10-Q 1 cvlt-20220630.htm 10-Q cvlt-20220630
COMMVAULT SYSTEMS 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 2022
 
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 1-33026 
Commvault Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-3447504
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1 Commvault Way
Tinton Falls, New Jersey 07724
(Address of principal executive offices, including zip code)

(732) 870-4000
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockCVLTThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerxAccelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
As of July 25, 2022, there were 44,806,580 shares of the registrant’s common stock, $0.01 par value, outstanding.
1


COMMVAULT SYSTEMS, INC.
FORM 10-Q
INDEX
 
  Page
Part I – FINANCIAL INFORMATION
Item 1.Financial Statements
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2



Commvault Systems, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
June 30,
2022
March 31,
2022
ASSETS
Current assets:
Cash and cash equivalents$258,713 $267,507 
Trade accounts receivable, net181,535 194,238 
Other current assets24,785 22,336 
Total current assets465,033 484,081 
Property and equipment, net104,599 106,513 
Operating lease assets13,136 14,921 
Deferred commissions cost52,767 52,974 
Intangible asset, net3,229 3,542 
Goodwill127,780 127,780 
Other assets26,179 26,269 
Total assets$792,723 $816,080 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$884 $432 
Accrued liabilities86,397 121,837 
Current portion of operating lease liabilities4,113 4,778 
Deferred revenue264,527 267,017 
Total current liabilities355,921 394,064 
Deferred revenue, less current portion151,950 150,180 
Deferred tax liabilities, net799 808 
Long-term operating lease liabilities9,801 11,270 
Other liabilities3,768 3,929 
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.01 par value: 50,000 shares authorized, no shares issued and outstanding
  
Common stock, $0.01 par value: 250,000 shares authorized, 44,835 shares and 44,511 shares issued and outstanding at June 30, 2022 and March 31, 2022, respectively
446 443 
Additional paid-in capital1,194,931 1,165,948 
Accumulated deficit(911,315)(898,699)
Accumulated other comprehensive loss(13,578)(11,863)
Total stockholders’ equity270,484 255,829 
Total liabilities and stockholders’ equity$792,723 $816,080 
See accompanying unaudited notes to consolidated financial statements
1


Commvault Systems, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,
 20222021
Revenues:
Software and products$92,436 $82,162 
Services105,545 101,259 
Total revenues197,981 183,421 
Cost of revenues:
Software and products4,900 2,306 
Services28,857 22,969 
Total cost of revenues33,757 25,275 
Gross margin164,224 158,146 
Operating expenses:
Sales and marketing84,919 76,361 
Research and development40,113 36,135 
General and administrative26,976 26,429 
Restructuring 2,132 1,446 
Depreciation and amortization2,635 2,281 
Total operating expenses156,775 142,652 
Income from operations7,449 15,494 
Interest income261 134 
Interest expense(105) 
Other expense, net(389) 
Income before income taxes7,216 15,628 
Income tax expense3,705 1,731 
Net income$3,511 $13,897 
Net income per common share:
Basic$0.08 $0.30 
Diluted$0.08 $0.29 
Weighted average common shares outstanding:
Basic44,743 46,180 
Diluted45,865 48,167 

See accompanying unaudited notes to consolidated financial statements
2



Commvault Systems, Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
 Three Months Ended June 30,
 20222021
Net income$3,511 $13,897 
Other comprehensive loss:
Foreign currency translation adjustment(1,715)(591)
Comprehensive income$1,796 $13,306 

See accompanying unaudited notes to consolidated financial statements
3


Commvault Systems, Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)

  
Common Stock
Additional
Paid – In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance as of March 31, 202244,511 $443 $1,165,948 $(898,699)$(11,863)$255,829 
Stock-based compensation31,095 31,095 
Share issuances related to stock-based compensation634 6 681 687 
Repurchase of common stock(310)(3)(2,793)(16,127)(18,923)
Net income3,511 3,511 
Other comprehensive loss(1,715)(1,715)
Balance as of June 30, 202244,835 $446 $1,194,931 $(911,315)$(13,578)$270,484 

  
Common Stock
Additional
Paid – In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance as of March 31, 202146,482 $463 $1,069,695 $(665,774)$(10,350)$394,034 
Stock-based compensation21,811 21,811 
Share issuances related to stock-based compensation833 8 15,427 15,435 
Repurchase of common stock(1,249)(12)(11,030)(79,006)(90,048)
Net income13,897 13,897 
Other comprehensive loss(591)(591)
Balance as of June 30, 202146,066 $459 $1,095,903 $(730,883)$(10,941)$354,538 


See accompanying unaudited notes to consolidated financial statements

4


Commvault Systems, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended June 30,
 20222021
Cash flows from operating activities
Net income$3,511 $13,897 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,977 2,593 
Noncash stock-based compensation31,095 21,811 
Noncash change in fair value of equity securities389  
Amortization of deferred commissions cost5,314 4,166 
Changes in operating assets and liabilities:
Trade accounts receivable9,389 34,054 
Operating lease assets and liabilities, net(283)(153)
Other current assets and Other assets(2,710)(7,594)
Deferred commissions cost(6,652)(5,941)
Accounts payable482 (241)
Accrued liabilities(31,366)(26,067)
Deferred revenue10,258 669 
Other liabilities29 17 
Net cash provided by operating activities22,433 37,211 
Cash flows from investing activities
Purchase of property and equipment(867)(1,442)
Purchase of equity securities(1,015) 
Net cash used in investing activities(1,882)(1,442)
Cash flows from financing activities
Repurchase of common stock(18,923)(90,048)
Proceeds from stock-based compensation plans687 15,435 
Payment of debt issuance costs(63) 
Net cash used in financing activities(18,299)(74,613)
Effects of exchange rate — changes in cash(11,046)756 
Net decrease in cash and cash equivalents(8,794)(38,088)
Cash and cash equivalents at beginning of period267,507 397,237 
Cash and cash equivalents at end of period$258,713 $359,149 
See accompanying unaudited notes to consolidated financial statements

5

Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited
(In thousands, except per share data)


1.    Basis of Presentation
Commvault Systems, Inc. and its subsidiaries ("Commvault," "we," "us," or "our") is a provider of data protection and information management software applications and products. We develop, market and sell a suite of software applications and services, globally, that provides our customers with data protection solutions. We also provide our customers with a broad range of professional and customer support services, including data management-as-a-service, branded as Metallic.

The consolidated financial statements of Commvault as of June 30, 2022 and for the three months ended June 30, 2022 and 2021 are unaudited, and in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the financial statements and notes in our Annual Report on Form 10-K for fiscal 2022. The results reported in these financial statements should not necessarily be taken as indicative of results that may be expected for the entire fiscal year.
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments and estimates that affect the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The amounts of assets and liabilities reported in our balance sheets and the amounts of revenues and expenses reported for each of our periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, income taxes and related reserves, deferred commissions, purchased intangible assets and goodwill. Actual results could differ from those estimates.

2.    Summary of Significant Accounting Policies
Recently Adopted and Recently Issued Accounting Standards
There were no recently adopted accounting standards that had a material effect on our condensed consolidated financial statements and accompanying disclosures, and no recently issued accounting standards that are expected to have a material impact on our condensed consolidated financial statements and accompanying disclosures.

Concentration of Credit Risk
We grant credit to customers in a wide variety of industries worldwide and generally do not require collateral. Credit losses relating to these customers have been minimal.
Sales through our distribution agreement with Arrow Enterprise Computing Solutions, Inc. (“Arrow”) totaled 36% and 37% of total revenues for the three months ended June 30, 2022 and 2021, respectively. Arrow accounted for approximately 25% and 30% of total accounts receivable as of June 30, 2022 and March 31, 2022, respectively.

Equity Securities Accounted for at Net Asset Value
We held equity interests in private equity funds of $4,650 as of June 30, 2022, which are accounted for under the net asset value practical expedient as permitted under ASC 820, Fair Value Measurement. These investments are included in other assets in the accompanying consolidated balance sheets. The net asset values of these investments are determined using quarterly capital statements from the funds, which are based on our contributions to the funds, allocation of profit and loss and changes in fair value of the underlying fund investments. Changes in fair value as reported on the capital statements are recorded through profit and loss as non-operating income or expense. These private equity funds focus on making investments in key technology sectors, principally by investing in companies at expansion capital and growth equity stages. We have total unfunded commitments in private equity funds of $5,718 as of June 30, 2022. We did not own interests in any of these funds as of June 30, 2021.
6

Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)


Deferred Commissions Cost
Sales commissions, bonuses, and related payroll taxes earned by our employees are considered incremental and recoverable costs of obtaining a contract with a customer. Our typical contracts include performance obligations related to software licenses, software updates, customer support and other services, including software-as-a-service offerings. In these contracts, incremental costs of obtaining a contract are allocated to the performance obligations based on the relative estimated standalone selling prices and then recognized on a systematic basis that is consistent with the transfer of the goods or services to which the asset relates. We do not pay commissions on annual renewals of contracts for software updates and customer support for perpetual licenses. The costs allocated to software and products are expensed at the time of sale, when revenue for the functional software license or appliance is recognized. The costs allocated to software updates and customer support for perpetual licenses are amortized ratably over a period of approximately five years, the expected period of benefit of the asset capitalized. We currently estimate a period of five years is appropriate based on consideration of historical average customer life and the estimated useful life of the underlying software sold as part of the transaction. The commission paid on the renewal of a term-based or subscription software license is not commensurate with the commission paid on the initial purchase. As a result, the cost of commissions allocated to software updates and customer support on the initial term-based software license transactions are amortized over a period of approximately five years, consistent with the accounting for these costs associated with perpetual licenses. The costs of commissions allocated to software updates and support for the renewal of term-based software licenses is limited to the contractual period of the arrangement, as we pay a commensurate renewal commission upon the next renewal of the subscription license and related updates and support.
The costs related to professional services are amortized over the period the related professional services are provided and revenue is recognized. Amortization expense related to these costs is included in sales and marketing expenses in the accompanying consolidated statements of operations.

3.    Revenue
We derive revenues 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. Services include customer support (software updates and technical support), consulting, assessment and design services, installation services, customer education and Commvault software-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. 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. 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. We do not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the new subscription period.
We also sell 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. Revenue related to appliances is recognized when control of the appliances passes to the customer; typically upon delivery. In the second half of fiscal 2021 we began transitioning to a software only model in which we typically 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 have declined from recent fiscal years.
Services revenue includes revenue from customer support and other professional services. 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. The term of our subscription arrangements is typically three years but can range between one and five years.
7

Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)


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.

Commvault software-as-a-service, which is branded as Metallic, allows 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.

Most of our contracts with customers contain multiple performance obligations. 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 are typically estimated using the residual approach. Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis.

Our typical performance obligations include the following:

Performance ObligationWhen Performance Obligation
 is Typically Satisfied
When Payment is
Typically Due
How Standalone Selling Price is
Typically Estimated
Software and Products Revenue
Software LicensesUpon 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 UpdatesRatably over the course of the support contract (over time)At the beginning of the contract period Observable in renewal transactions
Customer SupportRatably 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 ServicesWhen the class is taught (point in time)
Within 90 days of services being performed
Observable in transactions without multiple performance obligations
Software-as-a-service (Metallic)
Ratably over the course of the contract (over time)Annual or monthly paymentsObservable in transactions without multiple performance obligations

Disaggregation of Revenue

We disaggregate revenue from contracts with customers into the nature of the products and services and geographical regions. Beginning in fiscal 2023, we have combined the management of our EMEA and APJ field organizations into our International region (Europe, Middle East, Africa, Australia, Japan, Southeast Asia, China). Our Americas region includes the United States, Canada, and Latin America.
Three Months Ended June 30, 2022
AmericasInternationalTotal
Software and Products Revenue$59,680 $32,756 $92,436 
Customer Support Revenue48,031 33,286 81,317 
Other Services Revenue14,898 9,330 24,228 
Total Revenue$122,609 $75,372 $197,981 

8

Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)

Three Months Ended June 30, 2021
AmericasInternationalTotal
Software and Products Revenue$51,787 $30,375 $82,162 
Customer Support Revenue51,874 37,095 88,969 
Other Services Revenue7,310 4,980 12,290 
Total Revenue$110,971 $72,450 $183,421 


Information about Contract Balances

Amounts collected in advance of services being provided are accounted for as deferred revenue. Nearly all of our deferred revenue balance is related to services revenue, primarily customer support contracts and software-as-a-service contracts.

In some arrangements we allow customers to pay for term-based software licenses and products over the term of the software license. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables, which are anticipated to be invoiced in the next twelve months, are included in accounts receivable on the consolidated balance sheets. Long-term unbilled receivables are included in other assets. The opening and closing balances of our accounts receivable, unbilled receivables, and deferred revenues are as follows:
Accounts ReceivableUnbilled Receivable
(current)
Unbilled Receivable
(long-term)
Deferred Revenue
(current)
Deferred Revenue
(long-term)
Opening Balance as of March 31, 2022
$177,182 $17,056 $14,296 $267,017 $150,180 
Increase (decrease), net(15,637)2,934 (394)(2,490)1,770 
Ending Balance as of June 30, 2022
$161,545 $19,990 $13,902 $264,527 $151,950 

The net decrease in accounts receivable (inclusive of unbilled receivables) is a result of a decrease in software and products revenue relative to the fourth quarter of the prior fiscal year. The decrease in deferred revenue is primarily the result of a strengthening of the U.S. dollar and a sequential decrease in deferred revenue associated with customer support contracts partially offset by an increase in deferred revenue associated with Metallic contracts that are billed upfront and recognized ratably over the contract period.

The amount of revenue recognized in the period that was included in the March 31, 2022 balance of deferred revenue was $92,149 for the three months ended June 30, 2022. The vast majority of this revenue consists of customer support arrangements and Metallic. The amount of software and products revenue recognized in the three months ended June 30, 2022 related to performance obligations from prior periods was not significant.

Remaining Performance Obligations

In addition to the amounts included in deferred revenue as of June 30, 2022, $76,825 of revenue may be recognized from remaining performance obligations, of which approximately $9,900 was related to software and products. We expect the majority of this software and products revenue to be recognized during fiscal 2023. Most of this software and products revenue is associated with renewals of term licenses which have not yet expired. The majority of the services revenue is related to other professional services which may be recognized over the next twelve months but is contingent upon a number of factors, including customers’ needs and Metallic.


9

Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)

4.    Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, vesting of restricted stock units and shares to be purchased under the Employee Stock Purchase Plan ("ESPP"). The dilutive effect of such potential common shares is reflected in diluted earnings per share by application of the treasury stock method.

The following table sets forth the reconciliation of basic and diluted common share:
Three Months Ended June 30,
20222021
Net income$3,511 $13,897 
Basic net income per common share:
Basic weighted average shares outstanding44,743 46,180 
Basic net income per common share$0.08 $0.30 
Diluted net income per common share:
Basic weighted average shares outstanding44,743 46,180 
Dilutive effect of stock options and restricted stock units1,122 1,987 
Diluted weighted average shares outstanding45,865 48,167 
Diluted net income per common share$0.08 $0.29 

The diluted weighted-average shares outstanding exclude outstanding stock options, restricted stock units, performance restricted stock units and shares to be purchased under the ESPP totaling 535 and 616 for the three months ended June 30, 2022 and 2021, respectively, because the effect would have been anti-dilutive.

5.    Commitments and Contingencies
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business or operating results.


6.    Capitalization
Our stock repurchase program has been funded by our existing cash and cash equivalent balances, as well as cash flows provided by our operations.
On April 21, 2022, the Board of Directors (the "Board") approved a new share repurchase program of $250,000. The Board's authorization has no expiration date. For the three months ended June 30, 2022, we repurchased $18,923 of our common stock, or approximately 310 shares. As a result, $231,077 remains available under the current authorization.

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Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)

7.    Stock Plans
The following table presents the stock-based compensation expense included in cost of services revenue, sales and marketing, research and development, general and administrative and restructuring expenses for the three months ended June 30, 2022 and 2021. Stock-based compensation is attributable to restricted stock units, performance-based awards and the ESPP.
 Three Months Ended June 30,
 20222021
Cost of services revenue$1,243 $1,185 
Sales and marketing11,393 7,308 
Research and development9,241 7,185 
General and administrative7,931 6,011 
Restructuring1,287 122 
Stock-based compensation expense$31,095 $21,811 
As of June 30, 2022, there was $155,830 of unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 1.87 years. We account for forfeitures as they occur. To the extent that awards are forfeited, stock-based compensation will be different from our current estimate.
Stock option activity was not significant in the three months ended June 30, 2022. In the three months ended June 30, 2021, there were 337 options exercised with an intrinsic value of $10,835.
Restricted Stock Units
Restricted stock unit activity for the three months ended June 30, 2022 is as follows:
Non-vested Restricted Stock UnitsNumber of
Awards
Weighted-
Average Grant
Date Fair Value
Non-vested as of March 31, 20223,310 $58.16 
Awarded814 62.60 
Vested(620)55.44 
Forfeited(113)59.46 
Non-vested as of June 30, 20223,391 $59.68 
The weighted-average fair value of restricted stock units awarded was $62.60 per unit during the three months ended June 30, 2022, and $73.66 per unit during the three months ended June 30, 2021. The weighted-average fair value of awards includes the awards with a market condition described below.


Performance Based Awards
In the three months ended June 30, 2022, we granted 126 performance restricted stock units ("PSUs") to certain executives. Vesting of these awards is contingent upon i) us meeting certain non-GAAP performance goals (performance-based) in fiscal 2023 and ii) our customary service periods. The awards vest over three years. The vesting quantity of these awards may vary based on actual fiscal 2023 performance. The related stock-based compensation expense is determined based on the value of the underlying shares on the date of grant and is recognized over the vesting term using the accelerated method. During the interim financial periods, management estimates the probable number of PSUs that would vest until the ultimate achievement of the performance goals is known. The awards are included in the restricted stock unit table.

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Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)

Awards with a Market Condition
In the three months ended June 30, 2022, we granted 126 market performance stock units to certain executives. The vesting of these awards is contingent upon us meeting certain total shareholder return ("TSR") levels as compared to the Russell 3000 market index over the next three years. The awards vest in three annual tranches and have a maximum potential to vest at 200% (252 shares) based on TSR performance. The related stock-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized using the accelerated method over the vesting term. The estimated fair value was calculated using a Monte Carlo simulation model. The fair value of the awards granted during the three months ended June 30, 2022 was $76.48 per unit. The awards are included in the restricted stock unit table.

8.    Income Taxes
Income tax expense was $3,705 in the three months ended June 30, 2022 compared to expense of $1,731 in the three months ended June 30, 2021. The increase in current income tax expense relative to the prior year relates primarily to current federal and state taxes driven by the effects of capitalization and amortization of research and development expenses starting in our fiscal year 2023 as required by the 2017 Tax Cuts and Jobs Act. We believe that it is more likely than not that we will not realize the benefits of our gross deferred tax assets and therefore continue to record 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 as of June 30, 2022.

9.    Restructuring
Our restructuring plans are aimed to increase efficiency in our sales, marketing and distribution functions, as well as reduce costs across all functional areas. In the fourth quarter of fiscal 2022, we initiated a restructuring plan to combine the management of our EMEA and APJ field organizations. These restructuring charges relate primarily to severance and related costs associated with headcount reductions and stock-based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plan.
For the three months ended June 30, 2022 and 2021, restructuring charges were comprised of the following:

Three Months Ended June 30,
20222021
Employee severance and related costs$845 $1,324 
Stock-based compensation1,287 122 
Total restructuring charges$2,132 $1,446 


Restructuring accruals

The activity in our restructuring accruals for the three months ended June 30, 2022 is as follows:
Total
Balance as of March 31, 2022
$2,261 
Employee severance and related costs845 
Payments(2,454)
Balance as of June 30, 2022
$652 

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Commvault Systems, Inc
Notes to Consolidated Financial Statements - Unaudited (continued)
(In thousands, except per share data)

10.    Revolving Credit Facility
On December 13, 2021, we entered into a five-year $100,000 senior secured revolving credit facility (the “Credit Facility”) with J.P. Morgan. 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 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 limits our ability to incur certain additional indebtedness, create or permit liens on assets, make acquisitions, make investments, loans or advances, sell or transfer assets, pay dividends or distributions, and engage in certain transactions with foreign affiliates. 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. As of June 30, 2022, there were no borrowings under the Credit Facility and we were in compliance with all covenants.
We have deferred the expense related to debt issuance costs, which are classified as other assets, and will amortize the costs into interest expense over the term of the Credit Facility. Unamortized amounts at June 30, 2022 were $514. The amortization of debt issuance costs and interest expense incurred for the three months ended June 30, 2022 was $92.

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Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis along with our consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q. The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Overview

Incorporated in Delaware in 1996, Commvault Systems, Inc. is a global data management company offering customers enterprise level, intelligent data services via a single platform and unified code base.

We believe in solving hard problems for our customers by enabling our customers to accelerate their digital transformation in today's ever-evolving workforce. Our product portfolio includes intuitive tools and powerful machine learning technology that drives automation, reduces complexity, reigns in data fragmentation, and accelerates a customer’s cloud journey. Our product functionality share the same back-end technologies to deliver the benefits of a holistic approach to protecting, managing, and securing data. Our products address many aspects of data management, from data protection and security, to data governance, transformation and insights, while providing scalability. We believe our technology and professional services provide the broadest set of capabilities in the industry, which enables customers to efficiently and cost-effectively scale their data on premise or in the cloud.
    
Sources of Revenues
We derive a significant portion of our total revenues from sales of licenses of our software applications and related appliance products. We do not customize our software or products for a specific end-user customer. We sell our software applications and products 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 47% and 45% of our total revenues for the three months ended June 30, 2022 and 2021, respectively.
We continue to focus on subscription and other recurring revenue arrangements and began generating revenue from the renewals of subscription licenses sold in prior years. Any of our licensing 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. 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 three months ended June 30, 2022 and 2021, approximately 81% and 60% of software license revenue was sold under a subscription model, respectively. We also sell to some customers, primarily managed service providers, via utility, or pay-as-you-go models. In these arrangements actual usage is regularly measured and billed. 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. Larger deal transactions (transactions greater than $0.1 million of software and products revenue) represented 75% and 69% of our total software and products revenue in the three months ended June 30, 2022 and 2021, respectively.
Software and products revenue generated through indirect distribution channels accounted for approximately 90% of total software and products revenue in both the three months ended June 30, 2022 and 2021. Software and products revenue generated through direct distribution channels accounted for approximately 10% of total software and products revenue in both the three months ended June 30, 2022 and 2021. 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 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 intend to continue to invest in both our channel relationships and direct sales force in the future, but we continue to expect more revenue to be generated through indirect distribution channels over the long term. The
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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.
We have a non-exclusive distribution agreement covering our North American commercial markets and our U.S. Federal Government market with Arrow Enterprise Computing Solutions, Inc. ("Arrow"), a subsidiary of Arrow Electronics, Inc. Pursuant to this distribution agreement, 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 generated 36% and 37% of our total revenues through Arrow for the three months ended June 30, 2022 and 2021, respectively. If Arrow were to discontinue or reduce the sales of our products or if our agreement with Arrow were terminated, and if we were unable to take back the management of our reseller channel or find another North American distributor to replace Arrow, there could be a material adverse effect on our future business.
Our services revenue was 53% and 55% of our total revenues for the three months ended June 30, 2022 and 2021, respectively. Our services revenue is made up of fees from the delivery of customer support and other professional services, which are typically sold in connection with the sale of our software applications. 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 software-as-a-service solution, allows customers to use hosted software over the contract period without taking possession of the software. Revenue related to Metallic is also included in services revenue and is generally recognized ratably over the contract term. 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.

Foreign Currency Exchange Rates’ Impact on Results of Operations
Sales outside the United States were 44% of our total revenue for the three months ended June 30, 2022 and 45% of our total revenue for the three months ended June 30, 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. 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.
Using the average foreign currency exchange rates from the three months ended June 30, 2021, our software and products revenue would have been higher by $3.9 million, our services revenue would have been higher by $4.9 million, our cost of sales would have been higher by $1.0 million and our operating expenses would have been higher by $4.3 million from non-U.S. operations for the three months ended June 30, 2022.
In addition, we are exposed to risks of foreign currency fluctuation primarily from cash balances, accounts receivables and intercompany accounts denominated in foreign currencies and are subject to the resulting transaction gains and losses, which are recorded as a component of general and administrative expenses. We recognized net foreign currency transaction gains of approximately $0.5 million and losses of $0.1 million for the three months ended June 30, 2022 and 2021, respectively.

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Critical Accounting Policies
In presenting our consolidated financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and judgments that affect the amounts reported therein. Some of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable and appropriate. Actual results may differ significantly from these estimates. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application, while in other cases, significant judgment is required in selecting among available alternative accounting standards that allow different accounting treatment for similar transactions. We consider these policies requiring significant management judgment to be critical accounting policies. These critical accounting policies are:
Revenue Recognition
Accounting for Income Taxes
Goodwill
There have been no significant changes in our critical accounting policies during the three months ended June 30, 2022 as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” included in our Annual Report on Form 10-K for the year ended March 31, 2022.
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Results of Operations
Three months ended June 30, 2022 compared to three months ended June 30, 2021
Revenues (in millions)
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Total revenues increased $14.6 million, or 8% as a result of the following:
An increase in software and products and Metallic revenues.
Software and products revenue represented 47% of our total revenue in the three months ended June 30, 2022 and 45% of our total revenue in the three months ended June 30, 2021.
Services revenue represented 53% of our total revenue in the three months ended June 30, 2022 and 55% of our total revenue in the three months ended June 30, 2021.
Using the average foreign currency exchange rates from the three months ended June 30, 2021, our total revenues would have been 13% higher for the three months ended June 30, 2022.
Software and products revenue increased $10.2 million, or 13%, as a result of the following:
An increase of $13.3 million, or 24%, in larger deal revenue (deals greater than $0.1 million). Larger deal revenue represented 75% of our software and products revenue in the three months ended June 30, 2022 and 69% of our software and products revenue in the three months ended June 30, 2021.
The average dollar amount of larger deal revenue transactions was approximately $379 thousand and $305 thousand for the three months ended June 30, 2022 and 2021, respectively, representing a 24% increase.
This increase was partially offset by a decrease of $3.1 million in transactions less than $0.1 million.
Using the average foreign currency exchange rates from the three months ended June 30, 2021, our software and products revenue would have been 17% higher for the three months ended June 30, 2022.
Services revenue increased $4.3 million, or 4%, primarily due to the following:
An increase in other services revenue, driven primarily by the year over year increase in revenue from Metallic, partially offset by a decrease in revenue from customer support agreements.
Using the average foreign currency exchange rates from the three months ended June 30, 2021, our services revenue would have been 9% higher for the three months ended June 30, 2022.
We track software and products revenue on a geographic basis. Beginning in fiscal 2023, we have combined the management of our EMEA and APJ field organizations into our International region (Europe, Middle East, Africa, Australia, Japan, Southeast Asia, China). Our Americas region includes the United States, Canada, and Latin America. Americas and International represented 65% and 35% of total software and products revenue, respectively, for the three months ended June 30, 2022. Software and products revenue increased year over year by 15% in the Americas and by 8% in International.
The increase in Americas software and products revenue was primarily the result of increases in larger deal transactions revenue. This increase was driven primarily by an increase in the average dollar amount of larger deal transactions, partially offset by a decrease in smaller deal transactions revenue.
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The increase in International software and products revenue was primarily the result of a 15% increase in larger deal revenue driven by an increase in the volume of larger deal transactions. Using the average foreign currency exchange rates from the three months ended June 30, 2021, our International software and products revenue would have been 20% higher for the three months ended June 30, 2022.

Our software and products revenue in International is subject to changes in foreign exchange rates as more fully discussed above in the “Foreign Currency Exchange Rates’ Impact on Results of Operations” section.

Cost of Revenues and Gross Margin ($ in millions)

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cvlt-20220630_g7.jpgcvlt-20220630_g8.jpgcvlt-20220630_g9.jpg
Total cost of revenues increased $8.5 million, and represented 17% and 14% of our total revenues for the three months ended June 30, 2022 and 2021, respectively.
Cost of software and products revenue increased $2.6 million and represented 5% of our total software and products revenue for the three months ended June 30, 2022 compared to 3% for the three months ended June 30, 2021.
Cost of services revenue increased $5.9 million, representing 27% of our total services revenue for the three months ended June 30, 2022 compared to 23% for the three months ended June 30, 2021. The increase in cost of services revenue primarily related to an increase in the cost of infrastructure related to Metallic.








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Operating Expenses ($ in millions)
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cvlt-20220630_g13.jpgcvlt-20220630_g14.jpgcvlt-20220630_g15.jpg
Sales and marketing expenses increased $8.6 million, or 11%, primarily due to increases in employee compensation and sales commissions associated with increased revenue versus the prior year.
Research and development expenses increased $4.0 million, or 11%, as a result of an increase in employee compensation and related expenses attributable to the expansion of our engineering group.
The increase in employee compensation included an increase in stock-based compensation of $2.1 million compared to prior year.
Investing in research and development has been a priority for Commvault, and we anticipate continued spending related to the development of our data and information management software applications.
General and administrative expenses increased $0.4 million, or 2%, primarily due to the following:
Stock-based compensation increases compared to the prior year partially offset by a decrease in legal costs relative to the same period of the prior year.
Restructuring: Our restructuring plans are intended to increase efficiency in our sales, marketing and distribution functions as well as reduce costs across all functional areas. Beginning in fiscal 2023, we have combined the management of our EMEA and APJ field operations. Restructuring expenses were $2.1 million and $1.4 million for the three months ended June 30, 2022 and 2021, respectively. These restructuring charges relate primarily to severance and related costs associated with headcount reductions. These charges include $1.3 million and $0.1 million of stock-based compensation related to modifications of existing awards granted to certain employees included in the restructuring for the three months ended June 30, 2022 and 2021, respectively. We cannot guarantee the restructuring program will achieve its intended result. 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.
Depreciation and amortization expense increased $0.3 million, from $2.3 million in the three months ended June 30, 2021 to $2.6 million in the three months ended June 30, 2022, as a result of the acquisition an intangible asset in the fourth quarter of fiscal year 2022.

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Income Tax Expense
Income tax expense was $3.7 million in the three months ended June 30, 2022 compared to expense of $1.7 million in the three months ended June 30, 2021. The increase in current income tax expense relative to the prior year relates primarily to current federal and state taxes driven by the effects of capitalization and amortization of research and development expenses starting in our fiscal year 2023 as required by the 2017 Tax Cuts and Jobs Act. We believe that it is more likely than not that we will not realize the benefits of our gross deferred tax assets and therefore continue to record 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 as of June 30, 2022.

Liquidity and Capital Resources
As of June 30, 2022, our cash balance was $258.7 million. In recent fiscal years, our principal source of liquidity has been cash provided by operations. The amount of cash and cash equivalents held outside of the United States by our foreign legal entities was approximately $167.8 million. These balances are dispersed across many international locations around the world. 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.
On December 13, 2021, we entered into a five-year $100 million senior secured revolving credit facility (the “Credit Facility”) with J.P. Morgan. 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 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 limits our ability to incur certain additional indebtedness, create or permit liens on assets, make acquisitions, make investments, loans or advances, sell or transfer assets, pay dividends or distributions, and engage in certain transactions with foreign affiliates. 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. As of June 30, 2022, there were no borrowings under the Credit Facility and we were in compliance with all covenants.
On April 21, 2022, the Board of Directors approved a new share repurchase program of $250 million. The Board's authorization has no expiration date. For the three months ended June 30, 2022, we have repurchased $18.9 million of our common stock. As a result, $231.1 million remains available under the current authorization.
Our summarized cash flow information is as follows (in thousands):
 Three Months Ended June 30,
 20222021
Net cash provided by operating activities$22,433 $37,211 
Net cash used in investing activities(1,882)(1,442)
Net cash used in financing activities(18,299)(74,613)
Effects of exchange rate - changes in cash(11,046)756 
Net decrease in cash and cash equivalents$(8,794)$(38,088)
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Net cash provided by operating activities was impacted by net income adjusted for the impact of non-cash charges and a decrease in accrued liabilities partially offset by a decrease in accounts receivable.
Net cash used in investing activities was related to $1.0 million in the purchase of equity securities and $0.9 million of capital expenditures.
Net cash used in financing activities was the result of $18.9 million of repurchases of common shares and $0.1 million of debt issuance costs partially offset by $0.7 million of proceeds from the exercise of stock options.
Working capital increased $19.1 million from $90.0 million as of March 31, 2022 to $109.1 million as of June 30, 2022. The net increase in working capital was primarily driven by cash provided by operating activities and the impact of foreign currency.
We believe that our existing cash, cash equivalents and our cash from operations will be sufficient to meet our anticipated cash needs for working capital, income taxes, capital expenditures and potential stock repurchases for at least the next twelve months. We may seek additional funding through public or private financings or other arrangements during this period. Adequate funds may not be available when needed or may not be available on terms favorable to us, or at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders will result. If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility, and would also require us to fund additional interest expense. If funding is insufficient at any time in the future, we may be unable to develop or enhance our products or services, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.

Off-Balance Sheet Arrangements
As of June 30, 2022, 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.

Impact of Recently Issued Accounting Standards
See Note 2 of the notes to the unaudited consolidated financial statements for a discussion of the impact of recently issued accounting standards.

Item 3 - Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
None.
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Foreign Currency Risk
Economic Exposure
As a global company, we face exposure to adverse movements in foreign currency exchange rates. Our international sales are generally denominated in foreign currencies and this revenue could be materially affected by currency fluctuations. Approximately 44% of our revenues were from outside the United States for the three months ended June 30, 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. Changes in currency exchange rates could adversely affect our reported revenues and require us to reduce our prices to remain competitive in foreign markets, which could also have a material adverse effect on our results of operations. 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.
Transaction Exposure
Our exposure to foreign currency transaction gains and losses is primarily the result of certain net receivables due from our foreign subsidiaries and customers being denominated in currencies other than the functional currency of the subsidiary. Our foreign subsidiaries conduct their businesses in local currency and we generally do not maintain excess U.S. dollar cash balances in foreign accounts.
Foreign currency transaction gains and losses are recorded in general and administrative expenses in the consolidated statements of operations. We recognized net foreign currency transaction gains of $0.5 million and losses of $0.1 million for the three months ended June 30, 2022 and 2021, respectively.

Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of June 30, 2022. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2022.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the first quarter of fiscal 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Internal Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. We do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business or operating results. Please refer to Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2022 for additional information.

Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2022, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the risks actually occur, our business, financial conditions or results of operations could be negatively affected. In that case, the trading price of our stock could decline, and our stockholders may lose part or all of their investment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer    
On April 21, 2022, the Board of Directors approved a new share repurchase program of $250.0 million. The Board's authorization has no expiration date. During the three months ended June 30, 2022, we repurchased $18.9 million of common stock, or approximately 0.3 million shares, under our share repurchase program. As a result, $231.1 million remains available under the current authorization. A summary of our repurchases of common stock is as follows:
PeriodTotal number of shares purchasedAverage price paid per shareTotal number of shares purchased as part of publicly announced programsApproximate dollar value of shares that may yet be purchased under the program
April 1-30, 2022— $— — $250,000
May 1-31, 2022142,800 $59.25 142,800 $241,539
June 1-30, 2022166,900 $62.68 166,900 $231,077
Three Months Ended June 30, 2022309,700 $61.10 309,700 

Item 3. Defaults upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not Applicable.

Item 5. Other Information
Retention Agreements
On July 14, 2022, the Compensation Committee of the Board of Directors of Commvault Systems, Inc. (the “Company”) approved a form of executive retention agreement to be entered into with Gary Merrill in connection with Mr. Merrill’s appointment as the Chief Financial Officer of the Company, as previously disclosed in the Current Report on Form 8-K, dated May 3, 2022, and Riccardo Di Blasio, the Chief Revenue Officer of the Company. On July 22, 2022 and on July 27, 2022, the Company entered into executive retention agreements with Mr. Merrill and Mr. Di Blasio (the "ERAs"). The ERA with Mr. Di Blasio replaces and supersedes his current executive retention and change in control agreements with the Company.
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Provided the executive executes a release of claims in favor of the Company, the ERAs provide for the following severance benefits upon a termination of employment (i) by the Company without cause or by the executive in certain circumstances as further described in the ERA other than within 24 months following a “change in control” (as defined in the ERA) (a “non-CIC qualifying termination”), and (ii) by the Company without cause or by the executive for “good reason” (as defined in the ERA) within 24 months following a change in control (a “CIC qualifying termination”): (a) 12 months of base salary plus, in the case of a CIC qualifying termination, a prorated target annual bonus, (b) accelerated vesting of equity awards that would have vested (x) within one year of termination in the case of a non-CIC qualifying termination with performance-based awards vesting at the actual level of performance or (y) in full in the event of a CIC qualifying termination with performance-based awards vesting at target or actual level of performance, as applicable, and (c) a lump-sum cash payment equal to 12 months of COBRA continuation.
The foregoing description of the ERAs is not complete and is qualified in its entirety by reference to the full text of the ERAs, which are filed hereto as Exhibits 10.2-10.3 and are incorporated herein by reference.

Item 6. Exhibits
Exhibit No.Description
Agreement and General Release with Brian Carolan, dated April 28, 2022 (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K dated May 3, 2022)
Executive Retention Agreement with Gary Merrill dated July 27, 2022
Executive Retention Agreement with Riccardo Di Blasio dated July 22, 2022
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Furnished herewith

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  Commvault Systems, Inc.
Dated: July 27, 2022 By:/s/ Sanjay Mirchandani
  Sanjay Mirchandani
  Director, President and Chief Executive Officer
(Principal Executive Officer)
Dated: July 27, 2022 By:/s/ Gary Merrill
  Gary Merrill
  Chief Financial Officer
(Principal Financial Officer)
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