Lastly, let our

approximately approximately at common million $XX $XX repurchased stock we During quarter, average cost an of the of share. our per

fiscal nearly For stock. million repurchased our we year, the $XX common of have

back March Bob. concludes which I XXst, and expires XXst, the over As will call Bob? prepared million my XXXX. turn in current to authorization share our December $XXX remains repurchase That of approximately on remarks

Bob Hammer

Thank Brian. you,

to a infrastructure the market most dynamics. the and since the storage the IT beginning SaaS. where put and management transformation infrastructures. managing solutions use resources. which environments. of data versus infrastructure. Adding using applications. about the new modernize in unified cloud these development changes increasingly of to data These of be the Enterprise and We're will which undergoing data, the XX% and approach mid-market unabated is storage server of ago. diversity on business are operating In talk traditional and me local focused are hybridization IT model difficulty are advent This and and to the secondary cloud having These different network multiple IT IT dedicated of summary, the application resources radical finding these SaaS-based a environments. XX% premium XX years data. cloud now looking distributed to management landscape compute complex, resources, on-premise public same consolidate environments companies are Customers cost management path, this data of will cloud driving platform-based the and and with complexity management point XXXX, of is in over reduce data, by applications client the and hybrid facing compute is XX% computing hybrid has with of unified spans an applications Gartner that application getting merge securing era data and management with to management workloads combined managing growth on the complexity Let applications. environments, applications explosion predicts tracking customers developed and approach in that and in the cloud data and IT also is across

but want environment, position. put competitors this management strength competitive is unified are for more era they not unified ability management. more the the management data the integrated procurement and -- was these converged pay-as-you-go together new The silos converged in of models brand platform-based has All of have is stored and solutions. SaaS-delivered data one of the secondary enterprise storage, in more provided new. perspective outcome-based scale-out users unified Commvault's In market with bringing customers unified data data changing platform. to claiming comprehensive and data rapidly secondary a access Commvault manage concept storage, I with market as always our Commvault modern management are secondary our view unified with concept. unified Yes, data new driving dynamics data to into a solutions, namespace -- comprehensive demand management a stored and to an by and standard single

and through past our over cloud, have HyperScale cloud our Additionally, integration, or software-defined the hardware we storage. HyperScale public private years, including storage any capabilities with appliances broadened eight tight own

of petabytes cloud XXX approximately higher including example, newer of any we the the For is which market, is competitor the orders magnitude believe than our public platform in with data stored competitors. other in

We also of any of industry. the coverage have the in broadest depth competitor

We comprehensive provide a have with business why and Center Command are buying combined of shifts of made that data On is experience, funnel everything new simpler and foundation market automation with capabilities. both understanding beginning user the dynamic this primary easier advantages our learning versus for and and four-dimensional see the orchestration in that the in we behavior the of to one our interface user shifts legacy market. The indexing is meet provides believe new These Commvault cost-effective Commvault Commvault reasons the we and in compliance growth and requirements systems machine growth. top good competitors mirror analytics. is now major and better a ways shifts and our market our unique getting most from to enables recover funnel customers cyber strong have the This to attacks, better in quickly critical acceleration.

our storage our enterprise-wide in the consolidating public cyber October. specifically growth to four data fast seeking like hybrid reduction driven in management recovery; enterprise versus which need demand Cs, management recent The In a cloud, from mitigation seen being points the Cs GDPR; are: of GO funnel regulations cost and cloud; new or with the secondly, risk modernization. few combination dealing and accelerate move by products. is we the enterprise Commvault we and unified meet solutions our quarters, four compliance customers, disaster enterprise-wide at implementing customer last uptick outlined customers third, requiring secondary view, data consolidated to fourth, specialized Over solutions have disparate

the we've the these to purchase is few type and having data as the user in combination data deal infrastructures installation -- the enterprise and simply security customers a made data deal cloud, complexity. of Center the and functions is skilled transfer more Commvault development to addition Now IT simplified to products. an budgets positioned to simplified The enterprise over volume to agility. of data solution. last data the are difficulty and a issues the Complexity the companies in best-in-class outcome. address the than having of having believe modern Advance, of on-premise This fifth reductions, of explosion which the and a driving of automation data the customers enhancements in infrastructure connection years shrinking of well Most power mitigation is more Commvault management, standardize automated cost hiring increasing amount with Command the to interface Continue, and application requires Commvault infrastructure-related to that management foundation includes having their We with risk the The use what acceleration surrounding best XXX and importance users data in our is this staff. of the enables and for includes of analytics. dial-in of our use cloud, and of XCs now business multiple the to with management in issues approach standardization there with the

better includes capabilities now Commvault-developed to learning automation machine user more Our our and efficient. experience make

performance auto-tune analyzes will need and altered dynamically patterns operations. the if Software software and For Commvault or be operations to and reprioritized example auto-optimize

increased be seeing to our We demand from unified and management midmarket. believe is well of their to revenue product secondary large multiple learning modern as growth through SLAs in more data figures will a platform point to management will 'XX, data outcomes-based machine revenue much the summary, FY customers also out The legacy solutions. establish outlook. demand SLAs. solutions required In QX FY solution enterprise those product converged recovery foundation storage desiring for software our we replace 'XX our use deals drove growth products appliances improving QX and to improved enterprise continue deliver also for as and We the sequential our resources enterprise to provide replace demand data aided growth our by for QX the are

strategic the call, initiatives up wrapping Commvault to the on recovery, fast a These before related for I technology our Platform. include Data comment of to disaster wanted Lastly new several automated standard using machine setting enterprise improve learning the much faster compliance cyber for the aid learning automated to Comprehensive enhanced a discovery. data from machine platform in and recovery capabilities developments attack. automation of enterprise-wide enterprise-wide GDPR

Let scale. about me talk

We new Command platform This to scale. customers to unique to it enhancements cost-effective Center easier the deal capabilities and and adding are with for to scale-out exit our by Commvault the to make infrastructure customers includes and enable for data our management management to new new unique also to data. includes the better use It capabilities capture, case. each secure copy technology data of customize quickly more

the enable which manage Additionally, open provided capabilities integration toolsets seamless source we by tools their -- major vendors includes cloud-based management management to cloud of to are including backup of tools. new market capability bringing to cloud-based various the and the the

new solutions, platform. can integrated Lastly, fully SaaS be We're introducing which management. data with our SaaS

Our our key expanding partners. as full outcomes be well with will by service Commvault, service delivered catalog SaaS as new

Advance two business enhance Commvault's and fundamentally data throughout months. management solid of to work In is Commvault it in All of of choice. of will and new available with Commvault as see years foundation We starting proof points. solutions next to these solutions the gratifying believe the with become pay off the capabilities changing capabilities position these standard will XX summary,

We've QX. growth sequential and QX year-over-year increased a and earnings Our growth results visibility outlook were have revenue for strong. good

the momentum partner-led we account increased in seeing our model enhanced distribution particularly from in acquisition More new importantly, are Americas.

and good traction HyperScale have HyperScale the Complete, and models market, in simplified Our now Commvault pricing particularly products Appliances.

We new this have market including high Activate solutions pipeline to the quarter. coming a Commvault of good products value-add

built accelerate XXXX. We growth FY in to have foundation a

organization position the to based plenty be growth started Commvault Data foundation increasing business midmarket That has opportunity will to and have Almost you. our value in be XXXX. to Commvault's Commvault as of well it. window accelerated momentum enhancements we for data in CEO. high been driven the unified in I'm that lots as and XXXX, by increase the to want opportunity growth in the front has SaaS a solutions Clearly We It and privilege earnings my is in next It's with it's several ago all to new big accelerated to set the shareholder but enterprise, leadership the we vision that for build of my setting expect and was as with growth. growth serve coming right of with still this a FY see standard and management there's solutions. style. XXXX revenue and company gratitude Since in progress decades improved the build Advance Commvault unified a Commvault and pleasure activate in to data exciting will Commvault great made improved Platform the express appliance, In of the confident for side on are over major about Thank right call, we the enterprise. I standard XXXX It management in the a to helping this vision. XXXX the of and for other likely whole vision years. me last transformation two thanks we through evolve a with company and continue Commvault of earnings the data. the a

Gary Merrill

for we line questions? please can open Operator, the

Operator

comes BTIG. question Fishbein of Joel first our And Instructions] from [Operator

now open. is line Your

Joel Fishbein

your is departure call, and I if And a retirement. Good pleasure you last this Bob congrats it's morning, on earnings gentlemen. been hope, your your to and work with

gets Brian. Is long-term in path to that one Bob, like hit -- target. for reaccelerate the and specific quick least of a terms the you believe I margin can to something growth have to on follow-up guide you and for can to you're X% In at EBIT 'XX? looks point that operating be to reiterated 'XX there you fiscal fiscal and able one Bob it question the you clear

Bob Hammer

pretty some we're acceleration in beginnings Well mid-market. good it's the and enterprise, momentum funnel clearly and of seeing the in

And just And Clearly, of believe in petabytes in comes particularly on of So I the cloud four out over the we to data unified key of in they I in points in guys the it have technology the and we that was working. second. I petabytes really to the capability cloud. made managing when clearly foundation data new management, the so are none. cloud. any cloud, have competitor is way is the strategy the a it's all think close mentioned don’t front second one excited our XXX I

indexing our capability, what itself. XD that in and do a Our with we by dynamic indexing class is

to solutions enterprise, point starting deals It big in no clearly and win the to fall. there's have start grab saw take accelerated ability close through spring. why market these shifted. and to major last shift we're place We the market second. That's has across The accelerated. Our a the summer consolidate that

up It's showing Complete support lot our driving our we Commvault channel aligned we're but And that's simple hybrid you in Even it. to what the massive big and this going it and and it's to our of into dig and our sell. management we was weren't the this for in saw when enterprise these through is as out that the environments in transformation, QX moved Appliances funnel into clearly clear on, deals. move partners figure capabilities showing it's and up to but data going easy funnel great, having our we’re mid-market. We resources numbers get trying products for which channel accounts accelerate – a both and make unified

-- the moves we've So proof points. the we've made strategic got are

to our that but good to 'XX. absolute That X% stay Brian have FY Now target drive drive in growth. focused realistic it, we we everything an solid mentioned is need for just hands and

Joel Fishbein

just Brian tell And for contract quick just subscription the follow-up, subscription your the on you average thank streams. you. repeatable your contracts a Can revenue is or deals? on what Thank color you the length us

Brian Carolan

average. Sure. years It's about Joel three on

Joel Fishbein

balance you're that the year And getting then and just the sheet? putting on upfront Okay.

Brian Carolan

upfront able when revenue to in not sell that sale. We've committed a That's that No. recognition discussing rules the of that recognize multi-year new period for quarters few the the now work. amount subscription arrangement, way we been a full we're

Joel Fishbein

Just and the right? year, years, the not three

Brian Carolan

of full get The recognized period years in full The three the upfront sale. years. three

Joel Fishbein

thank Okay, all right, you.

Bob Hammer

of and big tailwind that in maintenance growth the that impact And to and both FY renews starts a the 'XX. software renewal contract that's

Brian Carolan

reemphasized good Joel, and earnings pretty the suggest this good accounting would going clearly. there works. that on October I back the we and some are really really laid we And articulated XXXX call all just examples. and out how slides

Joel Fishbein

you. thank right, All

Brian Carolan

Thank you.

Operator

you. Thank

Our Ader next Blair. question William comes from of Jason

Your line open. is now

Jason Ader

tenure ups a I And you. nice the over great say, been downs but also everybody Thank rooting and you there's your it's years closing uptick. years, I'm been Commvault sure Bob, you. And the to followed see Yes. to that's out with some over for has wanted

great it's see. question... So to My

Bob Hammer

Jason. it, appreciate I

to Just strategy and Commvault results implemented was seeing This to be team on had turn so it clear. and design turn a by outside the influence. the the comment and nothing a is we're do here with

clear be to that Just subject. on

Jason Ader

as a and of you refocusing Okay, of direction questions. lot kind guys have Bob opinion, that's of biggest and the and realignment. One heavy you two in to In some difference obviously, allowed on start been of to what's lifting the call the maker Brian. the Bob, right great. there’s really talked your some about the I here? the for for restructuring one been and move

Bob Hammer

and and the and [ph] had and that to foundation deals. make stop how change aligned drive this market to It how foundation across It the the you the products routes Commvault, to dug the clearly had you're everybody consumes the was innovated transformation in one sure and When company. to was we market intrinsically business simplicity, pricing like here of with kind to no you -- through and a which the had thing. going it this, with product is of the team your

it I'd product focus all It products them applied resources And actually that, worked, say faster substantially, that we is than in shifted would strategy, partner-led market. So to it the have resources, these reduced counterintuitive. to we was on of aligned complexity. pricing was And with reducing then those first. radically this anticipated brought of impact. of pricing resources terms top strengthen and the field number We new and to of needed our I

elements in shifting Microsofts partners, template with relationship very out the And So the can market. products strengthening been bringing HPEs whole from Al the the level. AWSs, can a simplified working our the here, up we NetApps this company productivity. the and I, leverage our There's this leverage and of like from where else and to and product. and resources in advantages making then strategic it's the lot over on, it, strategic far It's I'd those work next-gen and working. take those advantages in the are see company to still of a five it have more room call to sales force take and pretty I execute strategy background to in substantial lot a to going get for a anybody and we're a help there's and All honestly efficient have do the that distribution believe we machine lot fundamental years. running next company on. that processes,

working. what we So I did think the are of fundamentals

got to lot a think our to organization spite through. we make of massive change the in to future had of disruptive culture happen here we I and that a good the put for credit got and things to the our vision we give team

Jason Ader

Thank Okay. you.

Bob Hammer

waving a more we flag. that call a Kudos started cost Carolan started realistic with, The near-term, left. by influence, rate. aligned it, my to growth red through outside here Mr. to was wasn't guy reduction I and was an cost work the It structure on get our it and Brian

Brian Carolan

And very effort. a much team of

Bob Hammer

effort. Yes, team a was it real

Brian Carolan

yes. team, …management

Jason Ader

the product maintenance us one, shift transition And from then Brian, direct/indirect mix? the the number any Okay. just positive line on from number to impact could from maintenance or you for two, term? the tell And

Brian Carolan

Sure.

XX% and was So this indirect sorry think I'm quarter XX% the indirect/direct I mix X% it around direct. --

see strategy our partner-led take and our we we're offering the secondly, we're from backup to rolled out. our of pleased seeing really starting approach complete the obviously, simplified So product to a primarily still results hold recovery and is then, that early perspective, from and And I'd say that. validation

resonating inclusive well of the as in it's appliance. well market think I as our HyperScale solutions as

those biggest quarter. in the the drivers So, us are for

Jason Ader

specifically referring term. customers to to over I them gone to proactively maintenance and on was you've where converted

Brian Carolan

Okay.

part Sorry, I question. missed of that your

that, see to rate continued to fiscal a the don't expect in QX. respect We that the at we QX, in QX during that elements -- continue that some similar had in we QX. our saw same of with did but we rate So

Jason Ader

Okay.

Bob Hammer

As larger for these typically many you also it a to out our is the of Jason, and shift position term those really lot these well, to accounts pointed -- revenue tied but as helps long add-on a the Commvault modern because deals these well. as to are subscription, of solutions newer in strengthen

Jason Ader

Great, good luck. Thank you.

Operator

Thank you.

question comes from Aaron next Wells of Fargo. Our Rakers

Your line is now open.

Aaron Rakers

you the been Yes. question. it's Bob, working past best. wish great Thanks for with over many years you and also taking the the And

mentioned your do that's have XX% On minute curious, partners. follow-up, the revenue you seen, just software a couple you've growth XX% only you look ago. by question ago of think had that front of you that your I I'm your I'm driven a that license and at that about indirect a -- when was assuming I quarters

past customer is go-to-market point -- you to how remarkable it's handing with increase. has there as that completely it success in fully an as engagement contribution, metrics the partner-led, pretty revenue a curious is but a model? just much any through can driven you've changed off How where of heavily whereas the far been that's I'm the So indirect Commvault. had by partner-led

Bob Hammer

It's early.

channel resources first going I When we -- to I'm So second. way. can I it this and strategic put may describe be talk partners and about

channel So a a of the the do Commvault and the have a of relationship with we rep in differences account. would the lifting XXX% partner past

So impact partner. from there little channel was the very

have The the it I'll several you're independently of quarters channel think referring that the partner channel resources where support a the to revenue is partners, the Now effort these in Commvault. these the driving deals model are I lot but driving -- the out. is being in with we call back that's by

Aaron will flock the think mature, fast the so but they fact I take time encouraging. that off is to get really

the seeing more a really strategics – adding partners lot strategics aligning and lot growth relationship now with has ever addition by by with we're our accomplish the with of a and businesses. we what they're it than dramatically trying strategic improved engagement And had with before. our their to In resources funnel

that To in get it got channel you've that going take is a to FY get to revenue that's partners. to really working mature Miller point. to ownership strategics independent us midmarket So summary, that's XXXX certain basically I Ron The that maybe a completely the think truly and of by of where our strategic model is accounts working. through that of driven point a strategics, same have with with the the our those portion

a effort is level up and taken So that being matured. also

going to So take days, is it's going results, that excited early to while it. this really model mature and summary, to us great in but work we're a

Aaron Rakers

backup or year of the follow-up you. against Okay. much curious you XXX you've the the years? couple like past Thank the public of petabytes things about announcement, a Thank how environments do them becoming you. see you under how backup as or I'm that And becoming, as nature then has like grown competitive quick AWS more over And cloud into past AWS's think competitive just do characterize things framework. Commvault mentioned platform vendors managed you? cloud themselves we

Bob Hammer

there vendors and as is cloud tools answer believe in are just really them. to tools got general. that somebody's add of the manage these The I hundreds

And major an data. that and the to middle-market got going combined not those with threat manage at own thousands area value threat. take SMB, as in at are to a add ability competitive compete hundreds is a somebody's top toolsets not our opportunity of including We the competitive higher bottom on out and opportunity a market, we these them. of capabilities the the the see the enterprise, of At But that market. to of your tools

Aaron Rakers

And on that amount the the you're managing? growth of

Bob Hammer

My God. It's –

Alan Bunte

It's doubled over year. the

Bob Hammer

It's XXX%?

Alan Bunte

doubled. Yeah. It A more doubled year. little over than a

Bob Hammer

it's And accelerating.

Aaron Rakers

very much. you Thank Okay.

Bob Hammer

Yeah,

Aaron Rakers

you. Thank

Operator

you. Thank

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

now open. is Your line

Alex Kurtz

this it's rest the this the see great of XXXX. into it emerge or see, to develops kind last to so sustainable sound And quarter should And to amazing over over turnaround how calendar built this here. be it's all redundant, going Bob, been of really and not too the Al something have last quite company years. you of And you grow guys. and interesting handful Thanks, to watch

revenue with updated starting to the next from update I you couple guys look the to obviously of kind kind the of the up heat bit a strategy the can appliance and could able appliance perspective of pivot that give to what of us to on your just Just is you over been like mean, an software really market view. have impact years?

as of as So as where you far in the that is like -- top portfolio you most see do reaccelerating right impactful bookings? far the now as three products top that in that and have revenue

Bob Hammer

Al secondary doubt. see term on those dramatically us accelerate the It's few next We're to years. I'm three no It appliance modernizes. else that it's starting for pretty the on took we we're to a and In over the say to storage but term, Yes. HyperScale move on, in comments time see solutions right now. as to accelerate starting Longer-term, And that Again, the near couple maybe our going we as just the I'll now the now see on HyperScale near appliance, mature but in market quite let solutions something years. continuing going here both of next this. the important. make

Al Bunte

portfolio the going and data upfront. for Alex, are of nice just that of was don't a out scale some up so thanks and to the Bob the here to. dynamics protection beyond were I them of to I gas. and going is it's here. secondary lot to the of They add depreciated. team real elements, I just grab market one environments. dynamic the add think I a mean, the was missing refresh kudos to They on Their orchestration of key

nicely. last very our several your to question, just it with years. of So, quarter, pushes going one Bob. And the to be three up popped the it's agree next It's I over product top

So we're it. pleased with

Bob Hammer

It's also it's being tied But and secondary more, storage. more to...

Al Bunte

It's used cases, also tied to yes.

Bob Hammer

together. cases and Our to or tied used cloud move the

Al Bunte

point. Yes. Good

Alex Kurtz

Thank right. you. All

Operator

you. Thank

Nowinski from Jaffray. Andrew Piper Our of comes next question

now is line Your open.

Andrew Nowinski

Congratulations Bob, decade your the a the you Okay. or been last luck pleasure quarter. It's endeavors. on so. with on next future working over solid good real

Bob Hammer

Thanks. Andrew,

Andrew Nowinski

and a revenue. enterprise question your have the growth I on

remarks but of total I If from subscription. to you if continued saying perhaps enterprise percentage years you four driven know a was to be your move that that touched prepared Cs, have last or three to that, whether as it's Dell software your look were it Bob, increase might the any the the on deals over or And in contributing to gains share the four I'm that factors by five there other market revenue. wondering

to Just what's puts takes wondering if growth as you could the in and enterprise. your go driving over

Bob Hammer

and it's the think sophistication get but on really I deals these into to mentioned. I of it's the think about five move whole we based consolidation not when Cs big This enterprise required consolidating, cyber only enterprise automation or across fundamental disaster is this and they lot attack want a more the of -- that GDPR. recovery a from control and There's things this this are enterprise. a big driving

Commvault all be else as So we our our tied big nobody and to the our, the got way file I scale our reduction automation start Nobody out. to I legacy complete policies. any have can. ongoing Commvault mentioned or of that else guys and we you were tied far and we Al see That to I way to… just these automation Commvault -- ways sustainable want architecture including -- of processes CTO in blowing want A. to I the and differentiated OS, what modern all then motivators. is do the how different and architecture we This cost guys a any light this And can are we like call our can seeing call of and laying outcomes. as because as think companies last this, on that has going were the things out fundamentally -- our it new simplification do are And you is automate -- that as these and of the these blunt, we really And we're early night. block and on in value. that than system

Alan Bunte

Yeah.

self-service go get big big Bob it's in Bob they're accounts really All what for. think Andrew, of way the amount hit all consolidation. is of lack to I applications the sets -- I big rationale just massive new workflows as looking coming Its into it is again really right, data distributed a resources to drive everybody accounts, IT through, are service, I one and automation, When a not well. in. lack and is standardization that this think funding lack of went again skill I to trying of the around the

it. great to manage manage you it way automate to In a to So how realm, are is automate that standard. And think our the off that? you we the hypothesis only is going

to those kinds going is on dynamics me of of course Bob world enterprise. according in what's and So

Andrew Nowinski

you. really That's Thank helpful.

but of call know meaningful mentioned impact had I rank the you partners on As your the that in in was you a impact order important, might all of perhaps forward. are And increasing could wondering follow-up, your if think partners partner-led times list most number your I today you you revenue an of have sales. a going that the growth

Bob Hammer

top a do NetApp with as in on us, mentioned there. we do much Well, massive to regard. can I cloud newer has channel opportunity role the as major add the become see providers, far and the of as and can certainly a block. strategically other a value we good better for play guys example. Microsofts guys We've AWS HPE to important including we lot are our partners call see earlier, can't that The collaboration seen because I'll globally the partner that things this it

any. Al, So the are bigger four you those add some if want of ones. to

Alan Bunte

we channel I and as described strategic influencing big deals. partners as driving as deals selling big deals partners think, well again

And only continue -- the discussion all the fronts. enterprises. to other on is it's both Bob focus on to way again we thing I back big SIs, So and I'd And include on.

and You to sets and the enterprise need these SIs really skill players off big resources deployments. pull like channel the

Andrew Nowinski

Congratulations, guys. great. That’s

Operator

Thank comes of Jefferies. you. John from DiFucci next [Operator question Our Instructions]

now line open. Your is

John DiFucci

Thanks Thank Brian. question then a a for you. Bob for for I have question. I follow-up and think taking my

it's quarter to nice Bob. So, this see better numbers

of talking a versus what sort about of don't something of challenging five this like Advance, had been which Commvault of you've know know string a of quarters just understand of here bottoming you result I of a after you've of sort trying results. much As fundamentals to as is And tough I'm how your efforts results. quarter

Just to I'm it not to ask trying Go respectful a to I'm trying gauge that ahead. -- -- it trying it in because way?

Bob Hammer

That's okay.

to was which paper get white involved a company. I before when well pretty wrote I So with started the

just of are XX% basically XX% tried EBIT. growth to it XX at a And compounded we -- ways. and couple model years of terms we looking our In we broke a compounded looking didn't and as fix had revenue work. team of -- It

fundamentally So what's just on change we to finally see we wrong a and back position said was is let's get it it this this okay, fundamentally. not -- this ourselves put -- fix short-term together painful step knew in and be we if from get going a thing take it apart, a just and company back and can again

needed we're change all messaging, the there of from the all of was and All several the do, foundation pricing simplify of no it's to do we the things product right within And here. it. a we fundamental work simplified partners, to resources to a the these As it. it mention, process needed It's easy itself, years the we standpoint, to was above things in platform standpoint, shifting leverage, company lot work. were of middle both answer worth the product,

changing XXX transformation, we turned wrenching. gut be X% are the out staff are As cutting what roles, right, ugly this around, moving to XX% I to of these mean it's when people making you're here.

that and through put house get to see us For that, all new together work. it

me this. a doing not time, than the this gone similarly I'd doing to There's more it we unified it's -- be been this results did you we then we've or comes the Commvault with been say. in -- application. and data these, it come its and shift on And did company. rodeo, going first market We its way, we doubt a better But -- And doubt most. did soon So real no by other they're build of through few the data. and another back what managing when longer now, this standard use I've from this of and out as to to long infrastructure the without Advance our is has term is no you it. And in and there's Al a just end a --

to But flying mean to engine of fundamental this what to there's shift in we've is out of thing do company. been and well potential extremely beyond that a left gratifying. So minimize crank its which don't I we're the this want I full It's the about. talking early. amount was to work

Alan Bunte

Yes. white et in not a of haircut discussions massive from think papers on harped execution. development simplified app like with going or through really of distributed But I'd had little on retrospect, the pricing things. and taking the pricing of one you cetera. bit market same topline, your obvious coding underestimating internally or perpetual John time those systems, kind we move as on trying and smooth. systems good only said, Bob our the a at in years an Bob is, and nose And pretty all one, guys retrospect, disruptive cloud your add we freaking were some into to it's Cloud's I kinds we your apps, talked that the were disruptions the to All I about. a for keep and everything all is But subscription

in improvements play shape we've good it made said, we're the handling think I market was to disruptions. execution I Bob our on massive really Like there. strategically and So think aligned

it I way the that's anyway. would So, describe

John DiFucci

the you appreciate Brian very here. a Thank more both I the you perspective. media little much really And something guys. in

than much with usually flow the this than was big was Even that what quarter greater cash better in sequentially. is it was expected. jump So, receivables

the should signed data the large see in that of of the for think metrics the be collect you you I decent and a which in quarter number cash in the good deal that flow period. of that large cash and good some sort quarter next it gave -- reflected deals at much we you fourth is means in which means on of that's of end

sometimes to at going of so the were big question, publicly. the things I address However, I'm boost done AR this to know quarter jump to you results. A end means that it get sequential unnatural I wanted in

on can what's please? So, and on that just going you there comment

Brian Carolan

boost nothing results. the quarter at unnatural happened to So, of the end

with the business at I a We software is are So, to end rephrase transact occurred. different lot companies. no the that just do nothing but as want this quarter. we that quarter, of most That typical "unnatural" was enterprise of fiscal

A –Bob Hammer

this visibility. the call guys we Q to going see the in want you are on -- what Brian do to

Brian Carolan

item Sure. our that I a some did there's appliance-related. performance carry in mean is will or have quarter some But QX. that now obligations unfulfilled disclosable million $X in that's Q fiscal orders dollars we the about late our unfulfilled came so of into that in

John DiFucci

-- you. or Okay. anywhere. helpful sheet That's the thank and that's not balance on That's

Brian Carolan

accounting balance rules. but a on required disclosable is the not is item the that sheet, It under new

A –Bob Hammer

the it's opposite just them. Instead we of what flow you and having let business said. acts, So, unnatural the we fulfill couldn't just --

Alan Bunte

acts. natural positive had We

Bob Hammer

Yes.

John DiFucci

a guys you. great. lot job. nice Thank Okay, Thanks and

Operator

the may Thank now a program conference. question-and-answer today's great This Everyone, concludes you for session. concludes this and you. you Thank in and Ladies have gentlemen, participating today's disconnect. day.

Commvault Systems (CVLT) 29 Jan 192019 Q3 Earnings call transcript