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Solid F3Q20 Results for Commvault

Written on: Dec 16, 2019 10:30:00 AM

Written by: Alex Raben



Recent earning results show Commvault are delivering strong results.

Commvault reports better than expected F3Q20 results driven by strong large deal execution across most major regions. Please read more in this brief article.


Commvault reported better than expected revenue by $3.6M as large deal activity in the Americas (# of deals over $100K up 26% q/q) and EMEA (up 36% q/q) performed well across both Enterprise and Commercial. This is the second quarter now of improved top-line performance, in large part due to the complete re-build of sales leadership in all major regions, especially in Enterprise/Global Accounts in Americas. ACV grew to $140M from $121M last quarter and $90M a year ago with average deal size of $279K vs. $328K last quarter and $268K a year ago. Subscription revenue is now at 40% of software revenue, up from 10% in FY16 as the Company continues to drive toward this selling motion along with new SaaS products like Metallic.

Key focus point was the upcoming first major renewal cycle for subscription deals sold in FY18. With a handful of new products like Hedvig, Hyperscale, and Metallic, there should be an opportunity for the sales org. to deliver solid expansion rates as these renewals begin to close in FY21 (~$80M in Sub./Util. software renewal opportunity in FY21).

Adjusting estimates

We are adjusting our revenue estimates in FY20 to $685M (from $681M) and our above consensus FY21 estimate to $711M (from $720M) primarily from the services line and maintained license estimate from strong software performance and recent sales hires. We are also raising EPS in FY20 to $1.62 (from $1.55) but lowering FY21 to $1.78 (from $1.84) from our lowered services estimate.

What the bulls liked

Bulls will argue that sales capacity still has upside as new hiring is at/near record levels in Americas and should be boosted by this renewal cycle.

What the bears liked

Bears will argue that the model is simply comping depressed growth rates from FY19 and that the sales org. may not have the right profile of reps to execute against expansion opportunities. The Company remains noncommittal on signing off on 10%+ growth rates, signaling some internal ceiling on meaningful re-acceleration in the business.

Source: Pacific Crest Securities. The full report can be found here.

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