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

HP ProLiant Gen8: Integrated lifecycle automation

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". ®

Reducing security risks from open source software

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.