Is Commvault back on track?
The backup vendor snapped a string of four quarters of year-over-year revenue declines when it reported of $155.7 million last quarter, up 2% from the previous year. More impressively, its software revenue of $71.4 million increased 24% from the previous year.
While Commvault continued to make money during its sales declines, its $13.2 million income last quarter was its highest take in a year.
Now we’ll see if Commvault can gain momentum with its its new platform launched in October. Wall Street analysts expect revenue of $156.3 million this quarter, a small uptick from last year.
Commvault spent the past year revamping its sales and marketing teams before the new data protection and management platform launch. Discussing the earnings Wednesday, Commvault CEO Bob Hammer said that transformation period is over.
Hammer said the latest software platform was a controlled release to select customers, with broader distribution expected this quarter. But he said the changes made to that release played a key role in attracting customers. Commvault reacted to claims that its software was too expensive and complicated by altering its pricing model and making it available in smaller bundles.
“As we went into this transformation, we had to segregate the product line, pricing, packaging … “ he said. “We had to make some really significant underlying changes to the platform to align to the cloud..
“We experienced significant increases in the amount of large enterprise deals and had higher than normal close rates,” he added.
Commvault’s enterprise deals of more than $100,000 in a quarter represented 54% of its software revenue, and increased 33% from the previous quarter.
Hammer said more enterprises are moving backups to the cloud, which hurts storage hardware vendors but is a positive for Commvault because it helps with the process. Commvault software use the cloud as a repository, just as it would if the backups were going to disk or tape.
“As customers migrate to the cloud, adopt new IT infrastructures and deploy newly architected applications, they are looking for a strategic partner who has technology and services that can help them make the transition,” he said.
“AWS might have hundreds of different data centers, so we can move the data in those clouds, orchestrate those infrastructures, spit up compute network storage in the cloud, tie to a given application and manage and index all that data. So now customers have a complete picture of what the heck is going on with the data no matter where it resides. And we can federate across the different AWS silos or [Microsoft] Azure silos or between Azure and AWS or Azure and OpenStack, et cetera.”
Another thing helping Commvault is the largest backup software vendors are going through their own changes. EMC is getting acquired by Dell, Veritas just spun out from Symantec, Hewlett-Packard split up and IBM has been in a storage revenue freefall.
“I’m not going to get into a specific commentary on Veritas or what’s going on with EMC or some of the other larger competitors of ours, HP or IBM,” Hammer said. “But, clearly we’ve gotten significantly out in the front of every one of those competitors from a technical standpoint, a services and support standpoint, and we’re going to create additional distance between us and these competitors. We are on a much firmer foundation right now … and every one of the competitors I just mentioned has what I call significant architectural underlying issues that will take time and money to address.”
Commvault still has to worry about Veeam Software, which has been cutting into Commvault’s business from below. Veeam, a private company, said it had a 55% increase in bookings revenue in the fourth quarter of the year. Veeam said its bookings revenue for 2015 totaled $474 million. Commvault’s revenue for calendar 2015 was $581 million.