Commvault preliminary results for its third fiscal 2023 quarter ended December 31 indicate a 4 percent revenue decline to $195.1 million with a net loss of $310,000.
President and CEO Sanjay Mirchandani said: “As customers and prospects continue to grapple with an uncertain outlook, we experienced slower than expected buying patterns and close rate execution. As a result, we saw a pullback in orders in December, particularly in our Americas software business.”
Software and products revenue was $89.6 million, a decrease of 9 percent year over year due to a weaker than forecasted enterprise market and delayed contract wins. Americas software and products revenue declined 20 percent. But international software and products revenues increased 6 percent year over year.
Services revenue in the quarter was $105.5 million, an increase of 2 percent year over year, driven by Metallic, its SaaS protection offering.
Annualized recurring revenue (ARR) was approximately $641 million, up 14 percent year over year, also driven by continued strength in Metallic. Combined subscription and Metallic ARR now represents approximately 70 percent of Commvault’s total ARR.
Income from operations (EBIT) was $5.0 million for the third quarter compared to $12.4 million in the prior year. Commvault incurred $9.2 million of restructuring charges related to headcount reductions in the quarter.
Operating cash flow increased 13 percent to $30.2 million compared to $26.8 million of operating cash flow in the prior year quarter. The increase was driven by deferred revenue growth. Total cash was $273.5 million at quarter end.
Costs went down: R&D expenses were $5.99 million compared to $9.1 million a year ago, while general and administrative expenses were $5.8 million versus $8.2 million for the same quarter last year
Mirchandani said: “We are well equipped to navigate through economic uncertainty and adjust our cost structure to changes in demand. While this performance is below expectations, we are confident in our strategy and will continue to help customers keep their data secure, accessible, and actionable.”
The final third quarter results will be delivered on January 31 and we’ll hear more about its outlook then. Blocks & Files thinks other enterprise data protection suppliers will be similarly affected, as will enterprise storage system providers. The revenue downturn we have seen in the NAND and disk drive media suppliers may be spreading out across the storage industry.