CVLT - Earnings call transcript Q3 2022

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Operator

00:05 Good day, and welcome to Commvault Q3 Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions].

As a reminder, this call is being recorded. to call like Melnyk, to now Relations. Investor I'd turn over the Michael XX:XX

begin. may You

Michael Melnyk

A and morning about Good I'm joined Commvault's will XX:XX and call. not to today's on the XX:XX the Commvault's from assume company's now non-GAAP website. on to Michael the I'm Commvault's on most risks call CEO; Statements Sanjay? update Mirchandani, I'll made us. materially the During you plans, Sanjay basis. forward-looking XX:XX recent and cause presented financial Thank these different by welcome Sanjay to discussion future Melnyk, found XX:XX results reconciliation are and could release and statements assumptions. be measures our uncertainties, those be our uncertainties and his and include actual contemplated this Carolan CFO. Commvault to Brian earnings for results GAAP subject does risks, forward-looking earnings turn over with call, filed prospects. expectations, any between these remarks. reports of today's refer periodic that it All cautionary obligation to the joining statements. are and to a in can in Commvault such Commvault's for forward-looking statements for statements. a language non-GAAP conference Please SEC again

Sanjay Mirchandani

joining discuss our to you fiscal us Mike. results. Thanks, for and quarter morning, XX:XX thank Good third

the quarter speak breakout Our themselves. well and headlines this team in executed for

quality Subscription the in in ARR cloud-first year excited revenue underpin model. total million. of I'm proud rate, about history. $XX XX% We in to to XXX XX% was total metrics to and XX:XX a Fortune million. our best and data XX:XX for including years, X.X recurring year-over-year exabytes and several EBIT We've XX% quarterly XX% revenue $XXX nature, Software million grew ARR nearly of in the of We moved results, XX% and quarter now meaningfully cloud, $XX additions ago. that market had the wins. these financial years. our time first company a of revenue record and SaaS recurring Total accelerated to new the year-over-year Metallic to exceeded products XX% ARR. revenue representing time five record journey grew a customer While employees compared of achieved million in non-GAAP the to We growth for have hard million. past customer a approximately dedication more $XXX the even XX:XX year-over-year and could milestones. set work to of milestones the financials was increasing And our worldwide. not without new the operating a these three outpaced $XXX growth continue represents total And

reasons. for and We several about beyond also optimistic QX remain

we're First, share. winning taking and

software and reason to second highs well, record data Our XX:XX continues core revenue. offering a as a our with revenue that and products most appliance a and of through customers share I'll adjusted solution. workloads management represented growing customers' with performing And aligning patterns, management In software subscriptions incumbents, XX% pass consumption cases, when transformations. is XX% with for in existing product we're across and few momentum. the all-time X. is shortly. we and software adoption HyperScale and We're support seeing their advance provide simplicity multiple cloud the new product often products single, customers future are broadest Metallic, broader because every for customers with is a our need security, data This to provide legacy largely displacing hyper-growth single optimism examples category proof vendors and XX:XX setting scalability, The revenue. gain upstart service to

for XXX logos, quarter-over-quarter to XX% Which why and with its over new the is SaaS are deal. traction about deals Metallic for in the more ARR XX% applications to our Commvault. bullish solutions customers As were net Customers remain Metallic cloud, this the the be borne Commvault, we landed Commvault. of the or for new staggering. increased is pleased is it's seven-figure which a that to industry SaaS-based Total couldn't Metallic We cost-efficient, clear future scalable, and the trajectory are of demanding matter, This added the and enterprise-grade are business. we that and nearly Metallic approximately major because like X,XXX, future driving of migrate milestone first-ever XX:XX are more ACV growth. as of numbers

layer data workloads, with is of and first-mover protection clear offerings. This invest advantage both, XXX using to differentiated Commvault our This Metallic call numerous embraced as this Commvault than protection, a they global which Metallic Metallic involved its to What increasingly flexible XX:XX Commvault product. across Metallic software customers position. Metallic's XX:XX a inefficient customers and Fortune have a that growth environment. single will why recoverability of we chose customers compounded multiple demonstrate power of further we AND. multi-vendor Over growth wanted ransomware to deals company continue and way what HyperScale and which offerings. We and Complete of with using an another leadership product, -- QX and solidify reporting, one has and the of of XX% XX% are had XX% SaaS, swift company X myriad are than Over approximately materials more better Metallic

Our the MSP use, for advantage. provide we're future-proof breadth our partners only that, opportunities. third We our and community also meet are tomorrow. to needs is to the and this leveraging architecture the of ease of their optimism growth drive new competitive and solutions, reason is today company XX:XX This

more partner business globally. us collaborative is win helping engagement model Our

system management. After with integrators, our vendors, storage for their global legacy object transaction auto broad pressing on-premise ransomware X ability numerous business example, workloads, could reason that a For centralized one XX:XX these Another for protection. working is HyperScale on of to backup world's solution Commvault our the optimism and again, leading seven-figure a with a company compliance, they their resiliency. Once data most largest They centers systems of with the with needs. a and manufacturer. needed we scalable list with Complete certified closed requirements data to their customers strategic for workload solution were help all we only with meet switched evaluating

Board CIO instance, and rises no security just other For relentless of priorities. the They longer are CISO ransomware CEO level threats concerns. are or and

point competitors automation an the worlds adding that prevent, approach XXX tomorrow's You telecom multi-cloud, opportunity company's is of a complexity, the risk. ransomware, threat upstart cost, protection threats and threats innovate and in could with was integration increasingly we with We and than company, from needs. a of security, protect, traditionally leading security only to offerings. resulting and vendor have Rather deal. The couldn't these away, meet why the even us are In also looking these a do are and for see X siloed XX:XX IT alike recover partners going Fortune continue architecture figure these the and professionals Commvault ransomware legacy initial meet even unified to patchwork data which round not requirements. today. a of Whilst our edge solutions, multi-vendor our more XX:XX and vectors. this presented and help QX, breached

talent in believe entered ransomware prevention our this help Looking to We technology technology their large this fact, growing market. are uniquely and and and broaden reduce In customers in into capabilities detection believe will positioned ahead, agreement an acquire overseas space. an further ransomware. company we I Metallic's innovation XX:XX and to a further we

the strength long-term future. it of play and to well the teams in the our is XX:XX gives IT our I'll executing critical transformation financials. to continues Our the Commvault projects, which business. are for to Now, us allowing software innovate offerings in opportunity at look and a a confidence Brian closer for role for turn over core us customers' invest Brian?

Brian Carolan

review Hope everyone. reported that total $XXX released morning, results we a fiscal quarterly the of XX:XX and had we in good will Commvault. QX you on I the revenue in color an to and In exceeded marked time X% million of additional Sanjay, quarter. milestone $XXX company Thanks, 'XX, provide recap a morning. briefly million, some first history this year-over-year. the we chance QX XX:XX for increase revenue,

products million. approximately revenue $XX XX% to Software and year-over-year increased

$XXX,XXX. increased products, XX% we Americas in the XX:XX As closed deal figure average driven highest regions. year-over-year we In customer reminder, transactions transactions software approximately and across over software additions a our excluding QX, XX:XX through model. noted, software-only Sanjay in numerous EMEA QX, XX% deals pass new number software-only of we've years quarter. Revenue In increased had year-over-year. revenue. FYXX, in these appliance growth, and to from a XX% XX% $XXX,XXX volume moved represented of primarily grew of revenue, As to the record X% the year-over-year was approximately X all a The by and size

business high success, an addition existing In during customer to from customers new reached the our quarter. all-time

and pace discuss accelerating new our of me XX:XX further of Let expand transition emerging now validates motion. and Taken a model. both existing to the revenue together, our the business based recurring land success

increased software ago. of increase software $XX XX% licenses approximately to revenue, XX% year-over-year revenue total XX% Third Subscription year quarter and last a XX% from subscription million. an represented quarter

our of of XX% of transformation customers associated It year-over-year the increase which last from expand Recurring On and of $XXX revenue of our with a year-over-year. and being The I'll expansion XX% renewal hardware year XX% revenue, XX% the This represented XX:XX basis, quarter recurring barometer and partially total XX% measure the in was a services, strength from were sales. year-over-year future is and of fiscal underlying expenses growth. approximately We of the land, from ARR noted an up savings ARR, now and and transition point SaaS We XX:XX million of a XX% basis motions are of carries and legacy offset to pass-through revenue, an includes year-over-year XX% a mix an potential recurring grew points higher Sanjay revenue These XX% or approximately which year currency growth ARR Metallic for good software, our of $XXX growing our We to subscription XX% our model. XX of quarter, XX% in and royalties by constant quarter support and total decrease company. a revenue, by the business. SaaS Metallic. margin our XX%, $XXX represents important discuss and subscription XX:XX of subscription ago. earlier, health gross HyperScale ago. and last new ARR million. annual benefiting million. XX:XX believe of the quarter Metallic the is the of a Now to is revenue version tailwinds Total maintenance proof in clearly represents driven an up Total increased result products. ARR the recurring increased As third of reported cost subscription margins grew year-over-year. was is increase gross profitability. ARR,

field year-over-year I'll to to over XX.X%. driven by third-party compensation expenses Total in We Non-GAAP both was sales XX:XX spend, EBIT strategic and year-over-year sheet. expect million. and gross economies growth and of million, X% EBIT approximately XXX flows scale. time was $XX non-GAAP Metallic. XX:XX margins with investments costs increased and Metallic Now bookings, cash record Expense points margins operating $XXX record expenses, of to improve discuss including improved increased the on balance marketing a increased basis

XX% generated of over with sits approximately million in cash flow. we quarter, the For the quarter of We million overseas. cash, ended $XXX free $XX which approximately

technology a an balance. As and price firm our talent-driven capabilities. enhance million Sanjay our to The foreign announced purchase will cash approximately we protection acquisition funded from $XX entirely is mentioned, and ransomware overseas of be

have deal no the sheet. currently balance the to fiscal QX. debt in close expect XX:XX We on We

for quarter, QX. In guidance shares financial the $XXX to Now XX, for we We common our our revolving financial outlook a our January During throughout saw our QX, opened repurchased million, $XX through of of XXXX XX:XX we I'll X.X momentum 'XX. Since free approximately million, $XXX flow. we for FY accelerating December QX approximately $XXX event additional of X.X in XX% shares investor exceeding million stock credit million. discuss flexibility. facility cash repurchased million new initial provide million plus

quarter, As us. industry it's the our in the Sanjay good of shape in articulated, and and focus we this believe an business pipeline area are our always healthy. is that for At point

to diligently share market are this gains revenue QX leadership Against backdrop, we further are fiscal We guidance. raising position. and working our

of revenue to expect $XX let's revenue XX:XX approximately approximately software expenses. total We QX million. Now and of million $XXX shift

We expect XX%. to gross year-over-year be or QX margins flat approximately

increases, a including seasonal We margins and anticipate and expect year-over-year. operating XX%. annual go-to-market to that of up of total expenses expenses, will FICA reflect approximately reset, cost approximately investments. QX this merit in tax X% be expenses sales EBIT result We

I'll count for XX:XX share for things Sanjay? With approximately now shares. XX.X closing million Our Sanjay that, turn QX remarks. back is some to over projected

Sanjay Mirchandani

but you, Thank past Brian. have years few The normal. XX:XX been anything

While we've that the ongoing and data supply continues to the data. adapted importance, chain continues results. in delivered the to too and secure and create grow This need sweet so in pandemic spot. protect has unpredictability the quantity our both and as Yet, is to uncertainty,

in are making and is our message difference products Our resonating the market our for customers. a

We are that, and by to the up Q&A. confident I'll excited forward. call Operator? path With open our opportunity the in XX:XX

Operator

[Technical Instructions] [Operator Difficulty] XX:XX

Jason Ader

cases? out the best is XX:XX to [Technical lines struggling Difficulty] situations pretty in of demarcation where clear use there what fits figure of pretty a Are salesperson are -- is or it terms

Sanjay Mirchandani

that Roughly, includes different both our more our XX%, that of supports got is endpoints, VMs because power increasing. little to give the But workloads, say and of customers XX:XX of of very just XX:XX with incremental, and we about Metallic to to flexibility. the complementary. clear. through that and AND, on mostly the Metallic want than Metallic, give question, cloud-native you I on think containers, of different value one over ability there's applications playbook. work do on-premise our customers Metallic a and power a very that bother workloads products. XX% product XXX clear most had we Office bookings that AND, on includes overlap HyperScale, it's I'd The We've most I think is

Jason Ader

rev has it. then have headwind a say, just much of fiscal growth a you lines. Got follow-up Brian, rec, to for of ratable Do over a this rev how sense more along kind of, also come XX:XX And let's kind had shifted those ratable? would activity but to upfront so 'XX, where but to you not from with of shift more just kind your the MSPs rec, Metallic, have an that of

Brian Carolan

at marginal Jason. somewhat it's think I XX:XX this point,

a said, it's it's this large, we're you're point. Sanjay a very recognizable business, and of But seeing been this has SaaS really in much huge together of by of Anytime terms in both and headwind complimentary power have not in to at As it a the in-period as succeeding investing headwind. the revenue. going market

Jason Ader

right. XX:XX All you very Thank much. luck. Good

Operator

Aaron from Rakers next Fargo. XX:XX with Our Wells question comes

Your line is open.

Aaron Rakers

the into the some chain deploy of have me the is, A impacting the and on on question Where at with some Or well. questions as as quarter and the is the as out the we still quarter challenges the impacting Has conservatism some guidance of stand well, taking at that for closures we customers? today? Thanks supply do customers. there Yeah. XX:XX setup congrats in look quarter. and what just September couple quarter dynamics? you narrative from some guess, March lifted I discussed the deal going the ability those to first guys obviously was the based

Sanjay Mirchandani

last quarter, headwind sort course the supply of quarter. over increasing our said we chain we the second Like XX:XX of saw

it time. spoke to well where October And working think to products is were we over it done we've because we've in using trying in normalize of the -- we team risks it, that and there XX:XX going land using the directly. of executing, happened the really got AND, are cases going the sort ongoing we said, because are quarter, is managing of what wasn't were it well, cloud land, we're were power Aaron, said we're ahead some this we customers when to So for. I we

-- saying we've our normalized out at So but we're least pipeline in it. I'm it, of -- we're for seeing we've management not I'm saying

Aaron Rakers

Okay. XX:XX

quick questions. other couple Just

mean, you I million SaaS very business, was that Metallic Metallic of disclosed revenue the think based the It ARR. the on I think looks like, it from about saw you very, of standpoint, and kind $XXX strong on a subscription we ramp On how quarter.

in Asia-Pac. actually you think Metallic availability of in introduced October I or commenced

Metallic a way the about visible for any is subscription momentum of component that to think we you're ARR How more forward? curious, of that piece, seeing? much think I'm SaaS do because move driver as kind So becomes growth there that and SaaS we us about

Sanjay Mirchandani

all XX:XX ramp pleased And rev I the think Metallic. SaaS, on progress I in we're with on-premise, is, There that's on-premise. it. necessarily strong of lieu honesty, how really from The demand with in in hyper-growth. I cases call SaaS mean, making is it, with we're about customers, grade enterprise a not most but

AND of power the So important. is very

a subscription ones Like ARR Brian XX% is total. this. the year-on-year and -- only do I it's a think big that It's and contributor. SaaS of the both XX% the I and are said, growth We

unwrapping So Right more like can. grow not I it's now earlier, specifics yet. the over as we're said handsome. And we'll this fast out XX:XX focused everything just can we we're we as on call business to numbers just Now, doing time.

Aaron Rakers

that mid XX:XX for point? at question out Analyst fiscal believe, software Day you also some of thoughts, was that thoughts year. I Brian, XX% by ago? I outlined outlined relative then a of the to I curious, me if as progression mean, year total well growth Okay. Any kind you towards just to And are is, and correct of what then quick revenue think expectations, early the I'm this final sticking both XXXX, range, part going back into wrong, XXXX any EBIT,

Brian Carolan

was ARR growth in proven we We those software messaged. we Hey, in said of particular, what XX -- towards XX:XX perspective Yeah, same We're of those done you are approaching and as on We've profitability I We're gave know ahead two-year think January we're tracking and growth that Aaron. of of and share good ahead focused amount sizable now couple morning, we've that, especially of also a that is Rule of the years, think targets, a that XXXX, XX:XX Rule a the in XX. back balancing I on at of that. and well targets. revenue time. repurchases

you combine just were ago, at a that we If a of Rule of couple X. years

we've we since between little bit that. we're metric is not And measure change, our right ARR driving mix now combination. we're towards growth There that does absolutely substantial to a a So focused progress great And margin, then. the might change on made but ourselves. and believe direction

We growth leave while that. investing will And as it the in ARR continue manage businesses, at such to Metallic.

Sanjay Mirchandani

to want add comment. just I XX:XX one

healthy. It's that business core comments really share. and in And I us is Our we're bullet to of is fuel enumerated my sort earlier. the software first growing, was And taking grow that Metallic. allowing

Okay.

together, And so, a workloads sort we're complementary, and the important in power us the the the all to architecture. over value. about combination are to They think no-compromise It's happen This way new the AND deliver in really upload moved cloud, a it's us, look it. as the is a to of one is forking to adopt of it's customers working And really not it. that's causing cloud, into to cloud, serious because where other. give

Aaron Rakers

you, guys. Thank XX:XX

Sanjay Mirchandani

Welcome. XX:XX

Operator

next with Sandler. Fish Our question comes XX:XX from Piper James

line Your open. is

James Fish

the and or guess, question. XX:XX the behind made on why in comment takedown mix quarter. a you're but margins the success margin, seeing Hey, out driving important. Aaron's so. tremendous there you're the this may the little of side question Metallic changing potentially of are be fiscal Rule just that I 'XX going off kind Great think where of especially and for for not Kind years? invest you towards thanks for guys, growth Brian, they more at bit I because point, there, about growth XX

Brian Carolan

call you. ARR, that, news really Yeah, is get with known both the hyper-growth. due different from moving a that, squarely are customers seeing We're I that that hard the economies to it's margins, to direction, out XX:XX little you're XX:XX We our Hey, advantage. scale market the is to Commvault early-mover understand SaaS when solutions. we'll driver and growing hear and on of software look power I from key they a you're both working and more James. is scale those specifics of software of SaaS believe good have course, mean, us in dealing demanding offerings. And for experiencing Good good bottom. differentiator are in to we're Metallic enterprise we the We SaaS well going margins. the but I focused think mean, morning, dynamics. is And top

Sanjay Mirchandani

At have a I It's I Metallic Metallic. seven sharing been XX:XX compromised something it's no And the has business investing past with. growth of just very that six, we our with business been in point I'll that we're you like, here. very jump core. business in mean, happy we've with over a a It's leans know, quarters. in. nicely we're the don't

of knows force them sales take how both Our to to market.

it. partners it. are adopting MSPs love Our

XX:XX 'XX 'XX. lot our are guidance, we points QX So investing that's FY in XX% approximates of fiscal example, we've just XXX for investment. a up margin, And about basis EBIT year from it. done of And

Okay. XXX roughly that's basis year up 'XX. And points since fiscal

delivering we're metric results. growing ARR, us. the a which for key So is We're

couple delivering as X, we're were growing healthy said, And of Brian and years of it. so and Okay. X. at a we Rule a margin, the -- EBIT ago And

Okay.

So are we We're and fronts, making hopefully are importantly, embracing are investing. on right the we it. all making customers choices, most --

James Fish

mean, line. of It quarter the top aspect guys. on great maybe XX:XX sense, the on And it, makes go-to-market I

investing Brian, spent the just overall change the have there has and, for sell SG&A upside behind in gave sales might the in But growth more subscriptions the Metallic? some a headcount? You details on adding you incentives and factor more been force of of is to there. a it some Or

Sanjay Mirchandani

appreciate, focused with our are Without commensurate makes playbooks that much whether away, compensation better. news be it we you've good The the XX:XX is, it the prioritizing too field, for got customers things when things how product. giving something results are

is direction. that aligned in everything hopefully So

James Fish

guys. Thanks, XX:XX

Operator

comes next Martinuzzi Eric Street. XX:XX with Our from Lake question

open. is line Your

Eric Martinuzzi

plan kind the laid we've out that the or exceeded one exceeded buyback. that ago? you XX:XX we the Yeah. original a here, year I and guys I aggressive actually that outlook. talked At a wanted about pretty of we to new were delve into a level given the Board reload understand have

Brian Carolan

in of that's free Good Eric. out 'XX. XX% Brian flow we cash FY the It's January plus right against was commitment that $XXX we're Yeah. here. laid now. And plan of The XX:XX XXXX. million, Yeah, in executing morning, starting

Eric Martinuzzi

Okay. because I'm -- not Maybe XX:XX following here

Brian Carolan

that plan, is immediate There that is change There no plan. Eric. no XX:XX change to to

Eric Martinuzzi

XX:XX Okay.

we So, quarter. number a current anticipate should smaller in the

Brian Carolan

opportunistic to we free moving committed forward. cash flow and XX% be will of We XX:XX

Eric Martinuzzi

XX:XX Okay. question pricing right. had pricing, All specifically And I renewals. the then, regarding a large on deal

You guys into discussions now have -- you of have how I are pricing on base year the second and that wondering your was installed renewals been going?

Brian Carolan

demonstrated percentage at had a of our than quarter we was that conversations. seeing year-over-year. those record culmination we've deals XX%. a result. revenue. That deals up motion for XX:XX Well, And of I renewal. fact, to us think that more time we've with It's to up another opening performance I'd was forecasting seen on had seeing business. been pleased a of we're about and customer, we've But kind tailwind been The we're deal that software as this We with encompass the In work $XXX,XXX just company. we've volume of now discussions expand renew. we're of as the All XX:XX adopt, more that, and for things is just like and our us. emphasize not for it's in have complementary renewal greater the a as often and XX% very that much it's XX% sizes of those land, seeing of the conjunction Its many that up that's renewal the large the one a with

adopt, continues motion. expand, renew all Again, a So one to feed one the other. it's land, in and

Eric Martinuzzi

Congrats it. the and outlook. the Got XX:XX on quarter

Brian Carolan

Eric. you, XX:XX Thank

Operator

XX:XX session. This the participating today's for concludes you Q&A Thank conference. in

Everyone, great day. disconnect. now a have may You

Commvault Systems (CVLT) 25 Jan 222022 Q3 Earnings call transcript