cvlt-20220930

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, 2022

☐ 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 Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter 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 the 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 the definitions 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 28, 2022, there were 44,532,038 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
	Unaudited Consolidated Balance Sheets as of S epte m ber 30, 2022 and March 31, 2022	1
	Unaudited Consolidated Statements of Operations for the three and six months ended Se ptember 30, 2022 and 2021	2
	Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended Septem ber 30, 2022 and 2021	3
	Unaudited Consolidated Statements of Stockholders’ Equity for the three and six months ended September 30, 2022 and 2021	4
	Unaudited Consolidated Statements of Cash Flows for the six months ended S eptember 30, 2022 and 2021	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	26

Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

SIGNATURES		29

Table of Contents

Commvault Systems, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)


	September 30, 2022		March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	262,485	$	267,507


Trade accounts receivable, net	170,166		194,238
Other current assets	23,225		22,336
Total current assets	455,876		484,081

Property and equipment, net	102,562		106,513
Operating lease assets	11,853		14,921
Deferred commissions cost	52,300		52,974
Intangible asset, net	2,917		3,542
Goodwill	127,780		127,780
Other assets	26,500		26,269
Total assets	$	779,788	$	816,080
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	200	$	432
Accrued liabilities	86,251		121,837
Current portion of operating lease liabilities	3,932		4,778
Deferred revenue	259,013		267,017
Total current liabilities	349,396		394,064
Deferred revenue, less current portion	151,968		150,180
Deferred tax liabilities, net	731		808
Long-term operating lease liabilities	8,738		11,270
Other liabilities	3,692		3,929
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, 44,597 shares and 44,511 shares issued and outstanding at September 30, 2022 and March 31, 2022, respectively	444		443
Additional paid-in capital	1,220,667		1,165,948
Accumulated deficit	(940,396)		(898,699)
Accumulated other comprehensive loss	(15,452)		(11,863)
Total stockholders’ equity	265,263		255,829
Total liabilities and stockholders’ equity	$	779,788	$	816,080

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Software and products	$	82,825	$	75,261	$	175,261	$	157,423
Services	105,232		102,579		210,777		203,838
Total revenues	188,057		177,840		386,038		361,261
Cost of revenues:
Software and products	2,286		2,894		7,186		5,200
Services	30,016		23,680		58,873		46,649
Total cost of revenues	32,302		26,574		66,059		51,849
Gross margin	155,755		151,266		319,979		309,412
Operating expenses:
Sales and marketing	81,299		82,928		166,218		159,289
Research and development	37,053		37,726		77,166		73,861
General and administrative	25,553		25,358		52,529		51,787
Restructuring	—		636		2,132		2,082

Depreciation and amortization	2,537		2,352		5,172		4,633
Total operating expenses	146,442		149,000		303,217		291,652
Income from operations	9,313		2,266		16,762		17,760
Interest income	291		289		552		423
Interest expense	(105)		—		(210)		—
Other income (expense), net	154		—		(235)		—
Income before income taxes	9,653		2,555		16,869		18,183
Income tax expense	5,135		824		8,840		2,555
Net income	$	4,518	$	1,731	$	8,029	$	15,628
Net income per common share:
Basic	$	0.10	$	0.04	$	0.18	$	0.34
Diluted	$	0.10	$	0.04	$	0.18	$	0.33
Weighted average common shares outstanding:
Basic	44,759		45,743		44,751		45,960
Diluted	45,540		47,599		45,745		47,936

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Net income	$	4,518	$	1,731	$	8,029	$	15,628
Other comprehensive loss:
Foreign currency translation adjustment	(1,874)		(722)		(3,589)		(1,313)
Comprehensive income	$	2,644	$	1,009	$	4,440	$	14,315

See accompanying unaudited notes to consolidated financial statements

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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, 2022	44,835	$	446	$	1,194,931	$	(911,315)	$	(13,578)	$	270,484
Stock-based compensation				25,327						25,327
Share issuances related to stock-based compensation	465	5		6,667						6,672
Repurchase of common stock	(703)	(7)		(6,258)		(33,599)				(39,864)
Net income						4,518				4,518
Other comprehensive loss								(1,874)		(1,874)
Balance as of September 30, 2022	44,597	$	444	$	1,220,667	$	(940,396)	$	(15,452)	$	265,263



	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of March 31, 2022	44,511	$	443	$	1,165,948	$	(898,699)	$	(11,863)	$	255,829
Stock-based compensation				56,422						56,422
Share issuances related to stock-based compensation	1,099	11		7,348						7,359
Repurchase of common stock	(1,013)	(10)		(9,051)		(49,726)				(58,787)
Net income						8,029				8,029
Other comprehensive loss								(3,589)		(3,589)
Balance as of September 30, 2022	44,597	$	444	$	1,220,667	$	(940,396)	$	(15,452)	$	265,263

Table of Contents

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

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net income	$	8,029	$	15,628
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,855		5,258
Noncash stock-based compensation	56,422		48,260
Noncash change in fair value of equity securities	234		—


Amortization of deferred commissions cost	10,756		8,650


Changes in operating assets and liabilities:
Trade accounts receivable	15,863		27,519
Operating lease assets and liabilities, net	(181)		(544)
Other current assets and Other assets	(461)		(4,346)
Deferred commissions cost	(13,017)		(12,897)
Accounts payable	(213)		(193)
Accrued liabilities	(28,604)		(25,952)
Deferred revenue	16,464		1,831
Other liabilities	1,130		56
Net cash provided by operating activities	72,277		63,270
Cash flows from investing activities


Purchase of property and equipment	(1,381)		(1,993)
Purchase of equity securities	(1,793)		(2,706)

Net cash used in investing activities	(3,174)		(4,699)
Cash flows from financing activities
Repurchase of common stock	(58,787)		(180,092)
Proceeds from stock-based compensation plans	7,359		23,261
Payment of debt issuance costs	(63)		—

Net cash used in financing activities	(51,491)		(156,831)
Effects of exchange rate — changes in cash	(22,634)		(3,170)
Net decrease in cash and cash equivalents	(5,022)		(101,430)
Cash and cash equivalents at beginning of period	267,507		397,237
Cash and cash equivalents at end of period	$	262,485	$	295,807

See accompanying unaudited notes to consolidated financial statements

Table of C ontents

Commvault Systems, Inc

Notes to Consolidated Financial Statements - Unaudited

(In thousands, except per share data)

1. Basis of Presentation

Commvault Systems, Inc. and its subsidiaries ("Commvault," "we," "us," or "our") is a provider of data protection and information management software applications and products. We develop, market and sell a suite of software applications and services, globally, that provides our customers with data protection solutions. We also provide our customers with a broad range of professional and customer support services, including data protection-as-a-service, branded as Metallic.

The consolidated financial statements of Commvault as of September 30, 2022 and for the three and six months ended September 30, 2022 and 2021 are unaudited, and in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the financial statements and notes in our Annual Report on Form 10-K for fiscal 2022. The results reported in these financial statements should not necessarily be taken as indicative of results that may be expected for the entire fiscal year.

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments and estimates that affect the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The amounts of assets and liabilities reported in our balance sheets and the amounts of revenues and expenses reported for each of our periods presented are affected by estimates and assumptions, which are used for, but not limited to, the ac

SEC Form 10-Q filed by Commvault Systems Inc.