Is Veeam’s gain causing Commvault’s pain?

Commvault’s revenue keeps sliding while data protection software rival Veeam makes steady gains. Coincidence, or is Veeam taking deals that Commvault used to win?

Commvault’s revenue of $139 million was down nine percent from last year and eight percent from the previous quarter. Software revenue of $56.5 million fell 22 percent from last year and 19 percent from the previous quarter. Revenue from enterprise deals ($100,000 or more) dropped 29 percent from the previous quarter.

Commvault executives forecast revenue for the fiscal year, which ends in March 2016, to be roughly the same as last year — $608 million.

Veeam, which is a private company but discloses partial financial results, said its revenue bookings increased 22 percent last quarter over the previous year. Veeam claims its enterprise revenue (Veeam considers this deals of more than $50,000) increased 64 percent year-over-year.

Veeam said its total 2014 revenue bookings were $389 million and it has grown more than 20 percent in each of the first two quarters of 2014. That would bring its 2015 revenue close to $500 million if it keeps going at this pace.

“The headlines for the quarter are that we had a more challenging quarter than expected,” Commvault CEO Bob Hammer said on his company’s earnings call.

Commvault has actually had five consecutive challenging quarters as it rebuilds its sales organization and shifts its product strategy. Hammer said the company and the industry are in transition, but he doesn’t see Veeam as the cause of Commvault’s problems.

Hammer said Commvault, which handles virtual and physical backup and recovery, archiving and compliance and cloud data protection, goes far beyond Veeam’s technology. Veeam’s specialty is virtual data protection, but it has added replication and cloud capabilities in its move from SMB play to the mid-market and enterprise.

“As far as Veeam and the enterprise, Veeam does not have a platform,” Hammer said. “If you want to talk about enterprise, you can incrementally improve scale, but the scale we are talking about is nowhere near where Veeam’s is in terms of big enterprise scale.”

Commvault COO Al Bunte added: “It’s hard to do big enterprise scale and operational automation without a platform … And to my knowledge, the Veeam folks aren’t there yet.”

Doug Hazelman, Veeam’s VP of product strategy, sees it differently. He said Commvault has been the main competitor for Veeam as it moves into the enterprise.

“Commvault is definitely the one we’re competing with most as we go up market,” Hazelman said. “Look at the results we’ve had. We’re growing, and they’re not.”

Both companies have major upgrades coming.

Veeam is preparing to launch Veeam Availability Suite 9 with image-based VM replication to the cloud to enable disaster recovery as a service and greater storage array snapshot support.

Commvault also plans a 2015 launch of the next version of its Simpana platform, although it might not be called Simpana. Commvault executives never said the word Simpana on the earnings call Tuesday. They repeatedly referred to their “platform,” and emphasized the point products they have added in the past year in areas such as virtual data protection, cloud and end point protection. After all the changes Commvault is going through, it would not be surprising if they re-branded their platform.