Commvault Systems, Inc.

Good day, and welcome to Commvault Q3, fiscal year 2022, 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 this session, you will need to press star then 1 on your touchtone telephone. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call is being recorded. I would like to turn the call over to Michael Melnick, Investor Relations. You may begin.

Good morning, and welcome to our earnings conference call. I'm Michael Melnick, and I'm joined by Sanjay Mirchandani, Commvault's CEO, and Brian Carolyn, Commvault's CFO. Statements made on today's call will include forward-looking statements about Commvault, future expectations, plans, and prospects. All such forward-looking statements are subject to risks, uncertainties, and assumptions. Please refer to the cautionary language in today's earnings release and Commvault's most recent periodic reports filed with the SEC for discussion of the risks and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward-looking statements. Commvault does not assume any obligation to update these statements. During this call, Commvault's financial results are presented on a non-GAAP basis. A reconciliation between the non-GAAP and GAAP measures can be found on our website. Thank you again for joining us. I'll now turn it over to Sanjay for his remarks. Sanjay?

Thanks, Mike. Good morning, and thank you for joining us to discuss our fiscal third quarter results. Our team executed well in this breakout quarter, and the headlines speak for themselves. Software and products revenue meaningfully outpaced the market growth rate, increasing 11% year over year to a record $99 million. We exceeded $200 million in quarterly total revenue for the first time in company history. And non-GAAP EBIT was a record $43 million. While proud of these results, I'm even more excited about the quality of the metrics that underpin our financials and our accelerated journey to a cloud-first recurring revenue model. 81% of total revenue was recurring in nature compared to 74% a year ago. Total ARR grew 11% year over year to $561 million. Subscription and SaaS ARR grew 45% year over year to 309 million and now represents 55% of total ARR. We had the best quarter for new customer additions in years, including several Fortune 500 wins. We've moved nearly 2.5 exabytes of customer data to the cloud, representing approximately a five-time growth in the past three years. And Metallic continued to set new financial, and operating milestones. We could not achieve these milestones without the hard work and dedication of our employees worldwide. We also remain optimistic about Q4 and beyond for several reasons. First, we're winning and taking share. Our core software is performing well, with software and products revenue growing 13% when adjusted for pass-through appliance revenue. And in aligning with customers' consumption patterns, Subscriptions represented a record 71% of software and products revenue. We're seeing broader product adoption with new and existing customers across every single product category and are setting all-time highs with Hyperscale X. This is largely because we support the broadest workloads and provide the security, scalability, and simplicity customers need to advance their cloud transformations. In most cases, we're displacing incumbents, often multiple legacy and upstart vendors, to provide customers a single, future-proof data management solution. I'll share a few examples shortly. The second reason for our optimism is that Metallic, our hyper-growth data management as a service offering, continues to gain momentum. As more applications are born in or migrate to the cloud, it's clear that SaaS is the future of the industry, and for that matter, the future of Commvault. Customers are demanding scalable, cost-efficient, enterprise-grade SaaS-based solutions And we couldn't be more pleased with the traction because the numbers are staggering. We added over 400 new Metallic logos, 60% of which were net new to Commvault. Total customers increased approximately 40% quarter over quarter, nearly 1,500. And Metallic landed its first ever seven-figure ACB deal. This is a major milestone for Metallic and for Commvault as deals like this are driving ARR growth. Which is why we remain bullish about the trajectory of our Metallic business. We have a clear first mover advantage, and we will continue to invest to further Metallic's growth and solidify our differentiated leadership position. This growth is compounded as customers increasingly embrace both Commvault software and Metallic SaaS, which is what we call the power of Ant. Over 40% of Q3 deals involved more than one product. Over 50% of Metallic customers are using another Commvault product, And approximately 30% of Metallic customers are using multiple Metallic offerings. What better way to demonstrate this than with a global materials company that had an inefficient multi-vendor environment? This Fortune 500 company wanted a single layer of data protection, flexible reporting, and swift recoverability across its myriad of workloads, which is why they chose HyperscaleX and Commvault Complete with ransomware protection and numerous Metallic offerings. We're the only company to provide this breadth of solutions, ease of use, and the future-proof architecture to meet their needs today and tomorrow. This is our competitive advantage. Our third reason for optimism is that we're also leveraging our partners and the MSP community to drive new growth opportunities. Our collaborative partner engagement model is helping us win more business globally. For example, working with one of the world's largest systems integrators, we closed a seven-figure transaction with a leading global auto manufacturer. They needed a scalable backup solution for their on-premise data centers with a broad list of workloads, certified object storage system for compliance, and ransomware resiliency. After evaluating numerous vendors, they switched from their legacy solution to HyperscaleX with Commvault Complete data protection. Once again, we were the only company that could meet all these requirements with centralized workload management. Another reason for our optimism is our ability to help customers with their most strategic and pressing business needs. For instance, the relentless rise of ransomware and other security threats are no longer just CIO or CISO concerns. They're CEO and board level priorities. You see, these threats have bridged the traditionally siloed worlds of data protection and security, adding even more complexity, cost, and risk. Rather than a multi-vendor patchwork of point solutions, Security and IT professionals alike are increasingly looking for a unified architecture and approach to help protect, prevent, and recover from these and tomorrow's threat vectors. We do this today. In Q3, our partners presented us with an opportunity with a Fortune 500 telecom company resulting in a seven-figure deal. Commvault was the only vendor that could meet the company's ransomware, multi-cloud, automation, and integration needs. the legacy and upstart competitors couldn't even meet the initial round of requirements. Folks, these threats are not going away, which is why we also continue to innovate our leading-edge ransomware offerings. In fact, we entered into an agreement to acquire an overseas technology company to further our innovation in this space. We believe this technology and talent will broaden Metallic's ransomware detection and prevention capabilities and help customers further reduce their ransomware risk. Looking ahead, I believe we're uniquely positioned in a large and growing market. Our teams are executing well, and the strength of our core software offerings is allowing us to invest and innovate for the future. Commvault continues to play a critical role in customers' IT transformation projects, which gives us confidence in the long-term opportunity for our business. Now, I'll turn it over to Brian for a closer look at the financials.