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CommVault (CVLT) Q3 Earnings & Revenues Top Estimates, Up Y/Y

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CommVault Systems CVLT reported third-quarter fiscal 2021 non-GAAP earnings of 57 cents per share, beating the Zacks Consensus Estimate by 18.8%. Moreover, the figure increased 21.3% from the year-ago quarter.

Third-quarter revenues of $188 million surpassed the consensus mark by 6.8%. The revenue figure also climbed 6.6% year over year.

Revenues from Europe, the Middle East and Africa (EMEA) and Asia Pacific and Japan (APJ) grew 15.7% and 20.8% year over year to $62.5 million and $23.3 million, respectively. However, revenues from the Americas edged down 0.9% year on year to $102.2 million.

The company’s Annual Recurring Revenue (ARR) increased 10.6% year over year to $507.2 million.

CommVault’s performance was largely driven by the robust adoption of its Metallic software-as-a-service (SaaS) and HyperScale X offerings owing to the ongoing cloud migration across enterprises. Markedly, its Metallic services are deployed by enterprises across 24 countries.

Notably, the company closed multiple seven-figure deals and won a number of new deals supporting multi-product purchase. Moreover, its strategic partnership with Microsoft MSFT has accelerated the adoption of Metallic and was a key growth driver during the reported quarter.

Meanwhile, CommVault’s shares have returned 41.4% over the past year compared with the Zacks Computer – Software industry’s growth of 35.7%.

CommVault Systems, Inc. Price, Consensus and EPS Surprise

CommVault Systems, Inc. Price, Consensus and EPS Surprise
CommVault Systems, Inc. Price, Consensus and EPS Surprise

CommVault Systems, Inc. price-consensus-eps-surprise-chart | CommVault Systems, Inc. Quote

Quarter Details

Segment wise, Software and product revenues (47.1% of total revenues) went up 15.7% on a year-over-year basis to $88.6 million. Subscription revenues contributed 55% to Software and products revenues, up from the year-ago quarter’s 41%.

This growth in the Software and products segment was primarily driven by the 19% year-over-year increase in revenues from deals greater than $0.1 million.

Services revenues (52.9% of total revenues) came in at $99.4 million, down 0.4% year on year. Within the Services segment, customer support services revenues slid 0.9% year over year to $89.7 million, while other services revenues rose 5.4% to $9.7 million.

In the reported quarter, gross profit increased 9.4% year over year to $159.6 million. Gross margin expanded 220 basis points (bps) to 84.9% on a year-over-year basis.

Sales and marketing expenses declined 0.02% year on year to $84.5 million. General and administrative expenses decreased 4.9% year over year to $22.7 million. However, research and development expenses flared up 17.1% on a year-over-year basis to $35.7 million

Non-GAAP income from operations was $37.3 million, reflecting 28.9% growth from the year-ago period.

Balance Sheet & Cash Flow

As of Dec 31, 2020, CommVault had total cash and short-term investments of $388.4 million compared with the $394 million recorded as of Sep 30, 2020.

Cash flow from operations totaled $17 million in the fiscal third quarter compared with the $0.9 million reported in the year-ago quarter.

Guidance

For fourth-quarter fiscal 2021, CommVault projects totals revenues of $182 million, up 11% year over year. Software and Products revenues will likely be up nearly 26% year on year to $84 million.

The company anticipates increased IT spending on cloud and SaaS, driven by the ongoing digital transformation wave, to be a key growth driver. Apart from this, traction in its subscription-based offerings owing to an expanding addressable market will likely be a major positive.

However, management believes incremental cloud storage costs due to the increasing geographical footprint of Metallic will erode the company’s overall gross margin.

Zacks Rank & Other Stocks to Consider

Currently, CommVault carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader technology sector include Littelfuse LFUS and TechTarget TTGT. Both stocks sport a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Littelfuse is scheduled to release quarterly earnings on Feb 3, while TechTarget will report on Feb 10.

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