cvlt-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2021

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-33026

Commvault Systems, Inc.

(Exact name of registrant as specified in its charter)


Delaware						22-3447504
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1 Commvault Way

Tinton Falls, New Jersey 07724

(Address of principal executive offices, including zip code)

(732) 870-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CVLT	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by the Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit such files.) Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, "accelerated filer", "smaller reporting company" and "emerging growth company" in rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 25, 2021, there were 45,508,675 shares of the registrant’s common stock, $0.01 par value, outstanding.

COMMVAULT SYSTEMS, INC.

FORM 10-Q

INDEX


		Page
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements and Notes
	Unaudited Consolidated Balance Sheets as of September 30, 2021 and March 31, 2021	1
	Unaudited Consolidated Statements of Operations for the three and s ix months ended September 30, 2021 and 2020	2
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended September 30, 2021 and 2020	3
	Unaudited Consolidated Statements of Stockholders’ Equity for the three and six months ended September 30, 2021 and 2020	4
	Unaudited Consolidated Statements of Cash Flows for the six months ended September 30, 2021 and 2020	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28

Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

SIGNATURES		32

Commvault Systems, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)


	September 30, 2021		March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	295,807	$	397,237


Trade accounts receivable, net	166,272		188,126
Other current assets	20,651		22,237
Total current assets	482,730		607,600

Property and equipment, net	109,557		112,779
Operating lease assets	17,925		20,778
Deferred commissions cost	42,351		38,444

Goodwill	112,435		112,435
Other assets	14,756		12,137
Total assets	$	779,754	$	904,173
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	178	$	374
Accrued liabilities	85,604		112,148
Current portion of operating lease liabilities	6,455		7,469
Deferred revenue	247,578		253,211
Total current liabilities	339,815		373,202
Deferred revenue, less current portion	124,833		119,231
Deferred tax liabilities, net	762		761
Long-term operating lease liabilities	13,009		15,419
Other liabilities	1,557		1,526
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.01 par value: 50,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value: 250,000 shares authorized, 45,374 shares and 46,482 shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively	452		463
Additional paid-in capital	1,119,738		1,069,695
Accumulated deficit	(808,749)		(665,774)
Accumulated other comprehensive loss	(11,663)		(10,350)
Total stockholders’ equity	299,778		394,034
Total liabilities and stockholders’ equity	$	779,754	$	904,173

See accompanying unaudited notes to consolidated financial statements

Commvault Systems, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Software and products	$	75,261	$	72,309	$	157,423	$	148,863
Services	102,579		98,830		203,838		195,276
Total revenues	177,840		171,139		361,261		344,139
Cost of revenues:
Software and products	2,894		7,903		5,200		13,750
Services	23,680		18,896		46,649		37,600
Total cost of revenues	26,574		26,799		51,849		51,350
Gross margin	151,266		144,340		309,412		292,789
Operating expenses:
Sales and marketing	82,928		79,069		159,289		160,745
Research and development	37,726		30,955		73,861		62,097
General and administrative	25,358		24,748		51,787		46,307
Restructuring	636		5,767		2,082		8,091
Impairment of intangible assets	—		40,700		—		40,700
Depreciation and amortization	2,352		5,053		4,633		10,118
Total operating expenses	149,000		186,292		291,652		328,058
Income (loss) from operations	2,266		(41,952)		17,760		(35,269)
Interest income	289		249		423		592
Income (loss) before income taxes	2,555		(41,703)		18,183		(34,677)
Income tax expense (benefit)	824		(532)		2,555		4,211
Net income (loss)	$	1,731	$	(41,171)	$	15,628	$	(38,888)
Net income (loss) per common share:
Basic	$	0.04	$	(0.89)	$	0.34	$	(0.84)
Diluted	$	0.04	$	(0.89)	$	0.33	$	(0.84)
Weighted average common shares outstanding:
Basic	45,743		46,516		45,960		46,354
Diluted	47,599		46,516		47,936		46,354

See accompanying unaudited notes to consolidated financial statements

Commvault Systems, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Net income (loss)	$	1,731	$	(41,171)	$	15,628	$	(38,888)
Other comprehensive income (loss):
Foreign currency translation adjustment	(722)		788		(1,313)		1,738
Comprehensive income (loss)	$	1,009	$	(40,383)	$	14,315	$	(37,150)

See accompanying unaudited notes to consolidated financial statements

Commvault Systems, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of June 30, 2021	46,066	$	459	$	1,095,903	$	(730,883)	$	(10,941)	$	354,538
Stock-based compensation				26,449						26,449
Share issuances related to stock-based compensation	467	5		7,821						7,826
Repurchase of common stock	(1,159)	(12)		(10,435)		(79,597)				(90,044)

Net income						1,731				1,731
Other comprehensive loss								(722)		(722)
Balance as of September 30, 2021	45,374	$	452	$	1,119,738	$	(808,749)	$	(11,663)	$	299,778



	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of March 31, 2021	46,482	$	463	$	1,069,695	$	(665,774)	$	(10,350)	$	394,034
Stock-based compensation				48,260						48,260
Share issuances related to stock-based compensation	1,300	13		23,248						23,261
Repurchase of common stock	(2,408)	(24)		(21,465)		(158,603)				(180,092)

Net income						15,628				15,628
Other comprehensive loss								(1,313)		(1,313)
Balance as of September 30, 2021	45,374	$	452	$	1,119,738	$	(808,749)	$	(11,663)	$	299,778

Commvault Systems, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of June 30, 2020	46,321	$	461	$	997,838	$	(551,591)	$	(12,473)	$	434,235
Stock-based compensation				20,584						20,584

Share issuances related to stock-based compensation	364	3		5,037						5,040


Net loss						(41,171)				(41,171)
Other comprehensive income								788		788
Balance as of September 30, 2020	46,685	$	464	$	1,023,459	$	(592,762)	$	(11,685)	$	419,476



	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of March 31, 2020	46,011	$	458	$	978,659	$	(553,790)	$	(13,423)	$	411,904
Stock-based compensation				39,535						39,535

Share issuances related to stock-based compensation	674	6		5,265						5,271
Cumulative effect change in accounting for ASU 2016-13						(84)				(84)

Net loss						(38,888)				(38,888)
Other comprehensive income								1,738		1,738
Balance as of September 30, 2020	46,685	$	464	$	1,023,459	$	(592,762)	$	(11,685)	$	419,476

See accompanying unaudited notes to consolidated financial statements

Commvault Systems, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net income (loss)	$	15,628	$	(38,888)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	5,258		10,743
Noncash stock-based compensation	48,260		39,535


Amortization of deferred commissions cost	8,650		9,526
Impairment of operating lease assets	—		692
Impairment of intangible assets	—		40,700
Changes in operating assets and liabilities:
Trade accounts receivable	27,519		3,637
Operating lease assets and liabilities, net	(544)		(808)
Other current assets and Other assets	(4,346)		9,982
Deferred commissions cost	(12,897)		(9,965)
Accounts payable	(193)		(