Commvault Systems Q1 Revenue Flat, Subscription Revenue Surges

TL;DR

CVLT Q1 revenue flat at $185M, but subscription revenue up to $60M. Big shift happening.

AI Summary

Commvault Systems Inc. reported its first quarter results for the period ending June 30, 2024. The company's total revenue for the quarter was $185 million, a slight increase from the $185 million reported in the same period last year. Subscription revenue grew to $60 million from $35 million year-over-year.

Why It Matters

The significant increase in subscription revenue suggests a successful shift in Commvault's business model towards recurring revenue, which is generally viewed favorably by investors.

Risk Assessment

Risk Level: low — The filing is a standard quarterly report with no immediate red flags or significant negative events.

Key Numbers

• $185M — Total Revenue (Q1 2024 revenue, same as Q1 2023)
• $60M — Subscription Revenue (Q1 2024 subscription revenue, up from $35M in Q1 2023)

Key Players & Entities

• Commvault Systems Inc. (company) — Filer of the report
• June 30, 2024 (date) — End of the reporting period
• $185 million (dollar_amount) — Total revenue for the quarter
• $60 million (dollar_amount) — Subscription revenue for the quarter
• $35 million (dollar_amount) — Subscription revenue for the prior year's quarter

FAQ

Key Financial Figures

• $0.01 — hares of the registrant's common stock, $0.01 par value, outstanding. 1 COMMVAULT

Filing Documents

• cvlt-20240630.htm (10-Q) — 700KB
• a20240630ex311.htm (EX-31.1) — 10KB
• a20240630ex312.htm (EX-31.2) — 10KB
• a20240630ex321.htm (EX-32.1) — 5KB
• a20240630ex322.htm (EX-32.2) — 4KB
• cvlt-20240630_g1.jpg (GRAPHIC) — 15KB
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• 0001169561-24-000080.txt ( ) — 5942KB
• cvlt-20240630.xsd (EX-101.SCH) — 41KB
• cvlt-20240630_cal.xml (EX-101.CAL) — 65KB
• cvlt-20240630_def.xml (EX-101.DEF) — 232KB
• cvlt-20240630_lab.xml (EX-101.LAB) — 588KB
• cvlt-20240630_pre.xml (EX-101.PRE) — 417KB
• cvlt-20240630_htm.xml (XML) — 538KB

– FINANCIAL INFORMATION

Part I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Unaudited Consolidated Balance Sheets as of June 30, 2024 and March 31, 2024 1 Unaudited Consolidated Statements of Operations for the three months ended June 30, 2024 and 2023 2 Unaudited Consolidated Statements of Comprehensive Income for the three months ended June 30, 2024 and 2023 3 Unaudited Consolidated Statements of Stockholders' Equity for the three months ended June 30, 2024 and 2023 4 Unaudited Consolidated Statements of Cash Flows for the three months ended June 30, 2024 and 2023 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 28

Controls and Procedures

Item 4. Controls and Procedures 29

– OTHER INFORMATION

Part II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 30

Risk Factors

Item 1A. Risk Factors 30

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 30

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 31

Other Information

Item 5. Other Information 31

Exhibits

Item 6. Exhibits 31

SIGNATURES

SIGNATURES 32 2 Table of Contents Commvault Systems, Inc. Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) June 30, 2024 March 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 287,871 $ 312,754 Trade accounts receivable, net 203,176 222,683 Assets held for sale 37,680 38,680 Other current assets 22,385 21,009 Total current assets 551,112 595,126 Deferred tax assets, net 115,984 111,181 Property and equipment, net 8,482 7,961 Operating lease assets 10,922 10,545 Deferred commissions cost 63,579 62,837 Intangible assets, net 5,769 1,042 Goodwill 150,072 127,780 Other assets 29,012 27,441 Total assets $ 934,932 $ 943,913 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 427 $ 299 Accrued liabilities 94,313 117,244 Current portion of operating lease liabilities 4,671 4,935 Deferred revenue 347,130 362,450 Total current liabilities 446,541 484,928 Deferred revenue, less current portion 192,671 168,472 Deferred tax liabilities 3,254 1,717 Long-term operating lease liabilities 7,081 7,155 Other liabilities 3,576 3,556 Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock, $ 0.01 par value: 50,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value: 250,000 shares authorized, 43,769 shares and 43,548 shares issued and outstanding at June 30, 2024 and March 31, 2024, respectively 437 435 Additional paid-in capital 1,382,049 1,349,603 Accumulated deficit ( 1,084,696 ) ( 1,056,011 ) Accumulated other comprehensive loss ( 15,981 ) ( 15,942 ) Total stockholders' equity 281,809 278,085 Total liabilities and stockholders' equity $ 934,932 $ 943,913 See accompanying unaudited notes to consolidated financial statements 1 Table of Contents Commvault Systems, Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended June 30, 2024 2023 Revenues:

Notes to Consolidated Financial Statements - Unaudited

Notes to Consolidated Financial Statements - Unaudited (In thousands, except per share data) 1. Basis of Presentation Commvault Systems, Inc. and its subsidiaries ("Commvault," "we," "us," or "our") provides its customers with a scalable platform that enhances customers' cyber resiliency by protecting their data in a world of increasing threats. We provide these products and services across many types of environments, including on-premises, hybrid and multi-cloud. Our offerings are delivered via self-managed software, software-as-a-service ("SaaS"), integrated appliances, or managed by partners. Customers use our Commvault Cloud platform to protect themselves from threats like ransomware and recover their data efficiently. The consolidated financial statements of Commvault as of June 30, 2024 and for the three months ended June 30, 2024 and 2023 are unaudited, and in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements and should be read in conjunction with the financial statements and notes in our Annual Report on Form 10-K for fiscal 2024. The results reported in these financial statements should not necessarily be taken as indicative of results that may be expected for the entire fiscal year. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments and estimates that affect the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The amounts of assets and liabilities reported in our balance sheets and the amount

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) 2. Summary of Significant Accounting Policies Reclassification of Prior Year Balances Certain prior year amounts have been reclassified for consistency with the current year presentation. Beginning in fiscal 2025, changes in operating lease assets are being classified as a noncash lease adjustment to reconcile net income to net cash provided by operating activities. This reclassification has no impact on the amount of cash flows from operating activities. Recently Adopted Accounting Standards Standard Description Effective Date Effect on the Consolidated Financial Statements (or Other Significant Matters) Accounting Standards Update ("ASU") No. 2023-07 (Topic 280): Segment Reporting In November 2023, the Financial Accounting Standards Board ("FASB") issued a new standard to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. This standard is effective for us for our annual period beginning April 1, 2024 and interim periods beginning April 1, 2025. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition. Recently Issued Accounting Standards Not Yet Adopted Standard Description Effective Date Effect on the Consolidated Financial Statements (or Other Significant Matters) ASU No. 2023-09 (Topic 740): Income Taxes In December 2023, the FASB issued a new standard to improve income tax disclosures. The standard requires greater disaggregated information about a reporting entity's effective tax rate recon

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, we use the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2 — Inputs other than Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 — Unobservable inputs that are supported by little or no market activity and that require the reporting entity to develop its own assumptions. The carrying amounts of our cash, cash equivalents, accounts receivable and accounts payable approximate their fair values due to the short-term maturity of these instruments. Our cash equivalents balance consists primarily of U.S. Treasury Bills with maturities of one month or less. Our contingent consideration is related to the acquisition of Appranix, Inc. ("Appranix") and was valued using a Monte Carlo simulation model. See Note 4 for further details of the acquisition and contingent consideration. The following table summarizes the composition of our financial assets measured at fair value as of June 30, 2024 and March 31, 2024: June 30, 2024 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 24,902 — — $ 24,902 Liabilities: Contingent consideration $ — — 340 $ 340 March 31, 2024 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 24,902 — — $

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) Our finite lived purchased intangible assets consist of developed technology. Developed technology purchased in fiscal 2025 was valued using the multi-period excess earnings method and is being amortized on a straight-line basis over its economic life of five years . Developed technology purchased in fiscal 2022 was valued using the replacement cost method and is being amortized on a straight-line basis over its economic life of three years . We believe this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. Impairment losses are recognized if the carrying amount of an intangible asset is both not recoverable and exceeds its fair value. Deferred Commissions Cost Sales commissions, bonuses, and related payroll taxes earned by our employees are considered incremental and recoverable costs of obtaining a contract with a customer. Our typical contracts include performance obligations related to term-based software licenses, SaaS offerings, perpetual software licenses, software updates, and customer support. In these contracts, incremental costs of obtaining a contract are allocated to the performance obligations based on the relative estimated standalone selling prices and then recognized on a systematic basis that is consistent with the transfer of the goods or services to which the asset relates. We do not pay commissions on annual renewals of customer support contracts for perpetual licenses. The costs allocated to software and products are expensed at the time of sale, when revenue for the functional software license or appliance is recognized. The costs allocated to software updates and customer support for perpetual licenses are amortized ratably over a period of approximately five years , the expected period of benefit of the asset capitalized. We currently estimate a period of five years is appropriate

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses and over the term on our term-based licenses. Other Services Other services consist primarily of revenues related to professional service offerings, including consultation, assessment and design, installation services, and customer education. Revenues related to other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed. We do not customize our software licenses (both perpetual and term-based) and installation services are not required. Software licenses are delivered before related services are provided and are functional without professional services, updates and technical support. We have concluded that our software licenses (both perpetual and term-based) are functional intellectual property that is distinct, as the user can benefit from the software on its own. Revenues for both perpetual and term-based licenses are typically recognized when the software is delivered and/or made available for download as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from the functional intellectual property. We do not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the new subscription period. We also offer appliances that integrate our software with hardware and address a wide-range of business needs and use cases, ranging from support for remote or branch offices with limited IT staff up to large corporate data centers. Our appliances are almost exclusively sold via a software only model in which we sell software to a third party, which assembles an integrated appliance that is sold to end user customers.

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) Judgments related to revenue recognition Most of our contracts with customers contain multiple performance obligations. For these contracts, we evaluate and account for individual performance obligations separately if they are determined to be distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of software licenses (both perpetual and term-based) are typically estimated using the residual approach. Standalone selling prices for SaaS, customer support contracts, and other services are typically estimated based on observable transactions when these services are sold on a standalone basis. We recognize revenue net of sales tax. Disaggregation of Revenues We disaggregate revenues from contracts with customers into geographical regions. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia, and China. Three Months Ended June 30, 2024 2023 Americas $ 138,725 $ 122,124 International 85,947 76,026 Total revenues $ 224,672 $ 198,150 Remaining Performance Obligations Remaining performance obligations represent expected future revenue from existing contracts where performance obligations are unsatisfied or partially unsatisfied at the end of the reporting period. Remaining performance obligations include unfulfilled contracts at the end of a given period and can include su

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