Commvault Sets Fiscal 2016 Fourth Quarter Financial Revenue Record
-- Commvault ends fiscal year strong, overachieves on both fourth quarter revenue and earnings expectations --
-- Record total quarterly revenue of $159.6 million; third straight quarter of sequential growth --
-- The move to the cloud acts as a major catalyst for growth --
Fourth Quarter and Fiscal 2016 Highlights Include:
Fourth Quarter Fiscal 2016
Revenues $159.6 million $595.1 million
Income from Operations (EBIT) $9.3 million $2.0 million
EBIT Margin 5.8% 0.3%
Diluted Earnings Per Share $0.13 $0.00
Income from Operations (EBIT) $26.2 million $67.3 million
EBIT Margin 16.4% 11.3%
Diluted Earnings Per Share $0.36 $0.91
(Download Financial Tables)
TINTON FALLS, N.J. – May 3, 2016 – Commvault [NASDAQ: CVLT] today announced its financial results for the fourth quarter and fiscal year ended March 31, 2016.
N. Robert Hammer, Commvault's Chairman, President and CEO stated, “We delivered record quarterly revenue of $159.6 million, representing constant currency growth of 8% over the prior year quarter and 3% sequentially. Operating performance for the fourth quarter was highlighted by non-GAAP operating profit of $26.2 million, representing increases of 29% year-over-year and 25% sequentially. Our customers continue to embrace our market-leading integrated solutions, particularly those that enable customers to manage the transition to the cloud. Our industry leading technology coupled with solid sales execution continue to give us increased confidence in our future. In addition, our latest software release has been very well received by the market, in particular for our platform and expanded cloud functionality, and is expected to drive momentum into fiscal 2017. We remained opportunistic during the fourth fiscal quarter, repurchasing a total of $56.9 million of our common stock."
Total revenues for the fourth quarter of fiscal 2016 were $159.6 million, an increase of 6% year-over-year, an increase of 2% sequentially and an increase of 8% on a year-over-year constant currency basis. Software revenue in the fourth quarter of fiscal 2016 was $73.3 million, an increase of 5% year-over-year, an increase of 3% sequentially and an increase of 6% on a year-over-year constant currency basis. Services revenue in the fourth quarter of fiscal 2016 was $86.2 million, an increase of 7% year-over-year, an increase of 2% sequentially and an increase of 9% on a year-over-year constant currency basis.
For the full fiscal year, total revenues were $595.1 million, a decrease of 2% from fiscal 2015. On a constant currency basis, total revenues for the full fiscal year increased 3% over fiscal 2015. Software revenue for the full fiscal year was $258.8 million, a decrease of 9% from fiscal 2015. On a constant currency basis, software revenue for the full fiscal year decreased 4%. Services revenue for the full fiscal year was $336.3 million, an increase of 4% from fiscal 2015. On a constant currency basis, services revenue for the full fiscal year increased 9%.
On a GAAP basis, income from operations (EBIT) increased 95% to $9.3 million for the fourth quarter compared to $4.8 million in the same period of the prior year. Non-GAAP income from operations (EBIT) increased to $26.2 million in the fourth quarter of fiscal 2016 compared to $20.3 million in the fourth quarter of the prior year.
On a GAAP basis, income from operations (EBIT) for the full fiscal year was $2.0 million. Non-GAAP income from operations (EBIT) decreased to $67.3 million in fiscal 2016 compared to $104.7 million in fiscal 2015.
For the fourth quarter of fiscal 2016, Commvault reported net income of $5.8 million. Non-GAAP net income for the quarter increased to $16.6 million, or $0.36 per diluted share, from $12.8 million, or $0.27 per diluted share, in the same period of the prior year.
For the full fiscal year, Commvault reported a net income of $0.1 million. Non-GAAP net income for the full fiscal year decreased to $42.4 million, or $ 0.91 per diluted share, from $66.0 million, or $1.40 per diluted share, in fiscal 2015.
Operating cash flow totaled $37.2 million for the fourth quarter of fiscal 2016 which was an increase of $1.2 million, or 3%, compared to the fourth quarter of fiscal 2015. For the full fiscal year, operating cash flow was $84.4 million, compared to $123.8 million for fiscal 2015. Total cash and short-term investments were $387.2 million as of March 31, 2016 compared to $387.6 million as of March 31, 2015. During the fiscal fourth quarter, Commvault repurchased $56.9 million of our common stock (1.60 million shares) bringing our fiscal 2016 total repurchases to $91.5 million (2.56 million shares). As of May 3, 2016, there is $93.1 million available under the share repurchase program that currently expires on March 31, 2017. We made no borrowings against our line of credit during fiscal 2016.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV. (Download Financial Tables) An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
Recent Business Highlights:
•On March 15, 2016, Commvault announced that it teamed up with Forsythe Hosting Solutions and Hitachi Data Systems to provide a new, enterprise-class, hybrid cloud-capable backup and recovery as a service (BaaS) solution for enterprises looking to offload day-to-day backup and recovery responsibilities from in-house staff. The solution combines Commvault's next-generation software and data platform, Hitachi Data Systems' software-defined infrastructure solutions, and Forsythe's hosting and managed services.
•On March 9, 2016, Commvault announced that it launched Commvault Remote Managed Services to give customers the option of supporting and managing Commvault software environments through Commvault's dedicated Remote Managed Services team. This offering is also available through Commvault partners.
•On March 9, 2016, Commvault also announced new innovations to the Commvault Data Platform to further provide customers with a holistic, highly-scalable, and cost-efficient means of storing, accessing and recovering business-critical data on-premise and in the cloud. The new innovations include extended hypervisor support, a scale-out storage option on commodity hardware, newly available of APIs that extend open access to the Commvault Data Platform, and expanded coverage and support for the Commvault IntelliSnap ecosystem. Commvault also announced technology enhancements to its market-leading Commvault integrated solutions portfolio designed to help enterprises better support and manage ‘big data’ initiatives leveraging big data environments such as Hadoop, Greenplum and GPFS.
•On March 1, 2016, at the largest healthcare industry trade show - HIMMS, Commvault launched Commvault Clinical Archive to modernize the way healthcare organizations manage, migrate and share clinical data; the first solution that can address data management in both the clinical and business sides of healthcare on a single platform. Following Commvault’s strategic investment in Laitek, a pioneer in rapid data migration and storage services for PACS replacements, Commvault developed a solution built on the Commvault Data Platform and Laitek’s Semperdata™ platform. With the announcement of Commvault Clinical Archive, Commvault delivered on its commitment to launch industry-specific offerings, with healthcare as a first area of focus.
Use of Non-GAAP Financial Measures
Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations, non-GAAP income from operations margin, non-GAAP net income and non-GAAP diluted earnings per share. This selected financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Commvault believes these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP financial measures, in evaluating Commvault’s ongoing operational performance. Commvault believes that the use of these non-GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault’s industry, many of which present similar non-GAAP financial measures to the investment community. Finally, Commvault has provided software, services and total revenues on a constant currency basis. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.
All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are provided in Table IV (Download Financial Tables).
Non-GAAP income from operations and non-GAAP income from operations margin. These non-GAAP financial measures exclude noncash stock-based compensation charges and additional FICA and related payroll tax expense incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards. In fiscal 2015, Commvault also excluded certain expenses related to its planned move into a new corporate campus headquarters. Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault’s core operating results over multiple periods. When evaluating the performance of Commvault’s operating results and developing short and long term plans, Commvault does not consider such expenses. Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans. In addition, because of the varying available valuation methodologies, subjective assumptions such as volatility, which are outside of Commvault’s control and the variety of awards that companies can issue, Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on stock option exercises and vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault’s operating results and those of other companies.
There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin. The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature. Noncash stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault’s operating results. In addition, noncash stock-based compensation is an important part of Commvault’s employees’ compensation and can have a significant impact on their performance. Lastly, the components Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures.
Commvault’s management generally compensates for limitations described above related to the use of non-GAAP financial measures by providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, Commvault management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.
Non-GAAP net income and non-GAAP diluted EPS. Non-GAAP net income excludes noncash stock-based compensation, the additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards, and in fiscal 2015 certain expenses related to the move into a new corporate campus headquarters. In fiscal 2016, Commvault has also excluded its share of earnings from its equity method investment. In addition, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 37% in fiscal 2016 and fiscal 2015.
Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. On an annual basis, the GAAP tax rate over the prior two fiscal years was 34% for fiscal 2015 and 37% for fiscal 2014. The fiscal 2016 tax rate is not a meaningful percentage due to the dollar amount of GAAP pre-tax income. The cash tax rate over the past two fiscal years is estimated to be 26% for fiscal 2015 and 18% for fiscal 2014. Cash taxes paid in fiscal 2016 have declined compared to fiscal 2015 and fiscal 2014. Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over the next few years, Commvault believes its GAAP and cash tax rates will align.
Commvault measured itself to non-GAAP tax rates of 37% in fiscal 2016 and will continue to measure itself to a non-GAAP tax rate of 37% in fiscal 2017. Commvault believes that the use of a non-GAAP tax rate is a useful measure as it allows management and investors to compare its operating results on a more consistent basis over the multiple periods presented in its earnings release without the impact of significant variations in the tax rate as more fully described above. Non-GAAP EPS is derived from non-GAAP net income divided by the weighted average shares outstanding on a fully diluted basis.
Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault’s use of non-GAAP net income and non-GAAP EPS.
Conference Call Information
Commvault will host a conference call today, May 3, 2016, at 8:30 a.m. EDT (5:30 a.m. PDT) to discuss its financial results. To access this call, dial (877) 731-3955 (domestic) or (530) 379-4681 (international). Investors can also access the webcast by visiting www.commvault.com. The live webcast and replay will be hosted under the Events section of the website. An archived webcast of this conference call will also be available following the call.
Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform modern data environments. With solutions and services delivered directly and through a worldwide network of partners and service providers, Commvault solutions comprise one of the industry’s leading portfolios in data protection and recovery, cloud, virtualization, archive, file sync and share. Commvault has earned accolades from customers and third party influencers for its technology vision, innovation, and execution as an independent and trusted expert. Without the distraction of a hardware business or other business agenda, Commvault’s sole focus on data management has led to adoption by companies of all sizes, in all industries, and for solutions deployed on premise, across mobile platforms, to and from the cloud, and provided as-a-service. Commvault employs more than 2,000 highly skilled individuals across markets worldwide, is publicly traded on NASDAQ (CVLT), and is headquartered in Tinton Falls, New Jersey in the United States. To learn more about Commvault — and how it can help make your data work for you — visit www.commvault.com.
Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item IA. Risk Factors" in our annual report in Form 10-K and "Item 1A. Risk Factors" in our most recent quarter report in Form 10-Q. Statements regarding Commvault’s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements. The development and timing of any product release as well as any of its features or functionality remain at our sole discretion.
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