Commvault Systems Q2 FY25 Earnings Report

Ticker: CVLT · Form: 10-Q · Filed: Oct 30, 2024 · CIK: 1169561

Commvault Systems Inc 10-Q Filing Summary
FieldDetail
CompanyCommvault Systems Inc (CVLT)
Form Type10-Q
Filed DateOct 30, 2024
Risk Levellow
Pages15
Reading Time18 min
Key Dollar Amounts$0.01
Sentimentneutral

Sentiment: neutral

Topics: earnings, financials, software

Related Tickers: CVLT

TL;DR

CVLT Q2 FY25: Revenue details for subscriptions, licenses, and support services released.

AI Summary

Commvault Systems Inc. reported its second quarter results for the period ending September 30, 2024. The company's filing details revenue and other financial metrics for the second quarter and the first half of fiscal year 2025, comparing them to the same periods in fiscal year 2024. Specific financial figures for subscription revenue, perpetual license revenue, and customer support services are provided.

Why It Matters

This filing provides investors with a detailed look at Commvault's financial performance for the second quarter of fiscal year 2025, impacting investment decisions and stock valuation.

Risk Assessment

Risk Level: low — This is a standard quarterly earnings report with no immediate red flags or significant negative developments.

Key Numbers

  • 2024-09-30 — Period End Date (Second quarter fiscal year 2025)
  • 2024-03-31 — Fiscal Year End (Company's fiscal year end)
  • 2024-04-01 — Fiscal Year Start Date (Beginning of fiscal year 2025)

Key Players & Entities

  • COMMVAULT SYSTEMS INC (company) — Filer
  • 0001169561 (company) — Central Index Key
  • 7372 (company) — Standard Industrial Classification
  • DE (company) — State of Incorporation
  • NJ (company) — State
  • 732-870-4000 (company) — Business Phone

FAQ

What were Commvault's subscription revenue figures for Q2 FY25?

The filing indicates subscription revenue for the period July 1, 2024 to September 30, 2024, but the specific dollar amount is not detailed in this header section.

How does Commvault's Q2 FY25 perpetual license revenue compare to Q2 FY24?

The filing lists periods for perpetual license revenue for both Q2 FY25 (July 1, 2024 - September 30, 2024) and Q2 FY24 (July 1, 2023 - September 30, 2023), but specific amounts are not in this header.

What is the company's fiscal year end date?

Commvault Systems Inc.'s fiscal year ends on March 31st.

When was this 10-Q filing submitted?

This 10-Q filing was submitted on October 30, 2024.

What is the SIC code for Commvault Systems Inc.?

The Standard Industrial Classification (SIC) code for Commvault Systems Inc. is 7372, which falls under SERVICES-PREPACKAGED SOFTWARE.

Filing Stats: 4,527 words · 18 min read · ~15 pages · Grade level 16.6 · Accepted 2024-10-30 14:05:02

Key Financial Figures

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

Filing Documents

– FINANCIAL INFORMATION

Part I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Unaudited Consolidated Balance Sheets as of September 30, 2024 and March 31, 2024 1 Unaudited Consolidated Statements of Operations for the three and six months ended September 30, 2024 and 2023 2 Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2024 and 2023 3 Unaudited Consolidated Statements of Stockholders' Equity for the three and six months ended September 30, 2024 and 2023 4 Unaudited Consolidated Statements of Cash Flows for the six months ended September 30, 2024 and 2023 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 7

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 23

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 36

Controls and Procedures

Item 4. Controls and Procedures 37

– OTHER INFORMATION

Part II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 38

Risk Factors

Item 1A. Risk Factors 38

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 38

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 38

Other Information

Item 5. Other Information 39

Exhibits

Item 6. Exhibits 39

SIGNATURES

SIGNATURES 40 2 Table of Contents Commvault Systems, Inc. Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2024 March 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 303,071 $ 312,754 Trade accounts receivable, net 194,879 222,683 Assets held for sale 34,770 38,680 Other current assets 30,235 21,009 Total current assets 562,955 595,126 Deferred tax assets, net 119,969 111,181 Property and equipment, net 8,282 7,961 Operating lease assets 11,939 10,545 Deferred commissions cost 65,927 62,837 Intangible assets, net 5,196 1,042 Goodwill 150,072 127,780 Other assets 34,136 27,441 Total assets $ 958,476 $ 943,913 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 92 $ 299 Accrued liabilities 107,645 117,244 Current portion of operating lease liabilities 5,313 4,935 Deferred revenue 355,267 362,450 Total current liabilities 468,317 484,928 Deferred revenue, less current portion 198,090 168,472 Deferred tax liabilities 3,396 1,717 Long-term operating lease liabilities 7,192 7,155 Other liabilities 3,693 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, 43,739 shares and 43,548 shares issued and outstanding at September 30, 2024 and March 31, 2024, respectively 437 435 Additional paid-in capital 1,410,715 1,349,603 Accumulated deficit ( 1,117,782 ) ( 1,056,011 ) Accumulated other comprehensive loss ( 15,582 ) ( 15,942 ) Total stockholders' equity 277,788 278,085 Total liabilities and stockholders' equity $ 958,476 $ 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 September 30, Six Mont

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," the "Company," "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 September 30, 2024 and for the three and six months ended September 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 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

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) Concentration of Credit Risk We grant credit to customers in a wide variety of industries worldwide and generally do not require collateral. Credit losses relating to these customers have been minimal. Sales through our distribution agreement with Arrow Enterprise Computing Solutions, Inc. ("Arrow") totaled 37 % and 35 % of total revenues for the three months ended September 30, 2024 and 2023, respectively, and 36 % for both the six months ended September 30, 2024 and 2023. Arrow accounted for approximately 28 % and 29 % of total accounts receivable as of September 30, 2024 and March 31, 2024, respectively. Sales through our distribution agreement with Carahsoft Technology Corp. ("Carahsoft") totaled 11 % and 10 % of total revenues for the three and six months ended September 30, 2024, respectively. Carahsoft accounted for approximately 15 % of total accounts receivable as of September 30, 2024. 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

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) Equity Securities Accounted for at Net Asset Value We held equity interests in private equity funds of $ 8,034 as of September 30, 2024, which are accounted for under the net asset value practical expedient as permitted under ASC 820, Fair Value Measurement . These investments are included in other assets in the accompanying consolidated balance sheets. The net asset values of these investments are determined using quarterly capital statements from the funds, which are based on our contributions to the funds, allocation of profit and loss and changes in fair value of the underlying fund investments. Changes in fair value as reported on the capital statements are recorded through the consolidated statements of operations as non-operating income or expense. These private equity funds focus on making investments in key technology sectors, principally by investing in companies at expansion capital and growth equity stages. We had total unfunded commitments in private equity funds of $ 2,252 as of September 30, 2024. Goodwill and Intangible Assets Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired. The carrying value of goodwill is tested for impairment on an annual basis on January 1, or more often if an event occurs or circumstances change that would more likely than not reduce the fair value of its carrying amount. For the purpose of impairment testing, we have a single reporting unit. The impairment test consists of comparing the fair value of the reporting unit with its carrying amount that includes goodwill. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, an impairment loss would be recognized to reduce the carrying amount to its fair value. Our finite lived purchased intangible assets consist of developed technology. Develope

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) 3. Revenue We generate revenues through subscription arrangements, perpetual software licenses, customer support contracts and other services. Subscription Subscription includes the revenues derived from term-based arrangements, including the software portion of term-based licenses and SaaS offerings. The software component of term-based licenses is typically recognized when the software is delivered or made available for download. The term of our subscription arrangements is typically one to three years but can range between one and five years . For SaaS offerings, revenue is generally recognized ratably over the contract term beginning on the date that the service is made available to the customer. Perpetual License Perpetual license includes the revenues from the sale of perpetual software licenses. Perpetual software license revenue is typically recognized when the software is delivered or made available for download. Customer Support Customer support includes revenues associated with support contracts tied to our software products. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both subscription software and perpetual software license arrangements. We sell our customer support contracts as a percentage of net software purchases. Customer 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 ty

Notes to Consolidated Financial Statements - Unaudited (continued)

Notes to Consolidated Financial Statements - Unaudited (continued) (In thousands, except per share data) Our typical performance obligations include the following: Performance Obligation When Performance Obligation is Typically Satisfied When Payment is Typically Due How Standalone Selling Price is Typically Estimated Subscription Term-based software licenses Upon shipment or made available for download (point in time) Within 90 days of shipment except for certain subscription licenses which are paid for over time Residual approach Software-as-a-service (SaaS) Ratably over the course of the contract (over time) Annually or at the beginning of the contract period Observable in transactions without multiple performance obligations Perpetual License Perpetual software licenses Upon shipment or made available for download (point in time) Within 90 days of shipment Residual approach Customer Support

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