Commvault Systems, Inc.

Good day, and thank you for standing by. Welcome to the Commvault Q1 Fiscal 22 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mike Melnick, Director of Investor Relations. Please go ahead.

Good morning, and thanks for dialing in today for our call to discuss our first quarter fiscal year 22 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 risk 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 risks and uncertainties affecting our business, please see the risk factors contained in our annual report on Form 10-K and our most recent quarterly report on Form 10-Q and in other SEC filings and in the cautionary statements 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, the 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 been furnished to the SEC as an 8K 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 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. An archive of today's webcast will be available on our website following the call. With me on the call this morning are Sanjay Merchandani, 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.

Good morning, and thank you for joining us this morning. As the pandemic continues, I hope you're all remaining healthy and well. As you saw in our earnings release this morning, we're off to a solid start to the year with our Q1 results, and they're consistent with our near-term expectations. Software revenue grew 7%, and total revenue grew 6% year-on-year. Our total ARR grew 13% year-on-year, driven by new subscription customers and the continued strength of our metallic data protection as a service offering. We continued to make progress on our recurring revenue transition, with 78% of Q1 total revenue being recurring. We saw further evidence that our intelligent data services platform and strategy are resonating with customers as both new product contribution and multi-product adoption increased quarter over quarter. And we grew responsibly, achieving a non-GAAP EBIT margin of 22.4% and posting non-GAAP EPS of 62 cents. This would not be possible without the dedication and hard work of our employees. So I would like to extend my sincerest thanks to all our vaulters around the world. Brian will delve into the financials in a few minutes, but first let's discuss the market and our portfolio. The cloud-based market transformation we anticipated is in full swing, and it couldn't have happened at a better time as more companies returned to the office, revisit the IT priorities they paused during the pandemic, and grapple with a rise in ransomware attacks. As you know, the pandemic has changed business forever. At Commvault, even before COVID, we've always had a significant percentage of employees working remotely with talent and resources around the world. Yet, as more companies are taking advantage of people, systems, and data in multiple locations, they're turning to us to help them modernize their data environment to address these new needs and more effectively manage their data costs. We do this by offering the broadest workload support across environments, applications, and clouds, with industry-leading data management and protection, security, compliance, and governance capabilities. And we provide the ultimate choice and flexibility by delivering our solutions as software, an appliance, a managed service, or SaaS, all managed through a single pane of glass. This competitive differentiation is helping us expand with existing customers and land new customers globally. For example, Harel Group, one of Israel's largest insurance providers, uses our software to protect over 1.5 petabytes of data on-premise. In moving to Microsoft Azure, including Office 365, Harel needed to ensure that cloud data could be protected and recovered as easily and reliably as their on-premise data. Metallic's backup for Office 365 and Metallic Cloud Storage service enabled Harel to protect thousands of mailboxes, minimize infrastructure costs, and reduce the risk of ransomware attacks. Speaking of ransomware, during the quarter, we also saw more demand for our data security services from existing customers to help them recover and minimize disruption from ransomware attacks. In fact, we have these conversations daily with our customers and prospects. In a recent IDC survey of over 400 Commvault customers, 60% of respondents said their decision to choose Commvault was triggered by a desire to reduce risks from ransomware and other threats. More importantly, nearly 85% of those surveyed said that they felt more confident in their ability to recover from a ransomware attack after deploying Commvault software. For instance, among our Q1 wins was one of the nation's largest banks with over $150 billion in assets and thousands of branches and ATMs. This new customer chose CompVault over a legacy incumbent primarily because of a layered approach to ransomware recovery. Our offerings of Metallic cloud services combined with Hyperscale X can address the needs of both new customers and existing customers looking for more protection. We're attracting more cloud-leaning new customers with Metallic, which provides an easy-to-adopt, highly secure backup environment with local immutable copies on Hyperscale X and cloud copies in our air-gapped Metallic cloud storage service. It's our ability to bring the power of Hyperscale X alongside Metallic to provide capabilities no one else can match. The flexibility and breadth of capabilities across our entire Intelligent Data Services platform is resonating with customers. Tower Research Capital not only chose Commvault to protect petabytes of data across Dell EMC, Isilon, and NetApp, But we beat the competition based on our ability to lower total cost of ownership and operating costs, provide a standardized data management platform, and simplify their environment. This innovation continues to garner numerous industry accolades. GigaOM recently named Commvault as a leader and an outperformer in its GigaOM radar for hybrid cloud data protection reports for both enterprise and SMB. We were a top rated vendor in all key criteria and evaluation categories across both reports. And just last week, Commvault was also named the leader in Gartner's 2021 Magic Quadrant for enterprise backup and recovery software solutions for the 10th straight time. Now, I'd like to take a moment to discuss Metallic, a rising star in our intelligent data services portfolio. I'm excited to report that Metallic continues to show very strong momentum. We're seeing increased interest in managed services and SaaS as organizations with constrained resources are migrating more workloads to the cloud. In fact, most of the workloads we're managing through Metallic are net new workloads. We have demonstrated that our enterprise-grade data protection as a service platform can scale across customers of all segments, sizes, and types of data. In Q1, Metallic total customer growth continued to impress quarter on quarter with over 300 new customers. Over 50% of those customers are net new to Commvault. And more than half of our Metallic customers are using another Commvault solution. Another pattern we've seen over time is that a quarter of them are choosing more than one Metallic offering. These are exciting trends that demonstrate our ability to land new customers and expand our footprint with existing customers. We're also seeing continued adoption among enterprise customers with greater than 100K in Metallic ARR. The number of these customers nearly doubled this past quarter. And Metallic continues to rapidly innovate. We released Metallic Government Cloud, becoming the only data protection as a service offering in the industry to currently achieve FedRAMP high-ready certification status. Given the heightened security needs of customers, this certification validates that Metallic meets the most stringent confidentiality, integrity, and availability standards recognized by the US government. In Q1, we announced Metallic Backup for Microsoft Dynamics 365, completing protection for all three Microsoft Clouds. We also delivered Azure Active Directory Backup, a critical component for company security strategy. We saw immediate customer demand and wins for all of the new services and features. And just two weeks ago, we launched Metallic, for MSPs to offer customers even more choice in delivery models for their intelligent data services. With SoftwareOne as our design partner, we expect this new agreement will help scale the reach of Metallic around the globe. We're very encouraged by our momentum and we're confident in our ability to continue winning share of the large and growing data protection as a service market. We believe that we're well positioned to continue to deliver on our industry-leading innovation roadmap and drive our go-to-market initiatives to achieve our financial targets. I'll turn it over to Brian to discuss the financials.