Commvault Systems, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the CommVote fourth quarter full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mike Melnyk, Director of Investor Relations. Please go ahead, sir.

Good morning, and thanks for dialing in today for our call to discuss our fourth quarter and fiscal year 2020 earnings results. 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 the risks and uncertainties such as competitive factors, difficulties and delays inherent with development, manufacturing, marketing, and sale of software products and related services and general economic conditions. for discussion of these and other risk factors and uncertainties affecting our business. Please see the risk factors contained in our annual report on Form 10-K and our most recently quarterly report on Form 10-Q and in other SEC filings and in the cautionary statement contained in our press release and on our website. The company undertakes no responsibility to update the information in this conference call under any circumstance. In addition to development and timing of any product, release, as well as features or functionality remain at our sole discretion. Our press release related to today's announcement was issued over the wire services earlier this morning and has also been furnished to the SEC as an AK filing. The press release is also available on our investor relations website. On this conference call, we refer to non-GAAP financial measures. A reconciliation between the non-GAAP and GAAP measures can be found on our website. This conference call is being recorded and a replay is available for the webcast. and archive of today's webcast will be available on our website following the call. With me on the call this morning are Sanjay Mirchandani, President and Chief Executive Officer of Commvault, and Brian Carolyn, Chief Financial Officer of Commvault. Sanjay and Brian will each share opening remarks and commentary before we open the call for Q&A. Now I'll turn the call over to Sanjay.

Sanjay? Thank you, Mike. Good morning, and thank you for joining us today to discuss our fourth quarter and fiscal year 2020 results. I would like to begin by extending our thoughts on the millions suffering from the coronavirus and the subsequent economic hardships. Across Commvault, we are focused on keeping our employees safe and healthy while providing our customers with low-cost products and services they expect. In March, we began working from home to prioritize safety. Our employees, many of whom were already remote workers, quickly adjusted with minimal disruption to our operations. I would like to thank all our Vaulters for stepping up to ensure our business continues without interruption. I would also like to acknowledge the team's creativity in helping our customers adjust too. Recognizing the pandemic introduced new data challenges for a much larger remote workforce, we created a Commvault Cares program to provide customers with additional software, support, and education at no cost until September. This includes offering metallic endpoint backup and recovery with unlimited Azure backup storage from our good friends at Microsoft to protect against data corruption, deletion, malware, and ransomware attacks. To date, hundreds of customers have accessed free trial and are benefiting from the program. As you know, the pandemic presented some challenges for us during the quarter, and the economic picture is still evolving. However, we believe the progress we made last year and our ability to help our customers now when they need us most will enable us to weather these challenges and continue leading our industry for the long term. This is reinforced by the improved performance we delivered in the two prior quarters. We expected to carry that momentum into Q4, but COVID impacted APJ and EMEA throughout the quarter, then extended to the Americas in March. Despite this, we closed multiple seven-figure deals and won many new customers, including McDonald's, Blue Cross Blue Shield Minnesota, the City of Philadelphia, The Polish Ministry of Finance and Shared Services Canada, which provides IT services for the Canadian government. We launched a targeted competitive switch campaign and kicked off a fiscal year 21 subscription renewal cycle with two of our largest customers renewing their deals. That said, our current outlook for total software and product revenue is more measured than our pre-COVID expectations. We've seen a decline in the volume of smaller portfolio transactions, likely due to SMB customers that may be disproportionately challenged. Additionally, we believe customers may defer routine capacity add-ons until economic conditions begin to stabilize. Even with the mission-critical nature of our products, we expect new customer signings to remain challenged because they require a higher-touch sales process. During the quarter, we made some prudent short-term adjustments to our expense structure to align with the current deep revenue environment, most notably a temporary reduction of salaries. Our fiscal discipline and strong financials allow us to confidently make decisions that balance the needs of our customers, shareholders, and employees while remaining focused on our return to growth. Even with the expected pressure, we believe we have the same power to emerge from this pandemic as a stronger company because of our innovative product strategy, our large and loyal customer base, and growing software subscription and recurring revenue base.