CommVault Systems, Inc. (CVLT)

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CommVault (CVLT)

F4Q08 (Qtr End 03/31/08) Earnings Call

May 13, 2008 5:00 pm ET


Michael Picariello – Director of Investor Relations

N. Robert Hammer – Chairman, President and Chief Executive Officer

Louis Miceli – Chief Financial Officer

Alan Bunte – Chief Operating Officer


Thomas Curlin – RBC Capital Markets

Brent Bracelin – Pacific Crest Securities

Aaron Schwartz – JP Morgan

Derek Bingham – Goldman Sachs

Aaron Rakers – Wachovia Capital Markets

Steven Koenig – KeyBanc Capital Markets

Tim Klasell – Thomas Weisel Partners

Phillips Winslow – Credit Suisse Securities

Michael Turits – Raymond James & Associates

Walter Pritchard – Cowen and Co.



Welcome to the CommVault fiscal fourth quarter and fiscal 2008 earnings call. (Operator Instructions) At this time for opening remarks and introductions I will turn the call over to Michael Picariello, Director of Investor Relations.

Michael Picariello

With me on the call are Bob Hammer, Chairman, President and Chief Executive Officer; Al 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 the Q&A 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 our cautionary statement contained in our press release and on our website.

The company undertakes no responsibility to update this information in the conference call under any circumstance. Our earnings press release was issued today over the wire services after the market closed and has also been furnished to the SEC as an 8K 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 web cast live. An archive of today’s web cast will be available on our website following the call.

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

Robert Hammer

Welcome everyone and thanks for joining our fiscal fourth quarter and fiscal 2008 year-end conference call. We had a strong fourth quarter and fiscal year with continued progress in all areas of our business. The demand for our 7.0 software suite remains very high and has clearly helped us accelerate the growth of our emerging products.

With Simpana we continue to outperform our competition and increase our market share. For the quarter we achieved revenue of $56.6 million up 33% on a year-over-year basis versus $42.6 million in fiscal Q4 2007. Software revenue grew on a year-over-year basis by 32% while our services businesses grew 34% year-over-year.

For the year we achieved record revenues of $198.3 million, up 31% on a year-over-year basis versus $151.1 million in fiscal 2007 exceeding the high end of our revenue guidance. Software revenue grew on a year-over-year basis by 30% while our services business grew 33% year-over-year.

For the year non-GAAP operating income (EBIT) was $32.8 million up 44% year-over-year versus EBIT of $22.7 million for fiscal 2007. Non-GAAP earnings per share for fiscal 2008 was $0.57. Lou Miceli will provide more details on the financial results along with the fiscal 2009 guidance later in the call.

I want to talk about the economic environment. The buying patterns for our solutions remains strong. At the present time we continue to see healthy demand for our products across all geographies, vertical market segments and distribution channels. We are well aware that the current economic environment has added a lot of uncertainty about future demand. While we are not [inaudible] about the current economic climate we have not seen a slow down in demand for our solutions.

We believe demand for data management solutions is driven by the need to manage the unabated growth of data, data protection and availability, compliance, e-discovery and disaster recovery. Demand for data management solutions is also being driven by the need to retain data longer and reduce the cost of both storage and energy.

In addition, the adoption of disk space data management solutions and the need for improved recovery of data are causing customers to upgrade from traditional back up to more modern data protective solutions which utilize functions such as replication, continuous data protection and single instancing.

These industry trends have had a positive impact on our Q4 and we are seeing the benefit on our pipeline funnel as well. Gartner validated these industry trends in their recently released Market Scope for Enterprise Backup/Recovery Software in 2008. CommVault was one of the two highest rated vendors in their new rating system.

The demand for our Simpana 7.0 software suite remains extremely strong and has clearly helped us accelerate the growth of our emerging products which were up 103% in Q4 FY08 from Q4 FY 07. The core backup business was up 13% sequentially and 16% year-over-year. We have seen a very high adoption rate of Simpana. Currently about 1/3 of our entire install base has either upgraded to or purchased the Simpana suite.

We believe CommVault is uniquely positioned to deliver data and information management solutions with a single unified software platform that delivers best-in-class functionality and reliability with real cost and administrative savings. Our unique solution has enabled us to grow approximately three times faster than the market and gain market share.

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