CommVault Systems Management Discusses Q1 2013 Results - Earnings Call Transcript

CommVault Systems (CVLT)

Q1 2013 Earnings Call

July 31, 2012 8:30 am ET

Executives

Michael Picariello

Neil Robert Hammer - Chairman, Chief Executive Officer and President

Louis F. Miceli - Chief Financial Officer and Senior Vice President

Analysts

Joel P. Fishbein - Lazard Capital Markets LLC, Research Division

Jason Ader - William Blair & Company L.L.C., Research Division

Aaron Schwartz - Jefferies & Company, Inc., Research Division

Gregory Dunham - Goldman Sachs Group Inc., Research Division

Glenn Hanus - Needham & Company, LLC, Research Division

Aaron C. Rakers - Stifel, Nicolaus & Co., Inc., Research Division

Alex Kurtz - Sterne Agee & Leach Inc., Research Division

Michael Turits - Raymond James & Associates, Inc., Research Division

Robert P. Breza - RBC Capital Markets, LLC, Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Ryan R. Bergan - Craig-Hallum Capital Group LLC, Research Division

Brent A. Bracelin - Pacific Crest Securities, Inc., Research Division

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Brian Freed - Wunderlich Securities Inc., Research Division

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to CommVault's First Fiscal Quarter 2013 Earnings Call. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Michael Picariello, Director of Investor Relations. Please go ahead, sir.

Michael Picariello

Good morning. Thanks for dialing in today for our fiscal first quarter 2013 earnings call. With me on the call are Bob Hammer, Chairman, President and Chief Executive Officer; Al Bunte, Chief Operating Officer; and Lou Miceli, Chief Financial Officer.

Before we begin, I'd like to remind everyone that statements made during this call, including the question-and-answer session at the end of the call that relate to future results and projections, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations. Actual results may differ materially due to a number of risks and uncertainties, which are discussed in our SEC filings and in the cautionary statement contained in our press release and on our website. The company undertakes no responsibility to update the information in this conference call under any circumstance. Our earnings press release was issued over the wire services earlier today and has also been furnished to the SEC as an 8-K filing. The press release is also available on our IR website.

On this conference call, we will provide non-GAAP financial results. The reconciliation between the non-GAAP and GAAP measures can be found in Table 4 accompanying the press release and posted on our website. This conference call is also being recorded for replay and is being webcast. An archive of today's webcast will be available on our website following the call. I will now turn the call over to our CEO and President, Bob Hammer.

Neil Robert Hammer

Thanks, Mike. Good morning, everyone. And thanks for joining our fiscal 2013 earnings call. I am pleased that we had a solid start to fiscal 2013. This is especially gratifying since Q1 is typically our most challenging quarter that comes after a very strong Q4 FY '12. CommVault had good results on all key aspect of our business and across all geographies. Our positive Q1 results are indicative of continuing good underlying demand and the strength of our product, services and distribution. This positive momentum is continuing into Q2.

Let me briefly summarize our financial results. For the quarter, total revenues were $111.3 million, up 22% year-over-year and down 2% sequentially. Software revenue was $52.2 million and grew 24% year-over-year and was down 8% sequentially.

License revenue growth in Q1 was driven primarily by our continued success in penetrating large enterprise accounts globally. We also had excellent results from our services and support organizations. Services revenue was $57 million and grew 19% year-over-year and 3% sequentially. For the quarter, non-GAAP operating income, or EBIT, was a record $22.6 million, up 49% year-over-year. Non-GAAP EBIT margins were 20.3%. Non-GAAP diluted earnings per share for the quarter were $0.30.

Please note that given the economic uncertainty, we prudently controlled our plan spending during the quarter, which contributed to our overachieving our forecast at EBIT margin goal. However, we will continue to make the proper investments in order to achieve our future revenue and earnings growth objectives.

Let me spend a minute speaking about the macro environment. At the present time, we continue to see good underlying demand for our products across all geographies, vertical market segments and distribution channels. We are not naive about the current economic climate and are well aware of the uncertainty of future demand. However, with the exception of a few minor issues, we have not yet seen any material slowdown in the demand of buying patterns for our solutions. Please note, our quarter started well and ended well. We continue to significantly outpace the growth of the market and pick up market share.

Our overall funnel and big deal pipeline growth indicate healthy demand for our products across most geographies. The competitive strength of our technology services and support in combination with our sales force and key distribution partners have thus far enabled us to navigate well through the current economic slowdown.

We do anticipate that IT spending will continue to come under our negative pressure, the remainder of calendar 2012, and we assume the fight for the same budget dollar will ultimately get tougher. However, a primary value of our software, a significant cost reduction versus the competitive solutions as well as helping to solve key regulatory requirements and compliance problems. Those objectives remain high priorities for both companies and governments when considering data and information management solutions. We have good visibility going into the remainder of our Q2. Given our positive near term and FY '13 outlook, we will continue to have strong hiring in Q2.

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