Commvault Announces Fiscal 2021 Third Quarter Financial Results

TINTON FALLS, N.J., Jan. 27, 2021 /PRNewswire/ --


     Third quarter highlights include:




                                                     Third quarter



                              GAAP Results:



     Revenues                                  
       $188.0 million



     Income from Operations (EBIT)               
       $2.7 million



     EBIT Margin                                             1.4%



     Diluted Earnings Per Share                             $0.03




                              Non-GAAP Results:



     Income from Operations (EBIT)              
       $37.3 million



     EBIT Margin                                            19.8%



     Diluted Earnings Per Share                             $0.57

Commvault [NASDAQ: CVLT] today announced its financial results for the third quarter ended December 31, 2020.

"The strategic moves we made over the past two years are delivering results," said Sanjay Mirchandani, President and CEO, Commvault. "We have simplified how we do business, dramatically improved our execution, and are innovating faster than ever."

Total revenues for the third quarter of fiscal 2021 were $188.0 million, an increase of 7% year over year. Total recurring revenue was $140.0 million, an increase of 13% year over year.

Annualized recurring revenue (ARR), which is the annualized value of all active Commvault recurring revenue streams at the end of the reporting period, was $507.2 million as of December 31, 2020, up 11% from December 31, 2019.

Software and products revenue was $88.6 million, an increase of 16% year over year. The year over year increase in software and products revenue was driven by a 19% increase in revenue from larger deals (deals greater than $0.1 million in software and products revenue).

Larger deal revenue represented 68% of our software and products revenue in the three months ended December 31, 2020. The number of larger deal revenue transactions increased 3% year over year to 187 deals for the three months ended December 31, 2020. The average dollar amount of larger deal revenue transactions was approximately $322,000, representing a 15% increase from the prior year quarter.

Services revenue in the quarter was $99.4 million, flat year over year.

On a GAAP basis, income from operations (EBIT) was $2.7 million for the third quarter compared to a loss of $0.5 million in the prior year. Non-GAAP EBIT was $37.3 million in the quarter compared to $28.9 million in the prior year.

Operating cash flow totaled $17.0 million for the third quarter of fiscal 2021 compared to $0.9 million in the prior year quarter. Total cash and short-term investments were $388.4 million as of December 31, 2020 compared to $339.7 million as of March 31, 2020.

During the third quarter of fiscal 2021, Commvault repurchased 700,694 shares of its common stock totaling $33.1 million at an average price of approximately $47.28 per share. An update on our capital allocation policy will be provided on our investor day conference call.

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 selected 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 or superior to, 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 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. In fiscal 2020, Commvault also excluded costs related to a non-routine shareholder matter. Commvault has also excluded the noncash amortization and impairment of intangible assets and certain costs related to key employees of Hedvig 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.

Amortization and impairment charges of intangible assets are noncash items. Commvault believes the exclusion of these expenses provide for a useful comparison of operating results to prior periods and to 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.

Commvault's management generally compensates for the limitations described above related to the use of non-GAAP financial measures by providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. Further, Commvault 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 its FutureReady Investor Event today, January 27, 2021 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) to discuss quarterly results, its long-term vision and strategy and provide a multi-year business outlook. Investors can register and access the live webcast by visiting the event site on Commvault's website. The meeting will include a slide presentation and participants are encouraged to view the presentation via webcast at the event site.

About Commvault
Commvault is the recognized leader in data backup and recovery. Commvault's converged data management solution redefines what backup means for the progressive enterprise through solutions that protect, manage and use their most critical asset -- their data. Commvault software, solutions and services are available from the company and through a global ecosystem of trusted partners. Commvault employs more than 2,600 highly-skilled individuals across markets worldwide, is publicly traded on NASDAQ (CVLT), and is headquartered in Tinton Falls, New Jersey in the United States. To learn more about Commvault visit www.commvault.com

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, 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 in Form 10-K and "Item 1A. Risk Factors" in our most recent quarter report in 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.

©1999-2021 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                                          Nine Months Ended
                                                           December 31,                                              December 31,



                                                     2020                            2019                      2020                             2019

                                                                                                                                              ---


     Revenues:



     Software and products                               $
              88,625                                        $
              76,631                 $
       237,488               $
        208,900



     Services                                     99,367                                      99,720                                       294,643          297,236




     Total revenues                              187,992                                     176,351                                       532,131          506,136



     Cost of revenues:



     Software and products                         6,916                                       8,077                                        20,666           22,938



     Services                                     21,496                                      22,446                                        59,096           67,546




     Total cost of revenues                       28,412                                      30,523                                        79,762           90,484




     Gross margin                                159,580                                     145,828                                       452,369          415,652



     Operating expenses:



     Sales and marketing                          84,542                                      84,563                                       245,287          252,908



     Research and development                     35,727                                      30,503                                        97,824           77,310



     General and administrative                   22,702                                      23,864                                        69,009           71,124



     Restructuring                                11,618                                       2,021                                        19,709           18,951



     Impairment of intangible assets                   -                                                                                  40,700



     Depreciation and amortization                 2,323                                       5,356                                        12,441           10,681




     Total operating expenses                    156,912                                     146,307                                       484,970          430,974




     Income (loss) from operations                 2,668                                       (479)                                     (32,601)        (15,322)



     Interest income                                 167                                         786                                           759            4,270




     Income (loss) before income taxes             2,835                                         307                                      (31,842)        (11,052)



     Income tax expense                            1,162                                         957                                         5,373            3,528




     Net income (loss)                                    $
              1,673                                         $
              (650)               $
       (37,215)             $
        (14,580)




     Net income (loss) per common share:



     Basic                                                 $
              0.04                                        $
              (0.01)                 $
       (0.80)               $
        (0.32)




     Diluted                                               $
              0.03                                        $
              (0.01)                 $
       (0.80)               $
        (0.32)




     Weighted average common shares outstanding:



     Basic                                        47,013                                      46,028                                        46,575           45,586




     Diluted                                      48,013                                      46,028                                        46,575           45,586


                                                                                                                                 
           
           Table II


                                                        
           
             Commvault Systems, Inc.



                                                     
        
            Condensed Consolidated Balance Sheets

                                                           
          
                (In thousands)

                                                            
          
                (Unaudited)




                                                                                                      December 31,                         March 31,



                                                                                                              2020                  2020



                                                              
           
                ASSETS



     Current assets:



     Cash and cash equivalents                                                                                    $
        377,569                    $
         288,082



     Restricted cash                                                                                                               8,000



     Short-term investments                                                                                10,845                  43,645



     Trade accounts receivable, net                                                                       190,651                 146,990



     Other current assets                                                                                  27,570                  26,969




     Total current assets                                                                                 606,635                 513,686





     Property and equipment, net                                                                          113,079                 114,519



     Operating lease assets                                                                                23,709                  15,009



     Deferred commissions cost                                                                             35,306                  31,394



     Intangible assets, net                                                                                                       46,350



     Goodwill                                                                                             112,435                 112,435



     Other assets                                                                                          14,415                  11,683




     Total assets                                                                                                 $
        905,579                    $
         845,076





                                                      
        
            LIABILITIES AND STOCKHOLDERS' EQUITY



     Current Liabilities:



     Accounts payable                                                                                                $
         622                        $
         307



     Accrued liabilities                                                                                  102,924                  87,051



     Current portion of operating lease liabilities                                                         8,346                   7,699



     Deferred revenue                                                                                     247,544                 233,497




     Total current liabilities                                                                            359,436                 328,554





     Deferred revenue, less current portion                                                               108,280                  92,723



     Deferred tax liabilities, net                                                                            807                     849



     Long-term operating lease liabilities                                                                 17,561                   8,808



     Other liabilities                                                                                      5,424                   2,238





     Total stockholders' equity                                                                           414,071                 411,904




     Total liabilities and stockholders' equity                                                                   $
        905,579                    $
         845,076


                                                                                                                                                                                                      
         
     Table III


                                                                                       
          
                Commvault Systems, Inc.



                                                                                     
       
              Consolidated Statements of Cash Flows

                                                                                          
            
                (In thousands)

                                                                                           
            
                (Unaudited)




                                                                                                                       Three Months Ended                                Nine Months Ended
                                                                                                               December 31,                                     December 31,



                                                                                                 2020                               2019             2020                       2019

                                                                                                                                                                              ---


              
                Cash flows from operating activities



              Net income (loss)                                                                          $
              1,673                                 $
       (650)                     $
        (37,215)               $
        (14,580)



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



              Depreciation and amortization                                                    2,636                                          5,564                         13,379                  11,618



              Noncash stock-based compensation                                                22,037                                         18,974                         61,572                  48,581



              Impairment of intangible assets                                                      -                                                                      40,700



              Amortization of deferred commissions cost                                        4,221                                          4,420                         13,747                  13,150



              Impairment of operating lease assets                                               612                                            145                          1,304                   2,195



              Changes in operating assets and liabilities:



              Trade accounts receivable, net                                                (42,607)                                      (32,890)                      (38,970)                 12,735



              Operating lease assets and liabilities, net                                         89                                          (554)                         (719)                  (512)



              Other current assets and Other assets                                          (3,027)                                         7,382                          6,955                   5,586



              Deferred commissions cost                                                      (5,981)                                       (4,390)                      (15,946)               (11,352)



              Accounts payable                                                                   340                                        (1,301)                           273                 (1,726)



              Accrued liabilities                                                             17,635                                        (1,003)                           484                 (2,018)



              Deferred revenue                                                                20,941                                          5,817                         10,719                 (6,262)



              Other liabilities                                                              (1,564)                                         (625)                         2,964                 (1,407)




              Net cash provided by operating activities                                       17,005                                            889                         59,247                  56,008



              
                Cash flows from investing activities



              Purchase of short-term investments                                                   -                                                                                           (32,800)



              Proceeds from maturity of short-term investments                                     -                                        32,631                         32,800                  98,150



              Business combination, net of cash acquired                                           -                                     (157,495)                                             (157,495)



              Purchase of property and equipment, net                                        (2,332)                                         (454)                       (5,994)                (1,911)




              Net cash provided by (used in) investing activities                            (2,332)                                     (125,318)                         26,806                (94,056)



              
                Cash flows from financing activities



              Repurchase of common stock                                                    (33,132)                                                                    (33,132)               (40,026)



              Proceeds from stock-based compensation plans                                     1,732                                         24,619                          7,003                  30,944




              Net cash provided by (used in) financing activities                           (31,400)                                        24,619                       (26,129)                (9,082)



              Effects of exchange rate - changes in cash                                      11,143                                          2,210                         21,563                   (837)




              Net increase (decrease) in cash, cash equivalents and restricted cash          (5,584)                                      (97,600)                        81,487                (47,967)



              Cash, cash equivalents and restricted cash at beginning of period              383,153                                        377,625                        296,082                 327,992




              Cash, cash equivalents and restricted cash at end of period                              $
              377,569                               $
       280,025                       $
        377,569                 $
        280,025


                                                                                                                                                                                                                                             
     
     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                                
              
                Nine Months Ended
                                                                                                    December 31,                                                             December 31,



                                                                                     2020                                             2019                          2020                                         2019

                                                                                                                                                                                                               ---


     
                Non-GAAP financial measures and reconciliation:



     GAAP income (loss) from operations                                                                  $
              2,668                                                             $
              (479)                  $
         (32,601)                     $
         (15,322)



     Noncash stock-based compensation (1)                                         20,883                                                         18,265                                                      59,714                  46,899



     FICA and payroll tax expense related to stock-based compensation (2)            724                                                            550                                                       1,244                   1,190



     Restructuring (3)                                                            11,618                                                          2,021                                                      19,709                  18,951



     Non-routine shareholder matters (4)                                               -                                                                                                                                           7,628



     Amortization of intangible assets (5)                                             -                                                         2,825                                                       5,650                   2,825



     Hedvig deferred payments (6)                                                  1,406                                                          1,406                                                       4,218                   1,406



     Acquisition costs (7)                                                             -                                                         4,356                                                                              5,639



     Impairment of intangible assets (8)                                               -                                                                                                                   40,700




     
                Non-GAAP income from operations                                          $
              
                37,299                                               $
              
                28,944             $
         
           98,634               $
          
           69,216






     GAAP net income (loss)                                                                              $
              1,673                                                             $
              (650)                  $
         (37,215)                     $
         (14,580)



     Noncash stock-based compensation (1)                                         20,883                                                         18,265                                                      59,714                  46,899



     FICA and payroll tax expense related to stock-based compensation (2)            724                                                            550                                                       1,244                   1,190



     Restructuring (3)                                                            11,618                                                          2,021                                                      19,709                  18,951



     Non-routine shareholder matters (4)                                               -                                                                                                                                           7,628



     Amortization of intangible assets (5)                                             -                                                         2,825                                                       5,650                   2,825



     Hedvig deferred payments (6)                                                  1,406                                                          1,406                                                       4,218                   1,406



     Acquisition costs (7)                                                             -                                                         4,356                                                                              5,639



     Impairment of intangible assets (8)                                               -                                                                                                                   40,700



     Non-GAAP provision for income taxes adjustment (9)                          (8,955)                                                       (7,069)                                                   (21,464)               (16,313)




     
                Non-GAAP net income                                                      $
              
                27,349                                               $
              
                21,704             $
         
           72,556               $
          
           53,645






     Diluted weighted average shares outstanding                                  48,013                                                         46,598                                                      47,281                  46,272




     
                Non-GAAP diluted earnings per share                                        $
              
                0.57                                                 $
              
                0.47               $
         
           1.53                 $
          
           1.16







                                                                                    
              
                Three Months Ended                                
              
                Nine Months Ended
                                                                                                    December 31,                                                             December 31,



                                                                                     2020                                             2019                          2020                                         2019

                                                                                                                                                                                                               ---


     Subscription software and products revenue                                                         $
              48,650                                                            $
              31,749                    $
         138,239                        $
         86,049



     Perpetual software and products revenue                                      39,975                                                         44,882                                                      99,249                 122,851




     Total software and products revenue                                                                $
              88,625                                                            $
              76,631                    $
         237,488                       $
         208,900




     
                Subscription as a % of total software and products revenue         55%                                                           41%                                                        58%                    41%






                                                                                    
              
                Three Months Ended                                
              
                Nine Months Ended
                                                                                                    December 31,                                                             December 31,



                                                                                     2020                                             2019                          2020                                         2019

                                                                                                                                                                                                               ---


     Subscription software and products revenue                                                         $
              48,650                                                            $
              31,749                    $
         138,239                        $
         86,049



     Recurring support and services revenue                                       91,375                                                         91,694                                                     271,966                 273,305




     Total recurring revenue                                                                           $
              140,025                                                           $
              123,443                    $
         410,205                       $
         359,354




     
                Percentage of total revenues                                       74%                                                           70%                                                        77%                    71%





     Perpetual software and products revenue                                                            $
              39,975                                                            $
              44,882                     $
         99,249                       $
         122,851



     Non-recurring services revenue                                                7,992                                                          8,026                                                      22,677                  23,931




     Total non-recurring revenue                                                                        $
              47,967                                                            $
              52,908                    $
         121,926                       $
         146,782




     
                Percentage of total revenues                                       26%                                                           30%                                                        23%                    29%





     
                Total Revenue (10)                                                                   $
              187,992                                                           $
              176,351                    $
         532,131                       $
         506,136




                                                         
        
             Measures at period ending ($000s)



                                        December 31, 2019                                        March 31, 2020    December 31, 2020




     Annualized Recurring Revenue (11)                    $
       458,683                                         $
      451,667          $
     507,242



                                                 
         
       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





                                                 
         
       Three Months Ended December 31, 2019



                                    Americas          EMEA                  APJ                 Total

                                                                                                  ---


     Software and Products Revenue           $
        40,291                                             $
      29,107           $
      7,233  $
      76,631



     Customer Support Revenue        57,856                              22,237                            10,438  90,531



     Other Services Revenue           4,883                               2,673                             1,633   9,189




     Total Revenue                          $
        103,030                                             $
      54,017          $
      19,304 $
      176,351





                                                 
         
       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







                                                 
         
       Nine Months Ended December 31, 2019



                                    Americas          EMEA                  APJ                 Total

                                                                                                  ---


     Software and Products Revenue          $
        107,375                                             $
      71,922          $
      29,603 $
      208,900



     Customer Support Revenue       173,450                              65,810                            30,756 270,016



     Other Services Revenue          14,179                               8,035                             5,006  27,220




     Total Revenue                          $
        295,004                                            $
      145,767          $
      65,365 $
      506,136




                                                                                                                       Three Months Ended                                                         Nine Months Ended
                                                                                                           December 31, 2020                                                     December 31, 2020



                                                                                            Sequential                                    Year Over Year         Year Over Year




     
                Non-GAAP software and products revenue reconciliation



       GAAP software and products revenue                                                              $
            88,625                                                          $
              88,625                $
     237,488



           Adjustment for currency impact                                                     (1,404)                                                   (2,822)                                        (3,531)




     
                Non-GAAP software and products revenue on a constant currency basis (12)             $
            87,221                                                          $
              85,803                $
     233,957





                                                                                                                       Three Months Ended                                                         Nine Months Ended
                                                                                                           December 31, 2020                                                    December 31, 2020



                                                                                            Sequential                                    Year Over Year         Year Over Year




     
                Non-GAAP services revenue reconciliation



       GAAP services revenue                                                                           $
            99,367                                                          $
              99,367                $
     294,643



           Adjustment for currency impact                                                     (1,054)                                                   (2,459)                                        (2,884)




     
                Non-GAAP services revenue on a constant currency basis (12)                          $
            98,313                                                          $
              96,908                $
     291,759





                                                                                                                       Three Months Ended                                                         Nine Months Ended
                                                                                                           December 31, 2020                                                    December 31, 2020



                                                                                            Sequential                                    Year Over Year         Year Over Year




     
                Non-GAAP total revenue reconciliation



       GAAP total revenues                                                                            $
            187,992                                                         $
              187,992                $
     532,131



           Adjustment for currency impact                                                     (2,458)                                                   (5,281)                                        (6,415)




     
                Non-GAAP total revenues on a constant currency basis (12)                           $
            185,534                                                         $
              182,711                $
     525,716



              
                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                           Nine Months Ended
                                                  December 31,                                December 31,



                                        2020                          2019         2020                       2019




     Cost of services revenue                  $
              945                            $
          635                    $
      2,351   $
      2,023



     Sales and marketing              9,714                                 9,128                         25,906             24,133



     Research and development         6,203                                 5,222                         17,722              9,226



     General and administrative       4,021                                 3,280                         13,735             11,517




     Stock-based compensation expense       $
              20,883                         $
          18,265                   $
      59,714  $
      46,899




            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)  During fiscal 2020, Commvault
             incurred costs related to a non-
             routine shareholder matter.  The
             costs are for professional fees
             related to the settlement agreement
             with the shareholder and consulting
             fees incurred with the operational
             review which was agreed to as part
             of the settlement. Management
             believes, when used as a supplement
             to GAAP results, that the exclusion
             of these costs will better 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. Amortization of
             intangible assets may fluctuate in
             amount and frequency and Management
             considers this to be outside of
             Commvault's normal operating
             results.





     (6)  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.





     (7)  During the second quarter of fiscal
             2020, Commvault incurred costs
             related to the acquisition of
             Hedvig, Inc. Management believes,
             when used as a supplement to GAAP
             results, that the exclusion of these
             costs will help investors and
             financial analysts understand
             Commvault's operating results and
             underlying operational trends as
             compared to other periods.





     (8)  In the second quarter of fiscal 2021,
             Commvault recorded an impairment
             charge 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.





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





     (10) 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.
             Commvault currently does not have
             material revenue related to hosted,
             or software as a solution products.
             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.





     (11) 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 will be 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.





     (12) 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 2021. 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 table
             above.

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SOURCE Commvault