Commvault boosts profit big time on sustained steady revenue growth

Commvault has continued its revenue growth trend with a massive rise in profits in its first FY2022 quarter. This was the company’s fifth successive growth quarter.

Update. 28 July 2021. Earnings call information added and clarified Metallic customer count doubling.

Revenues for the quarter ended June 320 were $183.4 million — a rise of six per cent year-on-year — with profits of $13.9 million. That’s up 504 per cent, which is, to say the least, quite a rise. In fact it was Commvault’s largest profit for at least the past 24 quarters — our records don’t go any further back.

Sanjay Mirchandani.

President and CEO Sanjay Mirchandani said: “We are pleased that the momentum from the prior fiscal year continued into our first quarter. We remain confident that our transformation has put us in position to thrive in a post-pandemic world.”

Financial summary:

  • Total recurring revenue — $142.2M, up just one per cent year-on-year;
  • Annualised recurring revenue — $532.8M at quarter end, up seven per cent;
  • SW and products revenue in quarter — $82.3M, up 35 per cent;
  • Services revenue in the quarter — $101.3M, up five per cent;
  • Free cash flow — $35.8M, compared to $13.6M a year ago;
  • Gross margin — 86.9 per cent vs 86.2 per cent a year ago;
  • Earnings per share — $0.62 compared to $0.51 a year ago;
  • Total cash and investments — $359M vs $397M in the prior quarter.

Commvault has moved to a subscription business model and the total recurring revenue of  $142.2 million represented 78 per cent of total revenue. The rise in software and products revenue was driven by a 23 per cent increase in revenue from portfolio deals (deals less than $0.1 million in software and products revenue). 

Larger deal revenue (deals with greater than $1 million in software and products revenue) represented 69 per cent of Commvault’s software and products revenue in the quarter. The number of large deal transactions grew 34 per cent year-over-year to 185, and the average dollar amount was approximately $305,000. 

Wells Fargo analyst Aaron Rakers told subscribers this was “down from $313K and an estimated $402K in the prior and year ago quarters, respectively.” However, Commvault booked its largest ever subscription software deal in the company’s history a year ago, making the year-on-year comparison difficult.

There were more than 300 new Metallic (Backup via SaaS) customers in the quarter, with more than half of them new to Commvault. More than half of the Metallic customers use other Commvault products and more than a quarter of them have two or more Metallic services.

In the earnings call Mirchandani said: “We’re also seeing continued adoption among enterprise customers with greater than $100,000 in Metallic ARR. The number of these customers nearly doubled this past quarter. …  it’s a rising star in our portfolio. … we’re very pleased with where we’re going with this.”

The outlook for next quarter is for revenues of $184.5 million — a 7.8 per cent year-on-year increase. CFO Brian Carolan pointed out that: “Q2 is … typically a challenging quarter from a seasonality perspective.”