CVLT - Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Commvault Fourth Quarter Fiscal Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] It is now my pleasure to introduce Head of Investor Relations, Mike Melnyk.

Michael Melnyk

Good morning and welcome to our earnings conference call. of Head Melnyk, Mike Investor Relations. I'm joined Carolan, Commvault's I'm by Sanjay Brian and CEO; Commvault's CFO. Mirchandani, And An infographic with the key financial operating metrics Web for Investor is site reference. Relations posted on about today's include call Statements expectations, made prospects. forward-looking on statements and plans, Commvault will future subject are risks, uncertainties, statements forward-looking and such to All assumptions. results and and the the to a SEC the release discussion in be uncertainties periodic cause recent to of today's language refer most those actual reports these risks that and for company's could statements. Please forward-looking earnings the contemplated cautionary Commvault's different filed with in update Commvault statements. does not assume any obligation to these

During joining this non-GAAP non-GAAP and results us. Thank on presented the basis. can measures on site. be found call, a Commvault's financial GAAP our between for A again reconciliation Web are you

turn remarks. to I'll it his for Sanjay Sanjay? over Now

Sanjay Mirchandani

Mike. Good Commvault's year best" us thank was you and in XXXX Fiscal morning, for today. Thank joining "The history. you,

executing, Demand and partners and closed Our our with customers competition. the on differentiated and the is us are revenue, for resonating We year platform a is strong, and quarter. and high we record share from quarterly enabling alike. $XXX to and portfolio team the new total take of milestone was consecutive EBIT, note, for company, revenue EPS. QX in crossed million the $XXX posting second million revenue software a outpace

multi-product was growth through and adoption, large increased software driven deals. offerings, Our by SaaS the our continued of and traction

revenue and Additionally, Metallic growth. our and continue customer to scale meaningfully to contribute

increased it, of has in and to but our a report that growing. year-on-year a million, our potential. now love March of total accelerate nature, ARR. we six let's is we Metallic the discuss journey, Over will year are growth quarters highlights discuss in barometer recurring in SaaS $XXX I of represents subscription in as love in moment, At ahead. $XX financial is As revenue future ARR and the I'm extraordinary, now Brian million XX% ARR. customers availability, ARR XX, revenue we growth our XX% focused and increasingly recurring of it. commercial pleased on Its exceeded just And first to XX%

market, assembled through Over team innovation, We company it an simplification, domain service a at is mantra. and world-class the management our SaaS. data protection expertise years, today's transformed especially company, execution three cloud is the in tipping deep now. as and time firmly our a the and data past with we we've leadership This tailwind a And why point. for incredible is is believe

sharing at One, it's grounded You customers. see, converging once. three solutions more important. execution is and our and data our software complex in we never drivers Commvault we're solving heritage very this. continuously proven engine and to by elegant today. This is rare the innovate SaaS. critical problems results is hard Two, all industry-leading for has to in And have as humming has been problems these three,

me discuss one. Let these by one

we problems. First, hard solve

workloads. Well-funded to other Our remote different are in customers ransomware infrastructures, in multiple data, everywhere, bad in a on and cloud, transient take actors contending flight, and generations onsite, and new and of with Data is organizations, devices. data threats world. the hostage. They're live and using

their them companies who cloud. Customers Upstarts, more creating acquisitions look us create security the putting solutions only to on to to built as proven call more and All a collision, moving piecemeal I are often, while siloed which pressure on, silos. help through data IT and what of IT trusted protect journey. teams partner point are and to entrusted

all Force, that highest That's the and and government capabilities, the solve U.S. Coast Justice, Commvault data why U.S. for years, has chose XX For their security agencies their the demand Guard, hard like data of protection problems, mind, secure Commvault needs. readily provided and these customers' Air helped that of piece available. Space is Ministry and

we Second, environment, platform, workload customer provider, do We and solutions for for one any problems. world-class to any needs. hard data one management this these a build elegant, multitude of

rigidity removes and and in complexity architecture payment the their flexible Our systems. single class

our they can need enable transformation. past environments, Having competitive cloud straddle [Ph] advantage. years, Additionally, moved our of solution is both the to scale data on-prem needs. as and this meet and customers flex several evolving customer It many of cloud that over their few [exabytes] to a we the

and immutable upstart, of our roster. QX, world's one Office migrate For XXX largest mailbox are VMs, provide of customers the incumbent teams staring our shipbuilders on-prem to unified against to chose attack, example, get help unfortunate down them through work. legacy workloads platform. and vendors, there our we and They us all in a displaced and welcomed of the thousands ransomware, are the protect speaking to data when their their back an ransomware, cloud-based an to Fincantieri, cloud, copies to their of And

hit the needs. and to most the alerted we important it probably the the a that automation, company's ransomware opened by us For reason I it But our razor-sharp execution. attack, were to Not door meet our multi-cloud as their is it third, relationship only XXX but we time expanded believe example, ransomware, was company an provider only them. and is integration Fortune global was data, a the when did save materials

our company, are We transition nine why XXX of surpassed time. perpetual of basis we've a is subscription is from rule XX ARR. This a two it and I has built points the We we've in in expansion. accelerating while software. margin proof is our gone million XX. of pursuit franchise our self-funded believe well-executing past And from to definitive growth while this delivered revenue SaaS years, the to world-class that delivering consistent $XX Over we

We're they workloads, are the in discuss the of offers and address Now, IT SaaS company and let software flexibility unified on and between their scaled as security only have our moment and shouldn't require. they the them various priorities. Depending portfolio. with that to a provides to competing our solutions both. software, take workloads, me Metallic, complexity the where them and will collision naturally on-prem Today, systems, to they SaaS. with the choose need They need software journey or combined customers they

For accelerate on-prem and example, provider, their data software multinational footprint, their HyperScale across the X to entire an Metallic a Commvault cloud transition. added management capabilities and services customer, recently existing and expanded

We financials. win. are is a Power And one now why helping platform. they them protect more of of with Azure. in than virtual petabyte AND. is And it thousands of And [indiscernible] is unified in the showing the and that we This workload, up data this are doing machines,

ready growth value, lean revenue. and company. of higher We've future product, and in put why This we higher lifetime higher management ASP, XX% number to are drives management sorry, the This year-on-year customers the is as than one our saw we recurring cloud -- quarter in the we work with cloud into which bullish. data hard are more

to held roles we the as build I Operations. to results, of including most Gary turn a senior our well. I On new the deep Brian has Board want Chief us today on of team, and Gary talent invaluable. over company. reflects bench the we the his And at has Merrill's Brian recognize and stand CFO Accounting recently, solid note, a discuss today. the Commvault call announcement leadership our Before Chief several as me, to we all Business the him at Officer, counsel appointment wish made here foundation to as been enabled to him has is personal Commvault. and

initiatives Importantly, growth. been us positioned transformation to business accelerated Gary a has modernized our build leading for that allow and platform

to Brian. I'll the turn over call Now,

Brian Carolan

to right that. time appreciate professionally I I Sanjay. much, XX move years the another Commvault his has gives After very been XX personally have CFO confidence is me reins you is And me for colleague great ability coming to off I success. for successful both the to Commvault, partner my with Thank who hand that's for lead more great positioned years. and in decided and the pleasure well year it and the team. to than past record Gary on. have

we in results, quarter our the and $XXX Power about revenue reported We results year-over-year high the growth to both X% million. SaaS of talk a growth quarter. a let's total company's AND history. the exceeded with software the the best We accelerating And year record record contributing consecutive of driven our revenue trajectory. by in $XXX Now, for was on total closed approximately note. year with to second QX million FY'XX

XX% to $XXX crossed the revenue year-over-year marked time million. in in approximately increased revenue. and first that products history QX quarterly milestone software the $XXX Software we company million

quarter represented last XX% year XX% Fourth growth quarter appliance ago. of Subscription license from pass-through revenue increased approximately increase and an $XX sales total year-over-year approximately revenue subscription year-over-year. software was only revenue, software XX% a Software million. XX% XX% excluding to

X% XX% increased approximately year-over-year ARR. Up Revenue from year-over-year. year-over-year, QX size the XX% numerous transactions revenue. Metallic of the quarter. transition increased XX% deals from seven-figure We The and growing subscription $XXX,XXX our to We million. transactions recurring in software And model. deal to of tailwinds Subscription of in and And closed are our revenue total XX% grew quarter benefiting $XXX XX% represents grew and from ARR these the XX% now last XX% over represented of $XXX,XXX. and volume average 'XX. clearly software

XX% Total This by noted ARR of constant XX% been represented of earlier, quarter, services important the an grew is of revenue increase was our million. to Total from the and customers of growth. year-over-year year-ago. quarter. the future proof currency as a includes revenue Metallic maintenance in $XXX a a the to Recurring a and ARRR Sanjay ARR recurring increased We during basis, XX% potential software, subscription million. year-over-year underlying new year-over-year. our support has the the milestone transformation measure good Metallic. subscription total for revenue, which ARR believe As On $XXX crossed in barometer company. health an and is ARR XX% driven million approximately XX% business SaaS, point $XX up of growth

certain and record Now, is I seasonal sales year-over-year expenses increased cost annual XXX cost Expense improved We X% settlement netted gross margins related basis investments. expectedly and merit gross increases, an gain of QX in including reported carries year-over-year FICA of XX% This million from reflected operating higher EBIT both than XX.X%. a to profitability. year-over-year expenses expenses Total million, $XX net increased go-to-market to points and approximately of quarter Consolidated matters. software. a margins growth Non-GAAP non-GAAP EBIT mix $XXX with tax XX%. will legal million. fiscal SaaS reset, benefited of a G&A. expense approximately to a fourth of expenses of increased which revenue, and $X.X reflects also margin sales discuss

discuss sheet. Now, will cash flows the I and balance

cash deferred in payrolls. revenue growth cash growth QX quarter, in related we of which, the $XX million free flow ended the quarter performance, $XXX Metallic, sits repurchased overseas. XXX,XXX was We million. balance approximately driven approximately sheet, timing XX% in free on flow, for of million In to we of of $XX the stock debt For cash common QX, by no strong and with and approximately over shares our generated

Now, I financial for will our FY'XX. discuss QX outlook

We uncertainty, X% of we expect geopolitical $XX software Also of revenue, total of customer's Russian which to is Due particularly are approximately our guidance. factored risks patterns closely $XXX million. note, approximately near-term into operations ongoing to in previously QX business, and revenue total spending potential Europe. approximately the million, revenue monitoring contributed

to reflects result We approximately this accelerating of sales go-to-market We EBIT to expense profile. that revenue will X% operating investments and growth of our expect infrastructure in total margins expenses year-over-year. costs XX%. non-GAAP SaaS including cost expenses, up and anticipate QX approximately support

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

improved happy we revenue attractive growth, As our January, progress progress. we free At sustainable we plan the model, towards that policy. to year, characterized you to fiscal a time, recurring the outlined to out will report our update Investor we've cash return made and transition laid on take targets our moment profitability, XXXX I'm I flow, that to event. during by an a strong new terrific capital start

the comfortably software currently and ARR Our the mix We currently is total targeted subscription of while mix revenue Rule at recurring and are their ended within FY'XX tracking against And target, or XX XX. revenue software above ranges. at materially is tracking target. above

while very are were by all made nine just at two hyper we SaaS of We ago. scaling progress considering improvement was revenue expansion, years growth proud a and accelerating growth This significant the platform. driven we've margin

March that non-GAAP EBIT Factoring consensus of report pleased FY'XX in low of remain 'XX. fiscal Investor the range, margins SaaS approximately time reflected since should new $XXX success continued expect is a XX, Metallic, progress that we event, the X.X While up return event for Investor for shares call of believe major to was the be XXXX, of repurchase From his $XXX for XX of million cash XX% point share repurchased expectations. through over stock. with In on FICA Metallic now the a turn of Sanjay? We return FY'XX, focused to in approximately XX% million of and recently in a XX million. our we perspective, estimates. authorization to approved of ahead well flow to not I'm the practice against capital will we existing the momentum time. back remarks. free towards making Day closing continue pacing in to focal Rule currently Sanjay the our I target now

Sanjay Mirchandani

that our fiscal market 'XX, and recap, executing. To year wave. record is 'XX It is demand team accelerate build our year we time. Brian. fiscal year the healthy, management power we lead to and in it's data cloud for partners, 'XX. a is the Thanks, our to and intend is customers our and growth of Overall on with In expect was Commvault, and momentum resonating year year, fiscal

open up will questions. we the call for Now,

Operator

you. first Thank Our the Instructions] question of [Operator Sandler. James with Fish line Piper from comes

James Fish

Hey, Brian, just just something to here. thanks want the clarify for said. nice fiscal questions, way the and to year guys, end you actually

which the you're the for growth for imply X% margins the growth goal 'XX, the would EBITDA for reaffirming XX revenue revenue about low-XXs XX% to and of EBIT fiscal year? talking You're with

Brian Carolan

morning. James, this good is here, Brian

line we our tracking So, XXXX, yes, the we've I January, great mean out ones. targets we're or progress in above made all towards that top at and laid

out. the that At to Importantly, is fiscal towards And make point, we're is continue laid goal we objective above progress well ARR this an changing tracking objective. not this that as XX our our to year. throughout

James Fish

all you And, have and towards supply guys And, Last of over more the seem it Commvault software, delays like doesn't model help are guys. What appreciate actually billings, still project for moved example. noting some guys whole seeing Thanks, you, you impacts tightening announcements? material many there's or me, for it. regarding especially have chain, any lead on Brian, pressure chain. Got peers like years. from supply it the HyperScale, with indirect to showed seeing components a your for element was given been with great work infrastructure upside but obviously, the but lot, metrics, the one hardware --

Sanjay Mirchandani

quarters, hardware eye the deal, So, not we've let take keeping me a couple piece real software. it, just been past yes. our our the of supports of on the that Well, but

past closure of it below to because it a can timescales have couple the we've quarters, able matter. so, don't the the delivery de-risk if or successfully hardware it. And for times needs been it. is But real storage And in the uncertainty customers software

lean and been perfect The got -- So, lends has real in a takes It's a we've workload our delivery, the on into After QX, we've that keeping whole SaaS-based -- we're customers on but keeping eye is itself a Metallic, we've not if it. forecasting process science, tight it. on to account. been eye a flipside that.

Operator

you. Thank

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

Unidentified Analyst

I'm for is question. are on well, just the in able additional maybe deal an size curious, and within any the seeing update you're provide maybe you like growth on Michael doing sounds you Looks it on This taking that. guys really Aaron. like specifically is behalf metrics to guys, like my of are executing quarter? on -- Metallic growth customer very Metallic, going Hi, thanks nicely, the

Sanjay Mirchandani

customers our brought customers And quarter. over consistent growth shy in of was customer base customer last XXX over having and of just customers having got XX% of, -- a XX% Metallic than have new was think, Metallic. I by new also overlap both. great more our of Well, We've software,

kind the At we're metrics deal some think small, of point, if and be are, they milestone that numbers traction size in, great $XX there's we'll a large, we're we and seeing customers, ARR on action. So, in of share of right, are the think was but velocity, interested I and medium, seeing about important. power my details more other we're million size you'd sharing seeing seeing, we're the

Unidentified Analyst

that. Yes, appreciate

Operator

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

Jason Ader

good to you, these calls you. Brian, wanted be same miss you. not are going luck; say, to without thank And and the Yes, first

saying not target, not Second, for have necessarily you're clear, a FY'XX, to as be just still double-check FY'XX, saying but you're just Brian, that XX of that that? you wanted rule for to

Brian Carolan

at this It's Jason. point, our objective

it's think I too objective to anything. not early We're as right change changing now. an that

than little associated more I change great different. but early too think to the SaaS Obviously, as shipped it margins a comes that. in from business a it's -- with time Metallic. a that's more balance are that down really is seeing -- growth revenue to we we're And may pronounced margin as see success we bit growth, the

Jason Ader

Okay.

Brian Carolan

We'll year, another the during update investor you event. another at time

Jason Ader

Okay, that to guidance? Is so it? guidance it's think not objective, still the it's not a but right it's about way --

Brian Carolan

Correct, right.

Jason Ader

Okay.

Brian Carolan

That's correct.

Jason Ader

Okay. impact guide, just going in EMEA on of the or particular? And in then in was FX curious there any what's because the quarter

Brian Carolan

Yes, question. no, great

points foreign FX to So, factoring this rates, was for with somewhat revenue. dampened guidance. speak, current our exchange, by XXX XXX we by We're basis in growth as

keeping well. on so, it eye we're as an And

Jason Ader

you. Got

$XX Okay, four lastly, sort QX million we just but ARR, quick the know of services the million If revenue and by some $XX [indiscernible]… for line, exact, let's it's in of just just math. not to that's on then I say, I'm kind $XX rough, do on sort divide of million trying to Metallic

Brian Carolan

go yes, Yes, we'll -- ahead.

Jason Ader

I'm go ahead. sorry,

Brian Carolan

please. No,

Jason Ader

services, kind which going the the services with is flat was when so like years and XXs, I and in say, from left support two low I I'm ago. that is which be professional of basically -- line, just what subtract would

because would flat side, two Or numbers growing, about services So, services is be is right? later? support why there in thinking I years and professional the the on of am support software anything and kind professional going still

Brian Carolan

of exact revenue, it's recognized being to into an course carry back going that's close, completely time. to seeing growth that. without But accelerating of all think and that. I I on terms not you're SaaS we're know in easy the over the

So, as converting accelerated. we're divide form this and And on if revenue programmatically don't $XX exactly And professional an million four SaaS the at in the of if it our now customers as we're many is by strategically for the subscription to been several know ARR, offerings. that years in and you ARR can recurring new accelerating up doing that's just showing that of we've you take what rest well. I services, of growth

Sanjay Mirchandani

add keep And the And play more just more PS rightsizing. as our professional I'll automation, on an more delivery, we something into our build rightsized. this piece, we invest cloud-enabled we that services important for as to as channel, we continues do

Jason Ader

the So, of going Is of help how it because couple of if years the stuff to Metallic kind flattish think forgetting of to years over on couple you think we're right -- now, you're SaaS, that any a that of or -- you kind professional about about sort subtracting and next stuff, from is Metallic? some trying services, like sort support and us business do to to there? that give just adding have model without some can out any figure about

Brian Carolan

directionally, in you're, correct think I that.

Jason Ader

Okay, guys. thank you,

Brian Carolan

Jason. Thank Appreciate it. you,

Operator

next Street. Martinuzzi Thank line question comes with the from of you. Eric And your Lake

Eric Martinuzzi

Yes.

the acquisition small in revenue-wise. quarter, You wondering was had contribution a the what

Sanjay Mirchandani

products of Well, we've of the the firstly, the we making integrating been and close framework. serves me memory early-Feb, more part I throes think in Commvault right. if it it And

it's that the I'd primary our -- So, focus. revenue had, continue. acquired acquisition, streams yes, -- it's that track And part the The we had, say of material. the not as was that company on they that's

Eric Martinuzzi

projects, the that? curious FY'XX, XX,XXX-foot we appetite IT of kind year us enterprise for give maybe here look a view ago, know -- you kind of large can out versus And of a as to just transformational Okay. to

Sanjay Mirchandani

say Increasing. word, I one say, to if I I use would would have increasing. it's

cloud-based every of broader $XXX,XXX for my prepared that, more us the of we see number cloud strategic. And of single just They the strategic. customers over the and see for -- -- of track holds see data we million, data deal complex in being stead. platform $X past in or conversation protection, some for transformation, And those are them the transformation, more we And you did three more cloud rapidly ransomware involves are If unified how deals more of couple management. over comments exabytes moving all in involve more and increasing. record I examples gave we about about digital leveraging conversation for are that, our good of The form. seeing customers in conservations into quarters

Eric Martinuzzi

in we plan in interested then looking And wise, are for support? to at investment sales numbers or specifically, wise investment capital lastly your how percentage the Okay. for the support FY'XX, me, and customer human

Brian Carolan

point the on We of are in specificity at not level building But, we are this time. focused retaining, going talent. to and provide attracting,

Sanjay Mirchandani

we it's see, And how for -- the the the what priority a the you has a have we've of board a massive been of lot to. three if company productivity And that's fund what you'll we some Eric, of across done. over years. numbers lot past fund in that to And us continue wanted to able been

We productivity. the requires have with that. that good got obviously adoption sophistication leadership a of in level multi-product which We're are set customers. driving seasoned We've a driving we conversations understands of

All of that's productivity. driving

do. that's we to of what helping us resource All need

card. details, productivity So, internal been our into has calling without getting the

Eric Martinuzzi

my taking for Thanks Understand. question.

Operator

concludes call. you. today's you may conference you disconnect. and Thank now gentlemen, Thank this participating. Ladies for And

Commvault Systems (CVLT) 3 May 222022 Q4 Earnings call transcript