CVLT - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Commvault Q2 FY2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Michael Melnyk, Director of Investor Relations. sir. ahead, go Please

Michael Melnyk

thanks our in earnings fiscal and call results. for to discuss second for morning, today dialing our Good quarter XXXX

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

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

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

measures an me and Relations call, measures. call be to refer over this today's On also conference is press can related wire release issued has the website. the non-GAAP Chief GAAP for are today's Mirchandani, replay X-K available found the between services we this been on is website will being be financial before President of release Financial our Q&A. and will of The the commentary webcast. non-GAAP the morning our Brian available Commvault. opening to on on webcast and we This and conference and Carolan, is press Chief Investor With of website. our and morning Brian for A reconciliation An to also this Our recorded, filing. available will a furnished open the Executive each on SEC call. as call Sanjay remarks call was Officer earlier Officer archive share the announcement and Sanjay following Commvault;

call turn Sanjay? over Now Sanjay. I'll to the

Sanjay Mirchandani

retention The dollar I'm rate to our on Metallic, dollar Good our In deals growth. line together. our Thank crossed the XXX% multi-million portfolio improved saw in another landed business pleased go-to-market you, into SaaS thank quarter vision our ARR. as net delivered in exceeded just platform for seven figure we had row. multiple in for With and focus driving we QX, continued adoption Mike. we execution, quarter of the subscription QX, we share elements for Americas. second balanced that our morning a profitability. coming today. us top revenue are joining you and of total Key of growth

year-on-year growth. profit a margin healthy drove Adding to focus solid and operating with efficiency our Additionally, Europe had this, quarter and quarter-on-quarter on growth.

customers, securing their journey two as their navigating the talk strategy these threats working. ransomware. evidenced like mind, be of and of I is on face by data Our When continue in results to top things to to cloud

solutions provide easier to that to is for these goal Our customers challenges. it address make

faster. public to partnerships cloud. customer we're the double-digit Regarding cloud, sequential data helping in Each cloud are the moving newly move introduced our growth customers of solutions the quarter, seeing and amount to

XX% of start. excited tens data mailboxes and of than by XXX Metallic the expansion with sharing to has being award. into endpoints more Between also those are of Our and of most geographies, thousands customers Metallic petabytes new we new we're a received, And customers to more and offerings forward QX. strategic Commvault markets in Office off strong of five protects the accolades now Metallic’s to for net paying VMworld upcoming coveted rich look Microsoft Best a recently, partnership updates and it to quarters the come. with awards in and SaaS many innovation roadmap,

QX Ransomware scourge dealing that trusting their And that In levels. security September following one and ransomware alone, The back to resolve identify to to a worldwide customers this and security our partner The at across risks. an customers estimates be be are before all-time we security, and we're get high. customer our incidents to of data FBI they more the success attacks seeing team ensure conscious X,XXX and Regarding restores XXX% is of in when than were trusted for our customers strikes. customers ransomware can dashboard up to with critical ransomware security are in Commvault base. our rise attacks, recover launched turn too reasons the help proud a pre-pandemic ransomware running. businesses appear in ransomware we malware business increase customer the

a needs. top Additionally, we innovative product the solutions address customers we a for introduced mind, Disaster Commvault that Recovery, simplifies to these us We in the critical because and these security experience. standalone cloud help of with strengths tailwind believe have both represent customer ransomware,

and next-generation innovation innovation product, sometimes know CIO. understand we how While with X. a all out connection This combination. is can to delivered managed was the pane of I via all simplicity when Commvault scale-out and Commvault, can delivered I this undermine seamless lifeblood, year I real that innovation launched HyperScale new key our we protection, also why complexity In value. the July, is is It flagship QX. single, things cloud vision saw a the add Metallic, and a is appliance, ago of storage the world-class we on simple an it as This data integrated distributed laid Hedvig to a under glass. and power the in elegant capsulate

expanded multi-cloud and with management, workloads. introduced In capabilities Kubernetes addition DevOps data data container X, protection oriented with HyperScale we

service security, makes While solution access it storage to Further driving click Command for air-gap storage Commvault a built Commvault believe cloud in as simple of and is single confident is strategy our is pane contain this Storage glass. It as our a the we a bringing are Cloud is core in SaaS of to Service protection around ultimate together secure button offering layered the pull production. making together, struggling customers pre-announcements, believe recovery. for cloud cloud priorities the cloud the be new growth. and business. new with exciting ransomware We within strategy expanding rapidly next data return competitors Metallic cloud-based using to Center, a they our and ransomware, our and already containers This

day, in areas, cloud partnerships as add packaged force that and critical manage has our modern leading licensing such easier customers it become products security making newly that to containers is Our Microsoft emerging Commvault of industry-leading customers. or Commvault mass whether technology the for options data such industry, accelerate value topics the formidable as threats. cloud fragmentation paired reduce the urgent it workloads, security, for the and is once new and most journeys, like with embrace again of

vision, and to With Brian highlights that, becoming are it QX financial it's you, to the right value not industry our me provide over seeing the the portfolio and and outlook. are Brian. playbook. let turn we prospects executing. Our to approach only of is customers Bottom Over some have our line, best-in-class, we XXXX

Brian Carolan

growth. Thanks, to and Sanjay, to able pleased morning, bottom row, top line good in and We're a second quarter everyone. deliver for report were we

another on subscription executed was approximately successfully and expansion. had new and renewals, healthy I'll we Specifically, posted SaaS margin X% subscription added $XXX up the briefly Total of review quarter solid customers, ARR million, results. growth more year-over-year. revenue

million. X% revenue to year-over-year Products and $XX.X Software increased

XX% was from large deal subscription deal we the by figure in transactions the deals increased leading the over from second a software three The multiple deals We're these the fiscal increased was success approximately with in of in quarter, pipeline half revenue $XXX,XXX. year-over-year as volume regions. Average in large million. Software approximately represented quarter driven compared XX% growth large year ago. Revenue revenue transactions closed to year. $XX $XXX,XXX continued seven of revenue the Revenue XX% our business. grew software growth the across by X% size year-over-year. deals We Large all encouraged enter of these and our the way. to deals Americas

was opportunity customer. year-over-year, as These conversions benefit we saw a to the perpetual over with or of because lifetime strategically these year-over-year deals revenue also from solid improvements million $XXX,XXX, revenue and $XX EMEA We in Americas approximately value certain sequentially to flat rebound both second longer-term with under maintenance services subscription drive transactions higher quarter customers and active the regions. Fiscal in us grew arrangements. the licensing associated an transition

to Let me based more our recurring revenue discuss now a transition continued model.

positive marks FYXXXX point for our first the subscription year represents renewal reminder, business. significant cycle, a of inflection a As our which

We will revenue expect several the for continue renewal to be cycle the tailwind years. next a

and revenue revenue moves consume and recurring customers recurring and revenue, increasingly As a They revenue software following the as our percentage our products more services. business with on revenue operating metrics over our of annual as to time, align be total ARR. are, three focused we toward the way will percentage of recurring a reporting or subscription products

our We which across represented discuss In I'll each three revenue subscription quarter, consecutive a Now expansion software of our customers on base. indicates total executing and retention second moment added to XXX% subscription exceeded we're net XXX rate dollar for revenue. these subscription metrics. approximately FYXXXX take QX of XX% the opportunities

revenue point quarter. represented we annualized recurring quarter recurring we define a the $XXX to revenue introduced recurring in streams revenue revenue Commvault’s total Last of at of increased the and as million ARR time. Our ARR, total or value X% in year-over-year XX% annual

XX, increased million. $XXX September of year-over-year X% As ARR to our approximately

expenses our both profitability. sales XXX $XXX margin were to expenses at EBIT FYXXXX total combined expenses resulted XX% Now around points year-over-year XX.X%. approximately in cost a Growth million year-over-year of and software and revenue products million. year-over-year discipline basis expanded I'll flat and of QX expenses, EBIT $XX increase. with including operating discuss in

gears sheet. and now me Let the shift cash and balance flow discuss

approximately the quarter For balance free $XXX address revenue with that charge our ended meet accounting initial to continue I million cash release would and in sheet. primarily impairment issued the no options. performance quarter, on standalone the debt the of which million equivalents earlier of due Hedvig is $XX our cash we to to in flow, non-cash like the and we cash generated not morning. did this have This the amount included product, charge press was

our is The on drive a that capabilities improve us As integration HyperScale our in reliance this of our than technology customer less offering will gross vendors HyperScale remove overall portfolio and and on our was X experience. a platform storage to behind motivation was gives year. acquisition technology reminder, margin the primary absolutely integrated this strategic into expansion meaningful third-party the

our Now we'll for financial FYXXXX. QX outlook discuss

For FYXXXX, the third million. of quarter approximately to of total revenue $XXX we $XXX million expect

and to products provide revenue revenues. color to million take We I'll moment expect million. $XX a on $XX software some QX of additional

in appliance sales. see of the X of of fiscal will million With QX, a The absence revenue quarter pass-through launch start several from dollars. pass-through hardware the top-line represents HyperScale elimination revenue third this headwind to hardware we of

benefit modestly in remain down expect On margin year-over-year reduced the aligning of side, QX margins revenue operating gross current of and base we aforementioned hardware in the expense HyperScale customer XX%. We reduction XXXX X, with EBIT have royalties expense measures implemented we efficiency underlying function. the to seeing support cost that disciplined levels, third-party resulting total associated we to start pass-through expenses revenue expect our be approximately to in from our

Our projected QX XX.X share shares. approximately count is million for

share update will on repurchases. I Now you

repurchase to price foreseeable plan will share extended we year increased another current for cash the also future. momentum the the this recently the repurchases in the business repurchases XXXX. active enhanced for board the with our be potential XX, reflects program It Our from see The expectation to primary of authorization the and confidence that be quarter. and that return amount authorization the $XXX million share we the March is have levels. of to We use

additional providing Stay for future. to the capital details in forward targets look long-term near allocation policy financial we details. Finally, around and our additional tuned

back Now closing I'll for turn Sanjay over the remarks. to call some Sanjay.

Sanjay Mirchandani

have solutions best to be the in the simple, Brian. on a They differently more are challenges storage experience, seamless, today. and to all need the best data SaaS seen the management extensible. of has protection, be lately, keep We've that been this than of Thanks, Organizations and for scrambling our and embrace these path competitors multi-cloud. need to to as you've and data best year integrated to up. world And

ahead. opportunity the We are confident in

We long-term drive right new in portfolio, our confidence. A beyond. share that, and playbook, profitable on underscores and open and will fiscal year provide commitment to in renewed vision, to targets execution it have we sustainable financial the questions, the right XXXX growth With focus that and our the up right intention future repurchases let's the for believe

Operator

question your first Jason Ader with Instructions] And from is line [Operator the William Blair. of

Jason Ader

good morning wanted few Excuse questions ask guys. to about Hi, me, go-to-market. a

channel guys changes be some have starting mentioned will then folks Can So those that elaborate on some talked that the And of to pricing you the November – I implementing X. you first? a follow-up. we

Brian Carolan

came Jason, packaging here. Yes, July in our launch align in. actually more dialing so simplified Brian it's and to with as for usage. pricing Sure. part Thanks Good morning, we to we of customer out some

smooth we the efforts this channel. it. feedback early It's and actually cloud consumption-based the some So the going is we've sell-through good it's go-to-market got on be more going days, also to and and to think but

Sanjay Mirchandani

just align well we've customers with on for to the And us. workload it to board to as more granular getting made really as

Brian Carolan

And move it supports continued really to offerings. more subscription-based consumption-based just recurring our

Jason Ader

Okay. side could that better you doing still go-to-market Sanjay job you areas like for be are on just some of? a you, what of the And the guys feel

Sanjay Mirchandani

as done you've lot the We've space work of a Jason. tracking this, that with in been

we're related technologies, make adopt. our offerings, product offerings, to our to just sure products our continue I think that our subscription and related understood easy like are our SaaS going DR newer to

we to on of got So stuff be, the we I and our Japan I do, had we've it’s we've just on want had handle theater, we fine good put and really to most anything, in pick say pretty want to tuning already Asia we business. say – say where I'd to place. just if I’d if think a I'd work Pacific a continue

you strokes, broad see things as sort broadly large, are are the I to results, of those and from are beginning think can So by – things happen.

Jason Ader

side, the these the mean large on large just I deal is are but you right where business And happy you're like with of now? seems dependent still a on is mix deals, more of it there maybe them. pretty

today. with was on comfort large So just your comment quick a deals mix of of it a sort maybe level

Brian Carolan

Jason, Brian it’s here.

mean, EMEA figure seven So the environment, all it's I large with we’re I think about Americas even that now, ability APJ the current segment the with pleased pretty deal multiple. Americas in balanced in perform growth. right quarter and and to in our scored having especially deals

the that's think also us. I we see as contributions goodness under I So deals to start $XXX,XXX for with stabilization, But EMEA. some from said in the Americas solid

that I was So think good.

Jason Ader

you. Thank

Operator

of question next Fargo. from Your Wells the is with line Aaron Rakers

Jake Wilhelm

is if was this great little bit opportunities there. subscription ramps, a could Congrats on you're quarter. the seeing Aaron. for Jake your wondering the specifically about talk on you I Hi, upsell more

Brian Carolan

Yes, Sure. in. dialing for thanks

reassuring and are it's gratifying in all what's with and up said subscription I on being pretty goes a half show XXX%, half. firmly our business, business cross our net we're as motions retention the renewals going the dollar reassuring is second terms our with – for also second starting of we're also the first that the upsell the subscription what's is ARR. that our opportunity than to to a greater for meaningful be sell quarter subscription cycle and renewal for subscription over the that And in So on call, start pleased full of is rate

us So the confidence that gives second further in half.

Sanjay Mirchandani

pick it's say just past, just offerings, DR, from brought our everything of more of everything and a us, want our recent to brought of workload with I'd to we pane simplifies single use ability vastly what in thing ability of based basis. the choose other we in the to deliver And our market Metallic point subscription to product they customer's from and and glass a about a all that sort that's to pricing view, market, whether

So adoption these a things all ease selling that of the also becomes because for make and consumption directed key subscription. And we're of marketplace all Azure, model. easy towards example with off super in

Jake Wilhelm

I now? give right you're market us more as in what you just if seeing follow-up, enterprise wondering little a on And was bit could the Great. a color

Sanjay Mirchandani

you knowing things ransomware these data customers giving in – times our attacks, of the to ties the roadmap, to having core Enterprise into you enterprise. protection really our And well incumbency customers rightfully I in give back we're seeing be product, the especially ransomware without top like to we’ll at Jason. this can though skills, technology, new is knowing itself the knowing customers more better produce Cloud continues Metallic capabilities. can this, And help mind even going our into technology, it's time, type make skills, sorts the so. lends numbers, service – something, important as our decisions of

the and POC, couple we of seeing So ago months lean to starting we our brought sort that of leaned couple sales. a new enterprise good ago launched even months really think which towards that, a also product from traction a DR towards of is

all all fine. say So customers doing in are enterprise that I'd

to we we're that are is relevant our place in the as super us stead happen few a good structural holds months in think shifts that hopefully had the technology to I saw ago segment. and

it's there. in So good we think – place a we're

Jake Wilhelm

so Great. Thanks much.

Operator

from Your Thill is next line Brent question Jefferies. of with the

Joe Gallo

line, Joe on the to guys, line top to growth the Hey flow on of for on for the the is year good see year-over-year. down half the Appreciate question. but discipline and commitment first your It's the Brent. bottom is cash the this

when EBITDA? more evenly cash to we with see track So should flow start

Brian Carolan

Joe, Hey here. it's Brian

terms that, are we loaded flow. typically backend touch to of on in Just our cash

will second cash increased flows. in profitability half improving become with So the

that the was momentum COVID half in the see and to off QX again, cash we'll of flows. year. impact that still coming from be tends it QX our a keep happen just accelerated FYXXXX that the back QX So impacted in But weaker will also mind

Joe Gallo

stood else is that nothing But as Okay. a out there mormon.

Brian Carolan

No.

Sanjay Mirchandani

No.

Joe Gallo

you should a on you just then And but already, little can size how in Okay. opportunity renewal XQ, in to we guidance, think just touched maybe bit it the about regards it relative relative the to XXXX? to talked think on about opportunity a quarter, XXXX any XQ fiscal size we rough or XQ? bit little And but then, commentary last I in

Brian Carolan

Yes.

we haven't we opportunity the So targets, around stay subscription renewal will well as – issue FYXXXX. our of color that, part longer-term tuned beyond for longer-term

the something opportunity $XX the just in big year. about we software prior to XX% calls. And approximately sits picture, that's half renewals FYXXXX, of in that of on million subscription of So had related we've said second

Joe Gallo

Okay. you guys. Thank

Brian Carolan

Welcome.

Operator

from KeyBanc Capital Alex Your next Markets. of Kurtz question line with the is

Alex Kurtz

Yes. questions. taking the Thanks for

Just Brian, important XXX%, is on categorize Can the we it you And point? I might a net retention we on as very know metric track. to starting there? rate, that, a obviously over start fair could those fill later up that

Brian Carolan

We're not it's level XXX%. ready I above to disclose but kind specificity, of firmly that of would say

Alex Kurtz

of – right the and marketing uncertain there maybe decline through that hardware pass-through Is And software. accelerate guess Okay. business just then subscription I a XXX%, that to XX% alignment take? is set that transitioning compensation how renewals up to channel or or than But sales for way could and of the the guess, programs. capacity demand? accelerate – long more the path customers what's a coming I and the in function

Brian Carolan

year-on-year million let the hardware, reduced. I unpack several component fiscal is that, to did to of that for on say, going past-through significantly dollars of because basically that, couple almost the our it's hardware you this going are this top me fiscal do in it'll this start be by to but year, way, we're One is continue just of compare, different P&L, let concepts we a a begin I'd quarter, me So line of there. headwind the ending end when and the growth, out are a there quarter of out mentioned because get there

longer geos get subscription to consumption-based are and talk don't but all XX%. now that are because, targets towards come than going software I back a efforts offerings. to that So motions, this years, was as subscription we're and of in with going of going that subscription that with firmly industries we guidance, of our that couple know it's just of issue, there leaning respect a term now to we've And our XXX% we're certain are of part to will our consume terms if in way we over but go-to-market lead XX% software, XXXX, offerings. just emphasize long to we to will of don't that I however, less way, just we ever more migration mean, continue in

line, customers mind, start, that more great in And see want increase, to and become way, we Metallic drive it's off to we've which also of a can modern the more aligning seven got start the will not and more continue the revenues consume. will that where to revenue, ARR that's We is also it numbers Metallic it increase by into on more software a necessarily our selling when to way figures continue solid keep built total repeatable repeatable. that to but

Alex Kurtz

accelerate I the the And guess, percentage, right Brian? subscription renewal obviously cycles

Brian Carolan

Absolutely. Yes.

So FYXXXX be for future. will will be foreseeable greater a than FYXXXX, the us and for tailwind revenue this

Alex Kurtz

added couple business, pass-through a here. jump never clarify the you've pass-through to margin pass-through things, to The have revenue? right, Just of business, I'll off the hardware

Brian Carolan

margin royalties, on pass-through little there's that. excited sales no this less cost because X and overall reliance component, to appliance on it's upon there's royalties lower, because so HyperScale it lower that drive going Very launch, by our reduces we're

Alex Kurtz

give Okay. you that. that Last or license maybe typically some Did a think as deals function enterprise revenue, thing, quarter? you I this percentage disclose of of

Brian Carolan

size I $XXX,XXX. XX% Yes, deal The was That XX% was the of revenue. our it was and was did. average software – up deal count

Alex Kurtz

guys. Thanks

Brian Carolan

Alex. Thanks,

Operator

Your the next Andrews with of Jack question is from line Needham.

Jack Andrews

the you results. would could if your Good Sanjay, of to since congratulations slightly year product just be a introduction on introduced the Metallic, and it's and over to needs still what from what's just done you I been morning been biggest around this on, reflect you first the surprise perspective? maybe, ask

Sanjay Mirchandani

of in and pleased. we is said bring market. mean, was the part full endpoint climate We probably see product new pleased, anyone, and last business around we're were quarter traction. – in record put turned and it and made quarter customers be till wouldn’t I with brought parallel, of of the any we I we've seeing, patterns October, one and to some and to increase we're very, we're our and of our wanted decision it technology We we one very of put to that time, had the is I service then become everything that wish markets we've some consume services. In to very then the States into this marketplace hit the expand seen portfolio. avail announced available soon. more but of customers had to future. in where it and that sort a we and signed, used by big gave – it are starting the partnership it customers, was customer, new last in service launched to – and the firstly, a so Microsoft the We're folks on more September. are we've of very, how out, say built capabilities, where Substantial big getting us. the am very from in Jack, than then the the This part on team them and build the pandemic our year into those, United and to This product it to and preview glad super I made markets

Jack Andrews

need touch little more a the Great. for as you that. value bit X, you And And if sort to HyperScale the strategy just on to buying proposition I a perhaps have of around thanks was the could more this? developer-led of perspective go-to-market into of going Or follow-up. are wondering strategy, thinking go-to-market centers? this is different going to touch a around from

Sanjay Mirchandani

brings X, building at our it's everything Sure. But look flagship way place. at – brings our I vision we're one the product just that that HyperScale

much and converged in capabilities, one as themselves, our is from customers extending place. into off all SaaS of Metallic, and protection, in clouds could our parts that capability consume HyperScale as data the So, or our brings a X separately technology storage

plug want that we customer available file much it. to DR, on our can it of a on You that of optimization can plug and consume you every top capabilities, top way in that may make pretty

oriented APIs the For it rest that example, allows we use to to if want workflows, them set in have they do of it. DevOps richest

resounding building your So getting who from say, we we building use it queries traditional and this And to DevOps in that using storage can hey, we yes. the more – continue way in can in if thing too. in want ways they that we capabilities a are through model, we're model, a or – SaaS, or is are the data – customers got answer a protection we've

So, X we is their the is it a important is that way workflows us, such for HyperScale because platform everything customers an can or that that's why through ours. where cornerstone, use and bring that together own deliver in either

Jack Andrews

helpful. taking really Thanks it. That's Got questions. my for

Sanjay Mirchandani

Pleasure.

Brian Carolan

Operator, is there another question?

Operator

sure. Yes,

be is muted. question Next from Fish may line James the line of His with Piper Sandler.

James Fish

maintenance you the Brian, this revenues impacted flow next change. for quarter that the through if and have walk what guys. question. rest might the maybe you had strategic that through Hey, so? could us a it possible Can mentioned Thanks how how or and of year was for

Brian Carolan

Sure.

So morning, James. good

into a a One revenue is, our different more way and streams modern this greatly somewhat is how us our that maintenance convert to growth time consumer contracts number over strategic to services been of offering subscription we're you our muted. that is us a is This for X%, certainty historical proactively time, over growth adds modern So more with dollar has able more spoke want their on to offerings saw also customers consume way legacy business it overall software perpetual products with drive that helps grow to working cross-sell net fronts. that so exceeds the we're over that's to them have customer. testament the workloads value with be that the it cloud that with consumption And our opportunities grow to and with about and based. that for subscription with rate the aligns up-sell we and more customers I ability more to our are going firmly XXX%, retention lifetime that it's to

continue also will to it, muted add we're for ARR portfolio their will growth, revenue product The it to services think and So I to that. incentive because with be be an this expand of time customers Commvault. will continue but our pleased to with over

James Fish

what point to, part Got you don't coming start headwind as we pricing the of kind And removing way roughly these of movement? to it. but about have revenue mentioned at think the this related the XXX%, three-quarters from actually you you kind and today, kind then transitions, to XX% software of in of transition do but we're the impact of won't we're we get

Brian Carolan

is just XX% our revenue part me of more clarify, subscription of targets longer in recurring issue is Analyst term actually, and let based recurring So Again, an Investor James, our as its software XX% it's total Day. nature. of we'll

for is more So on opportunities a it today. to will north in FYXXXX tuned continue but have stay of FYXXXX, this. headwind focused And for track become it squarely as We're us. we it'll that, and where

products. I and model think business to the to our it's also a really good way thing our aligns customers consume for want

James Fish

for Got it. guys. the questions, Thanks

Operator

Your final line of question with is from Street. Lake the Martinuzzi Eric

Eric Martinuzzi

they and you is more capability about management expansion opportunity, the of see this, look but rollout the new to kind data need it of bit largest of from Yes, on little really customers cross-sell I opportunity? biggest the as going or X. of on Is the customers, also you the flagship capacity on the do the Obviously, we've talked kickoff more consume dive got expansion up-sell? need deeper cross-sell your as HyperScale where your capacity you and offering, up-sell revenue launch opportunity wanted a a of it a with or information at the on

Sanjay Mirchandani

Specifically the X, HyperScale Eric?

Eric Martinuzzi

Yes.

Sanjay Mirchandani

HyperScale use X is shop want. for cases a various For me, the one-stop customers

to really everything it, place. in it's data of containers. you ease they them more for but got if be with obviously ransomware, deploy it has sort capacity gives we've one, is this, ease built-in able DR capacity to this, protection, functionality, new use. cloud-burst the workloads, workflows for It's new And of, it So one want

and So customers or it's a way easiest expand. started for to get the one-stop shop it's

is say both. the I'd So answer

Eric Martinuzzi

had operating then jumping up talked QX to back And margin right. the you question the All Okay. I'm about for of call. earnings and inching expenses kind you,

based Do in the least were it rise in roughly my like expenses on throughout You QX QX? We the the flat those had operating were expenses expenses still expected the rise we to them, versus quarters? expect math, at out year. operating operating to looks actually, non-GAAP now

Brian Carolan

QX, of fight we're we're we're costs things matter expenses temporary is investments like of that going that now. to back and that we're our ones as all discipline able in terms around trying and maintaining reduce costs down to new lower This at from be order. and it's for trying right to least And to T&E world So a come and guiding non-essential just the year-over-year. event any a slightly the prioritizing such

maintaining right So we're we're discipline are of expense pleased But kind and the of to internally profile the now, now. more where term our we come company. longer profile margin on right

Eric Martinuzzi

me. Okay. that's on quarter, the It's it Congratulations good for to see.

Brian Carolan

Thanks Eric.

Sanjay Mirchandani

Thank you.

Operator

ladies now today's you, today. gentlemen, conference Thank that lines. you your for concludes and this you call ask We participating disconnect thank for and

Commvault Systems (CVLT) 27 Oct 202021 Q2 Earnings call transcript