Commvault posts flat Q4 2019 revenues

Revenues in Commvault’s latest quarter dipped slightly, just enough to remind incoming CEO Sanjay Mirchandani, that he has a job on his hands after three months in the post.

Revenues of $181.4m in the fourth fiscal 2019 quarter fell two per cent year-on-year ($184.9m). There was a loss of $2.2m (-$1.7m).

The earnings call revealed two reasons for the revenue dip, according to CFO Brian Carolan, who cited “lower than expected revenues from large enterprise transactions and poor execution with the channel, particularly in the mid market.”

Full fy2019 revenues were up two per cent to $710.9m ($699.4m) and net income improved to $3.6m (-$61.9m).

Commvault quarterly revenues and profits/losses.
Commvault annual revenues and net income

Mirchandani said Commvault is making good progress with “significant increases in annual contract value, repeatable revenue and earnings per share.”

In the earnings announcement, he said the company had “implemented extensive operational and organisational changes over the past twelve months, which have enabled us to reduce costs, increase repeatable revenues, and deliver significant year-over-year earnings growth.  However, we have more work to do to ensure that Commvault reaches its full potential.”

The company is “focused on simplifying our business and improving execution. Actions are underway in each of these areas, and our employees are energised about where Commvault is heading.”

All change at Commvault

With regard to simplifying operations, Mirchandani said: “In the last few weeks, we’ve made several changes to further improve our performance and ensure we have the right people in place to deliver on our strategy. We work to ensure the leadership team and I are much closer to our customers by realigning our field and partner teams globally, flattening our organisation by eliminating the Chief Operating Officer role and recalibrating our partner organisation.”

He said: “I asked a Commvault veteran, Gary Merrill, to lead our global operations and simplification initiatives as Vice President of Business Operations, a new executive position and priority for fiscal year 2020…As a result of our changes, our field teams can now focus on our strategic initiatives like landing new customers and selling subscriptions.”

He mentioned “improving our run rates through better channel engagement, enablement and my putting resources closer to the field. This includes increasing our large deal predictability by strengthening our funnel to better demand generation capabilities and more aggressive digital marketing.”

There’s more: “To drive our strategy and dramatically improve our go-to-market processes, I brought in Tom Broderick, our VP of Strategy and Business Readiness. He is responsible for ensuring that’d we have a clear end to end path to effectively and efficiently bring our products to market and drive satisfaction throughout our ecosystem.”

The channel partner angle is receiving attention too: “We elevated our strategic alliances, cloud and managed services teams higher in the organisation and aligned our field partner leads closely with our field sales leadership, so they’re in lockstep with their regions.”

Finally: “I’m finalising new elements of our strategy that I believe will land new customers, broaden the reach of our partners and clearly deliver more value. I look forward to sharing these finalise initiatives in the coming months.”

Channel flannel

William Blair analyst Jason Ader said: “VAR checks indicate that Commvault has lost substantial competitive ground to Veeam, Rubrik, and Cohesity.”

Ader is cautious but positive in his outlook for Commvault: “While some investors might argue that these proposed changes are too little too late, especially as execution has almost become a perennial challenge at Commvault, we are giving the new CEO the benefit of the doubt here, especially given our belief that the underlying drivers of Commvault’s business remain intact.

“Specifically, multi-cloud adoption is driving enterprises to reevaluate and ultimately modernise their data protection capabilities, enabling substantial opportunities for Commvault and its peers.”

We note that Ron Miller, SVP worldwide sales, resigned last month. Carolan said the company aims to hire a chief revenue officer by the end of the current quarter.