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Commvault Announces Fiscal 2022 Third Quarter Financial Results

·24 min read

--- Record total revenue up 8% year over year ---

--- Annualized recurring revenue (ARR) up 11% year over year ---

--- $85 million of share repurchases ---

TINTON FALLS, N.J., Jan. 25, 2022 /PRNewswire/ --

Commvault is the global leader in enterprise backup, recovery, archive and the cloud (PRNewsFoto/Commvault) (PRNewsfoto/Commvault)
Commvault is the global leader in enterprise backup, recovery, archive and the cloud (PRNewsFoto/Commvault) (PRNewsfoto/Commvault)

Third quarter highlights include:



Third quarter

GAAP Results:



Revenues


$202.4 million

Income from Operations (EBIT)


$12.4 million

EBIT Margin


6.1%

Diluted Earnings Per Share


$0.21




Non-GAAP Results:



Income from Operations (EBIT)


$43.1 million

EBIT Margin


21.3%

Diluted Earnings Per Share


$0.67

Commvault (NASDAQ: CVLT) today announced its financial results for the third quarter ended December 31, 2021.

"The team executed well across the board, delivering another record quarter," said Sanjay Mirchandani, President and CEO. "Increasingly, customers are turning to us because we provide one platform for software and SaaS offerings to address a multitude of data management needs. This is fueling our growth and accelerating our journey to a cloud-first recurring revenue model."

Total revenues for the third quarter of fiscal 2022 were $202.4 million, an increase of 8% year over year. Total recurring revenue was $164.4 million, representing 81% of total revenue.

Annualized recurring revenue (ARR), which is the annualized value of all active Commvault recurring revenue streams at the end of the reporting period, was $561.2 million as of December 31, 2021, up 11% from December 31, 2020.

Software and products revenue was $98.6 million, an increase of 11% year over year. The year over year increase in software and products revenue was driven by a 24% increase in larger deals (deals greater than $0.1 million in software and products revenue).

Larger deal revenue (deals with greater than $0.1 million and software and products revenue) represented 76% of our software and products revenue in the three months ended December 31, 2021. The number of larger deal revenue transactions increased 20% year over year to 225 deals for the three months ended December 31, 2021. The average dollar amount of larger deal revenue transactions was approximately $332,000.

Services revenue in the quarter was $103.8 million, an increase of 4% year over year. The increase in services revenue was driven primarily by the increase in Metallic software as a service revenue.

On a GAAP basis, income from operations (EBIT) was $12.4 million for the third quarter compared to $2.7 million in the prior year. Non-GAAP EBIT was $43.1 million in the quarter compared to $37.3 million in the prior year.

Operating cash flow totaled $26.8 million for the third quarter of fiscal 2022 compared to $17.0 million in the prior year quarter. Total cash and short-term investments were $233.7 million as of December 31, 2021 compared to $397.2 million as of March 31, 2021.

During the third quarter of fiscal 2022, Commvault repurchased approximately 1.3 million shares of its common stock totaling $85.3 million at an average price of approximately $65.72 per share.

A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table IV included in this press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."

Use of Non-GAAP Financial Measures

Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations, non-GAAP income from operations margin, non-GAAP net income, non-GAAP diluted earnings per share and annualized recurring revenue (ARR). This financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Commvault believes these non-GAAP operating measures are useful to investors, when used as a supplement to GAAP financial measures, in evaluating Commvault's ongoing operational performance. Commvault believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault's industry, many of which present similar non-GAAP financial measures to the investment community. Commvault has also provided software and products, services and total revenues on a constant currency basis. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.

All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are provided in Table IV included in this press release.

Non-GAAP income from operations and non-GAAP income from operations margin. These non-GAAP financial measures exclude noncash stock-based compensation charges and additional Federal Insurance Contribution Act (FICA) and related payroll tax expense incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards as well as restructuring costs. Commvault has also excluded certain costs related to key employees of Hedvig, the gain on the sale of its equity method investment in Laitek, Inc. and, for fiscal year 2021, the noncash amortization of intangible assets and the impairment of the intangible assets from its non-GAAP results. These expenses are further discussed in Table IV. Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault's core operating results over multiple periods. When evaluating the performance of Commvault's operating results and developing short- and long-term plans, Commvault does not consider such expenses.

Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans. Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on stock option exercises and vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault's operating results and those of other companies.

There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin. The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature. Noncash stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault's operating results. In addition, noncash stock-based compensation is an important part of Commvault's employees' compensation and can have a significant impact on their performance. Lastly, the components that Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures.

Due to the limitations related to the use of non-GAAP measures, Commvault's management assists investors by providing a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, Commvault's management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.

Non-GAAP net income and non-GAAP diluted earnings per share (EPS). In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporates a non-GAAP effective tax rate of 27%.

Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income. For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages. Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over time, Commvault believes its GAAP and cash tax rates will align.

Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault's use of non-GAAP net income and non-GAAP EPS.

Conference Call Information
Commvault will host a conference call today, January 25, 2022 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results. To access this call, dial 844-742-4247 (domestic) or 661-378-9470 (international). The live webcast can be accessed under the "Events" section of Commvault's website. An archived webcast of this conference call will also be available following the call.

About Commvault
Commvault (NASDAQ: CVLT) liberates business and IT professionals to do amazing things with their data by ensuring the fundamental integrity of their business. Its industry-leading Intelligent Data Services Platform empowers these professionals to store, protect, optimize, and use their data, wherever it lives. Delivering the ultimate in simplicity and flexibility to customers, its Intelligent Data Services Platform is available as software subscription, an integrated appliance, partner-managed, and software as a service—a critical differentiator in the market. For 25 years, more than 100,000 organizations have relied on Commvault, and today, Metallic is accelerating customer adoption to modernize their environments as they look to SaaS for the future. Driven by its values—Connect, Inspire, Care, and Deliver—Commvault employs more than 2,700 highly-skilled individuals around the world. Visit Commvault.com or follow us at @Commvault.

Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, the outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item IA. Risk Factors" in our annual report on Form 10-K and "Item 1A. Risk Factors" in our most recent quarterly report on Form 10-Q. Statements regarding Commvault's beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements. The development and timing of any product release as well as any of its features or functionality remain at our sole discretion.

©1999-2022 Commvault Systems, Inc. All rights reserved. Commvault, Commvault and logo, the "C hexagon" logo, Commvault Systems, Commvault HyperScale, ScaleProtect, Commvault OnePass, Unified Data Management, Quick Recovery, QR, CommNet, GridStor, Vault Tracker, InnerVault, Quick Snap, QSnap, IntelliSnap, Recovery Director, CommServe, CommCell, APSS, Commvault Edge, Commvault GO, Commvault Advantage, Commvault Complete, Commvault Activate, Commvault Orchestrate, Commvault Command Center, Hedvig, Universal Data Plane, the "Cube" logo, Metallic, the "M Wave" logo, Be Ready and CommValue are trademarks or registered trademarks of Commvault Systems, Inc. All other third party brands, products, service names, trademarks, or registered service marks are the property of and used to identify the products or services of their respective owners. All specifications are subject to change without notice.

Table I

Commvault Systems, Inc.


Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Revenues:








Software and products

$ 98,575


$ 88,625


$ 255,998


$ 237,488

Services

103,806


99,367


307,644


294,643

Total revenues

202,381


187,992


563,642


532,131

Cost of revenues:








Software and products

4,271


6,916


9,471


20,666

Services

25,692


21,496


72,341


59,096

Total cost of revenues

29,963


28,412


81,812


79,762

Gross margin

172,418


159,580


481,830


452,369

Operating expenses:








Sales and marketing

89,217


84,542


248,506


245,287

Research and development

39,257


35,727


113,118


97,824

General and administrative

29,132


22,702


80,919


69,009

Restructuring


11,618


2,082


19,709

Impairment of intangible assets




40,700

Depreciation and amortization

2,451


2,323


7,084


12,441

Total operating expenses

160,057


156,912


451,709


484,970

Income (loss) from operations

12,361


2,668


30,121


(32,601)

Interest income

120


167


543


759

Interest expense

(19)



(19)


Other income, net

564



564


Income (loss) before income taxes

13,026


2,835


31,209


(31,842)

Income tax expense

3,018


1,162


5,573


5,373

Net income (loss)

$ 10,008


$ 1,673


$ 25,636


$ (37,215)

Net income (loss) per common share:








Basic

$ 0.22


$ 0.04


$ 0.56


$ (0.80)

Diluted

$ 0.21


$ 0.03


$ 0.54


$ (0.80)

Weighted average common shares outstanding:








Basic

45,242


47,013


45,720


46,575

Diluted

46,719


48,013


47,552


46,575

Table II

Commvault Systems, Inc.


Consolidated Balance Sheets

(In thousands)

(Unaudited)




December 31,


March 31,



2021


2021

ASSETS



Current assets:





Cash and cash equivalents


$ 233,691


$ 397,237

Trade accounts receivable, net


213,040


188,126

Other current assets


20,310


22,237

Total current assets


467,041


607,600






Property and equipment, net


108,122


112,779

Operating lease assets


16,492


20,778

Deferred commissions cost


46,491


38,444

Goodwill


112,435


112,435

Other assets


17,978


12,137

Total assets


$ 768,559


$ 904,173






LIABILITIES AND STOCKHOLDERS' EQUITY



Current Liabilities:





Accounts payable


$ 248


$ 374

Accrued liabilities


106,384


112,148

Current portion of operating lease liabilities


5,615


7,469

Deferred revenue


253,527


253,211

Total current liabilities


365,774


373,202






Deferred revenue, less current portion


134,856


119,231

Deferred tax liabilities, net


754


761

Long-term operating lease liabilities


12,148


15,419

Other liabilities


1,567


1,526






Total stockholders' equity


253,460


394,034

Total liabilities and stockholders' equity


$ 768,559


$ 904,173

Table III

Commvault Systems, Inc.


Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Cash flows from operating activities








Net income (loss)

$ 10,008


$ 1,673


$ 25,636


$ (37,215)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:








Depreciation and amortization

2,769


2,636


8,027


13,379

Noncash stock-based compensation

28,533


22,037


76,793


61,572

Noncash change in fair value of equity securities

436



436


Amortization of deferred commissions cost

4,694


4,221


13,344


13,747

Impairment of operating lease assets


612



1,304

Impairment of intangible assets




40,700

Changes in operating assets and liabilities:








Trade accounts receivable, net

(53,065)


(42,607)


(25,546)


(38,970)

Operating lease assets and liabilities, net

(265)


89


(809)


(719)

Other current assets and Other assets

2,174


(3,027)


(2,172)


6,955

Deferred commissions cost

(8,955)


(5,981)


(21,852)


(15,946)

Accounts payable

73


340


(120)


273

Accrued liabilities

22,659


17,635


(3,293)


484

Deferred revenue

17,733


20,941


19,564


10,719

Other liabilities


(1,564)


56


2,964

Net cash provided by operating activities

26,794


17,005


90,064


59,247

Cash flows from investing activities








Proceeds from maturity of short-term investments




32,800

Purchase of property and equipment

(1,335)


(2,332)


(3,328)


(5,994)

Purchase of equity securities

(821)



(3,527)


Other

500



500


Net cash (used in) provided by investing activities

(1,656)


(2,332)


(6,355)


26,806

Cash flows from financing activities








Repurchase of common stock

(85,322)


(33,132)


(265,414)


(33,132)

Proceeds from stock-based compensation plans

427


1,732


23,688


7,003

Payment of debt issuance costs

(609)



(609)


Net cash used in financing activities

(85,504)


(31,400)


(242,335)


(26,129)

Effects of exchange rate — changes in cash

(1,750)


11,143


(4,920)


21,563

Net (decrease) increase in cash and cash equivalents

(62,116)


(5,584)


(163,546)


81,487

Cash and cash equivalents at beginning of period

295,807


383,153


397,237


296,082

Cash and cash equivalents at end of period

$ 233,691


$ 377,569


$ 233,691


$ 377,569

Table IV

Commvault Systems, Inc.


Reconciliation of GAAP to Non-GAAP Financial Measures and Other Financial Information

(In thousands, except per share data)

(Unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Non-GAAP financial measures and reconciliation:








GAAP income (loss) from operations

$ 12,361


$ 2,668


$ 30,121


$ (32,601)

Noncash stock-based compensation (1)

28,533


20,883


76,421


59,714

FICA and payroll tax expense related to stock-based compensation (2)

812


724


2,270


1,244

Restructuring (3)


11,618


2,082


19,709

Hedvig deferred payments (4)

1,406


1,406


4,217


4,218

Amortization of intangible assets (5)




5,650

Impairment of intangible assets (6)




40,700

Non-GAAP income from operations

$ 43,112


$ 37,299


$ 115,111


$ 98,634









GAAP net income (loss)

$ 10,008


$ 1,673


$ 25,636


$ (37,215)

Noncash stock-based compensation (1)

28,533


20,883


76,421


59,714

FICA and payroll tax expense related to stock-based compensation (2)

812


724


2,270


1,244

Restructuring (3)


11,618


2,082


19,709

Hedvig deferred payments (4)

1,406


1,406


4,217


4,218

Amortization of intangible assets (5)




5,650

Impairment of intangible assets (6)




40,700

Gain on sale of equity method investment (7)

(1,000)



(1,000)


Non-GAAP provision for income taxes adjustment (8)

(8,532)


(8,955)


(25,531)


(21,464)

Non-GAAP net income

$ 31,227


$ 27,349


$ 84,095


$ 72,556









Diluted weighted average shares outstanding

46,719


48,013


47,552


47,281

Non-GAAP diluted earnings per share

$ 0.67


$ 0.57


$ 1.77


$ 1.53










Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Subscription software and products revenue

$ 70,403


$ 48,650


$ 167,526


$ 138,239

Perpetual software and products revenue

28,172


39,975


88,472


99,249

Total software and products revenue

$ 98,575


$ 88,625


$ 255,998


$ 237,488

Subscription as a % of total software and products revenue

71%


55%


65%


58%










Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Subscription software and products revenue

$ 70,403


$ 48,650


$ 167,526


$ 138,239

Recurring support and services revenue

94,038


91,375


279,797


271,966

Total recurring revenue

$ 164,441


$ 140,025


$ 447,323


$ 410,205

Percentage of total revenues

81%


74%


79%


77%









Perpetual software and products revenue

$ 28,172


$ 39,975


$ 88,472


$ 99,249

Non-recurring services revenue

9,768


7,992


27,847


22,677

Total non-recurring revenue

$ 37,940


$ 47,967


$ 116,319


$ 121,926

Percentage of total revenues

19%


26%


21%


23%









Total Revenue (9)

$ 202,381


$ 187,992


$ 563,642


$ 532,131





Measures at period ending





December 31, 2020


March 31, 2021


December 31, 2021

Annualized Recurring Revenue (10)




$ 507,242


$ 517,948


$ 561,226


Three Months Ended December 31, 2021


Americas

EMEA

APJ

Total

Software and Products Revenue

$ 57,538

$ 32,949

$ 8,088

$ 98,575

Customer Support Revenue

50,163

26,018

9,826

86,007

Other Services Revenue

10,620

5,234

1,945

17,799

Total Revenue

$ 118,321

$ 64,201

$ 19,859

$ 202,381






Three Months Ended December 31, 2020


Americas

EMEA

APJ

Total

Software and Products Revenue

$ 43,636

$ 33,374

$ 11,615

$ 88,625

Customer Support Revenue

53,488

25,808

10,386

89,682

Other Services Revenue

5,031

3,332

1,322

9,685

Total Revenue

$ 102,155

$ 62,514

$ 23,323

$ 187,992






Nine Months Ended December 31, 2021


Americas

EMEA

APJ

Total

Software and Products Revenue

$ 153,510

$ 76,570

$ 25,918

$ 255,998

Customer Support Revenue

153,244

79,080

30,105

262,429

Other Services Revenue

27,323

12,776

5,116

45,215

Total Revenue

$ 334,077

$ 168,426

$ 61,139

$ 563,642









Nine Months Ended December 31, 2020


Americas

EMEA

APJ

Total

Software and Products Revenue

$ 133,522

$ 74,232

$ 29,734

$ 237,488

Customer Support Revenue

162,903

74,029

30,840

267,772

Other Services Revenue

13,938

8,971

3,962

26,871

Total Revenue

$ 310,363

$ 157,232

$ 64,536

$ 532,131



Three Months Ended
December 31, 2021


Nine Months Ended
December 31, 2021



Sequential


Year Over Year


Year Over Year

Non-GAAP software and products revenue reconciliation







GAAP software and products revenue


$ 98,575


$ 98,575


$ 255,998

Adjustment for currency impact


1,360


1,512


(2,404)

Non-GAAP software and products revenue on a constant currency basis (11)


$ 99,935


$ 100,087


$ 253,594










Three Months Ended
December 31, 2021


Nine Months Ended
December 31, 2021



Sequential


Year Over Year


Year Over Year

Non-GAAP services revenue reconciliation







GAAP services revenue


$ 103,806


$ 103,806


$ 307,644

Adjustment for currency impact


978


846


(4,845)

Non-GAAP services revenue on a constant currency basis (11)


$ 104,784


$ 104,652


$ 302,799










Three Months Ended
December 31, 2021


Nine Months Ended
December 31, 2021



Sequential


Year Over Year


Year Over Year

Non-GAAP total revenue reconciliation







GAAP total revenues


$ 202,381


$ 202,381


$ 563,642

Adjustment for currency impact


2,338


2,358


(7,249)

Non-GAAP total revenues on a constant currency basis (11)


$ 204,719


$ 204,739


$ 556,393

Footnotes - Adjustments


(1) Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan. Those amounts are represented as follows:



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Cost of services revenue

$ 1,140


$ 945


$ 3,367


$ 2,351

Sales and marketing

10,073


9,714


27,355


25,906

Research and development

9,127


6,203


24,722


17,722

General and administrative

8,193


4,021


20,977


13,735

Stock-based compensation expense

$ 28,533


$ 20,883


$ 76,421


$ 59,714


The table above excludes stock-based compensation expense related to the Company's restructuring activities described below in footnote three.


(2)

Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in-the-money stock options or vest in restricted stock awards.


(3)

In recent fiscal years, Commvault initiated restructuring plans to increase efficiency in its sales, marketing and distribution functions as well as reduce costs across all functional areas. These restructuring charges relate primarily to severance and related costs associated with headcount reductions, as well as the closure of offices. Restructuring includes stock-based compensation related to modifications of awards granted to former employees. Management believes, when used as a supplement to GAAP results, that the exclusion of these charges will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.


(4)

In connection with the acquisition of Hedvig Inc., certain Hedvig shareholders will receive cash payments for the 30 months following the date of acquisition, subject to their continued employment with Commvault. While these payments are proportionate to these shareholders' ownership of Hedvig, under GAAP they are accounted for as compensation expense within Research and development expenses over the course of the 30 month service period. Management believes, when used as a supplement to GAAP results, that the exclusion of these non-routine expenses will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to prior periods.


(5)

Represents noncash amortization of intangible assets.


(6)

In the second quarter of fiscal 2021, Commvault recorded an impairment of its acquired intangible assets. These non-cash charges are not representative of ongoing costs to the business and are not expected to recur. As a result, these charges are being excluded to provide investors with a more comparable measure of costs associated with ongoing operations.


(7)

Represents the gain on the sale of Commvault's equity investment in Laitek, Inc.


(8)

The provision for income taxes is adjusted to reflect Commvault's estimated non-GAAP effective tax rate of 27%.


(9)

This table includes the following financial metrics that are derived from Commvault's GAAP recognized revenue:



Subscription software and products revenue - The amounts included on this line include the software and product portion of a) non-cancellable term-based, or subscription, licenses that expire at the end of the contractual term; and b) "pay-as-you-go" utility arrangements based on product usage that are structured with no guaranteed minimums. These revenues are included in Software and Products Revenue on Commvault's Consolidated Statement of Operations.



Perpetual software and products revenue - The amounts included on this line are primarily associated with revenue from the sale of perpetual software licenses. These revenues are included in Software and Products Revenue on Commvault's Consolidated Statement of Operations.



Recurring support and services revenue - The amounts included on this line consist primarily of maintenance and support revenues associated with the sale of both subscription and perpetual software arrangements. This revenue is included in Services Revenue on Commvault's Consolidated Statement of Operations. This line also includes revenue from software-as-a-service arrangements.



Non-recurring services revenue - The amounts included on this line are primarily revenues associated with Commvault's installation and consultation services. These revenues are included in Services Revenue on Commvault's Consolidated Statement of Operations.



Management believes that reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the recurring nature of certain revenue amounts and trends as compared to prior periods.



Note that nearly all of Commvault's software and product revenue is related to solutions that are run in the customer's environment. As a result, as required under ASC 606, substantially all of Commvault's software and product revenue is recognized at a point in time, when it is delivered to the customer, and not ratably over the course of a contractual period. This is the case for both perpetual software licenses and subscription software licenses. Metallic, Commvault's software-as-a-service offering is recognized over time as services revenue.


(10)

Annualized Recurring Revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes the following contract types: subscription agreements (including utility), maintenance contracts related to perpetual licenses, other extended maintenance contracts (enterprise support), managed services, and Metallic. It excludes any element of the deal arrangement that is not expected to recur, primarily perpetual licenses and most professional services. Contracts are annualized by dividing the total contract value by the number of days in the contract term, then multiplying by 365.



ARR should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. Management believes that reviewing this metric, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault's recurring revenue streams versus prior periods.


(11)

Revenues on a constant currency basis are calculated using the average foreign exchange rates from a previous period and applying these rates to foreign-denominated revenues in the corresponding period of fiscal 2022. The difference between revenue calculated based on these foreign exchange rates and revenues calculated in accordance with GAAP is listed as Adjustment for currency impact in the tables above.

Investor Relations Contact:
Michael J. Melnyk, CFA
732-870-4581
mmelnyk@commvault.com

Media Relations Contact:
Miranda Foster
732-728-5378
mfoster@commvault.com

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SOURCE Commvault