Even with the sales expectation bar lowered due to the economy, CommVault still failed to clear it by a long way last quarter. Now CommVault CEO Bob Hammer is looking for data deduplication and management of storage clouds to pull his company out of its slump.
CommVault’s revenue of $56.1 million last quarter was down 1% from last year and down 7% from the disappointing previous quarter, and well below its previous forecast of $63 million to $67 million. CommVault’s net income of $200,000 for the quarter was down from $6.2 million in the same quarter last year.
Hammer blamed the poor results mainly on the economy, compounded by pricing discounts from his larger competitors Symantec and – to a lesser extent — EMC with its Avamar products.
“The numbers weren’t good,” Hammer told StorageSoup. “We got hit pretty hard clearly, but most of it was the economy. We found customers freezing budgets, reducing budgets, reducing capex. We also saw more competitive pricing pressures, but the big issue was the market locked up.”
The good news, Hammer says, is CommVault has already seen a thaw in spending budgets and strong interest in sales of Simpana 8 driven by deduplication. CommVault released Simpana 8 in late January, and its large OEM partners Dell and Hitachi Data Systems will begin selling it this quarter.
CommVault’s internal goals call for revenues to increase in double-digit percentages this quarter, but the company lacked the confidence to give any forecast. Hammer did say many customers’ budget restrictions have lifted.
“It’s too early to call this a big thaw, but it looks like the fundamentals are in place,” Hammer said. “The whole psychology is lot more positive. Budgets are there and customers are initiating projects. There’s still budget scrutiny, but it seems to be a lot easier to work with customers to close the deal.”
Hammer said CommVault shuffled its workforce to try to increase revenue by placing more people in sales and reducing other areas. The vendor will also offer “more flexible” pricing and payment models to counter what Hammer calls Symantec’s “kill CommVault in the cradle” discount programs. CommVault’s average selling price dropped to around $200,000 last quarter from $250,000 the previous quarter.
Hammer said Simpana 8 gained several hundred customers in the quarter, including more than 100 for its block-level dedupe. He says the software dedupe product had a high win rate against dedupe appliances from Data Domain, Quantum and others.
“The release was extremely successful, which sounds interesting given that we missed our number,” Hammer said.
CommVault is already looking to Simpana 9, which will likely be in beta late this year and in general release in mid-2010. The concentration will be on helping service providers managing storage in the cloud. Hammer says managed service providers are already a fast-growing segment of CommVault’s customer base.
“Storage clouds represent a natural target for Simpana,” he said. “There is no universal automated platform to manager internal and external clouds in a large global enterprise. We’ve been working on several innovative concepts to enable Simpana to be the first fully automated platform to deal with key aspects of cloud computing.”