CVLT

CommVault Systems, Inc. (CVLT)

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CommVault Systems, Inc. (CVLT)

F2Q09 (Qtr End 09/30/08) Earnings Call Transcript

October 29, 2008, 5:00 pm ET

Executives

Michael Picariello – Director, IR

Bob Hammer – Chairman, President and CEO

Lou Miceli – CFO

Al Bunte – COO

Analysts

Tom Curlin – RBC Capital Markets

Aaron Rakers – Wachovia

Samad Samana – Morgan Keegan

Aaron Schwartz – JPMorgan

Rajesh Ghai – Think Equity

Brent Bracelin – Pacific Crest Securities

Steve Koenig – KeyBanc Capital Markets

David Bayer – Cantor Fitzgerald

Derek Bingham – Goldman Sachs

Dennis [ph] – Credit Suisse

Tim Klasell – Thomas Weisel Partners

Joel Inman – Robert W. Baird

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to CommVault’s fiscal second quarter 2009. At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question and answer session. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Michael Picariello, Director of Investor Relations. Please go ahead, sir.

Michael Picariello

Good afternoon. Thanks for dialing in today. With me on the call are Bob Hammer, Chairman, President, and Chief Executive Officer; Alan Bunte, Chief Operating Officer; and Lou Miceli, Chief Financial Officer.

Before we begin, I would like to remind everyone that statements made during this call including in the question-and-answer session at the end of the call, that relate to future results and projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations.

Actual results may differ materially due to a number of risks and uncertainties, which are discussed in our SEC filings and in the cautionary statement contained in our press release and on our website. The Company undertakes no responsibility to update the information in this conference call under any circumstances.

Our earning press release was issued today over the wire services after the market closed and has also been furnished to the SEC as an 8-K filing. The press release is also available on our Investor Relations website.

On this conference call, we will provide non-GAAP financial results. The reconciliation between the non-GAAP and GAAP measures can be found in Table IV accompanying the press release and posted on our website.

This conference call is also being recorded for replay and is being webcasted. An archive of today’s webcast will be available on our website following the call.

I will now turn the call over to our CEO and President, Bob Hammer.

Bob Hammer

Thanks, Michael. Welcome, everyone, and thanks for joining our Fiscal Second Quarter 2009 Earnings Call. For the quarter, we achieved revenues of $63.3 million, up 34% on a year over year basis versus $47.4 million in fiscal Q2 2008. Software licensed revenue grew on a year over year basis by 32% while our services businesses grew 35% year over year. For the quarter, non-GAAP operating income or EBIT was $10.4 million, up 49% year over year versus EBIT of $7 million in fiscal Q2 2008. Non-GAAP earnings per share for the quarter were $0.17.

Free cash flow for the quarter was $13 million, up approximately 240% from the prior year quarter. Lou Miceli will go into more detail about our financial results and updated guidance later in the call. As I normally do, let me provide some color on how Simpana 7.0 is doing along with deal stats before speaking about the broader macroeconomic environment.

For fiscal Q2, sales of our advanced data and information management products or ADIM products which do not include backup products grew 76% year over year. ADIM products represented 30% of software revenue versus 23% in Q2 of last year. Archiving, single instancing replication, and search functionality continued to be the key drivers for the growth of these products.

Currently, approximately 50% of our entire installed base is using Simpana 7.0. We added 274 new customers in the quarter. As usual, the new customer additions did not include a large number of small orders from new OEM customers who registered throughout the internet. Our customer base now totals approximately 9,100.

In the second quarter of fiscal 2009, approximately 52% of our software revenue came from deals over $100,000 comparing with 37% in the second quarter of last year and up from 29% in the first quarter of fiscal 2009. The dollar volume of deals over $100,000 grew 84% year over year. This statistic supports our decision to focus our efforts and strategies on the large enterprise accounts and also indicates the increasing competitive advantages of our single, unified data and information management platform, the increasing leverage from our strategic partners, distributors, and borrowers, and the success of our increased market awareness campaigns.

In deals over $100,000, sales of our ADIM products represented approximately 41% of the sale in the second quarter compared to 33% of the sale in the second quarter of fiscal 2008. We believe this stat demonstrates the increasing acceptance of our Simpana platform at the enterprise level.

Going forward, we’ll continue to focus on increasing our penetration of large enterprise accounts. In addition, we have developed and implemented a series of initiatives aimed at strengthening our position in the SMB segment of the market. We are confident that these initiatives can have a substantial impact in increasing our SMB market share.

Turning now to international operations, international operations generated 39% of our total revenues in the quarter with the United States operations generating 61%. International revenue was up 61% in Q2 FY ‘09 versus the same quarter a year ago. US revenue was up 21% in Q2 2009 versus Q2 2008. We continue to expand our international distribution with strong growth in Europe, Canada, Australia, and Asia.

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