Commvault CEO Hammer says goodbye, prepares handoff
Bob Hammer is ready to pass the baton to a new CEO. He says Commvault is in good shape, but the data protection vendor still faces questions and challenges in a shifting market.
Retiring Commvault CEO Bob Hammer held up the backup vendor's latest quarterly results as vindication of his long-term strategy.
Last May, Hammer said he would step down as Commvault CEO after 20 years, as soon as the board finds a replacement. That day has come. Sources inside and outside of the company said a new CEO has been selected and will be revealed next week. During Commvault's earnings call on Tuesday, Hammer said the vendor will identify its new CEO "in the near future."
Later, he said, "This is likely my last earnings call." He thanked the entire organization for helping to build a "great company and coming through the other side of a major transformation in high style. I'm confident that Commvault has a big window of opportunity in front of it. It will be exciting to see this company evolve over the next several years."
Commvault taking on 'critical challenges'
Commvault's $184 million in revenue last quarter beat its forecast by $3 million, following four straight quarters of missing its revenue goals. Revenue grew only 2% year over year, which means it is likely still losing market share. But it did report a $13.4 million profit after losing $59 million in the same quarter last year.
Bob Hammer
Hammer called the results "early validation" of the vendor's latest strategy. But while treating the results as a victory lap, Hammer also admitted his successor will still have "lots of work" to do to bring Commvault back.
"We still face critical challenges," the Commvault CEO said. "There's still lots of work left to do, but that work is now being done within the context of improving tailwinds."
Hammer said Commvault is well-positioned to take on newcomers hawking converged scale-out secondary storage, claiming Commvault has had that technology all along.
"The results we're seeing is a Commvault design strategy, and it was implemented by the team here and had nothing to do with outside influence," Hammer said. "Just to be clear on that subject."
That was a veiled shot at critics, which have included influential Commvault investor Elliott Management. Elliott published a letter criticizing Commvault management last April. The letter said the vendor lost ground in the market because of mismanagement and called for changes in the company's executive suite and board.
One month later, 76-year-old Hammer said he would retire as Commvault CEO, but remain on the board.
We finally said, 'OK, let's just step back from this thing and see if we can fundamentally change what's wrong and get ourselves in position.'
Bob HammerCEO, Commvault
Elliott's April 2018 letter praised Commvault's products, but said it was a poorly run business, suffering from low stock price, profitability and revenue growth. The open letter cited "operational inefficiency."
Elliott also criticized Commvault for being slow to adopt data protection technologies, such as appliances, virtualization and hyper-converged backup. That was an apparent nod to the likes of Veeam Software, Actifio, Cohesity and Rubrik, all early adopters in one of those areas. Those private companies have picked up hundreds of millions of dollars in venture funding and have already cut into Commvault's market share.
But Hammer defended Commvault's technologies on Tuesday. He didn't refer to any rivals by name, but said his company innovated in some of the areas Elliott mentioned before the "new competitors" came around.
"New competitors are claiming unified data management as a brand-new concept," he said. "Yes, they have integrated converged unified data management with scale-out secondary storage, but the concept is not new. Commvault was and is the standard for unified data management."
Looking back and ahead
Hammer became Commvault CEO in 1998. Commvault became a public company in 2006 and turned into a legitimate challenger to data protection giants Veritas, EMC, IBM and Hewlett-Packard. Commvault grew steadily during its early days as a public company, but hit a wall in 2014. Growth slowed, and Commvault suffered losses as the market changed. Commvault software was considered too expensive and too complicated, as nimble newcomers came along with more targeted products.
"Our model broke," Hammer said.
After trying several fixes, the Commvault CEO instituted Advance, a long-term program to streamline Commvault's products and business processes. Commvault Advance required layoffs and reorganization on the business side, as well as a simplification of its products and pricing. Hammer said Commvault is now reaping the benefits of the changes.
"We tried to fix it a couple of ways," Hammer said. "It didn't work. So, we finally said, 'OK, let's just step back from this thing and see if we can fundamentally change what's wrong and get ourselves in position.' Just take it apart, put it back together again fundamentally. We knew it was going to be painful."
The company Hammer will hand off now has four product lines: Complete Backup and Recovery, HyperScale integrated appliances, Orchestrate disaster recovery and Activate analytics.
Will the comeback last? Commvault has had fits and starts since its 2014 slump. Hammer said the vendor was "successfully recast" in mid-2017 after several good quarters, only to fall back into a slump again.
"I think we have got a good vision for the future," Hammer said on Tuesday, as he prepares to wave goodbye.
Bob Hammer
