Data management specialist CommVault could be open to activist investor activity, said an analyst, after reporting a loss and seeing yearly revenues down on Americas sales inadequacies and foreign currency headwinds.
First, fiscal 2016 revenues were down nine per cent on the year, at $139.1m, and down eight per cent sequentially, with the sequential Q4-Q1 fall being a seasonal phenomenon at CommVault.
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Second, and perhaps worse, there was a net loss of $1.3m, the first in our five years of recorded CommVault results. Just a year ago CommVault profit reached $12.7m, but it fell to $3.4m in the last quarter.
William Blair analyst Jason Ader said that if the company doesn’t pick itself up in the second half it may become a target for activist investor incursions, or its board starting to think about private equity ownership.
This suggests the second quarter may also be poor, and CommVault’s flat guidance of around $139m confirms that. It hopes yearly software growth will return in its third quarter, and it expects the full year will have no growth over fiscal 2015’s $607.5m, and may even show a slight decline.
Stifel MD Aaron Rakers notes that "attrition in CommVault’s Americas sales organisation has had a significant negative impact on results [and] we believe the Americas sales capacity could have been down as much as 10 per cent year on year."
Software revenue was $56.5m, a decrease of 22 per cent year-over-year and 19 per cent down sequentially. Services revenue of $82.6m was up three per cent on the year, and two per cent sequentially.
CommVault’s ultra-grand fromage, chairman, president and CEO Bob Hammer, admitted: “Our fiscal first quarter proved to be more challenging than we expected.”
However, things can only get better, apparently: "The core foundational elements are now in place to propel improvement in the second half of the fiscal year [and] the substantial changes we are making will strengthen our competitive position, increase our available market, make it easier for our channel partners to sell, [and] significantly improve revenue and earnings growth."
US sales were impacted by a sales force restructuring and low bid close-rates. The US sales organisation is in better shape and the sales push is building some momentum.
In contrast, VMware backup upstart Veeam continues on its sparkling roll, with a 22 per cent uplift in bookings revenue in the second calendar 2015 quarter, when compared with a year ago. There was a 64 per cent year-on-year increase in enterprise customer revenues.
It has also amassed more than 157,000 customers, adding them at the rate of 3,500 a month.
CommVault doesn’t think its results have been much impacted by competitive inroads, saying 90 per cent of its problems are self-inflicted, via such things as sales force changes and reacting too slowly to appliance needs by customers.
CommVault will have a major new release of its flagship Simpana product, v11, in the autumn and that should boost its pipeline.
The pressure on its Americas sales force will now be enormous, and now is the time for CommVault customers to press for discounts, while exhibiting a Veeam coffee mug on their desks. ®