Commvault Systems (CVLT) 2 May 232023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Commvault Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded.

to Melnyk. conference like speaker to now Mike today, would hand over the your I ahead. go Please

Thank you, Investor the posted morning, and with I'm your joined Gerald. key Good for Sanjay Investor Gary Mike conference our by operating An reference. Melnyk, Relations call. Merrill, earnings financial Commvault's website Head earnings Commvault's and to of Mirchandani, Relations, CFO. I'm and and CEO; welcome presentation to is metrics

expectations, the periodic the forward-looking made assume uncertainties be of for to prospects. statements. plans Commvault's today's risks to future in company's will different reports from in about Statements and are and discussion risks, earnings recent those cause to forward-looking obligation language today's a not refer and actual SEC does with include such statements. to statements statements on Please Commvault contemplated results forward-looking and the All cautionary filed most release these Commvault's the call subject update these any could uncertainties that assumptions.

this are reconciliation financial on for a us. website. measures GAAP Thank on results be our can joining presented Commvault's non-GAAP and A you between basis. again non-GAAP During call, found

it Sanjay? his Sanjay to turn for I'll Now over remarks.

results ending momentum. you, We strong fiscal delivered Thank year with Mike. renewed the QX

Let ARR me share increased some highlights. Total XX% year-over-year.

return EBIT margins SaaS SaaS SaaS had growing offering profitably, $XXX fastest million XX% of and continuing all customer exceeded of adding Our to we this We total additions, placing over XXX history. strong our customers SaaS old among cash subscription and ARR, quarter another in new shareholders. of delivering ARR, to while the XX% and which did represents Metallic, in subscription year grew XX% three year-over-year. applications it ARR,

first of today protection detail marks data the more our company cloud leading shortly, phase share will evolution the in to Gary industry. become strategic next the but

Our twofold. mission is

market. to on-premise share market, the rapidly data in while to SaaS will gain industry-leading growing in protection we First, taking simultaneously continue share deliver the mature

intently lasting expansion remain on result in responsible growth and operating we margin time. Second, over a should which continued focused way, our accelerating in

Let's we on one, manageability, customers IT our cost. discuss position. leadership focused biggest solve laser challenges, do today's this, priority helping strengthening security number To and are

also data the the is As our cloud, of distributed mission and must systems and modernize that move and clouds, regions, services manage and fragmented to critical they are datacenters. applications new tandem, protect becoming rapidly across customers tomorrow. applications, SaaS In

In fact, XX% spending that reported IDC recently at enterprise SaaS applications growing for is pace.

grow If with will onerous will data manage. these managed growth, an IT to priority. costly on-premise continue become and and to applications improperly, fast remain SaaS Even this

and of power make for were number our one our and cloud. all claims about report don't protection, edge Unlike capabilities on-prem one that You industry-leading They exclusive. software SaaS. see dynamic This choices SaaS our why deliver technology is customers protection misleading don't competitors, leadership, of the to. is we This are three not We rated we capabilities hybrid cloud. are Gartner's provides platform. center, and with critical of data we mutually and best-in-class data components across complementary through the data have

and and to approach compliance and built data we've and into a Through monitoring our workloads capabilities enhance locations. environments manageability intelligence, more protection reduce This proactive platform. all costs, across automation, simplified our deeply customers gives security

Now protection let's The are discuss security. blurring. data up of security and world

It's customers and for mitigate critical to only data we and protect their holistic environments, are the fragmented of that After are decisions to IT consequences. costly exploit have the lasting environment CISOs, cyber across CIOs, wrong workloads. can monitor more their and no why protections. with Commvault one a to risks, cyber platform single company with entire decision and result Boards a vulnerability executive threats the As is proactively security teams built-in threats making are assess all immune turning and

data where security protection Affairs vendor quarter our including detection. cyber Metallic chose early most, evolve agencies, matters during their advanced is as first Commvault of the also We with Department and only And the example, to to Veteran help Army customers Fort in Sam For protection. US the was federal data FedRAMP deception compromised. for achieved the space before high SaaS status, protect data it the ransomware offering

which risks plan threats. dormant integrations like Sentinel, capabilities to with customers several and companies brings leading IT we new challenge. more QX, solve defend for In next the introduce a the Metallic service fundamental risks With But organizations. is includes solution. as IT CyberArk and this industry increasing to to This only from others, touch Microsoft additional us of comes costs and that's Automation critical. low problems efficiently. their complexity like models constrained To part exfiltration address

years AI future. and it also their several imperative us better a embrace in costs to our while help our We is five their and and enhancing customers of closest ownership ago helps manage competitor than the cost deliver times This to experience. simplifying total enable

engineer into to offerings. continue will we it So our

continuous customers This turn needs. for data Commvault is the protection to why innovation

instance, of solution this, For areas. Where motions on protection Fortune one incumbent worldwide, platform, increased around and Which strategic thousands we customers retailer. lasting renew priority managed the single To at our the footprint responsible data towards brings and our growth high detail. could not, of on a land, of accelerating to will while in modern paramount our proven in the discuss data is with legacy achieve also vendors offer reallocating us growth. displaced glass. expand investments discrete decision. our recently we're stores Gary a and second more and Commvault pane other their XXX the protection what serving millions focus

it remove customer engage and to across We even easier for also cost-efficient friction customers the to more journey hard be working to and successful. been have make

and focused we including of on relentlessly resources Lastly, cost facilities. are our operations, people, technology, own

elegantly We in bodes fiscal protection macro for XXXX. our unsettled term, responsible us this a the that solves investing accelerating that environment hard delivering the near strategy growth platform While on problems. year enables to believe remains and well growth our we in customers' focus in data believe

turn been evolution We've off. he in Before out want reporting to is point multi-year paying I call the financial change Gary, will over a key discuss. to I a that which

Now with subscription aperture offerings, into give success Metallic this of progress. insight the on business time SaaS you the part more and our and our software open to our of it's

With turn it discuss to that, Gary? over I'll Gary to the numbers.

Sanjay. for and us. joining Thanks, morning, thank Good you

software As you presentation new revenue is our of align approaching we release model reporting saw press in now with as in led Table our are of financial and P&L license SaaS cost by which offerings, our business provided earnings supplemental XX% for transition to P&L strategy. morning, X revenue our revenue. contained This our we captions go-to-market and and total this term

these the them The revenue enhanced as arrangements community line from single will our to allow subscription will of understanding and results. a have to item investment be combining referred in

As the a included of reminder, historically over transaction. offerings ratably license recognized services support the over customer term professional in time, been other time revenue, generally services. and like which recognized software time with revenue is is as revenue SaaS recognized at has along

revenue revenue tables supplemental business basis caption. this Table The to earnings back cost X of a the in using look financial morning's provide included new and on press trends, on two-year quarterly release

that can are we earnings be found Investor quarterly Relations new Lastly, website. introducing presentation on our a

our financial results. discuss let's Now,

includes X% QX $XX from our million, software currency we beating pleased year-over-year the basis. Total a to Revenue This was which revenue in all with large million. constant software XX% was performance, We as $XXX,XXX. than our on deals metrics. quarter size define compared The greater large deals of guided transactions revenue represented are of of up software revenue a year for the $XXX,XXX in ago. with software quarter deal XX% $XXX average

new XX% Customer compared the and year perpetual million XX ago. increased our quarterly subscription XX% term-based was support current certain line of exchange driven updates, revenue million is and phone presentation. foreign and of licenses. million compared total from our revenue a decline items the QX our new software customers slides our to to to XX contained to software revenue a a structure, customer X% reporting by represented The support our to conversion new year revenue, on earnings which offerings. to and SaaS, was A customer in $XX includes subscription year-over-year strategic Under and $XX includes support web-based for QX ago. term P&L support perpetual portion $XX headwinds reporting of reconciliation from software year-over-year in licenses

QX SaaS XX% million. QX Subscription the million, increase Now $XXX from XX% I'll an QX, in ARR In XX% ARR, was up prior to of based of subscription XX% in year-over-year licenses year. year-over-year and Total in ARR, including represents total ARR. $XXX contracts grew ARR discuss XX% of constant currency. total term and

These million which impressive million. of company our milestone We nearing subscription future doubled the fiscal year metrics from opportunity. are XXXX. includes a with confidence key This provide quickly ARR growth SaaS $XXX in ARR subscription approaching $XXX for

subscription our perspective, during fiscal working licenses and XXX% numbers land as of strategy XXX we From software retention SaaS. We expand added and new term-based is customers customer dollar drove net for a for strong XXX% QX. over

Approximately SaaS SaaS of Metallic customers Metallic used XX% Our of driver expansion. solution are XX% of customer multiple software primary and have offerings Metallic Commvault a offerings. customers

also While MXXX adoption other and our and backup and of the seeing most offerings Kubernetes offerings our use cases, like recovery broader popular dynamics remain ThreatWise. and Air we're Gap storage

Fiscal SaaS operating to expenses gross revenue expenses an and were X% We XX software. mix carries Fiscal increased basis ended XX.X%, higher X,XXX discuss X% of with points down cost two past reflect employees, million, QX QX year-over-year. quarters. approximately a I'll increase of continue Now, margins and $XXX were and sales the of a sequentially the which headcount global of down profitability. quarter over an

our focusing most managing on priorities. are people, expenses investments third party our critical We facilities and by

to against evaluate base market the demand We continue will resource environment. our

well fiscal prioritization non-GAAP expense resources. $XX QX strongest of discipline guidance and driven EBIT EBIT EBIT of were our year, Non-GAAP XX.X%, million strategic margin of result for the was margins the and by and ahead operating

nearly SaaS XXXX revenue I'll marketing fiscal increased XX% revenue $XXX sales were prior primarily year-over-year. and the XX% drove that, Fiscal revenue constant operating leverage target. an revenue with was Under license total through Now, finished structure, increase year of X% at expenses revenue, in $XXX of and currency subscription revenue new On to Within discuss fiscal software year up million, which total operating of year. aligned year a million total XX% our basis, our of compared reporting XXXX XX% software X%. XXXX and tripled We was increased XX% million, term results. $XXX full year-over-year.

gross EBIT were our XX.X%. Full includes XXX and EBIT was year million non-GAAP of margins SaaS approximately basis $XXX revenue. non-GAAP points from margin primarily headwinds, This accelerating

the metrics to sheet for States. full United year the the Free million key We for debt Moving the cash of $XX million quarter cash. and in flow is and XXXX. $XXX cash with quarter. in and some no fiscal $XXX for million flow balance balance ended $XXX this QX million was

a As approximately In accelerated year flows. XX% reminder, of our the to second R&D stock repurchases we by to TCJA million, our cash payments related X were cash $X XXXX burdened flows tax fiscal representing of free approximately provisions. million half $XX for federal shares million capitalization QX,

year, the XX% representing repurchased stock, our target. well we existing cash free For of $XXX full million XX% our of fiscal flows, ahead of

Now, generate we are I discuss a next platform, strong our are to and few return. capital our software cash future. approaching we the in vector, Metallic growth provide to complete, capital evolution -- flow improve how to SaaS like continuing profitability, scaling would while spend subscription a minutes attractive focused on free our nearly With

base. scale focused our our expand amplifying we as or are discrete We renewal land on growing subscription and opportunities

we Secondly, model. SaaS refine to focused our hire velocity sales segmentation the solely additional as plan market we insight reps on

that exit drive field year. enhanced expect the fiscal sales we as refinements to these We go-to-market productivity

as underlying financial towards primary in transitioning We guidance cash our KPIs our business reporting flow and ARR of are also momentum. free

both midpoint. based the fiscal growth portion revenue, million which year-over-year For term licenses representing we and expect QX, subscription $XX of of SaaS, to includes million, $XX the XX% software at

expect revenue million. to of $XXX total $XXX million We

these At margins consolidated and QX we be margin levels, for margins XX.X% of revenue EBIT expect approximately gross to XX%.

shares. Our projected QX for diluted count is XX million share

total XXXX XX% year guidance which metrics fiscal free XXXX, subscription we to ARR growth ARR, For we year-over-year, XX% our include We and expanding except flow. fiscal the cash ARR to strong year of increase by driven are expect full year-over-year.

subscription ARR and based reminder, includes a As SaaS. term licenses

$XXX XX% cross revenue million expect the total million, We the to expect range subscription growing of subscription over be million we $XXX revenue the to XX% At levels, year-over-year to be of million. range midpoint. to revenue, of $XXX should these which in at $XXX in

XX% cash of margins points expansion basis gross consolidated expect margin XX also EBIT We year-over-year, XX%, XXX points basis flow $XXX non-GAAP to million. and to of of free

to up authorization Finally, our approved our of refresh Board recently stock. for of $XXX stock a million repurchase

existing our of with repurchasing our practice to expect free cash of more annual We continue than XX% flow.

we of priority investment an I leader technology the are including, what core I that the protection in are remains environment. attributes macro want data Before even a space Commvault critical an we in spending close, highlight believe IT to unsettled

large We drive have base installed of customers, for a model ARR. consistent of with expansion. a recurring underpinned We room subscription approximately margin $XXX by growing and revenue million profitability

a debt-free cash demonstrated sheet, and history have returns. balance flow of capital We healthy a

turn Sanjay? closing call the for his remarks. will now I to back Sanjay

Gary. you, Thank

redefine to the XX%, an that their ransom because it XXXX. for firm We The of more showed data Report findings security them. in average continue X,XXX organization restore includes Response never percentage customers was with to data from to if that able just protection The Incident organizations the incidents in handled recently its of But law for ransomware which that our been XX% BakerHostetler $XXX,XXX. targeted important Data firm has Security paid systems. published ransomware hit dropped

Data increasing updating go-to-market our will in our on been along critical. ARR the never the you look strategy, and has momentum way. We showcase motion protection believe We more forward year to focus ahead. roadmap,

we'll Now questions. your take

question will time, Our we a session. Instructions] Guggenheim the Partners. Howard first Ma you. of question-and-answer from conduct comes At Thank this [Operator

Your is open. now line

to to Great. delays and those versus new maybe quantify are that's the think company, projects Metallic focus uncertainty the way on levered Thank and certainly ARR. such every a and see IR new as spending on good top carry projects, pipeline IT and projects. that of business, -- more there normal I'll disclosures of expansion affecting logos you. call, are, since just to also about given dependent tied course large ongoing on perhaps the data as perhaps encouraging Sanjay, software large will that's It the that's be outperformance and that is deck multi-year more mix not deals growth line to as what the nearly in well large more is the

the scrutiny That's year last the of our The delays of the around way the in at sure. company. has -- in which For been been to purchasing, evolving our between we've size our deals, disciplines and deals. pipeline how the in had re-learn heart forecasting we've models -- the the

-- really we've we've So I to decent our a job of being models. think, fine-tune done able forecasting

over quarter characteristics ASP the of size increasing and deals higher. in Gary while think that also I large our the mentioned average business was the last of the

our eye So and velocity we things expand wheels are around in deal are on as land, close focus are keeping our and around comments deal with a then, volume, all Metallic, These happening. renew of that size, very motion. a investment part discrete we are shared motions around the that business

good think -- a I our more be are was we've got learning retraining So and to that. year last specific models the year re-learning around -- we

color. for Okay. a Gary. I That's follow-up and totally understandable helpful it's just quick have

And Subscription -- forward. like between around Metallic subscription expectations specifically. decline perpetual would rate going also the and into full-year subscription ARR. see you giving drivers growth the also you Thank that license perpetual click now could and helpful. Metallic to XX% on any ARR should term for the nice And subscription guide if double comment your new of and of are be you of it's Can Gary, So, for that business and breaking license we you. separately expect out guys total and

of SaaS, to best cloud that journey, they related especially journey. on subscription for how continue buy. revenue Hey, licenses and want move good of because our Howard, looking and today. the highlighting We're And for and software flexibility of also their are morning combines that's and us best to customers as term-based now joining and thanks which SaaS, that the their ARR, software customers cloud

of into we contributor As year-over-year. the We to see was subscription Metallic. I I related ARR to that look which and that out on total guidance double was ARR. ARR, gave which XX% the or ARR fastest our about XX%, is Relative momentum risks to greater nearly growth year-over-year ARR Metallic did we'll XX%.

increase. especially to value dollar continue the of that expect on momentum, the We on Metallic

focus So software our expand of majority that increase, Metallic the motion. refined will land, play newer on with combined the

Okay, great, thanks so much.

One you. while the I moment prepare Thank next question. please

question of Fargo. from Aaron Wells next Rakers Our comes

is Your line open. now

guys. appreciate I model with also cetera. question to the appreciate and et regard with thanks, all Yes, ask today's the me announcements the you changes, details let

So I couple real a quick. if can, of questions,

of about all, first I the back just, So the relative the ago the the of as the closures view, pushout? quarter, how was just updated months environment it to environment, shape seeing what as of to Can of you're up. a throughout of any trying say, deal go demand quarter? the environment I current seeing. talk kind Were you deals you're three saw let's you get want there to to kind linearity macro Just far demand that pace

we take not the and on The a it's purchasing I'll see reflected the where of And it. lot budgets for joining that We this losing I us one see to Aaron, environment, macro really cycles be -- us. thanks Gary. scrutiny some for for continues decision. think it's it's of We're deals. companies. the sales and it primarily, around did of the challenging

increase with just strong current stabilized what's where and Our Specifically quarter-over-quarter? kind business our your deal of about question that our a related changed Americas Americas in very had. saw business last about sequentially. our sequentially had in lengthening, into We quarter they the especially to has some They quarter. XX% quarter rebound we're nicely the really spoke that pleased Americas of

see did further is, the all. deterioration So stabilization what showing it’s at us We occurred. any has not

those pleased pleased we're some mentioned, the to we're some happened stabilized. we this continue current into seen what at But And in dealing our business a we in the as We're -- to manage around QX. Sanjay suggests place the business of with actually deals, kind with and we're point, in of move guidance that As good timelines. see sequential the any with But learning it's how reflected push while right, fiscal performance. scrutiny. we headwinds haven't we're

Yeah. That's detail. great

question a What term XXX you how a about longer I know points year. years model couple second is, gave XX know I been it's of particularly is thinking expansion basis about, you're in this a of The ago. you I'm interested guys to margin that, talked couple operating framework years

it margin, think I operating I but think you kind of that back number. mid a time? you this the not do see could a kind of is of about How go that mid-XX%, towards you maybe than EBIT say year, trajectory couple achievable do we think ago, about years EBITDA talked just something to or that, want or as driving still forward, we XX% more was over

Aaron. Good question.

So we FY sitting that about baseline, QX which accelerating really and that and what's us of maybe multiyear at Metallic business. not you on XXXX gross XXX XXXX. and ahead of kind finished of to related fiscal includes absorbing little to margin a -- our to and a set on long-term margin here about giving EBIT focused we're perspective points XX.X% basis today, is guidance. We're But give

market. in for relatively pleased out. we're targets where laid investment of with that coming make that's revenue enterprise we're on absorbed. So percent the a we're And strategic much future. We're best We Metallic. out at, We OpEx did platform the the with invested considering the at SaaS how we've we

about we XXX where that FY can from So deliver every points as I that go year. think confident Metallic basis XX margins here, are we for margin. EBIT I'm to But improving XXXX,

now of kind in margin. gross on that see revised our disclosure can You

headed years. what few XX% margins. that the over towards on lift is next margin So we're believe Metallic roughly getting Metallic we We're still slowly the

the We top get in improves. incremental line business, the leverage as can especially

can within continue ARR year-over-year. in mid want keep that demonstrated ARR of can with Aaron, that XX% scale So growth digit as getting we double-digit be we that and in of ability where that. we and obviously grow We our as our to we to mid-teens kind confident to grow think go should about, and delivering to the Right? to the business we're continue that mid EBITDA also growth. I doing business, long-term history We think size margin have double

helpful. That's

quick subscription you Finally, the is, or you're of about as around effect other business, I'll we obviously, would renewal flywheel any the as Is that? think subscription cycle. us the real there KPIs growing that just question as could anything we cede what forward, be far metrics renewal share is, the business with seeing as look floor. the on And the

Yes. Absolutely.

kind Aaron, Metallic was couple retention the strong that So motion. But also that that we for with strength the which XXX%, of dollar we're net renew this One really of XXX%. number which a metrics subscription, of is retention other shows introduced of net show -- the the renewal dollar quarter expand, which land, motion. that very pleased is this strong

at our most think, have base that's renewal -- shareholders subscription, normal the a and of model. our part analysts I point, term business on are the license motion. we Now, this term-base growing aware, And basis of

in model. it some XXXX us versus our to in greater That predictability XXXX. expect fiscal will fiscal tailwinds some good We be give and

actually Historically, a deals there we rounded to the three it of years. and stronger current helps length which it overall maybe the period but term environment, some no in for to three impacts is two years. deliver P&L, us In is average impact term between velocity. see up Aaron, ARR, compression those Historically

So now scaling focused and that. two three years our average than closer term length to we're years is on probably

will in it predictability some it us give guidance. we helps the So with our us XXXX into and FY have good confidence

Thank you much. very

as Jim moment floor next yours. the Sandler. One I prepare you. now Piper from is Thank Fish question. The

you view think Hey, little where seen been versus the guys today business really of six guys, and few have new SaaS XX% or off now may you visibility we Is less bit Commvault, of -- in dependent and kind beyond visibility working coming fits growth as it ago? think how of you achieve this still visibility because few do especially years long that have of that but months? kind here. quarters good the and around to a about crossing were thanks Historically for starts, kind should Aaron's that the on from a we've do questions. you numbers through Subscription a we're it we're of that Working term, your is

Jim, SaaS It's the we which break and combines business, and former. today's I'll it's the model Hey, have it software In business Gary. the where subscription the up.

have as ever to On because visibility a of we sales now we the had more perpetual people we've and ago company, software, than now this had were the when years we year. was couple what it we license, have on for primarily term relative a motion starting empty every

predictable Now it, we renewing tailwind nice on have it. just but a that's focused importantly not more and expanding we're

beyond goes it that visibility of the the expansion renewal key on a year this expansion it motion, and So to that motion renewal just focus goes to is base. which

The as knows is SaaS on everybody ratable recognition. the beauty of,

the now was for in the our gives forecast gives of business, us about only perspective, much right, was XX% our year, presentation, of revenue into it revenue So $XX it which more visibility but million disclosed not it and which amounts. right, that it’s us is Metallic about predictability revenue ratable

So combine a and we together never when gives that attributes, the it as that SaaS company really we visibility their us individual had the before. subscription and

subs Metallic year and that today this really to to you're last a retention and compared specifically metrics that out you for gave versus asking term net rates, Metallic, you're about into how it that's giving we Gary, retention what segue, next breakout about give does the that revenue, And time? We I'm today, how quarterly what appreciate especially is rate my think be net at should question. the going good

gave to we right, dollar retention, and the the combines to So our metrics key the quarter. continue subscription and net we'd the software think to the The it, we business, talk around business give every are net SaaS today, retention. and of which they around SaaS KPI expect the dollar we'll especially metrics continue that about

not dollar base basically Metallic were just starting really look two last year-over-year, so was in out small, The the you retention, year when year the right? We business. of comparable because net it's

have meaningful that's we three, a and actually therefore, we're So that's have year in opportunity we that expansion base now meaningful.

a XX% even we that retention XXX%, strong, even customers, net is even that excludes which within Metallic Metallic that software at And it expansion another also dollar is opportunity the really have. are customers which of whole

this or and both, with us customers SaaS now to base So and forefront. of it drive combination really our part expand the XX% of we'll allows a motion, keep growing installed subscription, to that it of are as where continue renew

I also annual how as perspective to some Jim, of give the that well gave continue shareholders update as guidance change to we're gave year we quarterly about the our well, as guidance, I'll the goes that seeing full-year the today. a as

everything on get virtually continue to a saw basis. will you that today So quarterly

Gary. Thanks, Great.

the One Thomas KeyBanc moment as I prepare Welcome next question. Blakey from Capital Markets.

is line now open. Your

Thanks, guys, line results. the congratulations I'm of the with taking I Lovely on stick, question kind for and guess of disclosure. my questioning. NDR to going

in much both, what's Is this consumption Just -- but driving any do these products are cases, use right. new. And I'm just wondering based, maybe color of in terms expansion?

come that of the to Metallic perspective? you start more what NDR what and from customer, XXXX looks selling We'll are as term like back So expansion, and fiscal there. understand a those like kind a we driving expansion are opportunities what's in look me so you to what me? of XXXX, When

stab the let of broad at. me, you of Let flows take see Sanjay. It's Tom, me a the expansion. the I'll the sort how to give portfolio that expansion mapping I and

use Metallic our using take capabilities integrated being one well, customers Metallic. MRR gapped from our air our into software on platform Let's the software recovery Metallic being as and Metallic. reserve,

where two data of you they their okay, copy together. expansion, That's want so another the bring off-premise. And a classic things

services the XXX Kubernetes console all embracing started around portfolio. customers who from virtual same and with and do Office within that things got very new machines, other quickly start and we realized You've can the quickly Metallic they do we can

give our to the in Metallic of of that not of that of Metallic plus our also that the seeing more have really also the we're our to and the customers in the software able Commvault one services than to ability but extensibility. fact within And platform, So platform uniqueness software. be customers the SaaS number the has XX% approach our is only seamless one platform service power that customer our platform take

So expansion. enhancing of that's mutually within capability sort our the

scenarios data Now, avail more but, recovery capabilities, snap-ins capabilities we capacity to or just their but add continue into expansion software disaster our as can in of of classic portfolio customers capabilities our as we additional technology. add there platform. that -- literally These core our security be into

we'll So absolutely are today and because the transition, away. for in for numbers, you go as is showing it's that taken customers I going continue couple we've think we not of last it shared to the I of on-premise like years in portfolio important customers making our I think strategy to seamless the is said, with be

their As on-premise to between best needs public both and and they of to sides. of in piecemeal one you to and the uniform want either this. world want sides only to be go world, that. platform But going world can't we're they're the hybrid and they're ones breed or on a going patchwork both cloud It sort transition of do

is That's how or very XXX%, granular expansions breaking or helpful, how services, terms understanding much of and just services? Sanjay. just is too about and of sort capacity is much quickly Is capacity new subjective there follow-up that in a there any new out some XXX% --

upsell very the same especially maybe I'll the the which generally granular product. more but specifics, coming as give little too of -- helping relates from which -- to is, would I'll is give jump a that It's maybe perspective, in. of I strong, I say XXX% majority in qualitative bit on to the you what is it Metallic, the frame

and majority being see of coming Metallic XX% XX% that. SaaS opportunity our able deliver one to accelerate that we mentioned, have customers even I is The the with than from you -- more So only number that the really as will offering. have XXX% that to

expand use opportunity products So use expansion focus now the really to we that to cases Sanjay even the time really renewal, that Metallic tied multi-product as huge of a cases have still at mentioned, Metallic metrics. more on XX% across to work driving and of number and to on base customer

what sell And want in now you helpful. them. capacity from the very of coming things to hear and that's of No, terms a to you'd have majority that's cadre to

floor of gross basis support, old the uptick XXX about margin, it reporting points. cede last way here the a the solid Just and in follow-up at services I'll and

here you I helpful. Metallic reached the would some just scaling have color here, Gary, about of Just, an in update be finally terms bother we always bottom and there of

We're say SaaS that I through we're margin back of companies in We're reported seeing XX% the our and expansion march gross now really improvement we we're the three. next based with kind in that that Metallic mark packaging couple as pricing significant get we'll kind on out tracking. Yes, over trajectory incremental happen would that we maybe into some enhancements. gone typical years, year margin to efficiencies. scale solely that expect of for focused you results we're can coming we of infrastructure that on We're and margin gross magic and made and have Metallic quarter-over-quarter on towards it. improvements the other as new actually

using and more customers I having dollar on multiple bring will we that use retention, Metallic are along that drive product, cases, net the than also expansion. one As mentioned as margin on to start

the think gives what maybe specific. the going on couple I you'll point where reflects XX% where I I kind margin. Metallic of to we're predictability, our see consolidated a next XX%, it Right. the have opportunity then kind the of us gross of of scale. to at continued start That is that on to And gave years think, you're now that guidance little improvement over that where So more we

we towards XXX work our that kind at and it. basis points old can we're format back of of that -- model Now now business

Very helpful. Congratulations, guys.

Thank you.

you. Thank

Lake [Operator is yours. prepare Instructions] floor as the Street next Eric moment from Markets. The I Capital Martinuzzi Welcome, One question.

employees reps? for up to comfortable the on sales you're it that or that You wanted the FY sounds go the I to inside XXXX the reps, be areas, out cost because with. to inside and year where explore going talked initiatives headcount sales we like FY land you X,XXX is kind expect hiring in of Do finished into But shifting while growth pretty the with to expand. lower headcount We've maybe dug growing your XXXX. about where around it is,

to Eric, we're is, is bit we a right, by can that a a quarter about there is on And specifically that one where that talked related what handle it's that a opportunity huge there that opportunity I a massive nice it's looking that a time the one. and piece we're Gary. to can think market the philosophy instead motion at refinements some ISR is, us we velocity see the I making. close, ISR of little multi-quarter, Metallic perspective, of just attacking for from driven quite an the have of will payback.

we the we broadly more but And as land to some well. of EBIT broadly that us businesses we the metrics combine expect. expand can pleased think business is, our the that, segment sales the the heard of that guidance relative means marketing, all company, also we throughout and yes, with businesses generally to and what line we is about discrete have other our with in reflective we're on the not -- continue of gave, top to parts in business, and drive headcount reflective with the especially just have. this company, and you've we talking as in marketing, resources focus, try focus margin And levels discrete productivity throughout as improvement that we is we our sales Tied that

or headcount sideways? up, [indiscernible] for is me, going down down

guidance. Eric, give Yes. headcount don't we specific

good As is I the headcount we continue brought said, grow to relatively place. that And pace in headcount, we at X% half. means right, a in our second a our OpEx, than as revenue faster down

services? was special in in projects, there then professional And tied non-recurring outperformance the right. jump a all there. seemed QX. of was there to a Okay, source -- It Was the services like any the that

had Yes, performance our one professional strong a hit from We again. this really services. I'll

our strongest few you -- strong of the one our it If back over go results. past years, was

of work efficiencies now As through our able services. our continue pandemic, you their really help they we as to know, identify in the well really professional really really on were customers and drive to leveraging that we're out and cost services infrastructure, have we the backlog the

to So professional services. some in project just completion good more it was

taking for my Thanks it. Got questions.

Sure.

One moment as I prepare the next question.

Our Wells Fargo. next question comes from Aaron of Rakers

is line open. Your now

revenue taking and how that guidance about the to getting think where customer think that level about, in how quick get recurring we around We of some next that a other the talked we for given, be I'm kind revenue see And the about Yes. X% the expect the guess, does something a in do curious stabilizing that Thanks that the which full-year, think year? this over the that to we do just for two a as I kind you've quarter, support a becomes point that continued decline line steady at that level? the lot burns state? to of that growth perpetual, we've contribution. look and buckets; Is declined as at subscription last the I off perpetual on you may follow-up. certain

Hey Gary. you think think been with about outside right, revenue. a if perpetual about you wrap I Aaron, can declining additional can kind of some I for and model items of up license it's line the you that million subscription kind The Because of [indiscernible] our recast transition provide financials, has, line year. $XX the now see, that's other three at we items, you. really of it look revenue

rate can that think get fits of $XX another I kind like installed will FY movement run revenue $XX to downward out over at long-term in of in that continued lies It's We base and FY maybe have where as year of kind we time. similar still it XXXX, I still million million levels to on a that that see to have probably about an XXXX. probably way. again, you But probably item

customer you'll as support subscription perpetual see both similar for for which trends. both support our line, includes FY and The and think well XXXX, I customer for

as start SaaS, another We're is in see time. think as and little we'll that on well vast maintenance roughly XXXX. and on get similar And stabilize to our out balance state a should Perpetual half to customers line to year, you the I subscription as we FY similar we of point of You'll a where to related about line. the that right. steady that that half that perpetual then now start more over base get well roll than more to still the trends have in as I majority think

just of will perspective what that little give concentration and So between perpetual. the is a subscription

the which is The last services. other line,

automation as or done that, think an I I on of $XX annual on a number think is and basis. work think I take product million probably partner about leverage. lot give We've that

make a because we're it keep kind as the well. good that product our of us So, product effectively that also channel use drive is easier also business state what making to and our helps that business means, allows and us optimize. services in to leverage steady enhancements us of do leverage more It for to channel the is partners

that. appreciate I Gary. Thanks, Yeah.

Welcome.

this Mike it Thank you At would like to to time, Melnyk for your for I questions. closing turn back remarks.

this call for Thank you all joining our morning.

earnings For after fiscal will look posting with We Thank conclusion year call. following the an shortly we forward reference, the you be QX to inclusive you. updated your the of and version joining. for up of of guidance presentation XXXX the

Thank the your conclude today's participation program. does conference. you for This in

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