TINTON FALLS, N.J., Jan. 10, 2023 /PRNewswire/ —
|Income from Operations (EBIT)||$5.0 million|
|EBIT Margin||2.6 %|
|Diluted Loss Per Share||$(0.01)|
|Income from Operations (EBIT)||$38.5 million|
|EBIT Margin||19.7 %|
|Diluted Earnings Per Share||$0.62|
Commvault (NASDAQ: CVLT) today announced preliminary unaudited financial results for the fiscal third quarter ended December 31, 2022.
“As customers and prospects continue to grapple with an uncertain outlook, we experienced slower than expected buying patterns and close rate execution,” said Sanjay Mirchandani, President and CEO. “As a result, we saw a pullback in orders in December, particularly in our Americas software business. We are well equipped to navigate through economic uncertainty and adjust our cost structure to changes in demand. While this performance is below expectations, we are confident in our strategy and will continue to help customers keep their data secure, accessible, and actionable.”
Total revenues for the third quarter of fiscal 2023 were $195.1 million, a decrease of 4% year over year. On a year over year constant currency basis, total revenue growth would have been 1%.
Annualized recurring revenue (ARR), which is the annualized value of all active Commvault recurring revenue streams at the end of the reporting period, was approximately $641 million as of December 31, 2022, up 14% year over year. On a year over year constant currency basis, ARR growth would have been 18%, driven by continued strength in Metallic. Combined Subscription and Metallic ARR now represents approximately 70% of total ARR.
Software and products revenue was $89.6 million, a decrease of 9% year over year due to a weaker than forecasted enterprise market and execution on close rates. On a year over year constant currency basis, software and products revenue would have declined 5%. Americas software and products revenue declined 20%. Our International software and products revenues increased 6% year over year, which would have been 17% on a constant currency basis.
Services revenue in the quarter was $105.5 million, an increase of 2% year over year. The year over year increase in revenue was driven by Metallic. On a year over year constant currency basis, services revenue would have increased 7%.
On a GAAP basis, income from operations (EBIT) was $5.0 million for the third quarter compared to $12.4 million in the prior year. During the third quarter, we incurred $9.2 million of restructuring charges related to headcount reductions. Non-GAAP EBIT was $38.5 million in the quarter compared to $43.1 million in the prior year. The year over year decline in non-GAAP EBIT was primarily attributable to the decline in software and products revenue.
Operating cash flow increased 13% to $30.2 million for the third quarter of fiscal 2023 compared to $26.8 million of operating cash flow in the prior year quarter. The increase was driven by deferred revenue growth.
During the third quarter of fiscal 2023, Commvault repurchased $31.3 million of common stock. Total cash was $273.5 million as of December 31, 2022.
A reconciliation of GAAP to non-GAAP results has been provided in Financial Statement Table I included in this press release. An explanation of these measures is also included below under the heading “Use of Non-GAAP Financial Measures.”
The preliminary results for the fiscal third quarter ended December 31, 2022, are an estimate, based on information available to management as of the date of this release, and are subject to further changes upon completion of the company’s standard quarter closing procedures. This update does not present all necessary information for an understanding of Commvault’s financial condition as of the date of this release, or its results of operations for the fiscal third quarter. As we complete our quarter-end financial close process and finalize our financial statements for the quarter it is possible that we may identify items that require adjustments to the preliminary financial information set forth above, and those changes could be material. We do not intend to update such financial information prior to the release of final fiscal third quarter financial results, which is currently scheduled for January 31, 2023. Commvault will host a conference call on Tuesday, January 31, 2023, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results and its outlook for the fiscal fourth quarter. The live webcast and call dial-in numbers can be accessed by registering under the “Events” section of Commvault’s website. An archived webcast of this conference call will also be available following the call.
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). 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 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.