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CVLT Commvault Systems

Filed: 28 Jul 21, 2:02pm

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, 2021
 
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 the Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such 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 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 definition 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 27, 2021, there were 45,870,960 shares of the registrant’s common stock, $0.01 par value, outstanding.
1


COMMVAULT SYSTEMS, INC.
FORM 10-Q
INDEX
 

2



Commvault Systems, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
June 30,
2021
March 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$359,149 $397,237 
Trade accounts receivable, net158,862 188,126 
Other current assets23,868 22,237 
Total current assets541,879 607,600 
Property and equipment, net111,778 112,779 
Operating lease assets19,666 20,778 
Deferred commissions cost40,352 38,444 
Goodwill112,435 112,435 
Other assets13,278 12,137 
Total assets$839,388 $904,173 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$136 $374 
Accrued liabilities87,141 112,148 
Current portion of operating lease liabilities7,263 7,469 
Deferred revenue252,743 253,211 
Total current liabilities347,283 373,202 
Deferred revenue, less current portion120,915 119,231 
Deferred tax liabilities, net762 761 
Long-term operating lease liabilities14,351 15,419 
Other liabilities1,539 1,526 
Commitments and contingencies00
Stockholders’ equity:
Preferred stock, $0.01 par value: 50,000 shares authorized, 0 shares issued and outstanding
Common stock, $0.01 par value: 250,000 shares authorized, 46,066 shares and 46,482 shares issued and outstanding at June 30, 2021 and March 31, 2021, respectively459 463 
Additional paid-in capital1,095,903 1,069,695 
Accumulated deficit(730,883)(665,774)
Accumulated other comprehensive loss(10,941)(10,350)
Total stockholders’ equity354,538 394,034 
Total liabilities and stockholders’ equity$839,388 $904,173 
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,
 20212020
Revenues:
Software and products$82,162 $76,554 
Services101,259 96,446 
Total revenues183,421 173,000 
Cost of revenues:
Software and products2,306 5,847 
Services22,969 18,704 
Total cost of revenues25,275 24,551 
Gross margin158,146 148,449 
Operating expenses:
Sales and marketing76,361 81,676 
Research and development36,135 31,142 
General and administrative26,429 21,559 
Restructuring1,446 2,324 
Depreciation and amortization2,281 5,065 
Total operating expenses142,652 141,766 
Income from operations15,494 6,683 
Interest income134 343 
Income before income taxes15,628 7,026 
Income tax expense1,731 4,743 
Net income$13,897 $2,283 
Net income per common share:
Basic$0.30 $0.05 
Diluted$0.29 $0.05 
Weighted average common shares outstanding:
Basic46,180 46,191 
Diluted48,167 46,503 

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,
 20212020
Net income$13,897 $2,283 
Other comprehensive income (loss):
Foreign currency translation adjustment(591)950 
Comprehensive income$13,306 $3,233 

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, 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 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 

  
Common Stock
Additional
Paid – In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance as of March 31, 202046,011 $458 $978,659 $(553,790)$(13,423)$411,904 
Stock-based compensation18,951 18,951 
Share issuances related to stock-based compensation310 228 231 
Cumulative effect change in accounting for ASU 2016-13(84)(84)
Net income2,283 2,283 
Other comprehensive income950 950 
Balance as of June 30, 202046,321 $461 $997,838 $(551,591)$(12,473)$434,235 

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,
 20212020
Cash flows from operating activities
Net income$13,897 $2,283 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,593 5,378 
Noncash stock-based compensation21,811 18,951 
Amortization of deferred commissions cost4,166 4,567 
Impairment of operating lease assets467 
Changes in operating assets and liabilities:
Trade accounts receivable34,054 (11,384)
Operating lease assets and liabilities, net(153)(520)
Other current assets and Other assets(7,594)7,289 
Deferred commissions cost(5,941)(5,646)
Accounts payable(241)(159)
Accrued liabilities(26,067)(7,699)
Deferred revenue669 (543)
Other liabilities17 2,301 
Net cash provided by operating activities37,211 15,285 
Cash flows from investing activities
Proceeds from maturity of short-term investments32,800 
Purchase of property and equipment(1,442)(1,643)
Net cash provided by (used in) investing activities(1,442)31,157 
Cash flows from financing activities
Repurchase of common stock(90,048)
Proceeds from stock-based compensation plans15,435 231 
Net cash provided by (used in) financing activities(74,613)231 
Effects of exchange rate — changes in cash756 2,677 
Net increase (decrease) in cash, cash equivalents and restricted cash(38,088)49,350 
Cash, cash equivalents and restricted cash at beginning of period397,237 296,082 
Cash, cash equivalents and restricted cash at end of period$359,149 $345,432 
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.

The consolidated financial statements of Commvault as of June 30, 2021 and for the three months ended June 30, 2021 and 2020 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 2021. 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 amount 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, and goodwill and purchased intangible assets. Actual results could differ from those estimates.

2.    Summary of Significant Accounting Policies
Recently Adopted Accounting Standards
StandardDescriptionEffective DateEffect on the Consolidated Financial Statements (or Other Significant Matters)
ASU No. 2019-12 (Topic 740), Income TaxesIn December 2019, the Financial Accounting Standards Board ("FASB") issued a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.We adopted this standard as of April 1, 2021.The standard did not have a significant impact on our financial statements.


6

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


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 historically been minimal.
Sales through our distribution agreement with Arrow Enterprise Computing Solutions, Inc. (“Arrow”) totaled 37% of total revenues for both the three months ended June 30, 2021 and 2020. Arrow accounted for approximately 32% and 33% of total accounts receivable as of June 30, 2021 and March 31, 2021, respectively.

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 typically 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 or appliance sold as part of the transaction.
Beginning in fiscal 2022, we modified the terms of our commission plans, and as a result, the commission paid on the renewal of a term-based, or subscription software license, was 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 transaction are now 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 intend to pay a commensurate renewal commission upon the next renewal of the subscription license and related updates and support. This change in commission plans also resulted in a change in the estimate of the amortization period of our existing Deferred commissions cost associated with term licenses. This change in amortization period resulted in an approximately $1,100 reduction in fiscal 2022 first quarter Sales and marketing expense (than if the change in estimate did not occur).
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 2 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.
7

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

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 sell software to a third party, which assembles an integrated appliance that is sold to end user customers. As a result, we expect the revenue and costs associated with hardware will decline 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.

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.

In fiscal 2020 Commvault launched Metallic, which is a Commvault software-as-a-service offering. Revenue from Metallic is recognized ratably 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 is 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.

8

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

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 timeResidual approach
Customer Support Revenue
Software UpdatesRatably over the course of the support contract (over time)At the beginning of the contract periodObservable in renewal transactions
Customer SupportRatably over the course of the support contract (over time)At the beginning of the contract periodObservable 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 performedObservable in transactions without multiple performance obligations
Education ServicesWhen the class is taught (point in time)Within 90 days of services being performedObservable 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. The geographic regions that are tracked are the Americas (United States, Canada, Latin America), EMEA (Europe, Middle East, Africa) and APJ (Australia, New Zealand, Southeast Asia, China). We operate in 1 segment.
Three Months Ended June 30, 2021
AmericasEMEAAPJTotal
Software and Products Revenue$51,787 $21,341 $9,034 $82,162 
Customer Support Revenue51,874 26,774 10,321 88,969 
Other Services Revenue7,310 3,428 1,552 12,290 
Total Revenue$110,971 $51,543 $20,907 $183,421 

Three Months Ended June 30, 2020
AmericasEMEAAPJTotal
Software and Products Revenue$50,645 $18,795 $7,114 $76,554 
Customer Support Revenue55,238 23,310 10,095 88,643 
Other Services Revenue4,113 2,555 1,135 7,803 
Total Revenue$109,996 $44,660 $18,344 $173,000 




9

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

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.

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, 2021$168,985 $19,141 $7,463 $253,211 $119,231 
Increase (decrease), net(30,078)814 (2,429)(468)1,684 
Ending Balance as of June 30, 2021$138,907 $19,955 $5,034 $252,743 $120,915 

The 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 increase in Deferred revenue is primarily the result of an increase in deferred revenue associated with Metallic contracts that are billed upfront and recognized ratably over the contract period partially offset by a decline in deferred revenue associated with customer support contracts.

The amount of revenue recognized in the period that was included in the March 31, 2021 balance of deferred revenue was $90,809 for the three months ended June 30, 2021. The vast majority of this revenue consists of customer support arrangements. The amount of software and products revenue recognized in the three months ended June 30, 2021 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, 2021, $37,615 of revenue may be recognized from remaining performance obligations, of which approximately $4,100 was related to software and products. We expect the majority of this software and products revenue to be recognized during fiscal 2022. The vast 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 schedules.

10

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

4.    Net Income per Common Share
Three Months Ended June 30,
20212020
Net income$13,897 $2,283 
Basic net income per common share:
Basic weighted average shares outstanding46,180 46,191 
Basic net income per common share$0.30 $0.05 
Diluted net income per common share:
Basic weighted average shares outstanding46,180 46,191 
Dilutive effect of stock options and restricted stock units1,987 312 
Diluted weighted average shares outstanding48,167 46,503 
Diluted net income per common share$0.29 $0.05 
The diluted weighted-average shares outstanding exclude outstanding stock options, restricted stock units, performance restricted stock units and shares to be purchased under the employee stock purchase plan totaling 616 and 3,166 for the three months ended June 30, 2021 and 2020, 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. On February 9, 2021, Rubrik, Inc. filed a patent-infringement lawsuit against Commvault Systems, Inc. in the United States District Court for the Western District of Texas – Waco Division. Rubrik asserts U.S. Patents 11,016,761, 10,852,998, 10,133,495, and 9,075,773. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate timing or outcome of this matter. We are unable at this time to determine whether the outcome of the litigation will have a material impact on our results of operations, financial condition, or cash flows. We believe that Rubrik’s claims are without merit, and we intend to vigorously contest them.
We do not believe that we are currently party to any other pending legal action that could reasonably be expected to have a material adverse effect on our business or operating results.

6.    Capitalization
During the three months ended June 30, 2021, we repurchased $90,048 of common stock (1,249 shares). There were 0 repurchases of common stock during the first quarter of fiscal year 2021. Our stock repurchase program has been funded by our existing cash and cash equivalent balances as well as cash flows provided by our operations.
Our Board has approved, and we intend to execute, a capital allocation policy that provides for the repurchase of $200,000 of our common stock for the period from February 1, 2021 through the end of our 2022 fiscal year, plus the use of approximately 75% of our fiscal 2022 free cash flow for additional repurchases during fiscal year 2022. From the period beginning February 1, 2021 through June 30, 2021 we have repurchased $152,175 of our common stock.
11

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 expenses and Restructuring expenses for the three months ended June 30, 2021 and 2020. Stock-based compensation is attributable to stock options, restricted stock units, performance based awards and the employee stock purchase plan.
 Three Months Ended June 30,
 20212020
Cost of services revenue$1,185 $666 
Sales and marketing7,308 7,204 
Research and development7,185 5,941 
General and administrative6,011 5,083 
Restructuring122 57 
Stock-based compensation expense$21,811 $18,951 
As of June 30, 2021, there was $137,596 of unrecognized stock-based compensation expense related to restricted stock unit awards that is expected to be recognized over a weighted-average period of 1.83 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.
12

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

Stock Options
Stock option activity for the three months ended June 30, 2021 is as follows:
OptionsNumber of OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (Years)Aggregate Intrinsic Value
Outstanding as of March 31, 20211,357 $62.06 
Options granted
Options exercised(337)45.87 
Options forfeited
Options expired(1)81.21 
Outstanding as of June 30, 20211,019 67.38 2.17$14,645 
Exercisable as of June 30, 20211,019 67.38 2.17$14,645 

The total intrinsic value of options exercised was $10,835 for the three months ended June 30, 2021 and $115 for the three months ended June 30, 2020.
Restricted Stock Units
Restricted stock unit activity for the three months ended June 30, 2021 is as follows:
Non-vested Restricted Stock UnitsNumber of
Awards
Weighted-
Average Grant
Date Fair Value
Non-vested as of March 31, 20213,451 $44.90 
Awarded585 73.66 
Vested(496)43.86 
Forfeited(124)47.77 
Non-vested as of June 30, 20213,416 $49.87 
The weighted-average fair value of restricted stock units awarded was $73.66 per unit during the three months ended June 30, 2021, $36.62 per unit during the three months ended June 30, 2020. 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, 2021, we granted 117 performance restricted stock units ("PSUs") to certain executives. Vesting of these awards is contingent upon i) us meeting certain revenue and non-GAAP performance goals (performance-based) in fiscal 2022 and ii) our customary service periods. The awards vest over three years. These awards generally have potential to vest at 200% based on actual fiscal 2022 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.

13

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, 2021, we granted 105 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 3 annual tranches and have a maximum potential to vest at 200% (210 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, 2021 was $87.74 per unit. The awards are included in the restricted stock unit table.

8.    Income Taxes
Income tax expense was $1,731 in the three months ended June 30, 2021 compared to expense of $4,743 in the three months ended June 30, 2020. Current quarter income tax expense relates primarily to current foreign taxes. In fiscal 2018, we determined that it was more likely than not that we will not realize the benefits of our gross deferred tax assets and therefore 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 0. Our position remains unchanged with respect to the realizability of our deferred tax assets as of June 30, 2021.

9.    Restructuring
Our restructuring plan, initiated in the first quarter of fiscal 2019, is aimed to increase efficiency in our sales, marketing and distribution functions as well as reduce costs across all functional areas. These restructuring charges relate primarily to severance and related costs associated with headcount reductions, stock-based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plan and lease abandonment charges.
For the three months ended June 30, 2021 and 2020, restructuring charges were comprised of the following:

Three Months Ended June 30,
20212020
Employee severance and related costs$1,324 $1,800 
Lease impairments and related costs (1)
467 
Stock-based compensation122 57 
Total restructuring charges$1,446 $2,324 

(1) Lease impairment charges for the three months ended June 30, 2020 relate to 2 offices. There were 0 lease impairment charges for the three months ended June 30, 2021.

Restructuring accruals

The activity in our restructuring accruals for the three months ended June 30, 2021 is as follows:
Total
Balance as of March 31, 2021$3,095 
Employee severance and related costs1,324 
Payments(2,602)
Balance as of June 30, 2021$1,817 
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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, 2021. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Overview

Commvault Systems, Inc. is a global data protection and information management software company offering customers enterprise level, intelligent data management solutions built from the ground up on a single platform and unified code base. Commvault was incorporated in Delaware in 1996.

At Commvault, we believe in solving hard problems for our customers. To do this, we provide capabilities which enable our customers to accelerate their digital transformation in today's ever evolving workforce using tools that are light touch and utilize artificial intelligence and machine learning to drive automation. Our product portfolio empowers our customers to reduce complexity, reign in data fragmentation, and accelerate their cloud journey. All software functionality shares the same back-end technologies to deliver the benefits of a holistic approach to protecting, managing, and accessing data. Our software addresses many aspects of storage and data management in the enterprise, while providing scalability and control of data and information. We believe our technology provides the broadest set of capabilities in the industry, which allows customers to reduce storage costs and administrative overhead. We also provide our customers with a broad range of professional services.
    
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 45% and 44% of our total revenues for the three months ended June 30, 2021 and 2020, respectively.
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. Larger deals (transactions greater than $0.1 million) represented 69% and 73% of our total software and products revenue in the three months ended June 30, 2021 and 2020, 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, 2021 and 2020. 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, 2021 and 2020. 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 plan 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 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 37% of our total revenues through Arrow in both the three months ended June 30, 2021 and 2020. If Arrow were to discontinue or reduce the sales of our products, or if our agreement with
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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, then such events would have a material adverse effect on our future business.
Our services revenue was 55% of our total revenues for the three months ended June 30, 2021 and 56% of our total revenues for the three months ended June 30, 2020. 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. 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. Our newly launched software-as-a-service solution, branded Metallic, is also included in services revenue. Revenue from Metallic is recognized ratably over the contract period.

Foreign Currency Exchange Rates’ Impact on Results of Operations
Sales outside the United States were 45% of our total revenue for the three months ended June 30, 2021 and 42% of our total revenue for the three months ended June 30, 2020. 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, 2020, our software and products revenue would have been lower by $3.1 million, our services revenue would have been lower by $4.5 million, our cost of sales would have been lower by $0.9 million and our operating expenses would have been lower by $3.5 million from non-U.S. operations for the three months ended June 30, 2021.
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 losses of approximately $0.1 million and $0.8 million for the three months ended June 30, 2021 and 2020, respectively.

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Critical Accounting Policies
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period-to-period. Accordingly, actual results could differ significantly from the estimates made by our management. 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, 2021 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, 2021.
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Results of Operations
Three months ended June 30, 2021 compared to three months ended June 30, 2020
Revenues (in millions)
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Total revenues increased $10.4 million, or 6%.
Software and products revenue represented 45% of our total revenue in the three months ended June 30, 2021 and 44% of our total revenue in the three months ended June 30, 2020.
Larger deal revenue (deals greater than $0.1 million) represented 69% of our software and products revenue in the three months ended June 30, 2021 and 73% of our software and products revenue in the three months ended June 30, 2020.
Software and products revenue increased $5.6 million, or 7%, as a result of the following:
An increase of $4.7 million, or 23%, in transactions less than $0.1 million.
An increase of $0.9 million, or 2%, in larger deal revenue.
An increase of 34% in the volume of larger deal revenue transactions to 185 deals for the three months ended June 30, 2021, up from 138 deals for the three months ended June 30, 2020.
The average dollar amount of larger deal revenue transactions was approximately $305 thousand and $403 thousand for the three months ended June 30, 2021 and 2020, respectively, representing a 24% decrease. The prior year first quarter included a high seven figure transaction that significantly impacted the average dollar amount per transaction.
Services revenue represented 55% of our total revenue in the three months ended June 30, 2021 and 56% of our total revenue in the three months ended June 30, 2020. Services revenue increased $4.8 million primarily due to the following:
An increase of $4.5 million of other services revenue, driven primarily by the year over year increase in revenue from Metallic.
An increase of $0.3 million in revenue from customer support agreements.
We track software and products revenue on a geographic basis. The geographic regions that are tracked are the Americas (United States, Canada, Latin America), EMEA (Europe, Middle East, Africa) and APJ (Australia, New Zealand, Southeast Asia, China, Japan). Americas, EMEA and APJ represented 63%, 26% and 11% of total software and products revenue, respectively, for the three months ended June 30, 2021. Software and products revenue increased year over year by 2% in the Americas, 14% in EMEA and 27% in APJ.
The increase in Americas software and products revenue was primarily the result of a 43% increase in transactions less than $0.1 million.
EMEA software and products revenue increased as a result of a 20% increase in revenue on deals under $0.1 million. Using exchange rates from the prior year, the increase in software and products revenue would have been 4%.
The increase in APJ was the result of larger deal transactions increasing more than two times over the prior year period, partially offset by a decrease in deals under $0.1 million. Using exchange rates from the prior year, the increase in software and products revenue would have been 16%.

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Our software and products revenue in EMEA and APJ 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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Total cost of revenues increased $0.7 million, and represented 14% of our total revenues for both the three months ended June 30, 2021 and 2020.
Cost of software and products revenue decreased $3.5 million, and represented 3% of our total software and products revenue for the three months ended June 30, 2021 compared to 8% for the three months ended June 30, 2020. The decrease is the result of reduced sales of hardware associated with our appliance as well as reduced software royalties associated with sales of HyperScale appliances and software. Beginning with the launch of HyperScale X in the middle of fiscal 2021, we began transitioning to a software only model. HyperScale X also has reduced software royalties relative to prior versions of HyperScale.
Cost of services revenue increased $4.2 million, representing 23% of our total services revenue for the three months ended June 30, 2021 compared to 19% for the three months ended June 30, 2020. The increase in cost of services revenue is primarily related to an increase in the cost of infrastructure related to Metallic, as well as an increase in employee compensation and related expenses compared to the prior year due to the temporary pay cuts enacted in the first quarter of 2021.











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Operating Expenses ($ in millions)
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Sales and marketing expenses decreased $5.3 million, or 7%, primarily due to a decrease in employee compensation and related costs.
Research and development expenses increased $5.0 million, or 16%, 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 $1.2 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 $4.9 million, or 23%, primarily due to the following:
Increase in employee compensation and related expenses compared to the prior year due to the temporary pay cuts enacted in the first quarter of 2021.
Increase in legal expenses of $2.4 million for legal costs related to intellectual property matters.
Stock-based compensation increased $1.2 million compared to the prior year.

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Restructuring: Our restructuring plan is intended to increase efficiency in our sales, marketing and distribution functions as well as reduce costs across all functional areas.  Restructuring expenses were $1.4 million and $2.3 million in the three months ended June 30, 2021 and 2020, respectively. These restructuring charges relate primarily to severance and related costs associated with headcount reductions. These charges include $0.1 million in both the three months ended June 30, 2021 and 2020, respectively, 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. 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 decreased $2.8 million, from $5.1 million in the three months ended June 30, 2020 to $2.3 million in the three months ended June 30, 2021, driven by the elimination of amortization of intangible assets related to Hedvig due to their impairment in the second quarter of fiscal 2021.

Income Tax Expense
Income tax expense was $1.7 million in the three months ended June 30, 2021 compared to expense of $4.7 million in the three months ended June 30, 2020. The income tax expense for the three months ended June 30, 2021 relates primarily to current foreign taxes.


Liquidity and Capital Resources
As of June 30, 2021, our cash balance was $359.1 million. In recent fiscal years, our principal source of liquidity has been cash provided by operations.
As of June 30, 2021, the amount of cash and cash equivalents held outside of the United States by our foreign legal entities was approximately $186 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 needed 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.
During the three months ended June 30, 2021, we repurchased $90.0 million of our common stock (1.2 million shares) under our share repurchase program. Our stock repurchase program has been funded by our existing cash and cash equivalent balances as well as cash flows provided by our operations.
Our Board has approved, and we intend to execute, a capital allocation policy that provides for the repurchase of $200 million of our common stock for the period from February 1, 2021 through the end of our 2022 fiscal year, plus the use of approximately 75% of our fiscal 2022 free cash flow for additional repurchases during fiscal year 2022. Since February 1, 2021 through June 30, 2021 we have repurchased $152.2 million of common stock.
Our summarized cash flow information is as follows (in thousands):
 Three Months Ended June 30,
 20212020
Net cash provided by operating activities$37,211 $15,285 
Net cash provided by (used in) investing activities(1,442)31,157 
Net cash provided by (used in) financing activities(74,613)231 
Effects of exchange rate-changes in cash756 2,677 
Net increase (decrease) in cash, cash equivalents and restricted cash$(38,088)$49,350 
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Net cash provided by operating activities was impacted by net income adjusted for the impact of non-cash charges, a decrease in accounts receivable, partially offset by a decease in accrued liabilities.
Net cash used in investing activities was related to $1.4 million of capital expenditures.
Net cash used in financing activities was the result of $90.0 million of repurchases of common shares partially offset by $15.4 million of proceeds from the exercise of stock options.
Working capital decreased $39.8 million from $234.4 million as of March 31, 2021 to $194.6 million as of June 30, 2021. The net decrease in working capital is primarily the result of cash used for share repurchases during the quarter.
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, 2021, 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.
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. These provisions continue in perpetuity along with our software licensing 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.

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

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Item 3 - Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
None.
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 45% of our sales were outside the United States for the three months ended June 30, 2021. 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 losses of less than $0.1 million and $0.8 million for the three months ended June 30, 2021 and 2020, 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, 2021. 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, 2021.
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 2022 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 controls 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. On February 9, 2021, Rubrik, Inc. filed a patent-infringement lawsuit against Commvault Systems, Inc. in the United States District Court for the Western District of Texas – Waco Division. Rubrik asserts U.S. Patents 11,016,761, 10,852,998, 10,133,495, and 9,075,773. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate timing or outcome of this matter. We are unable at this time to determine whether the outcome of the litigation will have a material impact on our results of operations, financial condition, or cash flows. We believe that Rubrik’s claims are without merit, and we intend to vigorously contest them.
We do not believe that we are currently party to any other 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, 2021 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, 2021, 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 Sale of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer
    
During the three months ended June 30, 2021, we repurchased $90.0 million of common stock, or 1,249,200 shares, under our share repurchase program. A summary of our repurchases of common stock is as follows:

PeriodTotal number of shares purchased as part of publicly announced programsAverage price paid per shareTotal dollar value of purchasesApproximate dollar value of shares that may yet be purchased under the program
April 2021455,600 $68.30 $31,118,398 *
May 2021428,200 $69.94 $29,949,069 *
June 2021365,400 $79.31 $28,980,687 *
Three months ended June 30, 20211,249,200 $72.08 90,048,154 

* Our Board has approved, and we intend to execute, a capital allocation policy that provides for the repurchase of $200 million of our common stock for the period from February 1, 2021 through the end of our 2022 fiscal year, plus the use of approximately 75% of our fiscal 2022 free cash flow for additional repurchases during fiscal year 2022. Since February 1, 2021 through June 30, 2021 we have repurchased $152.2 million of common stock.

Item 3. Defaults upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not Applicable.

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Item 5. Other Information
None.

Item 6. Exhibits
Exhibit No.Description
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)

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Signatures
Pursuant to the requirements of the Securities 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 28, 2021 By:/s/ Sanjay Mirchandani
  Sanjay Mirchandani
  Director, President and Chief Executive Officer
Dated:July 28, 2021 By:/s/ Brian Carolan
  Brian Carolan
  Vice President and Chief Financial Officer
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