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What changed in COMMVAULT SYSTEMS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COMMVAULT SYSTEMS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+270 added−247 removedSource: 10-K (2024-05-13) vs 10-K (2023-05-05)

Top changes in COMMVAULT SYSTEMS INC's 2024 10-K

270 paragraphs added · 247 removed · 192 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

54 edited+18 added−21 removed8 unchanged
Biggest changeIn addition, we offer customers staff-augmentation options via resident support engineers to assist with rapid expert deployment and operation of the Commvault suite. • Ransomware Recovery Services. Commvault Readiness Solutions provide the resources and expertise to quickly accelerate returning to normal business operations through the proper design, implementation, administration, and support of our customers' data protection environment. • Education Services.
Biggest changeCommvault Readiness Solutions provide the resources and expertise to quickly accelerate returning to normal business operations through the proper design, implementation, administration, and support of our customers' data protection and cyber resilience environment. • Education Services. We offer training content for learners at all levels, with basic, intermediate, and expert certifications available.
Our primary competitors in the data protection software applications market, each of which has one or more products that compete with a part of or our entire product suite, include Dell-EMC, IBM, Veritas, Veeam, Rubrik, Cohesity, Druva, and Avepoint.
Our primary competitors in the data protection software applications market, each of which has one or more products that compete with a part of or our entire product suite, include Avepoint, Cohesity, Dell-EMC, Druva, IBM, Rubrik, Veeam, and Veritas.
Prior to that, Mr. Mirchandani held various positions at Microsoft Corporation and Arthur Andersen LLP. Mr. Mirchandani has a Master of Business Administration degree from the University of Pittsburgh and a bachelor’s degree in mathematics from Drew University. Gary Merrill has served as our Chief Financial Officer since July 2022. Prior to his current role, Mr.
Prior to that, Mr. Mirchandani held various positions at Microsoft Corporation and Arthur Andersen LLP. Mr. Mirchandani has a Master of Business Administration degree from the University of Pittsburgh and a bachelor’s degree in mathematics from Drew University. Gary Merrill has served as our Chief Financial Officer ("CFO") since July 2022. Prior to his current role, Mr.
Merrill served as our Chief of Business Operations from April 2021 until June 2022. He also held the position of Vice President of Operations from April 2019 through March 2021 and from December 2012 to March 2019, served as Chief Accounting Officer. Prior to joining Commvault, Mr. Merrill held accounting management positions with several 9 publicly traded companies. Mr.
Merrill served as our Chief of Business Operations from April 2021 until June 2022. He also held the position of Vice President of Operations from April 2019 through March 2021 and from December 2012 to March 2019, served as Chief Accounting Officer. Prior to joining Commvault, Mr. Merrill held accounting management positions with several publicly traded companies. Mr.
Customers looking to move IT operations to the cloud depend on service providers to migrate, manage and protect their data and cloud infrastructures. We partner with a broad ecosystem of managed service providers and cloud partners to effectively deliver data protection-as-a-service solutions based on Commvault solutions across geographies, vertical markets and offerings.
Customers looking to move IT operations to the cloud depend on service providers to migrate, manage and protect their data and cloud infrastructures. We partner with a broad ecosystem of managed service providers and cloud partners to effectively deliver data protection-as-a-service solutions based on Commvault solutions across geographies, vertical markets and offerings. Marketplace .
All such filings are available on the Investor Relations portion of our website free of charge. The contents of our website are not incorporated by reference into this Form 10-K or in any other report, statement or document we file with the SEC. 10
All such filings are available on the Investor Relations portion of our website free of charge. The contents of our website are not incorporated by reference into this Form 10-K or in any other report, statement or document we file with the SEC. 9
Additional options enable content search, data encryption and auditing features to support data discovery and compliance. Our success and ability to compete depend on our continued development and protection of our solutions. We rely primarily on a combination of trade secret, patent, copyright and trademark laws, as well as contractual provisions, to establish and protect our intellectual property rights.
Additional options enable content search and auditing features to support data discovery and compliance. 7 Our success and ability to compete depend on our continued development and protection of our solutions. We rely primarily on a combination of trade secret, patent, copyright and trademark laws, as well as contractual provisions, to establish and protect our intellectual property rights.
This program has become the hub for all diversity, equity and inclusion ("DEI") related conversations, where employees and senior leaders share courageous life experiences related to bias and social injustice. Since its inception, we have hosted p owerful sessions, each virtually, reaching our workforce around the globe.
This program has become the hub for all diversity, equity and inclusion issues and related conversations, where employees and senior leaders share courageous life experiences related to bias and social injustice. Since its inception, we have hosted p owerful sessions, each virtually, reaching our workforce around the globe.
We have implemented an Employee Resource Group (“ERG”) operating model and have established five ERGs for cross-cultural learning, mentoring and relationship building across employees: 1. CV WIT (Women in Technology) 2. Multi-Culture 3. PRISM (LGBTQ+ & Allies) 4. VALOR (Veterans & Military) 5.
We have implemented an Employee Resource Group (“ERG”) operating model and have established five ERGs for cross-cultural learning, mentoring and relationship building across employees: 1. Women in Technology (WiT) 2. Multi-Culture 3. PRISM (LGBTQ+ & Allies) 4. VALOR (Veterans & Allies) 5.
Our cloud-based support system creates a virtual global support center combining these locations to allow for the fastest possible resolution times for customer incidents. We have designed our support infrastructure to be able to scale with the increasing globalization of our customers. • Customer Success Options .
Our cloud-based support system creates a virtual global support center combining these locations to allow for the fastest possible resolution times for customer incidents. We have designed our support infrastructure to scale with the increasing globalization of our customers. • Customer Success Options .
These partners team with our technical, engineering, marketing and sales force to enhance integration, tuning, operational management, implementation and vision for solutions that are designed to meet current and future data protection needs.
These partners team with our technical, engineering, marketing and sales force to enhance integration, tuning, operational management, implementation and vision for solutions that are designed to meet current and future data protection and cyber resilience needs.
Competition The data protection and replication market is intensely competitive and highly fragmented. The principal competitive factors in our industry include product functionality, performance, integration, platform coverage, scalability, price, global sales infrastructure, technical support, branding and reputation. The ability of major system vendors to bundle solutions is also a significant competitive factor in our industry.
Competition The data protection and cyber resilience market is intensely competitive and highly fragmented. The principal competitive factors in our industry include product functionality, performance, integration, platform coverage, scalability, price, global sales infrastructure, technical support, branding and reputation. The ability of major system vendors to bundle solutions is also a significant competitive factor in our industry.
Prior to joining Commvault, Mr. Mirchandani served from September 2016 to January 2019 as the Chief Executive Officer of Puppet, Inc. (“Puppet”), an Oregon-based IT automation company. Mr. Mirchandani joined Puppet in May 2016 as President and Chief Operating Officer. Mr. Mirchandani brings a wealth of international business experience through his diverse well-rounded career in technology.
Mirchandani served from September 2016 to January 2019 as the Chief Executive Officer of Puppet, Inc. (“Puppet”), an Oregon-based IT automation company. Mr. Mirchandani joined Puppet in May 2016 as President and Chief Operating Officer. Mr. Mirchandani brings a wealth of international business experience through his diverse well-rounded career in technology.
We patent our technical infrastructure and key usability and design concepts. Our software’s unique capabilities are covered by a robust portfolio of patents worldwide. Areas such as data protection, security, transformation, insights, and compliance and governance, including our Metallic SaaS and HyperScale X solutions, are core to our competitive advantage.
We patent our technical infrastructure and key usability and design concepts. Our software’s unique capabilities are covered by a robust portfolio of patents worldwide. Areas such as cyber resilience, data protection, security, transformation, insights, and compliance and governance, including our SaaS and HyperScale X solutions, are core to our competitive advantage.
As a result, these competitors can devote greater resources to the development, promotion, sale and support of their products than we can. Refer to our "Risk Factors" below. Sales and Marketing We sell our data protection solutions to businesses of all sizes, and government agencies. We sell through our global direct sales force and partner channels.
As a result, these competitors can devote greater resources to the development, promotion, sale and support of their products than we can. Refer to our "Risk Factors" below. Sales and Marketing We sell our cyber resilience solutions to businesses of all sizes and government agencies. We sell through our global direct sales force and partner channels.
Our solutions are the data protection platform for many service providers, which provide cloud-based solutions to customers worldwide. As companies of all sizes and markets rapidly adopt cloud infrastructures for cost efficiencies, speed and agility, we remain committed to these strategic relationships to address this growing trend.
Our solutions are the cyber resilience platform for many service providers, which provide cloud-based solutions to customers worldwide. As companies of all sizes and markets rapidly adopt cloud infrastructures for cost efficiencies, speed and agility, we remain committed to these strategic relationships to address this growing trend.
We not only drive the ability to be a best-in-class data protection organization but also uphold our value in the marketplace by leading as an employer of choice. We continue to elevate our employee engagement and belonging efforts – which is the foundation of our approach.
We not only drive the ability to be a best-in-class cyber resilience organization but also uphold our value in the marketplace by leading as an employer of choice. We continue to elevate our employee engagement and belonging efforts which is the foundation of our approach.
Arrow's primary role is to enable a more efficient and effective distribution channel for our products and services by managing our reseller partners and leveraging their own industry experience. Sales generated through our distribution agreement with Arrow accounted for 37% of our total revenue in both fiscal 2023 and fiscal 2022. Service Provider Partners.
Arrow's primary role is to enable a more efficient and effective distribution channel for our products and services by managing our reseller partners and leveraging their own industry experience. Sales generated through our distribution agreement with Arrow accounted for 36% of our total revenue in fiscal 2024 and 37% in fiscal 2023. 6 Service Provider Partners.
More than 1,350 patents have been issued to Commvault globally as a result of our strategic patenting. We also have established proprietary trademark rights in markets across the globe, and Commvault owns hundreds of worldwide trademark registrations and pending registration applications. Refer to our “Risk Factors” below.
More than 1,400 patents have been issued to Commvault globally as a result of our strategic patenting. We also have established proprietary trademark rights in markets across the globe, and Commvault owns over 150 worldwide trademark registrations and pending registration applications. Refer to our “Risk Factors” below.
Throughout fiscal 2023, our employees participated in over 900 training programs, totaling more than 15,000 hours. 8 Diversity, Equity and Inclusion At Commvault, we believe that diversity is a business imperative at the heart of our human capital management strategy.
Throughout fiscal 2024, our employees participated in over 1,200 training programs, totaling more than 190,000 hours. Diversity, Equity and Inclusion At Commvault, we believe that diversity is a business imperative at the heart of our human capital management strategy.
Data Recovery Commvault Backup and Recovery ("CBR") is designed to meet the needs of any size business protecting workloads across all locations: hybrid environments including on-premise and multiple cloud providers; physical servers; virtual machines; applications and databases; endpoint devices; cloud applications and more.
It is designed to meet the needs of any size business protecting workloads across all locations, including hybrid environments such as on-premises and multiple cloud providers; physical servers; virtual machines (“VMs”); applications and databases; endpoint devices; and cloud applications.
CapAbilities (Disability inclusion & Allies) This year, we expanded our culture of belonging through two additional Employee Affinity Groups ("EAG"), Family Support Network and VAST - Vaulters Advocating Sustainable Technology. Foundational to these engagement initiatives is our Courageous Conversations program designed to foster difficult conversations in an open, safe and respectful manner.
CapAbilities (Disability inclusion) We also have two Employee Affinity Groups: Family Support Network and Environmental Group - VAST (Vaulters Advocating Sustainable Technology). Foundational to these engagement initiatives is our Courageous 8 Conversations program designed to foster difficult conversations in an open, safe and respectful manner.
With HyperScale X, customers can leverage the entire Commvault portfolio giving them access to all the features, functions, and industry leading integration with applications, databases, public cloud environments, hypervisors, operating systems, NAS systems and primary storage arrays, wherever the data resides.
With HyperScale X, customers can leverage the entire Commvault portfolio, giving them access to all the features, functions, and industry-leading integration with applications, databases, public cloud environments, hypervisors, operating systems, NAS systems, and primary storage arrays, wherever the data resides. It is available as a fully integrated appliance or as a reference architecture depending on an organization’s requirements.
We continue to be committed to securing the best talent with a concerted effort to expound on and build an inclusive and diverse pipeline of candidates. We are committed to providing a clear vision to career progression while investing in the development, creativity and aspirational needs of all employees. Employee Health, Safety and Wellness Commvault values its people.
We continue to be committed to securing the best talent with a concerted effort to expound on and build an inclusive and diverse pipeline of candidates. We are committed to providing an environment that fosters career growth, investing in the development, creativity and aspirational needs of all employees.
Metallic Recovery Reserve Metallic Recovery Reserve ("MRR") is the “easy button” to adopt secure and scalable cloud storage in minutes — delivering against an organization's hybrid cloud strategy, without the need for additional cloud expertise.
Commvault Cloud Air Gap Protect is the “easy button” to adopt secure and scalable cloud storage in minutes, supporting an organization's hybrid cloud strategy without the need for additional cloud expertise.
In addition, our strategic partners augment our marketing and sales campaigns through seminars, trade shows, joint public relations and advertising campaigns. Our customers and strategic partners provide references and recommendations that we often feature in external marketing activities. Research and Development Our research and development organization is responsible for the design, development, testing and certification of our data protection solutions.
In addition, our strategic partners augment our marketing and sales campaigns through seminars, trade shows, joint public relations and advertising campaigns. Our customers and strategic partners provide references and recommendations that we often feature in external marketing activities.
Information about our Executive Officers The following table presents information with respect to our executive officers as of May 3, 2023: Name Age Position Sanjay Mirchandani 58 President and Chief Executive Officer Gary Merrill 48 Chief Financial Officer Riccardo Di Blasio 51 Chief Revenue Officer Sanjay Mirchandani has served as our President and Chief Executive Officer since February 2019.
Information about our Executive Officers The following table presents information with respect to our executive officers as of May 9, 2024: Name Age Position Sanjay Mirchandani 59 President and Chief Executive Officer Gary Merrill 49 Chief Financial Officer Sanjay Mirchandani has served as our President and Chief Executive Officer ("CEO") since February 2019. Prior to joining Commvault, Mr.
In the event of a security breach, these laws may subject us to incident response, notice and remediation costs. Failure to safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under applicable data security, unfair practices or consumer protection laws.
Failure to safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under applicable data security, unfair practices or consumer protection laws. The scope and interpretation of these laws could change, and the associated burdens and our compliance costs could increase in the future.
Our data protection offerings are delivered via self-managed software, software-as-a-service (SaaS), integrated appliances, or managed by partners. Customers use our technology to protect themselves from threats like ransomware and recover their data efficiently. We believe in solving hard problems for our customers by enabling them to accelerate their digital transformation and protect their data in a difficult world.
Our offerings are delivered via self-managed software, software-as-a-service ("SaaS"), integrated appliances, or managed by partners. Customers use our Commvault Cloud platform to protect themselves from threats like ransomware and recover their data efficiently.
Innovative use of web-based diagnostic tools provides problem analysis and resolution. Our solution design is also an important 5 element in our comprehensive customer support, including “summary of findings” problem analysis, intelligent alerting and troubleshooting assistance. • Broad Expertise. Our support engineers have extensive knowledge of complex applications, servers and networks. We proactively take ownership of the customer’s problem.
Our comprehensive customer support includes “summary of findings” problem analysis, intelligent alerting and troubleshooting assistance. • Broad Expertise. Our support engineers have extensive knowledge of complex applications, servers and networks. We proactively take ownership of the customer’s problem.
We offer various enhanced Customer Success options including the Enterprise Success Program ("ESP") and Metallic Customer Success. Our ESP provides industry experts who provide strategic guidance and technical advice, alongside Success Account Managers, who are all focused on proactively helping our enterprise customers to achieve their goals and are aligned to their business initiatives.
We offer various enhanced Customer Success options, including Enterprise Success Program ("ESP") offerings, to our software and SaaS customers. Our Customer Success offerings provide resources focused on proactively helping our customers achieve their goals and are aligned to their business initiatives.
The entire program is centered around driving customer adoption, customer satisfaction and quick time to value. • Technology Consulting Services. Our technical consultants ensure that your data protection environment is designed for optimal results, configured quickly, and is easy to maintain. We offer architecture design; implementation; personalization; data migration; and health assessment services.
Our technical consultants ensure that customers’ data protection environment is designed for optimal results, configured quickly, and is easy to maintain. We offer architecture design; implementation; automation and orchestration; data migration; and health assessment services.
Our network of resellers bundle or sell our solutions together with their own products, and our value-added resellers resell our solutions independently. In order to broaden our market coverage, we work closely with our global original equipment manufacturer ("OEM") partners, investing significant time and resources to deliver unique, joint solutions incorporating Commvault solutions.
To broaden our market coverage, we work closely with our global original equipment manufacturer ("OEM") partners, investing significant time and resources to deliver joint solutions incorporating Commvault solutions.
Our engineering efforts support product development across all major 7 operating systems, databases, applications, hyperscalers and network storage devices. A substantial amount of our development effort goes into certification, integration and support of our solutions to ensure interoperability with our strategic partners’ solutions. We have also made substantial investments in the automation of our product test and quality assurance laboratories.
A substantial amount of our development effort goes into certification, integration and support of our solutions to ensure interoperability with our strategic partners’ solutions. We have also made substantial investments in the automation of our product test and quality assurance laboratories. Technology, Intellectual Property and Proprietary Rights We believe our solutions are a major differentiator versus our competitors’ portfolios.
Regulators around the world have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personal information, payment card information or other confidential information of individuals, and the FTC and many state attorneys general are applying federal and state consumer protection laws to impose standards on the online collection, use and dissemination of data.
Regulators around the world have adopted or proposed limitations on, or requirements regarding, the collection, distribution, use, security and storage of personal information, payment card information or other confidential information of individuals, and the U.S.
Item 1. Business Company Overview Incorporated in Delaware in 1996, Commvault Systems, Inc. provides its customers with a data protection platform that helps them secure, defend and recover their most precious asset, their data. We provide these products and services for their data across the following environments: on-premises, hybrid, or multi-cloud.
Item 1. Business Company Overview Incorporated in Delaware in 1996, Commvault Systems, Inc. provides its customers with a scalable platform that enhances customers' cyber resiliency by protecting their data in a world of increasing threats. We provide these products and services for their data across many types of environments, including on-premises, hybrid and multi-cloud.
We remain committed to providing employees with opportunities and resources that enable them to work successfully and creatively, while also investing in their professional and personal development.
As of March 31, 2024, we had 2,882 employees worldwide, of which approximately 40% were in the United States and 60% were located internationally. We remain committed to providing employees with opportunities and resources that enable them to work successfully and creatively, while also investing in their professional and personal development.
We offer multiple levels of service that can be tailored to our customers’ needs. Our services consist of: • Real-Time Support. C ustomers have 24/7 access to support with our support staff available by phone for first responses and to manage resolutions. Our customers also have access to an online support database for help with troubleshooting and operational questions.
C ustomers have 24/7 access to support with our support staff available by phone for first responses and to manage resolutions. Our customers also have access to an online support database for help with troubleshooting and operational questions. Innovative use of web-based diagnostic tools provides problem analysis and resolution.
A critical part of our corporate culture is the health, safety and wellness of our employees. We take a holistic approach to health and wellness to support the dynamic aspects of our employees’ lives, including their physical, social, mental, emotional, and financial well-being.
We take a holistic approach to health and wellness to support the dynamic aspects of our employees’ lives, including their physical, social, emotional, family and financial well-being. We operate in accordance with applicable safety laws and procedures to ensure we provide a safe work environment for all.
To accomplish that, our employees are empowered to drive innovation and help our customers—by inspiring one another and working to make what’s already great, even greater—whether that’s product, process or team. As of March 31, 2023, we had 2,779 employees worldwide, of which approximately 44% were in the United States and 56% were located internationally.
People Commvault aims to unlock potential in data, customers and our employees. To accomplish that, our employees are empowered to drive innovation and help our customers—by inspiring one another and working to make what’s already great, even greater—whether that’s product, process or team.
Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by OFAC, as well as anti-bribery and anti-corruption laws and regulations, including the FCPA and the U.K. Bribery Act. People Commvault aims to unlock potential in data, customers and our employees.
We are also subject to global laws and regulations that govern or restrict our business and activities in certain countries and with certain persons, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by OFAC, as well as anti-bribery and anti-corruption laws and regulations, including the FCPA and the U.K. Bribery Act.
We offer training content for learners at all levels, with basic, intermediate, and expert certifications available. We also provide a selection of self-paced online content for our products in our On-Demand Learning Library. • Remote Managed Services. The Commvault Remote Managed Services offering complements our software and SaaS platforms, providing results-oriented data protection to customers worldwide.
We also provide a selection of self-paced online content for our products in our On-Demand Learning Library. • Remote Managed Services. Commvault Remote Managed Services provide results-oriented data protection and cyber resilience to customers worldwide. Commvault experts provide secure, reliable, and cost-effective remote monitoring and management of our customers' data protection environment.
We believe that strategic and technology-based relationships with industry leaders are fundamental to our success. We have forged numerous relationships with software application, hardware and cloud vendors to enhance our combined capabilities and to create the optimal combination of data and information management applications.
We have forged numerous relationships with software, hardware, cloud and cybersecurity partners to enhance our combined capabilities and to create the optimal combination of data and information management applications. We believe this approach enhances our ability to expand our product offerings and customer base and to enter new markets.
We also maintain relationships with a broad range of industry operating system, application and infrastructure vendors to verify and demonstrate the interoperability of our portfolio with their equipment and technologies. 6 Distributors, Value-Added Reseller, Systems Integrator, Corporate Reseller and Original Equipment Manufacturer Relationships.
Collaboration with these market leaders allows us to provide solutions that enable our customers to improve data and information management efficiency. We also maintain relationships with a broad range of industry operating system, application and infrastructure vendors to verify and demonstrate the interoperability of our portfolio with their equipment and technologies.
Our solutions create an intuitive data protection experience across customer-managed enterprise software and SaaS-delivered cloud native solutions that mitigate data sprawl, facilitate cloud adoption, and meet customers wherever they are on their journey to modernize and transform their enterprise IT environment.
Commvault delivers a portfolio of products and services to effectively secure, quickly capture intelligence, and rapidly recover from ransomware attacks or any other threats. Our solutions create an intuitive cyber resilience experience across customer-managed enterprise software and SaaS-delivered cloud native solutions that mitigate data sprawl, facilitate cloud adoption, and help customers modernize and transform their enterprise IT environment.
On the Investor Relations section of the website, we post filings as soon as reasonably practicable after they are electronically filed with or furnished to the U.S.
Merrill began his career with Arthur Anderson LLP in its audit practice. Mr. Merrill obtained his bachelor’s degree in accounting from Elizabethtown College. Available Information Our website is located at: www.commvault.com. On the Investor Relations section of the website, we post filings as soon as reasonably practicable after they are electronically filed with or furnished to the U.S.
We support customers in a range of industries, including banking, insurance and financial services, government, healthcare, pharmaceuticals and medical services, technology, legal, manufacturing, utilities and energy. Strategic Relationships An important element of Commvault’s strategy is to establish partnerships that support development, marketing, selling and implementation of our technology solutions.
Strategic Relationships An important element of Commvault’s strategy is to establish partnerships that support development, marketing, selling and implementation of our solutions. We believe that strategic and technology-based relationships with industry leaders are fundamental to our success.
We maintain strategic product and technology relationships with industry leaders to ensure that our products are integrated with, supported by and add value to our partners’ portfolios. Collaboration with these market leaders allows us to provide applications that enable our customers to improve data and information management efficiency.
We have established the following types of strategic relationships: Alliance and Technology Partners . We maintain strategic sales, marketing and technology relationships with industry leaders to ensure that our products are integrated with, supported by and add value to our partners’ portfolios.
Our platform drives automation, reduces complexity, reigns in data fragmentation, and helps accelerate a customer’s cloud journey with a holistic approach to protecting, managing, and securing data. Our comprehensive solutions address the critical aspects of modern data protection, from data security to data recovery, data governance and compliance, in a flexible and scalable platform.
Our comprehensive solutions address the critical aspects of modern cyber resiliency, from data security to data recovery, data governance and compliance in a flexible and scalable platform. Products Commvault helps customers protect their data and be cyber resilient in a hybrid multi-cloud environment.
Commvault experts provide secure, reliable, and cost-effective remote monitoring and management of our customers' data protection environment. Customers Our current customer base spans thousands of organizations across a variety of sizes, including large global enterprise companies, and small or mid-sized businesses and government agencies.
Customers Our current customer base spans thousands of organizations across a variety of sizes, including large global enterprise companies, and small or mid-sized businesses and government agencies. We support customers in a range of industries, including banking, insurance and financial services, government, healthcare, pharmaceuticals and medical services, technology, legal, manufacturing, utilities and energy.
It is an integrated, air-gapped cloud storage target that enables IT organizations to efficiently adopt cloud storage for CBR, HyperScale X or Metallic – to ease digital transformation, save costs, reduce risk and scale. Data Security Leveraging patented deception technology, Metallic ThreatWise combines sophisticated early warning and early action with comprehensive data protection.
It is an integrated, air-gapped cloud storage target that enables IT organizations to efficiently adopt cloud storage for Operational Recovery, HyperScale X or SaaS to ease digital transformation, save costs, reduce risk and scale. This minimizes IT complexities and allows customers to easily store, isolate, and secure data while providing the foundation for predictable costs and reduced overhead.
CBR provides backup, verifiable recovery and cost-optimized cloud workload mobility, helping to ensure data availability and granular recovery, even across multiple clouds. Our simplified backup and recovery solution allows customers to protect all workloads – cloud, virtual machines ("VMs"), containers, applications, databases and endpoints – from the Command Center.
Operational Recovery provides backup, verifiable recovery, and cost-optimized cloud workload mobility, helping to ensure data availability and granular recovery, even across multiple clouds all managed with Commvault’s Command Center. Autonomous Recovery aims to reduce recovery time, downtime, and costs by bringing automation and validation to Operational Recovery.
HyperScale X technology accelerates hybrid cloud adoption with an integrated solution that delivers comprehensive data protection for all workloads, including containers, VMs and databases, from a single, extensible platform.
Commvault HyperScale X is an intuitive, easy-to-deploy and scale-out, integrated data protection solution to help enterprises transition from legacy scale-up infrastructures to the hybrid cloud, container and virtualized environments. Its flexible architecture allows customers to get up, run quickly and scale while delivering comprehensive data protection for all workloads, including containers, VMs and databases, from a single, extensible platform.
Commvault Complete Data Protection is a comprehensive, easy-to-use data protection solution that combines CBR with CDR. It delivers backup, replication, and disaster recovery for all workloads, on-premises, in the cloud, across multiple clouds, and in hybrid environments.
Designed for automated disaster and cyber recovery use cases, Autonomous Recovery can deliver backup, replication, and disaster recovery for all workloads, on-premises, in the cloud, across multiple clouds, and in hybrid environments. It provides trusted recovery of data and applications, VMs, and containers, along with verifiable recoverability of replicas, cost-optimized cloud data mobility and resilience.
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We believe our technology and service offerings provide the broadest set of capabilities in the industry, which enables customers to efficiently and cost-effectively scale their data wherever it resides. Products Commvault helps customers protect their data in a hybrid multi-cloud environment.
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With Commvault Cloud, customers have access to business-critical capabilities such as layered defenses to detect and minimize the impact of bad actors; automation to verify clean recovery points; and cloud-native capabilities to dedupe, scale, and as necessary, recover business. We believe in solving hard problems for our customers by enabling them to protect their data in a difficult world.
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Commvault delivers a portfolio of products and services to effectively secure, defend and recover data from ransomware attacks or any other threats.
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We do this by offering unified visibility and management across the entire hybrid enterprise so our customers can secure and recover data from any location to any location. Our Commvault Cloud offerings are organized in the following packages – Operational Recovery, Autonomous Recovery and Cyber Recovery.
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These offerings are organized into four categories - (1) Data Recovery, (2) Data Compliance & Governance, (3) Data Storage and (4) Data Security. Commvault's platform is managed through a single pane of glass called the Commvault Command Center. The Command Center provides configuration values and streamlined procedures for data protection and recovery tasks.
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Operational Recovery includes Commvault’s leading backup and recovery capabilities which can be utilized across hybrid enterprise workloads. It includes features like Zero Trust Architecture and immutable storage to ensure critical data is protected and recoverable. This solution can be delivered as customer-managed software, as SaaS, or a mix of the two to meet the requirements of hybrid enterprises worldwide.
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Customers use the Command Center to establish their data protection environment, identify content to be protected, and initiate and monitor backups and restores. The main navigation pane provides customers with easy access to various components including downloads, forms, analytics, and monitoring.
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Organizations can automatically failover applications to the secondary site in the event of a data incident and continue running without interruption. Cyber Recovery offers the most comprehensive set of Commvault Cloud capabilities.
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The Command Center provides a controlled foundation for self-service, helping to reduce the load on administrators and IT support staff.
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Building on Operational and Autonomous Recovery Solutions, Cyber Recovery adds data backup and data validation capabilities which help organizations scan for risks, remediate issues, identify compromises in the backup data, and recover clean data at scale. This includes threat scanning to hunt for threats within backup data and cyber deception and threat detection to provide early warning of attacks.
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Commvault Disaster Recovery (“CDR”) provides an easy-to-use replication and disaster recovery solution from a single extensible platform, all managed through the Command Center. Commvault’s standalone disaster recovery solution is both easy to implement and cost-effective. It provides recovery orchestration and recovery validation for enterprise workloads across on-premise and leading clouds.
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This enables organizations to minimize the impact of attacks and aims towards a fast recovery after a cyber incident. In addition, Commvault provides customers with a variety of industry-leading offerings, including Cleanroom Recovery, HyperScale X, Air Gap Protect and Compliance. Commvault Cloud’s Cleanroom Recovery is a resilience offering.
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It provides trusted recovery of data and applications, virtual machines, and containers, along with verifiable recoverability of replicas, cost-optimized cloud data mobility, security and resilient ransomware protection. Metallic Data Protection as-a-service (“Metallic”) delivers data protection technology with the simplicity and agility of SaaS, getting companies up and running to protect critical business data within minutes.
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Traditional isolated on-premises cleanrooms can be expensive to build and maintain, and incident response plans often go untested, increasing an 4 organization’s risk and recovery time objectives.
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Powered by 4 Commvault’s intelligent data protection platform, Metallic delivers enterprise-grade data protection as a service on a cloud platform, with advanced built-in security controls. Current Metallic offerings include data protection for Office 365, virtual machines and Kubernetes, databases, files, Dynamics 365, Salesforce and endpoints.
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Our Cleanroom Recovery solution empowers organizations to be ready to recover by providing a clean, isolated, and on-demand recovery location in the cloud, as well as the ability to regularly and proactively test their response plans and recover quickly.
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Data Compliance & Governance Commvault's Data Insights portfolio is an integrated family of solutions for actionable insights, combining Commvault Data Governance, Commvault File Storage Optimization, and Commvault eDiscovery and Compliance. These solutions can operate independent of Commvault Complete Data Protection or as part of a combined solution to maximize data protection capabilities for any business.
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Commvault's Compliance is an add-on product that facilitates efficient compliance and aids in ensuring relevant legal data remains unaltered. It provides built-in reporting, auditing, and logging to help ensure data is not modified or deleted for legal and compliance purposes. It reduces the time and costs spent between IT and legal departments to expedite discovery and review.
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This means that customers can gain insights to data that isn’t protected by Commvault to drive analytics and other tasks. Data Storage Hyperscale X Commvault HyperScale X is an intuitive, easy-to-deploy and scale-out, integrated data protection solution to help enterprises transition from legacy scale-up infrastructures.
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Professional & Customer Support Services Commvault offers a wide range of professional and customer support services to complement its product portfolio. We offer multiple levels of service that can be tailored to our customers’ needs. Our services consist of: • Real-Time Support.
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It provides security and resiliency to accelerate an organization’s digital transformation journey as they move to hybrid cloud, container and virtualized environments. Its flexible architecture allows customers to get up, run quickly and scale.
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Our ESP provides additional industry technical experts who provide strategic guidance and advice to ensure our enterprise customers achieve their cyber resiliency objectives. The entire Customer Success program is centered around driving customer adoption, customer satisfaction and quick time to value. 5 • Technology Consulting Services.
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It is available in two form factors giving customers the flexibility to choose an implementation based on specific needs and preferences: • Commvault HyperScale X Appliance: A fully integrated data protection appliance that streamlines operations and infrastructure and is ideally suited for smaller deployments that want the simplicity of an all-in-one integrated appliance from a single vendor. • Commvault HyperScale X Reference Architecture: Our pre-validated designs for popular server platforms provides greater flexibility and allows customers to leverage existing vendor relationships and is ideally suited for larger environments that require greater scale.
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In addition, we offer customers staff-augmentation options via resident support engineers to assist with rapid expert deployment and operation of the Commvault portfolio. • Recovery Services.
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It enables businesses of every size to neutralize attacks before they cause harm; detecting and diverting zero-day attacks that evade conventional detection technology and circumvent security controls. Professional & Customer Support Services Commvault offers a wide range of professional and customer support services to complement its product portfolio.
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We believe these partnerships enhance our position in the market and serve as an accelerator to sales. Distributors, Value-Added Reseller, Systems Integrator, Corporate Reseller and Original Equipment Manufacturer Relationships. These partners either bundle our solutions together with their own products or resell our solutions independently.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

68 edited+31 added−5 removed110 unchanged
Biggest changeA portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks. Sales to global federal, state, and local governmental agencies account for a portion of our revenue, and we may in the future increase sales to government entities.
Biggest changeThe scope and interpretation of these laws could change and the associated burdens and our compliance costs could increase in the future. A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks.
In the future, if we fail to timely complete this assessment, or if our independent auditors are unable to express an opinion on the effectiveness of our internal controls, there may be a loss of public confidence financial reporting, the market price of our stock could decline and we could be subject to regulatory sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, which would require additional financial and management resources.
In the future, if we fail to timely complete this assessment, or if our independent auditors are unable to express an opinion on the effectiveness of our internal controls, there may be a loss of public confidence in our financial reporting, the market price of our stock could decline and we could be subject to regulatory sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, which would require additional financial and management resources.
The market price of our common stock could be subject to significant fluctuations in response to: • variations in our quarterly or annual operating results; • changes in financial estimates, treatment of our tax assets or liabilities or investment recommendations by securities analysts following our business or our competitors; • the public’s response to our press releases, rumors, our other public announcements and our filings with the SEC; 21 • changes in accounting standards, policies, guidance or interpretations or principles; • sales of common stock by our directors, officers and significant stockholders; • announcements of technological innovations or enhanced or new products by us or our competitors; • our failure to achieve operating results consistent with securities analysts’ projections; • the operating and stock price performance of other companies that investors may deem comparable to us; • broad market and industry factors, including financial instability of banking institutions; and • other events or factors, including those resulting from war, incidents of terrorism or responses to such events.
The market price of our common stock could be subject to significant fluctuations in response to: • variations in our quarterly or annual operating results; • changes in financial estimates, treatment of our tax assets or liabilities or investment recommendations by securities analysts following our business or our competitors; • the public’s response to our press releases, rumors, our other public announcements and our filings with the SEC; • changes in accounting standards, policies, guidance or interpretations or principles; • sales of common stock by our directors, officers and significant stockholders; • announcements of technological innovations or enhanced or new products by us or our competitors; • our failure to achieve operating results consistent with securities analysts’ projections; • the operating and stock price performance of other companies that investors may deem comparable to us; • broad market and industry factors, including financial instability of banking institutions; and • other events or factors, including those resulting from war, incidents of terrorism or responses to such events.
Cybersecurity breaches and other exploited security vulnerabilities could subject us to significant costs and third-party liabilities, result in improper disclosure of data and violations of applicable privacy and other laws, require us to change our business practices, cause us to incur significant remediation costs, lead to loss of customer confidence in, or decreased use of our products and services, damage our reputation, divert the attention of management from the operation of our business, result in significant compensation or contractual penalties from us to our customers and their business partners as a result of losses to or claims by them, or expose us to litigation, regulatory investigations, and significant fines and penalties.
Cybersecurity breaches or incidents and other exploited security vulnerabilities could subject us to significant costs and third-party liabilities, result in improper disclosure of data and violations of applicable privacy and other laws, require us to change our business practices, cause us to incur significant remediation costs, lead to loss of customer confidence in, or decreased use of our products and services, damage our reputation, divert the attention of management from the operation of our business, result in significant compensation or contractual penalties from us to our customers and their business partners as a result of losses to or claims by them, or expose us to litigation, regulatory investigations, and significant fines and penalties.
Other states have enacted or proposed similar laws. These developments may increase legal risk and compliance costs for us and our customers. Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security. For example, the European Union’s ("E.U.") General Data Protection Regulation ("E.U. GDPR"), and the United Kingdom’s ("U.K.") GDPR ("U.K.
Other states have enacted or proposed similar laws. These developments may increase legal risk and compliance costs for us and our customers. 14 Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security. For example, the European Union’s ("E.U.") General Data Protection Regulation ("E.U. GDPR"), and the United Kingdom’s ("U.K.") GDPR ("U.K.
A change in these principles or interpretations could have a significant effect on our reported financial results, and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. 20 Risks Related to our Common Stock Goodwill represents a portion of our assets and any impairment of these assets could negatively impact our results of operations.
A change in these principles or interpretations could have a significant effect on our reported financial results, and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. Risks Related to our Common Stock Goodwill represents a portion of our assets and any impairment of these assets could negatively impact our results of operations.
The emergence of a public health threat could pose the risk that our employees, partners, and customers may be prevented from conducting business activities at full capacity for an indefinite period, due to 15 the spread of the disease or suggested or mandated by governmental authorities.
The emergence of a public health threat could pose the risk that our employees, partners, and customers may be prevented from conducting business activities at full capacity for an indefinite period, due to the spread of the disease or suggested or mandated by governmental authorities.
We rely on indirect sales channels, such as value-added resellers, systems integrators, corporate resellers, distributors, and OEMs, for the distribution of our solutions, and the failure of these channels to effectively sell our solutions could have a material adverse effect on our revenues and results of operations.
We rely on indirect sales channels, such as value-added resellers, systems integrators, corporate resellers, distributors, OEMs, and marketplaces for the distribution of our solutions, and the failure of these channels to effectively sell our solutions could have a material adverse effect on our revenues and results of operations.
The market prices of data protection solutions companies have been extremely volatile. Stock prices of many of those companies have often fluctuated in a manner unrelated or disproportionate to their operating performance. In the past, following periods of market volatility, stockholders have often instituted securities class action litigation.
The market prices of data protection solutions companies have been extremely volatile. Stock prices of many of those companies have often fluctuated in a manner unrelated or disproportionate to their operating performance. In the past, following periods of market volatility, stockholders have often instituted securities class 22 action litigation.
In recent years, India’s government has adopted policies that are designed to promote foreign investment, including significant tax incentives, relaxation of regulatory restrictions, liberalized import and export duties and preferential rules on foreign investment and repatriations. These policies may not 17 continue.
In recent years, India’s government has adopted policies that are designed to promote foreign investment, including significant tax incentives, relaxation of regulatory restrictions, liberalized import and export duties and preferential rules on foreign investment and repatriations. These policies may not continue.
Failure to 16 safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under applicable data security, unfair practices or consumer protection laws which could have an adverse effect on our business, financial condition or operating results.
Failure to safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under applicable data security, unfair practices or consumer protection laws which could have an adverse effect on our business, financial condition or operating results.
In the future, we may enter into additional foreign currency-based hedging contracts to reduce our exposure to significant fluctuations in currency exchange rates on the balance sheet, although there can be no assurances that we will do so.
In the future, we may enter into additional foreign currency-based hedging contracts to 17 reduce our exposure to significant fluctuations in currency exchange rates on the balance sheet, although there can be no assurances that we will do so.
Due to the potential for extended period of collection, we may be exposed to more significant credit risk. 12 We develop solutions that interoperate with certain products, operating systems and hardware developed by others, and if the developers of those operating systems and hardware do not cooperate with us or we are unable to devote the necessary resources so that our solutions interoperate with those systems, our development efforts may be delayed or foreclosed and our business and results of operations may be adversely affected.
Due to the potential for extended period of collection, we may be exposed to more significant credit risk. 11 We develop solutions that interoperate with certain products, operating systems and hardware developed by others, and if the developers of those operating systems and hardware do not cooperate with us or we are unable to devote the necessary resources so that our solutions interoperate with those systems, our development efforts may be delayed or foreclosed and our business and results of operations may be adversely affected.
We are currently subject, and may become further subject, to federal, state and foreign laws and regulations regarding the privacy and protection of personal data or other potentially sensitive information.
We are currently subject, and may become further subject, to local, state, federal and foreign laws and regulations regarding the privacy and protection of personal data or other potentially sensitive information.
These resellers may give a higher priority to other software applications, including those of our competitors, or may not continue to carry data protection solutions.
These resellers may give a higher priority to other software or SaaS applications, including those of our competitors, or may not continue to carry data protection solutions.
Any failure on our part to maintain and/or expand our network of resellers could impair our ability to grow revenues in the future. 11 Some of our resellers may, either independently or jointly with our competitors, develop and market solutions that compete with our offerings. If this were to occur, these resellers might discontinue marketing and distributing our solutions.
Any failure on our part to maintain and/or expand our network of resellers could impair our ability to grow revenues in the future. 10 Some of our resellers may, either independently or jointly with our competitors, develop and market solutions that compete with our offerings. If this were to occur, these resellers might discontinue marketing and distributing our solutions.
Actual or threatened public health crises could adversely affect our business in a material way. As a global company, with employees and customers located around the world in a variety of industries, our performance may be impacted by public health crises, including the COVID-19 pandemic, which has caused global economic uncertainty.
Actual or threatened public health crises could adversely affect our business in a material way. As a global company, with employees and customers located around the world in a variety of industries, our performance may be impacted by public health crises, including the COVID-19 pandemic and its variants, which has caused global economic uncertainty.
If the cost for maintenance and support agreements, or our term-based subscription licenses, with our customers is not competitive in the market or if our customers do not renew their agreements either at all, or on terms that are less favorable to us, our business and financial performance might be adversely impacted.
If the cost for maintenance and support agreements, or our term-based subscription licenses and SaaS arrangements, with our customers is not competitive in the market or if our customers do not renew their agreements either at all, or on terms that are less favorable to us, our business and financial performance might be adversely impacted.
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the "CCPA"), imposes obligations on certain businesses to provide specific disclosures in privacy notices and grant California residents certain rights related to their personal data. The CCPA imposes statutory fines for noncompliance (up to $7,500 per violation).
For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the "CCPA"), imposes obligations on certain businesses to provide specific disclosures in privacy notices and grants California residents certain rights related to their personal data. The CCPA imposes statutory fines for noncompliance (up to $7,500 per violation).
IT system failures, network disruptions and breaches of data security could disrupt our operations by causing delays or cancellation of customer orders, impeding the delivery of our solutions, negatively affecting customer support or professional services, preventing the processing of transactions and reporting of financial results, and disturbing our enterprise resource planning system.
IT system failures, network disruptions, cybersecurity incidents and breaches of data security could disrupt our operations by causing delays or cancellation of customer orders, impeding the delivery of our solutions, negatively affecting customer support or professional services, preventing the processing of transactions and reporting of financial results, and disturbing our enterprise resource planning system.
For further discussion on our revolving credit facility, see Note 17 of the notes to the consolidated financial statements. Risks Related to our International Operations If we are unable to effectively manage certain risks and challenges related to our India operations, our business could be harmed. Our India operations are a key factor to our success.
For further discussion on our revolving credit facility, see Note 16 of the notes to the consolidated financial statements. 16 Risks Related to our International Operations If we are unable to effectively manage certain risks and challenges related to our India operations, our business could be harmed. Our India operations are a key factor to our success.
This quantitative assessment requires us to assess and make judgments regarding a variety of factors which impact the fair value of the reporting unit or asset being tested, including business plans, anticipated future cash flows, economic projections and other market data.
This qualitative assessment requires us to assess and make judgments regarding a variety of factors which impact the fair value of the reporting unit or asset being tested, including business plans, anticipated future cash flows, economic projections and other market data.
We seek to detect and investigate all security incidents and to prevent their recurrence, but attempts to gain unauthorized access to our IT systems or other attacks may be successful, and in some cases, we might be unaware of an incident or its magnitude and effects.
We seek to detect and investigate all cybersecurity incidents and to prevent their recurrence, but attempts to gain unauthorized access to our IT systems or other attacks may be successful, and in some cases, we might be unaware of an incident or its magnitude and effects.
If our customers do not renew their annual maintenance and support agreements either at all, or on terms that are less favorable to us, our business and financial performance might be adversely impacted. Additionally, a significant amount of our revenues are from term-based, or subscription license arrangements. The arrangements are typically one to three years in duration.
If our customers do not renew their annual maintenance and support agreements either at all, or on terms that are less favorable to us, our business and financial performance might be adversely impacted. Additionally, a significant amount of our revenues are from term-based software license and SaaS arrangements. The arrangements are typically one to three years in duration.
Because our solutions are concentrated within the data protection market, if the demand for backup and data protection solutions devices declines, our sales, profitability and financial condition would be materially adversely affected. Furthermore, the data protection solutions market is dynamic and evolving.
Because our solutions are concentrated within the data protection and cyber resiliency market, if the demand for backup and data protection solutions devices declines, our sales, profitability and financial condition would be materially adversely affected. Furthermore, the data protection and cyber resiliency market is dynamic and evolving.
Volatile economic conditions, including those related to the COVID-19 pandemic and its variants, the war in Ukraine and the global response, or the financial instability of banking institutions could result in our customers and resellers facing liquidity concerns leading to them not being able to satisfy their payment obligations to us, which would have a material adverse effect on our financial condition, operating results and cash flows.
Volatile economic conditions, including those related to the wars in Israel and Ukraine and the global response to the conflicts, the COVID-19 pandemic and its variants, or the financial instability of banking institutions could result in our customers and resellers facing liquidity concerns leading to them not being able to satisfy their payment obligations to us, which would have a material adverse effect on our financial condition, operating results and cash flows.
Additionally, new and emerging data privacy regimes may be applicable in Asia, including China's Personal Information Protection Law, Japan's Act on the Protection of Personal Information, and Singapore's Personal Data Protection Act.
Additionally, new and emerging data privacy regimes may be applicable in Asia, including India's Digital Personal Data Protection Act, China's Personal Information Protection Law, Japan's Act on the Protection of Personal Information, and Singapore's Personal Data Protection Act.
Our future financial performance will depend in large part on continued growth in the number of organizations adopting data protection solutions for their environments. The market for data protection solutions may not continue to grow at historic rates, or at all.
Our future financial performance will depend in large part on continued growth in the number of organizations adopting data protection and cyber resilience solutions for their environments. The market for data protection and cyber resilience solutions may not continue to grow at historic rates, or at all.
At March 31, 2023, our goodwill was approximately $127.8 million, which represented approximately 16% of our total assets. We test goodwill for impairment at least annually at the reporting unit level, or more often if an event occurs or circumstances change that would more likely than not reduce the fair value of its carrying amount.
At March 31, 2024, our goodwill was approximately $127.8 million, which represented approximately 14% of our total assets. We test goodwill for impairment at least annually at the reporting unit level, or more often if an event occurs or circumstances change that would more likely than not reduce the fair value of its carrying amount.
If these investments do not yield the expected return, or we are unable to decrease the cost of delivering our cloud services, our gross margins, overall financial results, business model and competitive position could suffer. We rely on third-party hosting providers to deliver our as-a-service offerings.
If these investments do not yield the expected return, or we are unable to decrease the cost of delivering our cloud services, our gross margins, overall financial results, business model and competitive position could suffer. We rely on third-party hosting providers to deliver our SaaS offerings.
Risks associated with this restructuring program also include additional unexpected costs, adverse effects on employee morale and the failure to meet operational and growth targets due to the loss of key employees, any of which may impair our ability to achieve anticipated results of operations or otherwise harm our business.
Risks associated with this restructuring plan also include additional unexpected costs, adverse effects on employee morale and the failure to meet operation and growth targets due to the loss of key employees, any of which may impair our ability to achieve anticipated results of operations or otherwise harm our business.
If this market fails to grow or grows more slowly than we currently anticipate, our sales and profitability could be adversely affected. Our as-a-service offerings require costly and continual infrastructure investments and if these investments do not yield the expected return, our business and financial performance might be adversely impacted.
If this market fails to grow or grows more slowly than we currently anticipate, our sales and profitability could be adversely affected. Our SaaS offerings require costly and continual infrastructure investments and if these investments do not yield the expected return, our business and financial performance might be adversely impacted.
As a result, our failure to maintain high quality support and professional services would have a material adverse effect on our sales of software applications and results of operations. We implemented a restructuring program in fiscal 2022, which we cannot guarantee will achieve its intended result.
As a result, our failure to maintain high quality support and professional services would have a material adverse effect on our sales of software applications and results of operations. We implemented a restructuring plan in fiscal 2024, which we cannot guarantee will achieve its intended results.
We rely significantly on our value-added resellers, systems integrators and corporate resellers, which we collectively refer to as resellers, for the marketing and distribution of our software applications and services. Resellers are our most significant distribution channel.
We rely significantly on our value-added resellers, systems integrators and corporate resellers, which we collectively refer to as resellers, for the marketing and distribution of our products and services. Resellers are our most significant distribution channel.
The occurrence of any of the foregoing factors may have a material adverse effect on our business and results of operations. Risks Related to Information Technology and Security We may be subject to IT system failures, network disruptions and breaches in data security.
The occurrence of any of the foregoing factors may have a material adverse effect on our business and results of operations. 18 Risks Related to Technology and Security We may be subject to IT system failures, network disruptions, cybersecurity incidents and breaches in data security.
We depend on growth in the data protection solutions market, and lack of growth or contraction in this market could have a material adverse effect on our sales and financial condition.
We depend on growth in the data protection and cyber resiliency market, and lack of growth or contraction in this market could have a material adverse effect on our sales and financial condition.
In addition, we have a non-exclusive distribution agreement with Arrow pursuant to which Arrow’s primary role is to enable a more efficient and effective distribution channel for our products and services by managing our resellers and leveraging their industry experience.
In addition, we have a non-exclusive distribution agreement with Arrow pursuant to which Arrow’s primary role is to enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience.
Arrow accounted for approximately 37% of our total revenues for both fiscal 2023 and fiscal 2022 and 36% of our total revenues in fiscal 2021.
Arrow accounted for approximately 36% of our total revenues for fiscal 2024 and 37% of our total revenues in both fiscal 2023 and fiscal 2022.
Our business may be adversely affected by the impact of the war in Ukraine and a widespread outbreak of contagious diseases, including the COVID-19 pandemic and its variants.
Our business may be adversely affected by the impact of the wars in Israel and Ukraine and a widespread outbreak of contagious diseases, including the COVID-19 pandemic and its variants.
Similarly, if our customers or partners experience liquidity issues as a result of financial institution defaults or non-performance where they hold cash assets, their ability to pay us may become impaired and could have a material adverse effect on our results of operations, including the collection of accounts receivable and cash flows.
Similarly, if our customers or partners experience liquidity issues as a result of financial institution defaults or non-performance where they hold cash assets, their ability to pay us may become impaired and could have a material adverse effect on our results of operations, including the collection of accounts receivable and cash flows. Item 1B. Unresolved Staff Comments None.
Expansion of our international operations will require a significant amount of attention from our management and substantial financial resources and might require us to add qualified management in these markets. 18 In addition to facing risks similar to the risks faced by our domestic operations, our international operations are also subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many countries, including: • adverse effects in economic conditions in the countries in which we operate related specifically to the COVID-19 pandemic and the governmental regulations put in place as a result of the virus, the war in Ukraine, and the financial instability of banking institutions; • difficulties in staffing and managing our international operations; • foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including currency exchange controls; • difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations; • general economic conditions in the countries in which we operate, including seasonal reductions in business activity in the summer months in Europe and in other periods in other countries, could have an adverse effect on our earnings from operations in those countries; • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements may occur, including those pertaining to sanctions, export restrictions, privacy and data protection, trade and employment restrictions and intellectual property protections; • longer payment cycles for sales in foreign countries and difficulties in collecting accounts receivable; • competition from local suppliers; • greater risk of a failure of our employees and partners to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
In addition to facing risks similar to the risks faced by our domestic operations, our international operations are also subject to risks related to the differing legal, political, social and regulatory requirements and economic conditions of many countries, including: • adverse effects in economic conditions in the countries in which we operate related specifically to the wars in Israel and Ukraine, the COVID-19 pandemic and the governmental regulations put in place as a result of the virus, and the financial instability of banking institutions; • difficulties in staffing and managing our international operations; • foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including currency exchange controls; • difficulties in coordinating the activities of our geographically dispersed and culturally diverse operations; • general economic conditions in the countries in which we operate, including seasonal reductions in business activity in the summer months in Europe and in other periods in other countries, could have an adverse effect on our earnings from operations in those countries; • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements may occur, including those pertaining to sanctions, export restrictions, privacy and data protection, trade and employment restrictions and intellectual property protections; • longer payment cycles for sales in foreign countries and difficulties in collecting accounts receivable; • competition from local suppliers; • greater risk of a failure of our employees and partners to comply with both U.S. and foreign laws, including antitrust regulations, the U.S.
In order to deliver our as-a-service offerings via a cloud-based deployment, we have made and will continue to make capital investments and incur substantial costs to implement and maintain this alternative business model.
In order to deliver our SaaS offerings via a cloud-based deployment, we have made and will continue to make capital investments and incur substantial costs to implement and maintain this business model.
We believe that our significant presence in India provides certain important advantages for our business, such as direct access to a large pool of skilled professionals and assistance in growing our business internationally. However, it also creates certain risks that we must effectively manage. As of March 31, 2023, we had approximately 850 employees located in India.
We believe that our significant presence in India provides certain important advantages for our business, such as direct access to a large pool of skilled professionals and assistance in growing our business internationally. However, it also creates certain risks that we must effectively manage. As of March 31, 2024, we had 1,037 employees located in India.
If these offerings do not garner widespread market adoption, or there is a reduction in demand for these services caused by a lack of customer acceptance, technological challenges, weakening economic or political conditions, security or privacy concerns, inability to properly manage such services, competing technologies and products, decreases in corporate spending or otherwise, our financial results and competitive position could suffer.
If there is a reduction in demand for these services caused by a lack of customer acceptance, technological challenges, weakening economic or political conditions, security or privacy concerns, inability to properly manage such services, competing technologies and products, decreases in corporate spending or otherwise, our financial results and competitive position could suffer.
The data protection and replication market is intensely competitive, highly fragmented and characterized by rapidly changing technology and evolving standards, changing customer requirements and frequent new product introductions. Competitors vary in size and in the scope and breadth of the products and services offered.
The cyber resiliency market is intensely competitive, highly fragmented and characterized by rapidly changing technology and evolving standards, changing customer requirements and frequent new product introductions. Competitors vary in size and in the scope and breadth of the products and services offered.
Acquisitions involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable customers, legal liabilities, the need to amortize acquired intangible assets, and intellectual property ownership and infringement risks, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
We have engaged, and may continue to engage, in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. 15 Acquisitions involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable customers, legal liabilities, the need to amortize acquired intangible assets, and intellectual property ownership and infringement risks, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Because there are inherent uncertainties involved in these factors, significant differences between these estimates and actual results could result in future impairment charges and could materially impact our future financial results. For additional information on our goodwill impairment testing, see Note 2 of the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
Because there are inherent uncertainties involved in these factors, significant differences between these estimates and actual results could result in future impairment charges and could materially impact our future financial results. For additional information on our goodwill impairment testing, see Note 2 of the notes to the consolidated financial statements.
Factors that could affect our revenues and operating results include the following: • the unpredictability of the timing and magnitude of orders for our solutions, particularly transactions greater than $100,000 in recent fiscal years, a majority of our quarterly revenues were earned and recorded near the end of each quarter; • the possibility that our customers may cancel, defer or limit purchases as a result of reduced information technology budgets; • the possibility that our customers may defer purchases of our solutions in anticipation of new solutions or updates from us or our competitors; • the ability of our OEMs and resellers to meet their sales objectives; • market acceptance of our new solutions and enhancements; • our ability to control expenses; • changes in our pricing, packaging and distribution terms or those of our competitors; and • the demands on our management, sales force and customer services infrastructure as a result of the introduction of new solutions or updates.
Factors that could affect our revenues and operating results include the following: 21 • the unpredictability of the timing and magnitude of orders for our solutions, particularly transactions greater than $100,000, as a majority of our quarterly revenues were earned and recorded near the end of each quarter; • failure to develop substantial sales pipeline for our products; • failure to attract new customers and expand sales to our existing customers, including by effectively marketing and pricing our products; • the possibility that our customers may cancel, defer or limit purchases as a result of reduced information technology budgets; • the possibility that our customers may defer purchases of our solutions in anticipation of new solutions or updates from us or our competitors; • the ability of our OEMs and resellers to meet their sales objectives; • market acceptance of our new solutions and enhancements; • our ability to control expenses; • changes in our pricing, packaging and distribution terms or those of our competitors; and • the demands on our management, sales force and customer services infrastructure as a result of the introduction of new solutions or updates.
We generated approximately 47% and 48% of our revenues from outside the United States in fiscal 2023 and fiscal 2022, respectively. International revenue decreased 1% in fiscal 2023 compared to fiscal 2022.
We generated approximately 48% and 47% of our revenues from outside the United States in fiscal 2024 and fiscal 2023, respectively. International revenue increased 9% in fiscal 2024 compared to fiscal 2023.
Demand for data protection solutions is linked to growth in the amount of data generated and stored, demand for data retention and management (whether as a result of regulatory requirements or otherwise) and demand for and adoption of new backup devices and networking technologies.
Demand for data protection and cyber resilience solutions is linked to growth in the amount of data generated and stored, demand for data retention and management (whether as a result of regulatory requirements or otherwise) demand for and adoption of new backup devices and networking technologies, and ability to respond to and recover from data breaches in a secure environment.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies in a timely manner could adversely impact our business, internal controls, results of operations, and financial condition.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies in a timely manner could adversely impact our business, internal controls, results of operations, and financial condition. We may not be successful in our initiatives that utilize AI, which could adversely affect our business, reputation, or financial results.
In the normal course of business, we are subject to examination by taxing authorities throughout the world. The final determination of tax audits and any related litigation could be materially different from our historical tax provisions and accruals. For further discussion on income taxes, see Note 12 of the notes to the consolidated financial statements.
In the normal course of business, we are subject to examination by taxing authorities throughout the world. The final determination of tax audits and any related litigation could be materially different from our historical tax provisions and accruals.
Such instability could impede our ability to fully implement our business plan and growth strategy, which would harm our business and prospects. We rely on our key personnel to execute our existing business operations and identify and pursue new growth opportunities.
Turnover at the senior management level may create instability within the Company, which could impede the Company’s day-to-day operations. Such instability could impede our ability to fully implement our business plan and growth strategy, which would harm our business and prospects. We rely on our key personnel to execute our existing business operations and identify and pursue new growth opportunities.
Furthermore, our overall effective income tax rate and tax expenses may be affected by various factors in our business, including changes in our entity structure, geographic mix of income and expenses, tax laws, and variations in the estimated and actual level of annual profits before income tax.
For further discussion on income taxes, see Note 11 of the notes to the consolidated financial statements. 20 Furthermore, our overall effective income tax rate and tax expenses may be affected by various factors in our business, including changes in our entity structure, geographic mix of income and expenses, tax laws, and variations in the estimated and actual level of annual profits before income tax.
However, these provisions could apply even if an acquisition of control of the Company may be considered beneficial by some shareholders and could delay or prevent an acquisition of control that our Board of Directors determines is not in the best interests of our Company and our shareholders. 22 General Risks Our business could be materially and adversely affected as a result of natural disasters, terrorism or other catastrophic events.
However, these provisions could apply even if an acquisition of control of the Company may be considered beneficial by some shareholders and could delay or prevent an acquisition of control that our Board of Directors determines is not in the best interests of our Company and our shareholders.
We have had, and could have, changes in senior management which could be disruptive to management and operations of the Company and could have a material effect on our business, operating results and financial conditions. Turnover at the senior management level may create instability within the Company, which could impede the Company’s day-to-day operations.
Changes in senior management or key personnel could cause disruption in the Company and have a material effect on our business. We have had, and could have, changes in senior management which could be disruptive to management and operations of the Company and could have a material effect on our business, operating results and financial conditions.
The loss of key employees could result in significant disruptions to our business, and the integration and training of replacement personnel could be costly, time consuming, cause additional disruptions to our business and be unsuccessful. Borrowing against our revolving credit facility could adversely affect our operations and financial results. We have a $100 million revolving credit facility.
The loss of key employees could result in significant disruptions to our business, and the integration and training of replacement personnel could be costly, time consuming, cause additional disruptions to our business and be unsuccessful.
Any of these events may result in the loss of, or delay in, market acceptance of our solutions or damage to our reputation, which would seriously harm our sales, results of operations and financial condition. 14 We may not receive significant revenues from our current research and development efforts for several years, if at all.
Any of these events may result in the loss of, or delay in, market acceptance of our solutions or damage to our reputation, which would seriously harm our sales, results of operations and financial condition.
These events may cause us or our customers to temporarily suspend operations and could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our solutions, our ability to collect against existing trade receivables and our operating results.
These events may cause us or our customers to temporarily suspend operations and could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our solutions, our ability to collect against existing trade receivables and our operating results. 23 We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), the loss of which would have a severe negative affect on our operations and liquidity.
This customer base experiences budgetary constraints or shifts in spending priorities regularly which may adversely affect sales of our solutions to government entities. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will successfully sell our solutions.
Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will successfully sell our solutions.
IT system failures, network disruptions and breaches of data security could also result in the unintentional disclosure of customer or our information as well as damage our reputation. There can be no assurance that a system failure, network disruption or data security breach will not have a material adverse effect on our financial condition and operating results.
There can be no assurance that a system failure, network disruption, cybersecurity incident or data security breach will not have a material adverse effect on our financial condition and operating results.
Any material decrease in the volume of sales generated by OEMs could have a material adverse effect on our revenues and results of operations in future periods.
Any material decrease in the volume of sales generated by OEMs could have a material adverse effect on our revenues and results of operations in future periods. We also sell our solutions via marketplace offerings which enable customers to purchase our solutions through online platforms, typically hosted by a cloud provider.
Any future impairment of this asset could have a material adverse effect on our results of operations. We may experience a decline in revenues or volatility in our quarterly operating results, which may adversely affect the market price of our common stock.
Any future impairment of this asset could have a material adverse effect on our results of operations, which may adversely affect the market price of our common stock. Impairment charges of long-lived assets, including assets held for sale, could adversely affect our financial condition and results of operations.
In addition, as we look to deliver new or different cloud-based services, we are making significant technology investments to deliver new capabilities and advance our software to deliver cloud-native customer experiences. We expect that over time the percentage of our revenue attributable to our as-a-service offerings will continue to 13 increase.
In addition, as we look to deliver new or different cloud-based services, we are making significant technology investments to deliver new capabilities and advance our software to deliver cloud-native customer experiences. Our revenues 12 related to SaaS offerings have increased in recent years.
Developing software is expensive, and the investment in product development may involve a long payback cycle. Our research and development expenses were $141.8 million, or 18% of our total revenues in fiscal 2023, $153.6 million, or 20% of our total revenues in fiscal 2022 and $133.4 million, or 18% of our total revenues in fiscal 2021.
Our research and development expenses were $132.3 million, or 16% of our total revenues in fiscal 2024, $141.8 million, or 18% of our total revenues in fiscal 2023 and $153.6 million, or 20% of our total revenues in fiscal 2022.
These attempts, which might be related to industrial, corporate or other espionage, criminal hackers or state-sponsored intrusions, include trying to covertly introduce malware or ransomware to our environments and impersonating authorized users. 19 Third-party service providers that we may rely on to back up and process our confidential information may also be subject to similar threats.
Bad actors regularly attempt to gain unauthorized access to our IT systems, and many such attempts are increasingly sophisticated. These attempts, which might be related to industrial, corporate or other espionage, criminal hackers or state-sponsored intrusions, include trying to covertly introduce malware or ransomware to our environments and impersonating authorized users.
In fiscal 2022, we initiated a restructuring plan to increase efficiency in our sales, marketing and distribution functions while reducing costs across all functional areas. We cannot guarantee the restructuring program will achieve its intended result.
In fiscal 2024, we initiated a restructuring plan to enhance customer satisfaction, optimize operational efficiency, and align our customer experience functions with our strategic goals. We cannot guarantee the restructuring plan will achieve its intended results.
As of March 31, 2023, there were no borrowings under the credit facility.
Borrowing against our revolving credit facility could adversely affect our operations and financial results. We have a $100 million revolving credit facility. As of March 31, 2024, there were no borrowings under the credit facility.
Removed
We have engaged, and may continue to engage, in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Added
The marketplace allows us to publish an offer which an end user can then purchase directly, or through the assistance of a partner. Similar to our resellers and OEMs, marketplace providers have no obligation to sell or recommend our solutions or offer our solutions exclusively or at all.
Removed
The scope and interpretation of these laws could change and the associated burdens and our compliance costs could increase in the future. Changes in senior management or key personnel could cause disruption in the Company and have a material effect on our business.
Added
Sales through the marketplace have not been material to date; however, we anticipate an increase in revenue through this channel. Failure to effectively compete in the marketplace could have a material adverse effect on our revenues and results of operations in future periods.
Removed
Bad actors regularly attempt to gain unauthorized access to our IT systems, and many such attempts are increasingly sophisticated. The perception that the COVID-19 pandemic has made companies’ IT systems more vulnerable has increased the already significant volume of such attempts.
Added
Incorrect or improper implementation or use of our data security solutions could result in customer dissatisfaction and harm our business, financial condition, and results of operations. 13 Our products are deployed by our customers and partners in a wide variety of IT infrastructures, including large-scale, complex technology environments, and we believe our future success will depend, at least in part, on our ability to support such deployments.
Removed
We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), the loss of which would have a severe negative affect on our operations and liquidity.
Added
Implementations of our products may be technically complicated, and it may not be easy to maximize the value of our products without proper implementation, training, and support. Some of our customers have experienced difficulties implementing our products in the past and may experience implementation difficulties in the future.
Removed
For example, in response to the rapidly declining financial condition of regional banks Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”), the California Department of Financial Protection and Innovation and the New York State Department of Financial Services closed SVB and Signature on March 10, 2023 and March 12, 2023, respectively, and the FDIC was appointed as receiver for SVB and Signature.
Added
If our customers and partners are unable to implement our products successfully, perceptions of our products may be impaired, our reputation and brand may suffer, or customers may choose not to renew their subscriptions or purchase additional products from us.
Added
Any failure by customers or partners to appropriately implement our products could result in customer dissatisfaction, impact the perceived reliability of our products, result in negative press coverage, negatively affect our reputation, and harm our business, financial condition, and results of operations.
Added
We may not receive significant revenues from our current research and development efforts for several years, if at all. Developing software and technology is expensive, and the investment in product development may involve a long payback cycle.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe agreement includes a due diligence period for the buyer, is contingent on receiving approvals from certain government agencies, and includes other customary closing conditions. We believe the sale will likely close in the first half of fiscal 2024. Upon closing of the transaction, Commvault will enter into a lease for a portion of the premises.
Biggest changeWe believe the sale will be completed in calendar year 2024. Upon closing of the transaction, we intend to enter into a lease for a portion of the premises.
Item 2. Properties Our principal administrative, sales, marketing, customer support and research and development facility is located at our owned corporate headquarters in Tinton Falls, New Jersey. In January 2023 we entered into an agreement to sell the property.
Item 2. Properties Our principal administrative, sales, marketing, customer support and research and development facility is located at our owned corporate headquarters in Tinton Falls, New Jersey. In January 2023, we entered into an exclusive agreement to sell the property. The exclusivity expired in January 2024 and we are currently marketing the corporate headquarters for sale.
In addition, we have offices in the United States in California, Florida and Texas; and outside the United States in Australia, Austria, Belgium, Canada, China, Denmark, France, Germany, Hong Kong, India, Israel, Italy, Netherlands, Poland, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, United Arab Emirates, and United Kingdom.
In addition, we have offices in the United States in Florida and Texas; and outside the United States in Australia, Belgium, Brazil, Canada, China, Denmark, France, Germany, India, Israel, Italy, Japan, Malaysia, Netherlands, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, United Arab Emirates, and United Kingdom.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeA summary of our repurchases of common stock is as follows: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Approximate dollar value of shares that may yet be purchased under the program (in thousands) January 1-31, 2023 284,000 $ 60.37 284,000 $142,725 February 1-28, 2023 513,000 62.77 513,000 110,526 March 1-31, 2023 203,500 56.25 203,500 99,079 * Three months ended March 31, 2023 1,000,500 $ 60.76 1,000,500 *On April 20, 2023, the Board of Directors approved an increase in our share repurchase program so that $250.0 million was available.
Biggest changeA summary of our repurchases of common stock is as follows: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Approximate dollar value of shares that may yet be purchased under the program (in thousands) January 1-31, 2024 132,303 $ 78.88 132,303 $ 111,875 February 1-29, 2024 210,163 93.78 210,163 92,166 March 1-31, 2024 204,571 98.85 204,571 71,944 * Three months ended March 31, 2024 547,037 $ 92.07 547,037 *On April 18, 2024, the Board of Directors approved an increase in our share repurchase program so that $250.0 million was available.
Our future decisions concerning the payment of dividends on our common stock will depend upon our results of operations, financial condition and capital expenditure plans, as well as any other factors that the Board of Directors, in its sole discretion, may consider relevant. 25 Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between March 31, 2018 and March 31, 2023, with the cumulative total return of (i) The Nasdaq Computer Index and (ii) The Nasdaq Composite Index, over the same period.
Our future decisions concerning the payment of dividends on our common stock will depend upon our results of operations, financial condition and capital expenditure plans, as well as any other factors that the Board of Directors, in its sole discretion, may consider relevant. 26 Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between March 31, 2019 and March 31, 2024, with the cumulative total return of (i) The Nasdaq Composite Index and (ii) The Nasdaq Computer Index, over the same period.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for our Common Stock Our common stock is listed and traded on The Nasdaq Stock Market under the symbol “CVLT”. Stockholders As of May 3, 2023, there were approximately 43 holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for our Common Stock Our common stock is listed and traded on The Nasdaq Stock Market under the symbol “CVLT”. Stockholders As of May 9, 2024, there were approximately 41 holders of our common stock.
This graph assumes the investment of $100,000 on March 31, 2018 in our common stock, The Nasdaq Composite Index and The Nasdaq Computer Index, and assumes the reinvestment of dividends, if any. The graph assumes the initial value of our common stock on March 31, 2018 was the closing sales price of $57.20 per share.
This graph assumes the investment of $100,000 on March 31, 2019 in our common stock, The Nasdaq Composite Index and The Nasdaq Computer Index, and assumes the reinvestment of dividends, if any. The graph assumes the initial value of our common stock on March 31, 2019 was the closing sales price of $64.74 per share.
As a result, $99.1 million remained available under the current authorization.
As a result, $71.9 million remained available under the current authorization.
Information used in the graph was obtained from Nasdaq, a source we believe to be reliable, but we are not responsible for any errors or omissions in such information. 3/31/2018 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 Commvault 100.00 113.18 70.77 112.76 116.00 99.20 Nasdaq Composite Index 100.00 109.43 109.01 187.54 201.33 173.03 Nasdaq Computer Index 100.00 111.52 125.07 219.28 263.47 235.80 26 Issuer Purchases of Equity Securities During the three months ended March 31, 2023, we repurchased $60.8 million of common stock, or approximately 1.0 million shares, under our repurchase program.
Information used in the graph was obtained from Nasdaq, a source we believe to be reliable, but we are not responsible for any errors or omissions in such information. 3/31/2019 3/31/2020 3/31/2021 3/31/2022 3/31/2023 3/31/2024 Commvault 100.00 62.53 99.63 102.49 87.64 156.67 Nasdaq Composite Index 100.00 99.62 171.38 183.98 158.12 211.91 Nasdaq Computer Index 100.00 112.16 196.63 236.26 211.45 316.72 27 Issuer Purchases of Equity Securities During the three months ended March 31, 2024, we repurchased $50.4 million of common stock, or approximately 0.5 million shares, under our repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWhile we are not obligated to, our current practice is to repurchase shares using at least 75% of free cash flow (operating cash flow less capital expenditures). 36 A summary of the cash used for the stock repurchase program consists of the following: Year Ended March 31, 2023 2022 2021 2020 2019 Cash used for repurchases (in thousands) $ 150,921 $ 305,239 $ 95,259 $ 77,198 $ 132,697 Shares repurchased (in thousands) 2,521 4,307 1,643 1,701 2,115 Average price per share $ 59.90 $ 70.87 $ 57.97 $ 45.37 $ 62.74 Our summarized cash flow information is as follows (in thousands): Year Ended March 31, 2023 2022 Net cash provided by operating activities $ 170,288 $ 177,180 Net cash used in investing activities (5,286) (24,444) Net cash used in financing activities (135,579) (276,088) Effects of exchange rate — changes in cash (9,152) (6,378) Net increase (decrease) in cash and cash equivalents $ 20,271 $ (129,730) - Net cash provided by operating activities was impacted by: • Fiscal 2023: net loss adjusted for the impact of non-cash charges, including the impairment of our owned corporate headquarters, and increases in deferred revenue partially offset by decreases in accrued expenses. • Fiscal 2022: net income adjusted for the impact of non-cash charges and increases in deferred revenue and accrued expenses, partially offset by increases in accounts receivable and deferred commissions. - Net cash used in investing activities was impacted by: • Fiscal 2023: $3.2 million of capital expenditures and $2.1 million for the purchase of equity securities. • Fiscal 2022: $16.9 million used for the acquisition of TrapX, $3.9 million of capital expenditures and $4.1 million for the purchase of equity securities partially offset by proceeds of $0.5 million related to the sale of an equity investment. 37 - Net cash used in financing activities was impacted by: • Fiscal 2023: $150.9 million used to repurchase shares of our common stock under our repurchase program, $0.1 million of debt issuance costs paid partially offset by $15.4 million of proceeds from the exercise of stock options and the Employee Stock Purchase Plan. • Fiscal 2022: $305.2 million used to repurchase shares of our common stock under our repurchase program, $0.6 million of debt issuance costs paid partially offset by $29.7 million of proceeds from the exercise of stock options and the Employee Stock Purchase Plan.
Biggest changeA summary of the cash used for the stock repurchase program consists of the following: Year Ended March 31, 2024 2023 2022 2021 2020 Cash used for repurchases (in thousands) $ 184,021 $ 150,921 $ 305,239 $ 95,259 $ 77,198 Shares repurchased (in thousands) 2,479 2,521 4,307 1,643 1,701 Average price per share $ 74.24 $ 59.90 $ 70.87 $ 57.97 $ 45.37 Our summarized cash flow information is as follows (in thousands): Year Ended March 31, 2024 2023 Net cash provided by operating activities $ 203,798 $ 170,288 Net cash used in investing activities (5,521) (5,286) Net cash used in financing activities (170,581) (135,579) Effects of exchange rate — changes in cash (2,720) (9,152) Net increase in cash and cash equivalents $ 24,976 $ 20,271 - Net cash provided by operating activities was impacted by: • Fiscal 2024: net income adjusted for the impact of non-cash charges and increases in deferred revenue, partially offset by increases in accounts receivable. 38 • Fiscal 2023: net loss adjusted for the impact of non-cash charges, including the impairment of our owned corporate headquarters and increases in deferred revenue partially offset by decreases in accrued expenses. - Net cash used in investing activities was impacted by: • Fiscal 2024: $4.1 million of capital expenditures and $1.4 million for the purchase of equity securities. • Fiscal 2023: $3.2 million of capital expenditures and $2.1 million for the purchase of equity securities. - Net cash used in financing activities was impacted by: • Fiscal 2024: $184.0 million used to repurchase shares of our common stock under our repurchase program, partially offset by $13.4 million of proceeds from the exercise of stock options and the Employee Stock Purchase Plan. • Fiscal 2023: $150.9 million used to repurchase shares of our common stock under our repurchase program and $0.1 million of debt issuance costs paid, partially offset by $15.4 million of proceeds from the exercise of stock options and the Employee Stock Purchase Plan.
Outstanding borrowings under the Credit Facility accrue interest at an annual rate equal to Secured Overnight Financing Rate plus 1.25% subject to increases based on our actual leverage. The unused balance on the Credit Facility is also subject to a 0.25% annual interest charge subject to increases based on our actual leverage.
Outstanding borrowings under the Credit Facility accrue interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.25% subject to increases based on our actual leverage. The unused balance on the Credit Facility is also subject to a 0.25% annual interest charge subject to increases based on our actual leverage.
The Credit Facility also contains certain customary events of default which would permit the lender to, among other things, declare all loans then outstanding to be immediately due and payable if such default is not cured within applicable grace periods.
The Credit Facility also contains certain customary events of default 37 which would permit the lender to, among other things, declare all loans then outstanding to be immediately due and payable if such default is not cured within applicable grace periods.
We do not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the new subscription period. 30 We also offer appliances that integrate our software with hardware and address a wide-range of business needs and use cases, ranging from support for remote or branch offices with limited IT staff up to large corporate data centers.
We do not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the new subscription period. 31 We also offer appliances that integrate our software with hardware and address a wide-range of business needs and use cases, ranging from support for remote or branch offices with limited IT staff up to large corporate data centers.
If Arrow were to discontinue or reduce the sales of our products or if our agreement with Arrow was terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace Arrow, there could be a material adverse effect on our future business.
If Arrow were to discontinue or reduce the sales of our solutions or if our agreement with Arrow was terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace Arrow, there could be a material adverse effect on our future business.
Summary Disclosures about Contractual Obligations and Commercial Commitments Our material capital commitments consist of obligations under facilities and operating leases. Some of these leases have free or escalating rent payment provisions. Refer to the notes to the consolidated financial statements for further discussion on operating leases.
Summary Disclosures about Contractual Obligations and Commercial Commitments Our material capital commitments consist of obligations under facilities and operating leases. Some of these leases have free or escalating rent payment provisions. Refer to Note 15 of the notes to the consolidated financial statements for further discussion on operating leases.
Impact of Recently Issued Accounting Standards See Note 2 of the notes to the consolidated financial statements for a discussion of the impact of recently issued accounting standards. 38
Impact of Recently Issued Accounting Standards See Note 2 of the notes to the consolidated financial statements for a discussion of the impact of recently issued accounting standards.
Goodwill We test goodwill for impairment at least annually, on January 1, by performing a quantitative assessment of whether the fair value of each reporting unit or asset exceeds its carrying amount. We have one reporting unit. Goodwill is tested at this reporting unit level.
Goodwill We test goodwill for impairment at least annually, on January 1, by performing a qualitative assessment of whether the fair value of each reporting unit or asset exceeds its carrying amount. We have one reporting unit. Goodwill is tested at this reporting unit level.
The following is a description of these critical accounting policies. Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers . Our revenue recognition policies require us to make significant judgments and estimates.
The following is a description of these critical accounting policies. Revenue Recognition We account for revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers . Our revenue recognition policies require us to make significant judgments and estimates.
Foreign Currency Exchange Rates’ Impact on Results of Operations Sales outside the United States were 47% of our total revenue for fiscal 2023 and 48% for both fiscal 2022 and fiscal 2021. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period.
Foreign Currency Exchange Rates’ Impact on Results of Operations Sales outside the United States were 48% of our total revenue for fiscal 2024, 47% for fiscal 2023 and 48% for fiscal 2022. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period.
Our actual results may differ materially from those contained in or implied by any forward-looking statements. For discussion comparing the period ended March 31, 2022 to March 31, 2021, please refer to our Annual Report on Form 10-K, filed with the SEC on May 6, 2022.
Our actual results may differ materially from those contained in or implied by any forward-looking statements. For discussion comparing the period ended March 31, 2023 to March 31, 2022, please refer to our Annual Report on Form 10-K, filed with the SEC on May 5, 2023.
Our typical performance obligations include the following: Performance Obligation When Performance Obligation is Typically Satisfied When Payment is Typically Due How Standalone Selling Price is Typically Estimated Software and Products Revenue Software Licenses Upon shipment or made available for download (point in time) Within 90 days of shipment except for certain subscription licenses which are paid for over time Residual approach Customer Support Revenue Software Updates Ratably over the course of the support contract (over time) At the beginning of the contract period Observable in renewal transactions Customer Support Ratably over the course of the support contract (over time) At the beginning of the contract period Observable in renewal transactions Other Services Revenue Other Professional Services (except for education services) As work is performed (over time) Within 90 days of services being performed Observable in transactions without multiple performance obligations Education Services When the class is taught (point in time) Within 90 days of services being performed Observable in transactions without multiple performance obligations As-a-service (Metallic) Ratably over the course of the contract (over time) Annually or at the beginning of the contract period Observable in transactions without multiple performance obligations 31 Accounting for Income Taxes Under ASC 740, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts.
Our typical performance obligations include the following: Performance Obligation When Performance Obligation is Typically Satisfied When Payment is Typically Due How Standalone Selling Price is Typically Estimated Subscription Term-based software licenses Upon shipment or made available for download (point in time) Within 90 days of shipment except for certain subscription licenses which are paid for over time Residual approach Software-as-a-service (SaaS) Ratably over the course of the contract (over time) Annually or at the beginning of the contract period Observable in transactions without multiple performance obligations Perpetual License Perpetual software licenses Upon shipment or made available for download (point in time) Within 90 days of shipment Residual approach Customer Support Software updates Ratably over the course of the support contract (over time) At the beginning of the contract period Observable in renewal transactions Customer support Ratably over the course of the support contract (over time) At the beginning of the contract period Observable in renewal transactions Other Services Other professional services (except for education services) As work is performed (over time) Within 90 days of services being performed Observable in transactions without multiple performance obligations Education services When the class is taught (point in time) Within 90 days of services being performed Observable in transactions without multiple performance obligations 32 Accounting for Income Taxes Under ASC 740, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts.
We generated 37% of our total revenues through Arrow in both fiscal 2023 and fiscal 2022, and 36% of our total revenues in fiscal 2021.
We generated 36% of our total revenues through Arrow in fiscal 2024, and 37% of our total revenues in both fiscal 2023 and fiscal 2022.
We recognized net foreign currency transaction losses of $1.2 million in fiscal 2023, insignificant losses in fiscal 2022 and losses of $1.9 million in fiscal 2021. Critical Accounting Policies In presenting our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), we are required to make estimates and judgments that affect the amounts reported therein.
We recognized net foreign currency transaction losses of $2.4 million and $1.2 million in fiscal 2024 and fiscal 2023, respectively, and insignificant losses in fiscal 2022. 30 Critical Accounting Policies In presenting our consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), we are required to make estimates and judgments that affect the amounts reported therein.
On April 20, 2023, the Board of Directors approved an increase in our share repurchase program so that $250.0 million was available. The Board's authorization has no expiration date.
On April 18, 2024, the Board of Directors approved an increase in our share repurchase program so that $250.0 million was available. The Board's authorization has no expiration date.
Software revenue for both perpetual and subscription licenses is typically recognized when the software is delivered and/or made available for download as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property.
Revenues for both perpetual and term-based licenses is typically recognized when the software is delivered and/or made available for download as this is the point the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property.
Risks associated with this restructuring program also include additional unexpected costs, adverse effects on employee morale and the failure to meet operational and growth targets due to the loss of key employees, any of which may impair our ability to achieve anticipated results of operations or otherwise harm our business. 35 - Depreciation and amortization expense decreased $0.4 million, from $9.7 million in fiscal 2022 to $9.3 million in fiscal 2023, driven by the reclassification of our owned corporate headquarters as assets held for sale. - Impairment charges: During the fourth quarter of fiscal 2023, we entered into an agreement to sell our owned corporate headquarters in Tinton Falls, New Jersey.
Risks associated with our restructuring plans include additional unexpected costs, adverse effects on employee morale and the failure to meet operational and growth targets due to the loss of key employees, any of which may impair our ability to achieve anticipated results of operations or otherwise harm our business. – Depreciation and amortization expense decreased $2.9 million, from $9.3 million in fiscal 2023 to $6.4 million in fiscal 2024, driven by the reclassification of our owned corporate headquarters as assets held for sale in the fourth quarter of fiscal 2023. – Impairment charges: During the fourth quarter of fiscal 2023, we entered into an exclusive agreement to sell our owned corporate headquarters in Tinton Falls, New Jersey.
The failure of our indirect distribution channels or our direct sales force to effectively sell our software applications could have a material adverse effect on our revenues and results of operations.
The failure of our indirect distribution channels or our direct sales force to effectively sell our products and services could have a material adverse effect on our revenues and results of operations.
The valuation allowance is material to our financial statements. In the future, changes to our estimates regarding the realizability of our gross deferred tax assets could materially impact our results of operations. We conduct business globally and as a result, file income tax returns in the United States and in various state and foreign jurisdictions.
In the future, changes to our estimates regarding the realizability of our gross deferred tax assets could materially impact our results of operations. We conduct business globally and as a result, file income tax returns in the United States and in various state and foreign jurisdictions.
Also included in this category are other general corporate expenses, such as outside legal and accounting services, compliance costs and insurance; and • Depreciation and Amortization , consists of depreciation expense primarily for our owned corporate campus headquarters location, computer equipment we use for information services and in our development and test labs and amortization of intangible assets.
Also included in this category are other general corporate expenses, such as outside legal and accounting services, compliance costs and insurance; and • Depreciation and Amortization , consists of depreciation expense for computer equipment we use for information services and in our development and test labs, amortization of intangible assets, and in fiscal years 2023 and 2022, depreciation for our owned corporate headquarters.
We have a non-exclusive distribution agreement with Arrow pursuant to which Arrow's primary role is to enable a more efficient and effective distribution channel for our products and services by managing our reseller partners and leveraging their own industry experience.
We have a non-exclusive distribution agreement with Arrow pursuant to which Arrow's primary role is to enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience.
To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions generally results in increased revenue, operating expenses and income from operations for our non-U.S. operations.
To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions generally results in increased revenue, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenue, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.
As of March 31, 2023, there were no borrowings under the Credit Facility and we were in compliance with all covenants. During the year ended March 31, 2023, we repurchased $150.9 million of common stock, or approximately 2.5 million shares.
As of March 31, 2024, there were no borrowings under the Credit Facility and we were in compliance with all covenants. During the fiscal year ended March 31, 2024, we repurchased $184.0 million of common stock, or approximately 2.5 million shares.
For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of software and appliances are typically estimated using the residual approach.
For these contracts, we evaluate and account for individual performance obligations separately if they are determined to be distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices of software licenses (both perpetual and term-based) are typically estimated using the residual approach.
In applying our revenue recognition policy, we must determine which portions of our revenue are recognized currently (generally software and products revenue) and which portions must be deferred and recognized in future periods (generally services revenue).
In applying our revenue recognition policy, we must determine which portions of our revenue are recognized currently (generally software related revenue) and which portions must be deferred and recognized in future periods (generally SaaS, customer support, and other services revenue).
Royalty expense, included in cost of software and products revenues, was $9.3 million in fiscal 2023 and $11.2 million in fiscal 2022. We offer a 90-day limited product warranty for our software. To date, costs relating to this product warranty have not been material.
Royalty expense, included in cost of subscription and perpetual license revenues, was $9.7 million in fiscal 2024 and $9.3 million in fiscal 2023. We offer a 90-day limited product warranty for our software. To date, costs relating to this product warranty have not been material.
We have never incurred a liability relating to one of these indemnification provisions in the past and we believe that the likelihood of any future payout relating to these provisions is remote. Therefore, we have not recorded a liability during any period related to these indemnification provisions.
These provisions continue in perpetuity along with our software licensing and SaaS agreements. We have never incurred a liability relating to one of these indemnification provisions in the past and we believe that the likelihood of any future payout relating to these provisions is remote. Therefore, we have not recorded a liability during any period related to these indemnification provisions.
Our data protection offerings are delivered via self-managed software, software-as-a-service (SaaS), integrated appliances, or managed by partners. Customers use our technology to protect themselves from threats like ransomware and recover their data. Industry The industry in which we currently operate continues to go through accelerating changes as the result of compounding data growth and the introduction of new technologies.
Our offerings are delivered via self-managed software, software-as-a-service ("SaaS"), integrated appliances, or managed by partners. Customers use our Commvault Cloud platform to protect themselves from threats like ransomware and recover their data efficiently. Industry Our industry continues to go through accelerating changes as the result of compounding data growth, increasing security threats, and the introduction of new technologies.
In assessing the need for a valuation allowance, we weigh the available positive and negative evidence, including historical levels of pre-tax income, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies.
In assessing the need for a valuation allowance, we considered all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies.
We typically offer appliances via a software only model in which we sell software to a third party, which assembles an integrated appliance that is sold to end user customers. As a result, the revenue and costs associated with hardware are usually not included in our financial statements. Services revenue includes revenue from customer support, SaaS, and other professional services.
Our appliances are almost exclusively sold via a software only model in which we sell software to a third party, which assembles an integrated appliance that is sold to end user customers. As a result, the revenues and costs associated with hardware are usually not included in our financial statements.
Software and products revenue generated through direct distribution channels accounted for approximately 10% of total software and products revenue in recent fiscal years.
Subscription revenue generated through indirect distribution channels accounted for approximately 90% of total subscription revenue in recent fiscal years. Subscription revenue generated through direct distribution channels accounted for approximately 10% of total subscription revenue in recent fiscal years.
The software is delivered before related services are provided and is functional without professional services, updates and technical support. We have concluded that our software licenses (both perpetual and subscription) are functional intellectual property that is distinct, as the user can benefit from the software on its own.
We have concluded that our software licenses (both perpetual and subscription) are functional intellectual property that is distinct, as the user can benefit from the software on its own.
We believe that it is more likely than not that we will not realize the benefits of our gross deferred tax assets and therefore have recorded a valuation allowance to reduce the carrying value of these gross deferred tax assets, net of the impact of the reversal of taxable temporary differences, to zero.
In prior years, we believed that it was more likely than not that we would not realize the benefits of our gross deferred tax assets and therefore had recorded a valuation allowance to reduce the carrying value of those deferred tax assets, net of the impact of the reversals of taxable temporary differences, to zero.
Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis.
Standalone selling prices for SaaS, customer support contracts, and other services are typically estimated based on observable transactions when these services are sold on a standalone basis.
Description of Costs and Expenses Our cost of revenues is as follows: • Cost of Software and Products Revenue , consists primarily of the cost of third-party royalties and other costs such as media, manuals, translation and distribution costs, and hardware associated with our appliances; and • Cost of Services Revenue , consists of salary and employee benefit costs in providing customer support and other professional services as well as third-party hosting fees related to our as-a-service offerings.
Revenues from other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed. 29 Description of Costs and Expenses Our cost of revenues is as follows: • Cost of Subscription Revenue , consists primarily of the cost of third-party royalties and other costs such as media, manuals, translation and distribution costs, and hardware associated with our appliances as well as third-party hosting fees related to our SaaS offerings; • Cost of Perpetual License Revenue , consists primarily of the cost of third-party royalties and other costs such as media, manuals, translation and distribution costs; • Cost of Customer Support Revenue , consists of salary and employee benefit costs in providing customer support services; and • Cost of Other Services Revenue , consists of salary and employee benefit costs in providing professional services.
Deals initiated by our direct sales force are sometimes transacted through indirect channels based on end-user customer requirements and vice versa, which are not always in our control and can cause this overall percentage split to vary from fiscal year to fiscal year.
Deals initiated by our direct sales force are sometimes transacted through indirect channels based on end-user customer requirements, which are not always in our control and can cause this overall percentage split to vary from period-to-period. As such, there may be fluctuations in the dollars and percentage of subscription revenue generated through our direct distribution channels from time-to-time.
As such, there may be fluctuations in the dollars and percentage of software and products revenue generated through our direct distribution channels from time to time. We believe that the growth of our software and products revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy.
We believe that the growth of our subscription revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy.
Income Tax Expense Income tax expense was $20.4 million in fiscal 2023 compared to expense of $9.8 million in fiscal 2022. The income tax expense for the year ended March 31, 2023 relates primarily to current U.S. and foreign taxes.
Income Tax Expense (Benefit) Income tax benefit was $85.3 million in fiscal 2024 compared to expense of $20.4 million in fiscal 2023. The income tax benefit for the fiscal year ended March 31, 2024 relates primarily to the release of the previously recorded valuation allowance against certain deferred tax assets in the U.S. and foreign jurisdictions.
Off-Balance Sheet Arrangements As of March 31, 2023, we did not have off-balance sheet financing arrangements, including any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Off-Balance Sheet Arrangements As of March 31, 2024, we did not have off-balance sheet financing arrangements, including any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities. 39 Indemnifications Certain of our software licensing agreements contain certain provisions that indemnify our customers from any claim, suit or proceeding arising from alleged or actual intellectual property infringement.
We continue to focus on subscription and other recurring revenue arrangements and continue to generate revenue from the renewals of subscription licenses sold in prior years. Any of our pricing models (capacity, instance based, etc.) can be sold via a subscription arrangement. In these arrangements, the customer has the right to use the software over a designated period of time.
We are focused on these types of recurring revenue arrangements. 28 We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenses and SaaS offerings sold in prior years. Any of our pricing models (capacity, instance based, etc.) can be sold via a subscription arrangement, either through term-based licensing or hosted services.
Overview Incorporated in Delaware in 1996, Commvault Systems, Inc. provides its customers with a data protection platform that helps them secure, defend and recover their most precious asset, their data. We provide these products and services for their data across the following environments: on-premises, hybrid, or multi-cloud.
Overview Incorporated in Delaware in 1996, Commvault Systems, Inc. provides its customers with a scalable platform that enhances customers' cyber resiliency by protecting their data in a world of increasing threats. We provide these products and services for their data across many types of environments, including on-premises, hybrid and multi-cloud.
On December 13, 2021, we entered into a five-year $100 million senior secured revolving credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A.. The Credit Facility is available for share repurchases, general corporate purposes, and letters of credit. The Credit Facility contains financial maintenance covenants including a leverage ratio and interest coverage ratio.
The Credit Facility is available for share repurchases, general corporate purposes, and letters of credit. The Credit Facility contains financial maintenance covenants including a leverage ratio and interest coverage ratio.
The capacity of the license is fixed and the customer has made an unconditional commitment to pay. Software revenue in these arrangements is generally recognized when the software is delivered. During the fiscal year ended March 31, 2023, approximately 79% of software license revenue was sold under a subscription model.
In term-based license arrangements, the customer has the right to use the software over a designated period of time. The capacity of the license is fixed and the customer has made an unconditional commitment to pay. Software revenue in these arrangements is generally recognized when the software is delivered.
The amount of cash and cash equivalents held outside of the United States by our foreign legal entities was approximately $183.3 million. In recent fiscal years, our principal source of liquidity has been cash provided by operations. These balances are dispersed across approximately 35 international locations around the world.
Liquidity and Capital Resources In recent fiscal years, our principal source of liquidity has been cash provided by operations. As of March 31, 2024, our cash and cash equivalents balance was $312.8 million, of which approximately $214.2 million was held outside of the United States by our foreign legal entities.
These charges include $2.6 million in fiscal 2023 and $1.7 million in fiscal 2022 of stock-based compensation related to modifications of existing awards granted to certain employees included in the restructuring. We cannot guarantee the restructuring program will achieve its intended result.
These expenses included $2.6 million in fiscal 2023 of stock-based compensation related to modifications of existing awards granted to certain employees impacted by the plan.
Similarly, our revenue, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies. 29 Using the average foreign currency exchange rates from fiscal 2022, our software and products revenue would have been higher by $15.1 million, our services revenue would have been higher by $19.7 million, our cost of sales would have been higher by $4.2 million and our operating expenses would have been higher by $18.6 million from non-U.S. operations for fiscal 2023.
Using the average foreign currency exchange rates from fiscal 2023, our total revenues would have been lower by $4.1 million, our cost of revenues would have been higher by $0.1 million, and our operating expenses would have been lower by $1.4 million from non-U.S. operations for fiscal 2024.
Services include customer support (software updates and technical support), consulting, assessment and design services, installation services, customer education and as-a-service, which is branded as Metallic. We sell both perpetual and term-based licenses of our software. We refer to our term-based software licenses as subscription arrangements. We do not customize our software and installation services are not required.
We refer to our term-based software licenses as subscription arrangements. We do not customize our software and installation services are not required. The software is delivered before related services are provided and is functional without professional services, updates and technical support.
Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. We sell our customer support contracts as a percentage of net software purchases the support is related to. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses.
Our c ustomer support revenue includes support contracts tied to our software products. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements. We sell our customer support contracts as a percentage of net software.
Changes in judgment on any of these factors could materially impact the timing and amount of revenue recognized in a given period. We record revenue net of sales tax. We derive revenue from two primary sources: software and products, and services. Software and products revenue includes our software and integrated appliances that combine our software with hardware.
Changes in judgment on any of these factors could materially impact the timing and amount of revenue recognized in a given period. We recognize revenue net of sales tax. We generate revenues through subscription arrangements, perpetual software licenses, customer support contracts and other services.
Our software and products revenue in International is subject to changes in foreign exchange rates as further discussed above in the “Foreign Currency Exchange Rates’ Impact on Results of Operations” section. 33 Cost of Revenues and Gross Margin ($ in millions) - Total cost of revenues increased $21.5 million and represented 17% and 15% of our total revenues in fiscal 2023 and fiscal 2022, respectively. - Cost of software and products revenue increased $0.6 million and represented 4% of software and products revenue in both fiscal 2023 and fiscal 2022. - Cost of services revenue increased $20.9 million and represented 28% of our services revenue in fiscal 2023 compared to 24% in fiscal 2022.
Our total revenues in International is subject to changes in foreign exchange rates as further discussed above in the “Foreign Currency Exchange Rates’ Impact on Results of Operations” section. 34 Cost of Revenues and Gross Margin ($ in millions) Year Ended March 31, 2024 2023 Cost of Revenues Gross Margin Cost of Revenues Gross Margin Subscription $ 58.4 86 % $ 44.5 87 % Perpetual license 2.2 96 % 2.4 97 % Customer support 60.8 80 % 58.3 81 % Other services 30.3 32 % 30.2 37 % Total $ 151.6 82 % $ 135.4 83 % – Total cost of revenues increased $16.2 million and represented 18% and 17% of our total revenues in fiscal 2024 and fiscal 2023, respectively. – Cost of subscription revenue increased $13.9 million, representing 14% of our total subscription revenue in fiscal 2024 compared to 13% in fiscal 2023.
We track software and products revenue on a geographic basis. Our International region encompasses Europe, Middle East, Africa, Australia, India, Japan, Southeast Asia, and China. Our Americas region includes the United States, Canada, and Latin America. Americas and International represented 60% and 40% of total software and products revenue, respectively, for the fiscal year ended March 31, 2023.
Changes in other services revenue can vary period over period primarily due to the timing professional services are delivered. We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China.
Our other professional services include consulting, assessment and design services, installation services and customer education. Customer education services include courses taught by our instructors or third-party contractors. Revenue related to other professional services and customer education services is typically recognized as the services are performed. Most of our contracts with customers contain multiple performance obligations.
Our other services revenue consists primarily of professional service offerings, including consultation, assessment and design, installation services, and customer education. Revenues from other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed. Most of our contracts with customers contain multiple performance obligations.
The term of our subscription arrangements is typically three years but can range between one and five years. Commvault's SaaS offerings, which are branded as Metallic, allow customers to use hosted software over the contract period without taking possession of the software. Revenue related to Metallic is generally recognized ratably over the contract term as services revenue.
Software revenue in these arrangements is generally recognized when the software is delivered. In SaaS offerings, customers use hosted software over the contract period without taking possession of the software. Revenue related to SaaS is recognized ratably over the contract period. We sell both perpetual and term-based licenses of our software.
We believe that such dispersion meets the current and anticipated future liquidity needs of our foreign legal entities. In the event we need to repatriate funds from outside of the United States, such repatriation would likely be subject to restrictions by local laws and/or tax consequences including foreign withholding taxes.
In the event we need to repatriate funds from outside of the United States, such repatriation would likely be subject to restrictions by local laws and/or tax consequences, including foreign withholding taxes. On December 13, 2021, we entered into a five-year $100 million senior secured revolving credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A.
We sell our software applications to end-user customers both directly through our sales force and indirectly through our global network of value-added reseller partners, systems integrators, corporate resellers and original equipment manufacturers. Our software and products revenue was 45% of our total revenues for fiscal 2023, 46% in fiscal 2022 and 45% in fiscal 2021.
In SaaS offerings, customers use hosted software over the contract period without taking possession of the software. Revenue related to SaaS is recognized ratably over the contract period. We sell to end-user customers both directly through our sales force and indirectly through our global network of value-added reseller partners, systems integrators, corporate resellers, OEMs and marketplaces.
Investing in research and development has been a priority for Commvault, and we anticipate continued spending related to the development of our data protection software applications. - General and administrative expenses increased $1.2 million, or 1%, primarily due to increases in employee compensation and related expenses compared to prior year, partially offset by a $0.9 million decrease in stock-based compensation. - Restructuring: Our restructuring plan, initiated in the fourth quarter of fiscal 2022, is aimed to increase efficiency in our sales, marketing and distribution functions as well as reduce costs across all functional areas.
Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services. – General and administrative expenses increased $9.8 million, or 9%, primarily driven by a $4.4 million increase in employee compensation and related expenses including a $1.3 million increase in stock-based compensation year over year.
The plan also included a reorganization to combine our EMEA and APJ field organizations into our International region. Restructuring expenses were $15.5 million and $6.2 million for the years ended March 31, 2023 and 2022, respectively. These restructuring charges relate primarily to severance and related costs associated with headcount reductions.
It was aimed to increase efficiency in our sales, marketing and distribution functions as well as reduce costs across all functional areas. Restructuring expenses were $15.5 million for the year ended March 31, 2023. These restructuring charges relate primarily to severance and related costs associated with headcount reductions.
Interest Income Interest income increased $0.6 million, from $0.7 million in fiscal 2022 to $1.3 million in fiscal 2023 primarily as a result of an increase in long term receivables that include a financing component. Interest Expense Interest expense increased $0.4 million as a result of entering into a revolving credit facility in late fiscal 2022.
Interest Income Interest income increased $4.1 million, from $1.3 million in fiscal 2023 to $5.4 million in fiscal 2024 primarily as a result of increases in interest rates and the amount of invested funds subject to interest income. Interest Expense Interest expense was $0.4 million in fiscal 2024 compared to $0.5 million in fiscal 2023.
Removed
We are continuing to pursue an aggressive product development program in both data and information management solutions. Our data protection solutions include not only traditional backup, but also new innovations in de-duplication, data movement, virtualization, snap-based backups and enterprise reporting. Our information management innovations are primarily in the areas of archiving, eDiscovery, records management, governance, operational reporting and compliance.
Added
These changes are shifting the demands on the importance of resilience for the modern enterprise. Companies now require a comprehensive cyber resilience platform that simplifies and manages these forces holistically. Commvault Cloud is designed to secure and accelerate the recovery so that data can be restored from anywhere to anywhere, rapidly, reliably, and at scale.
Removed
We remain focused on both the data and information management trends in the marketplace and, in fact, a material portion of our existing research and development expenses are utilized toward the development of such new technologies. Given the nature of the industry in which we operate, our software applications are subject to obsolescence.
Added
Sources of Revenues We generate revenues through subscription arrangements, perpetual software licenses, customer support contracts and other services. A significant portion of our total revenues comes from subscription arrangements, which include both sales of term-based licenses and SaaS offerings.
Removed
We continually develop and introduce updates to our existing software applications in order to keep pace with evolving industry technologies.
Added
Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses. The term of our subscription arrangements is typically one to three years, but can range between one and five years.
Removed
In addition, we must address evolving industry standards, changing customer requirements and competitive software applications that may render our existing software applications obsolete. 27 Sources of Revenues We derive a significant portion of our total revenues from sales of licenses of our software applications. We do not customize our software for a specific end-user customer.
Added
Our other services revenue consists primarily of professional service offerings, including consultation, assessment and design, installation services, and customer education.
Removed
Software license revenue sold under a subscription model was 69% and 59% in the fiscal years ended March 31, 2022 and 2021, respectively. We also sell to some customers, primarily managed service providers, via utility, or pay-as-you-go models. In these arrangements, there is no minimum commitment and actual usage is regularly measured and billed.
Added
A significant portion of our total revenues comes from subscription arrangements, which include both sales of term-based licenses and SaaS offerings. We are focused on these types of recurring revenue arrangements. We expect our subscription arrangements will continue to generate revenues from the renewals of term-based licenses and SaaS offerings sold in prior years.
Removed
Revenue in these utility arrangements is recognized as the software is used. Our total software and products revenue in any particular period is, to a certain extent, dependent upon our ability to generate revenues from large customer software and products deals, which we refer to as larger deal transactions.
Added
Any of our pricing models (capacity, instance based, etc.) can be sold via a subscription arrangement, either through term-based licensing or hosted services. In term-based license arrangements, the customer has the right to use the software over a designated period of time. The capacity of the license is fixed and the customer has made an unconditional commitment to pay.
Removed
Larger deal transactions (transactions greater than $0.1 million of software and product revenue) represented approximately 73% of our software and products revenue in fiscal 2023, 72% in fiscal 2022 and 69% in fiscal 2021. Software and products revenue generated through indirect distribution channels accounted for approximately 90% of total software and products revenue in recent fiscal years.
Added
Our c ustomer support revenue includes support contracts tied to our software products. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support, and other premium support offerings, for both term-based software license and perpetual software license arrangements. We sell our customer support contracts as a percentage of net software.
Removed
Our services revenue was 55% of our total revenues for fiscal 2023, 54% in fiscal 2022 and 55% in fiscal 2021. Our services revenue is made up of fees from the delivery of customer support, SaaS, and other professional services, which are typically sold in connection with the sale of our software applications.
Added
Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year on our perpetual licenses. The term of our subscription arrangements is typically one to three years, but can range between one and five years.
Removed
Customer support agreements provide technical support and unspecified software updates on a when-and-if-available basis for an annual fee based on licenses purchased and the level of service subscribed. Metallic, our SaaS solution, allows customers to use hosted software over the contract period without taking possession of the software.
Added
As and for the fiscal year ended March 31, 2024, we believe that it is more likely than not that we will realize the benefits of our gross deferred tax assets and therefore we have released the previously recorded valuation allowance, resulting in an income tax benefit in the current period.
Removed
Revenue related to Metallic is generally recognized ratably over the contract term as services revenue.
Added
During the fourth quarter of fiscal 2024, we performed a qualitative impairment test for goodwill and concluded that the carrying amount of the reporting unit does not exceed the fair value. No goodwill impairment charges were recorded for the years ended March 31, 2024, 2023, and 2022.
Removed
Other professional services include consulting, assessment and design services, implementation and post-deployment services and training, all of which to date have predominantly been sold in connection with the sale of software applications. 28 Most of our customer support agreements related to perpetual licenses are for a one-year term.
Added
Results of Operations Amounts reported in millions are rounded based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed5 unchanged
Biggest changeWe recognized net foreign currency transaction losses of $1.2 million in fiscal 2023, insignificant losses in fiscal 2022, and losses of $1.9 million in fiscal 2021. 39
Biggest changeWe recognized net foreign currency transaction losses of $2.4 million and $1.2 million in fiscal 2024 and fiscal 2023, respectively, and insignificant losses in fiscal 2022. 40
Approximately 47% of our sales were outside the United States in fiscal 2023 and 48% in fiscal 2022. Our primary exposures are to fluctuations in exchange rates for the U.S. dollar versus the Euro, and to a lesser extent, the Australian dollar, British pound sterling, Canadian dollar, Chinese yuan, Indian rupee, Korean won and Singapore dollar.
Approximately 48% of our sales were outside the United States in fiscal 2024 and 47% in fiscal 2023. Our primary exposures are to fluctuations in exchange rates for the U.S. dollar versus the Euro, and to a lesser extent, the Australian dollar, British pound sterling, Canadian dollar, Chinese yuan, Indian rupee, Korean won and Singapore dollar.
Historically, we have periodically reviewed and revised the pricing of our products available to our customers in foreign countries and we have not maintained excess cash balances in foreign accounts. We estimate that a 10% change in all foreign exchange rates would impact our reported operating profit by approximately $11.0 million annually.
Historically, we have periodically reviewed and revised the pricing of our products available to our customers in foreign countries and we have not maintained excess cash balances in foreign accounts. We estimate that a 10% change in all foreign exchange rates would impact our reported operating profit by approximately $13.4 million annually.

Other CVLT 10-K year-over-year comparisons