Commvault Systems, Inc. · NASDAQ:CVLT
Commvault Systems — Q2 FY2019 Earnings Presentation
29 slides from Commvault Systems's earnings presentation, Oct 30, 2018
Slide 1: Commvault Advance Update
Commvault Advance Update Bob Hammer, CEO | Brian Carolan, CFO
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software pro
Slide 3: Commvault Advance: A plan for sustainable, long term growth and profitability
Commvault® Advance A plan for sustainable, long term growth and profitability Transform the Establish the Achieve Core Business: 25%+ Foundation for Predictable, Operating Margins Accelerating Growth Sustainable Growth in FY’21 3
Slide 4: Business model optimization: Driving shareholder value
Business model optimization Driving shareholder value Simplified Product & Pricing Channel Leverage Drives Shareholder Subscription Revenue Model Transition Value Aligning Cost Structure with Revenue Growth 4
Slide 5: Simplified Product & Pricing
Simplified Product & Pricing Best-in-class product strategy – Portfolio simplification SKU consolidation drives simplification and platform unification 20+ to20+ 6 to 6 1 to 1 5 to 1 5 to 1 4 to 1 4 to 1 BACKUP INFRASTRUCTURE COPY DATA CONTENT AND RECOVERY MANAGEMENT INDEXING The recognized leading
Slide 6: Channel Leverage: Sales reorganization
Channel Leverage Business model optimization – Sales reorganization Historical Current FY’20/21 Direction Key Accounts Direct Direct ENT Account Led Led Direct Executive ENT Territory Manager Channel Driven Channel Driven Commvault Inside Sales Rep Commvault Supported Supported Indirect Routes Indir
Slide 7: Aligning Cost Structure with Revenue Growth
Aligning Cost Structure with Revenue Growth Business model optimization – Update ® • Commvault Advance Phase 1 began during Q1 FY’19 Non‐GAAP EBIT • Instituted operating expense reductions Q2 FY'18 vs. Q2 FY'19 ($M) • Reduced workforce by ~200 heads (7% of total) in 1st half 2019 $25.1 • Instituted
Slide 8: Brian Carolan, CFO
> Brian Carolan, CFO
Slide 9: Subscription Revenue Model Transition
Subscription Revenue Model Transition Revenue model transition – Transition to repeatable revenue streams P&L Recognition Impact Upfront/Point in Time Ratably Over Time Repeatable Subscription Software Maintenance Contracts • Generally three year committed contracts • Generally annual contracts • In
Slide 10: Transition to repeatable subscription models: Benefits
Subscription Revenue Model Transition Transition to repeatable subscription models – Benefits customers and Commvault® CUSTOMER BENEFITS COMMVAULT BENEFITS • Simplifies the procurement process • Facilitates new customer acquisition • Lower up-front commitment • Increases the lifetime value of a cust
Slide 11: Perpetual vs. Subscription license comparison
Subscription Revenue Model Transition Transition to repeatable subscription models – Perpetual vs. Subscription license comparison - recognized revenue ($ in 000’s) • Headwind to first year Software and Support recognized revenue but greater lifetime value • Crossover to accretive value upon the fir
Slide 12: Two new financial metrics
Subscription Revenue Model Transition Two new financial metrics Introducing two new metrics to supplement our reported results Repeatable Subscription and vs. Utility Annual Non-Repeatable Revenue Contract Value (ACV) Will provide additional insight into the progress we are making in our revenue mod
Slide 13: Historical repeatable revenue stratification
Subscription Revenue Model Transition Repeatable revenue transition – Historical repeatable revenue stratification (in ‘000s) • Enhancing our Earnings Release & SEC Filings with new table disclosing reported Repeatable vs non-Repeatable Revenue • Historical amounts are disclosed in below table (see
Slide 14: Repeatable mix of software and products revenue
Subscription Revenue Model Transition Repeatable revenue transition – Repeatable mix of software and products revenue • Higher Subscription Mix Represents a Headwind to Software and Products Revenue • Q2 subscription mix higher than expected and the highest mix since the transition began • Focused o
Slide 15: Subscription and Utility Annual Contract Value (ACV)
Subscription and Utility Annual Contract Value (ACV) • How is Subscription and Utility ACV defined in our business model? • Annualized equivalent of the total contract value of all subscription and utility transactions, inclusive of revenue recognized as maintenance and support, measured at the end
Slide 16: Historical annual contract value
Subscription Revenue Model Transition Historical annual contract value – Subscription and Utility ACV Annual Contract Value ~90% YoY $80 Growth $ in Millions ~70% YoY Growth $60 $40 $20 $‐ 16
Slide 17: FY'19 – FY'21 Revenue & earnings targets
FY’19 – FY’21 Revenue & earnings targets
Slide 18: FY'19 Quarterly revenue and earnings targets
FY’19 – Quarterly Multi-year business model transformation – Revenue and earnings targets - FY’19 Quarterly Total Revenue ‐ FY'19 Overview of Key Initiatives by Quarter ~$189M • Worked with leading consulting firm to define and implement changes to the sales force, go to market channel resource ~$18
Slide 19: FY'19 – FY'21 Targets: Multi-year business model transformation
FY’19 – FY’21 Targets Business model optimization – Multi-year business model transformation FY’19: Assessment FY’20: Efficiency and FY’21: Growth and Planning Channel Execution Acceleration Revenue Growth Target Revenue Growth Target Revenue Growth Target Low single digits At Least 9% At Least 9% T
Slide 20: Revenue and earnings targets FY'18 to FY'21
FY’19 – FY’21 Targets Multi-year business model transformation – Revenue and earnings targets - FY’18 to FY’21 Simplification + Efficiency + Investment = Robust Profit Growth Total Revenue FY'18 ‐ FY'21 TGT Non‐GAAP EBIT FY'18 ‐ FY'21 TGT Annual Annual $850M+ $210M+ ~$780M ~$715M $699M ~$160M ~25%+
Slide 21: Target revenue stratification: Repeatable vs. Non-repeatable
Subscription Revenue Model Transition Revenue model transition – Target revenue stratification Repeatable vs. Non-repeatable revenue Repeatable Non‐Repeatable FY’19 % of total revenue $850M+ Transition Year • Completed product and license simplification ~$700M • Transformed distribution model ~80% ~
Slide 22: Target Subscription and Utility ACV
Subscription Revenue Model Transition Target Subscription and Utility ACV Transition to Subscription Models Subscription and Utility ACV ~$240M • Our goal is to drive an increasing proportion of subscription and utility licenses with the goal of approximately $240M of ACV by the end of FY2021 ~$76M
Slide 23: Operating expense targets
Business model optimization – Operating expense targets • Targeted actions to be completed by end of FY’19 Sales & Marketing R&D G&A Opex as a % of total revenue • Cost savings offset by increased core 74% product reinvestment ~68% ~63% ~60% • Headcount actions: • FY’19 YTD reduction of ~200 (or 7%)
Slide 24: Share Repurchases
> Share Repurchases
Slide 25: Repatriation of cash
Share Repurchases Repatriation of cash • Will continue to repatriate excess Total Cash and Investments foreign cash to the US US Intl in millions $484M • Repatriation of cash requires $461M compliance with foreign regulations $130 $197 • Need to maintain liquidity in the 35+ countries we operate $35
Slide 26: Share Repurchase Authorization
Share Repurchases Share Repurchase Authorization US Cash and Short Term Investments • Through October 29, 2018, we have in millions repurchased approximately $47 million of $354M our common stock in fiscal 2019. Available for repurchases through $200 March 2020 ~60% of total available cash • On Octo
Slide 27: Thank you.
Thank you. COMMVAULT.COM | 888.746.3849 | GET-INFO@COMMVAULT.COM © 2018 COMMVAULT SYSTEMS, INC. ALL RIGHTS RESERVED.
Slide 28: Appendix
> Appendix
Slide 29: Historical repeatable revenue stratification
Repeatable revenue transition – Historical repeatable revenue stratification (in ‘000s) Full Year YTD Q1'18 Q2'18 Q3'18 Q4'18 FY'18 Q1'19 Q2'19 FY'19 Repeatable Revenue: Subscription and Utility Software* $ 20,308 $ 14,396 $ 19,021 $ 33,130 $ 86,855 $ 29,070 $ 34,370 $ 63,440 Recurring Support and S