cvlt-20221231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: December 31, 2022

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-33026

Commvault Systems, Inc.

(Exact name of registrant as specified in its charter)


Delaware						22-3447504
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1 Commvault Way

Tinton Falls, New Jersey 07724

(Address of principal executive offices, including zip code)

(732) 870-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CVLT	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of January 27, 2023, there were 44,553,305 shares of the registrant’s common stock, $0.01 par value, outstanding.

COMMVAULT SYSTEMS, INC.

FORM 10-Q

INDEX


		Page
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets as of December 3 1 , 2022 and March 31, 2022	1
	Unaudited Consolidated Statements of Operations for the three and nine months ended December 31 , 2022 and 2021	2
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended December 3 1 , 2022 and 2021	3
	Unaudited Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 3 1 , 2022 and 2021	4
	Unaudited Consolidated Statements of Cash Flows for the nine months ended December 3 1 , 2022 and 2021	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	27

Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

SIGNATURES		30

Table of Contents

Commvault Systems, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)


	December 31, 2022		March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	273,469	$	267,507


Trade accounts receivable, net	215,464		194,238
Other current assets	17,747		22,336
Total current assets	506,680		484,081

Property and equipment, net	100,901		106,513
Operating lease assets	11,211		14,921
Deferred commissions cost	57,584		52,974
Intangible asset, net	2,604		3,542
Goodwill	127,780		127,780
Other assets	23,182		26,269
Total assets	$	829,942	$	816,080
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	459	$	432
Accrued liabilities	104,078		121,837
Current portion of operating lease liabilities	4,031		4,778
Deferred revenue	282,614		267,017
Total current liabilities	391,182		394,064
Deferred revenue, less current portion	166,084		150,180
Deferred tax liabilities, net	728		808
Long-term operating lease liabilities	8,150		11,270
Other liabilities	3,782		3,929
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.01 par value: 50,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value: 250,000 shares authorized, 44,762 shares and 44,511 shares issued and outstanding at December 31, 2022 and March 31, 2022, respectively	446		443
Additional paid-in capital	1,242,697		1,165,948
Accumulated deficit	(967,504)		(898,699)
Accumulated other comprehensive loss	(15,623)		(11,863)
Total stockholders’ equity	260,016		255,829
Total liabilities and stockholders’ equity	$	829,942	$	816,080

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenues:
Software and products	$	89,589	$	98,575	$	264,850	$	255,998
Services	105,485		103,806		316,262		307,644
Total revenues	195,074		202,381		581,112		563,642
Cost of revenues:
Software and products	3,122		4,271		10,308		9,471
Services	31,416		25,692		90,289		72,341
Total cost of revenues	34,538		29,963		100,597		81,812
Gross margin	160,536		172,418		480,515		481,830
Operating expenses:
Sales and marketing	87,343		89,217		253,561		248,506
Research and development	32,505		39,257		109,671		113,118
General and administrative	23,983		29,132		76,512		80,919
Restructuring	9,228		—		11,360		2,082

Depreciation and amortization	2,459		2,451		7,631		7,084
Total operating expenses	155,518		160,057		458,735		451,709
Income from operations	5,018		12,361		21,780		30,121
Interest income	364		120		916		543
Interest expense	(105)		(19)		(315)		(19)
Other income (expense), net	123		564		(112)		564
Income before income taxes	5,400		13,026		22,269		31,209
Income tax expense	5,710		3,018		14,550		5,573
Net income (loss)	$	(310)	$	10,008	$	7,719	$	25,636
Net income (loss) per common share:
Basic	$	(0.01)	$	0.22	$	0.17	$	0.56
Diluted	$	(0.01)	$	0.21	$	0.17	$	0.54
Weighted average common shares outstanding:
Basic	44,712		45,242		44,738		45,720
Diluted	44,712		46,719		45,810		47,552

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Net income (loss)	$	(310)	$	10,008	$	7,719	$	25,636
Other comprehensive income (loss):
Foreign currency translation adjustment	(171)		36		(3,760)		(1,277)
Comprehensive income (loss)	$	(481)	$	10,044	$	3,959	$	24,359

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of September 30, 2022	44,597	$	444	$	1,220,667	$	(940,396)	$	(15,452)	$	265,263
Stock-based compensation				24,645						24,645
Share issuances related to stock-based compensation	672	7		1,926						1,933
Repurchase of common stock	(507)	(5)		(4,541)		(26,798)				(31,344)
Net loss						(310)				(310)
Other comprehensive loss								(171)		(171)
Balance as of December 31, 2022	44,762	$	446	$	1,242,697	$	(967,504)	$	(15,623)	$	260,016



	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of March 31, 2022	44,511	$	443	$	1,165,948	$	(898,699)	$	(11,863)	$	255,829
Stock-based compensation				81,067						81,067
Share issuances related to stock-based compensation	1,771	18		9,274						9,292
Repurchase of common stock	(1,520)	(15)		(13,592)		(76,524)				(90,131)
Net income						7,719				7,719
Other comprehensive loss								(3,760)		(3,760)
Balance as of December 31, 2022	44,762	$	446	$	1,242,697	$	(967,504)	$	(15,623)	$	260,016

Table of Contents

Commvault Systems, Inc.

Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of September 30, 2021	45,374	$	452	$	1,119,738	$	(808,749)	$	(11,663)	$	299,778
Stock-based compensation				28,533						28,533

Share issuances related to stock-based compensation	606	6		421						427
Repurchase of common stock	(1,298)	(13)		(11,793)		(73,516)				(85,322)
Net income						10,008				10,008
Other comprehensive income								36		36
Balance as of December 31, 2021	44,682	$	445	$	1,136,899	$	(872,257)	$	(11,627)	$	253,460



	Common Stock			Additional Paid – In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance as of March 31, 2021	46,482	$	463	$	1,069,695	$	(665,774)	$	(10,350)	$	394,034
Stock-based compensation				76,793						76,793

Share issuances related to stock-based compensation	1,906	19		23,669						23,688
Repurchase of common stock	(3,706)	(37)		(33,258)		(232,119)				(265,414)
Net income						25,636				25,636
Other comprehensive loss								(1,277)		(1,277)
Balance as of December 31, 2021	44,682	$	445	$	1,136,899	$	(872,257)	$	(11,627)	$	253,460

See accompanying unaudited notes to consolidated financial statements

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Commvault Systems, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended December 31,
	2022		2021
Cash flows from operating activities
Net income	$	7,719	$	25,636
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	8,656		8,027
Noncash stock-based compensation	81,067		76,793
Noncash change in fair value of equity securities	112		436


Amortization of deferred commissions cost	16,533		13,344


Changes in operating assets and liabilities:
Trade accounts receivable	(17,779)		(25,546)
Operating lease assets and liabilities, net	(61)		(809)
Other current assets and Other assets	2,982		(2,172)
Deferred commissions cost	(22,663)		(21,852)
Accounts payable	49		(120)
Accrued liabilities	(17,103)		(3,293)
Deferred revenue	41,807		19,564
Other liabilities	1,136		56
Net cash provided by operating activities	102,455		90,064
Cash flows from investing activities


Purchase of property and equipment	(2,186)		(3,328)
Purchase of equity securities	(1,961)		(3,527)
Other	—		500
Net cash used in investing activities	(4,147)		(6,355)
Cash flows from financing activities
Repurchase of common stock	(90,131)		(265,414)
Proceeds from stock-based compensation plans	9,292		23,688
Payment of debt issuance costs	(63)		(609)

Net cash used in financing activities	(80,902)		(242,335)
Effects of exchange rate — changes in cash	(11,444)		(4,920)
Net increase (decrease) in cash and cash equivalents	5,962		(163,546)
Cash and cash equivalents at beginning of period	267,507		397,237
Cash and cash equivalents at end of period	$	273,469	$	233,691

See accompanying unaudited notes to consolidated financial statements

Table of Contents

SEC Form 10-Q filed by Commvault Systems Inc.