Commvault Systems, Inc.

Good day, ladies and gentlemen, and welcome to the Commvault Q1 Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions for how to participate will follow at that time. During the conference, if anyone should require assistance, please press star, then the number zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Jay Whalen, Chief Accounting Officer. Sir, you may begin.

Good morning. Thanks for dialing in today for our fiscal first quarter earnings call. With me on the call are Sanjay Mirchandani, President and Chief Executive Officer, and Brian Carolyn, Chief Financial Officer. Before we begin, I'd like to remind everyone that the statements made during this call, including in the question and answer session at the end of the call, may include forward-looking statements, including statements regarding financial projections and future performance. All the statements that relate to our beliefs, Plans, expectations, or intentions regarding the future are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on our current expectations. Actual results may differ materially due to a number of risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing, and sale of software products and related services, and general economic conditions. For discussion of these and other risks and uncertainties affecting our business, Thank you for joining us. On this conference call, we will provide non-GAAP financial results. The reconciliation between the non-GAAP and GAAP measures can be found on Table 4, accompanying the press release, and posted on our website. This conference call is being recorded, and replay is available for webcast. An archive of today's webcast will be available on our website following the call. I will now turn the call over to Sanjay.

Good morning, and thank you for joining our fiscal first quarter earnings call. In my first six months as CEO and President, I have spent a lot of time with our customers, partners, product teams, and our employees. And I continue to believe we have what we need to drive innovation and customer value for years to come. That said, we're not pleased with our Q1 results. Rather than making excuses, we're going to talk about our progress to date and why we believe our future is bright. As we expressed on our last call, we have work to do. And you will hear on this call that we have taken decisive actions and believe we're making the right steps to lay the foundation for growth. The foundation starts with having the right strategy and the right people to execute. In very quick order, we identified and onboarded the right people to build on Commvault's strong foundation, including Ricardo de Blasio, our new Chief Revenue Officer. He brings his extensive knowledge of the industry and strong reputation for execution to reinvigorate our field and channel go-to-market initiatives. He's already making an impact. Sandra Hamilton's customer success expertise is critical to our progression as a company. She's focused on evolving our customer engagement model. Rob Galustian, a Commvault veteran, is driving our new business incubation team to test and launch an innovative new product next quarter. I'll tell you more in a few minutes. We're really excited about this. And Ranga Rajagopalan, A newly hired VP of Products brings the deep domain expertise and product management experience needed to advance our already robust innovation roadmap. During our last call, I said I would share more details on the strategy to expedite our path to growth. It is built around three priorities, simplification, innovation, and execution. Let's take a few minutes to discuss our progress with each of these. Simplification is all about world-class operational efficiency. Our operations team is focused on improving our tools and analytical capabilities, sales and forecasting processes, partner enablement portal, and our internal employee experience. Combined with Sandy Hamilton's focus on customer success, we're building what we believe is a world-class engagement model for Commvault. We are extremely pleased with the progress to date. Simplifying how we do business with our customers and partners will enable us to unlock the full potential of our solutions and increase the value of our customer relationships. This brings us to driving innovation, our second priority. Our technology is trusted and is mission critical to our customers, and we are encouraged by the workloads and use cases per scene. Simply said, for our customers, multi-cloud is real. Last quarter, we said that our customers are managing more than 500 petabytes in the cloud with Combo. This has now grown to more than 600 petabytes and has doubled in the past year. This matters for three reasons. One, from the viewpoint of a CIO, customers' IT strategies always need what I like to call a from-to strategy. That is, most companies need to determine the best way to go from something to something. Existing technology to new technology. When I speak to our customers, this is a key differentiator, and they rely on Commvault to be the trusted partner to help them on this journey. Number two, our customers and partners are also leveraging us in exciting new ways to support their cloud-native applications, protect against threats like ransomware, and to comply with their regulatory and e-discovery requirements. Which brings us to our third reason. As companies modernize infrastructure and applications, they must also pivot their workforce and skills accordingly. Compile software helps companies more efficiently manage complex and varied tasks so that employees can be more productive. As customers pursue multi-cloud strategies, platform-as-a-service or PaaS applications have become more strategic, as cloud-native applications rely on PaaS to deliver modern experiences. We recently delivered new enhancements to our cloud services across Microsoft Azure, Amazon AWS, and the Google Cloud Platform to complement their PaaS offerings and ensure that data is protected in a seamless way. We're encouraged by our hyperscale appliance and software growth year over year, as well as by the customer feedback, that this provides flexibility and scalability in how they manage their on-prem, hybrid and multi-cloud environments. And finally, we're excited to announce a new SaaS offering that we will make available to beta customers in mid-August. Thank you very much. Thank you. No other vendor in our space offers such a robust set of capabilities delivered in a way that is so simple to use. Simplifying our operational efficiency and advancing our innovation are crucial. Additionally, success hinges on our ability to flawlessly execute. Today we're going to talk about execution in terms of geographies and partnerships. Our goal is to be predictable in everything we do. We work in Q1. Brian will get into more specifics in a few moments, but let me provide you with a brief overview of what we're seeing by geography. In North America, the economy is strong, and we have a robust funnel. Deal sizes are increasing, and the volume of large deals in the pipeline is encouraging. However, we've had challenges with deal closure. Given this, we've acted quickly to put the right leaders in place and are actively increasing our quota-carrying salespeople. Ricardo, working closely with America's team, is squarely focused on this. Europe, our second largest market, is an area for improvement. We saw large cross-border deals slow, which we believe is macro-related. We're also seeing a steady stream of large six- and seven-figure opportunities, which are more complex with larger closing cycles. We're adjusting accordingly, and we're encouraged by the prospects. We're also excited about the opportunity in APAC. We're seeing strong trends in Australia, our largest market, and India continues to show very impressive growth. We believe there are significant growth opportunities in this geography. Now let's talk more about partners. We continue to make great strides with our partner ecosystem. In fact, a recent worldwide partner survey confirmed that Commvault is very highly regarded by our partner community. This is further reinforced by HPE recognizing us as their Technology Partner of the Year for storage solutions. Additionally, just two weeks ago, we launched the simplest, Thank you very much. and continually enhancing our customer experience, CommVault will be the vendor of choice for our customers and partners both today and in the future. We have taken decisive action and have made significant progress to our operational efficiency. Our improved ability to execute and our innovation roadmap has never been richer. Again, while we're not pleased with our Q1 results, we remain committed and optimistic about our return to predictable growth.