Commvault earnings disappoint; can SaaS save its butt?

Commvault is 0-for-2 so far under new CEO Sanjay Mirchandani.

The data protection vendor reported earnings this week, falling below expectations for the second quarter since Mirchandani replaced Bob Hammer as Commvault CEO in February. Commvault was in a transition period when Mirchandani took over and this was his first full quarter as CEO, so it’s not fair to blame him for the slump. It is clear, however, that Commvault still has a long way to go to return to revenue growth in a highly competitive and dynamic data protection market.

“We’re not pleased with our results,” Mirchandani said Tuesday on Commvault’s earnings call.

But Mirchandani tried to paint a rosy picture for Commvault’s future by pointing to a new executive team and teasing a new SaaS offering that will start to roll out in mid-August.

“We have work to do and you will hear on this call that we have taken decisive actions, and believe we are making the right steps to lay the foundation for growth,” Mirchandani said.

New additions include chief revenue officer Riccardo Di Blasio, VP of product management Ranga Rajagopalan, and VP of customer success Sandra Hamilton. Also, Commvault vet Rob Kaloustian heads the launch of the new SaaS product.

Commvault’s sales results were far from encouraging. Total revenue of $162.2 million decreased eight percent from last year and 11% from the previous quarter. The revenue fell below Commvault’s previous forecast of $168 million and $172 million for the quarter.

Software and products revenue of $63.7 million declined 15% year-over-year and 21% quarter over quarter. Services revenue also declined 3% year-over-year and 2% from the previous quarter to $98.5 million. The sales decline hit the Americas especially hard, dropping 26% year-over-year.

Also, revenue from enterprise deals (over $100,000) fell 11%, even if the average enterprise deal increased 23% to $298,000.

Commvault did make $12.7 million in net income, partially because it slashed operating expenses by around 6% from last year to $116 million and cut 6% of its workforce to 2,513 employees.

Commvault CFO Brian Carolan forecasted revenue this quarter to be around $162 million or $163 million, roughly the same as last quarter.

Mirchandani warned against expecting any quick turnarounds. He said the company’s product goals have moved from innovation to simplification, and that will bring results over time.

“I wish the results were stronger,” he said. “I think if you believe that our customers around the world are on a journey, they’re going from something to something. I almost see – almost five years. It’s a large company and all of this transitioning.”

Mirchandani wouldn’t provide many details of the SaaS product ahead of its official launch, except to say it provisions and backs up data in minutes in testing.

He said the SaaS product uses machine learning to simplify management.

“It’s all about the user experience,” Mirchandani said.

The new SaaS offering is set for private beta in mid-August.

Commvault appears to be following in the steps of rivals Cohesity and Rubrik in launching SaaS management apps. Cohesity launched Helios and Rubrik brought out Polaris in 2018 to let users view and manage data across clouds and on-premises devices.

Commvault’s last significant product launch, its scale-out HyperScale appliance, has been on the market for more than a year. Mirchandani said he was encouraged by the HyperScale success so far but provided no revenue numbers.

“HyperScale is the technology of the future,” Carolan said.

Mirchandani, a VMware veteran and former CEO of IT automation tool vendor Puppet, came to Commvault when Hammer retired after 20 years on the job. Large Commvault investor Elliott Management had been critical of Hammer and the company’s previous management, and called for sweeping changes.

Mirchandani said his first six months have been about putting together the right team and strategy to succeed.

“This is a miss, there is no excuse about it,” Mirchandani said. “And I feel pretty good that we have the right team. I feel pretty good we have the right technology. I feel pretty good we have the right strategy. Now it’s just about doing it every single day.”