Feeds

Backup biz CommVault to Wall St: Cheer up, lads. We just need MORE SALES REPS

Lower-than-expected Q4 results accompany 'under-hiring' spree

Internet Security Threat Report 2014

Results are in for CommVault, whose final 2014 quarter showed a revenue rise and a slight drop in profits, missing Wall St's estimates. But the biggest surprise to analysts was its concession that it had "under-hired" in Q4.

The Simpana data protection and archiving software shipper found analysts were not sympatico when it unveiled results below Wall Street's expectations. Revenues in the fourth quarter ended 31 March 2014 were $156.8m, 13 per cent higher than a year ago, but just 2 per cent sequentially. Net income was $15.7m for the quarter, a decrease of $1.3m compared to the same period of the prior year.

Why was the fourth quarter disappointing? Chairman, president and CEO N Robert Hammer said there were “lower than forecasted results in the Americas, which negatively impacted our licence revenue growth for the quarter. The results in the Americas were surprising given our large enterprise deal funnel and good outlook for the quarter as of our prior earnings call.”

CommVault_Net_income

Net income for the full 2014 year was $64.1m on revenues of $586.3m. In the 2013 financial year the equivalent numbers were $53.2m profit on revenues of $496m.

Stifel Nicolaus MD Aaron Rakers said of the results: “CommVault saw large deal slippage at the end of F4Q14," adding that analysts at his firm estimated this as being equivalent to "up to 10 large ($1m to $5m+ average size) deals".

William Blair analyst Jason Ader pointed out “licence revenue grew by 10 per cent year-over-year, shy of the Street's 14 per cent growth expectation, with management blaming lower close rates on large enterprise deals in the Americas, with no consistent theme to explain these lower rates (though competition was ruled out).”

Booth analysts mentioned that CommVault found itself short of sales people in the fourth quarter and taking action, with Rakers mentioning a “needed sales and marketing headcount expansion” and “under-hiring in fiscal 2014 (specifically in sales and marketing.)”

Ader said there was “understaffing in the core enterprise business in the Americas (due to lower-than-expected hiring in fiscal 2014), which left the company more dependent on very large deals in the quarter.”

He writes that the company plans to significantly ramp up its salesforce hiring in the first half of fiscal 2015.

CEO Hammer commented in the earnings call (via Seeking Alpha):

Given our strong strategic position, we believe that the key determining variable in achieving our growth objectives [is the] number of effective sales teams. The Americas team has suffered from sales team understaffing throughout FY 2014.

The international operations reported better results than the Americas and CommVault has re-organised its EMEA operation, with new regional leadership and many new enterprise sales reps. APAC reorganisation is following similar lines but is a year behind EMEA, according to Rakers.

Ader contributed this thought: “We believe that outdated pricing for certain products and what management termed 'a dramatic acceleration to the cloud over the last six to nine months' also look to have contributed to the soft results and outlook.”

Then he added this:

We believe that the slowdown is not attributable to competitive pressures. However, we do believe that the secular shift from on-premise to cloud-based backup may be creating a pause in the traditional backup market.

CommVault has added cloud functionality to Simpana and has some 200 cloud service provider customers. But its outlook is likely to improve. Ader says it has developed "its cloud-focused salesforce over the last two years, and expects to triple its cloud investments in fiscal 2015". ®

Internet Security Threat Report 2014

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
IBM storage revenues sink: 'We are disappointed,' says CEO
Time to put the storage biz up for sale?
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
'Urika': Cray unveils new 1,500-core big data crunching monster
6TB of DRAM, 38TB of SSD flash and 120TB of disk storage
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
SDI wars: WTF is software defined infrastructure?
This time we play for ALL the marbles
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.