CommVault Systems Inc. Earnings: Margins Shrink on Rising Costs, Net Income Falls

Rising costs hurt CommVault Systems, Inc. (NASDAQ:CVLT) in the third quarter as profit dropped from a year earlier. CommVault Systems is a provider of data and information management software applications and related services. It develops, markets, and sells a unified suite of data and information management software applications under the Simpana brand.

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CommVault Systems Earnings Cheat Sheet for the Third Quarter

Results: Net income for CommVault Systems, Inc. fell to $7.2 million (15 cents per share) vs. $7.3 million (16 cents per share) a year earlier. This is a decline of 1.3% from the year earlier quarter.

Revenue: Rose 23.9% to $103.6 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CVLT reported adjusted net income of 27 cents per share. By that measure, the company beat the mean estimate of 18 cents per share. It beat the average revenue estimate of $100 million.

Quoting Management: N. Robert Hammer, CommVault’s chairman, president and CEO stated, “We achieved an excellent third quarter which was highlighted by record quarterly revenues of $103.6 million and record Non-GAAP operating income of $19.6 million. Our year-over-year software revenue growth of 23% was driven by accelerating demand and brand recognition of our Simpana nine software suite, excellent sales execution from our Americas and EMEA operations and continued market share gains. We continue to deliver accelerating revenue and non-GAAP earnings growth while still making strategic investments to expand our global sales, marketing, services and support capabilities to better position the company for the longer term.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 26.4%, with the biggest boost coming in the first quarter when revenue rose 38% from the year earlier quarter.

Gross margin shrank one percentage point to 86.9%. The contraction appeared to be driven by increased costs, which rose 34% from the year earlier quarter while revenue rose 23.9%.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 3 cents in the second quarter and by 4 cents in the first quarter.

Last quarter’s profit decrease breaks a streak of two consecutive quarters of year-over-year profit increases. Net income rose 45.8% in the second quarter and more than twofold in the first quarter.

Looking Forward: The average estimate for the fourth quarter is steady at 19 cents a share. Over the past three months, the average estimate for the fiscal year has climbed from 64 cents per to share to 69 cents.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com