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CommVault CEO says business good despite earnings slip

Despite a lackluster quarter for sales, CommVault CEO Bob Hammer raises the forecast for the rest of the year and says Simpana 8 is on track with improved data deduplication.

CommVault Systems Inc. CEO Bob Hammer blamed the backup vendor's disappointing revenue last quarter on large deals slipping into this quarter and said enough of those deals have closed to justify raising the forecast for the rest of the year.

Interest in CommVault's backup and related products remains strong despite revenue of $55 million, up 25% over last year but down 3% from the previous quarter and $1 million below analysts' expectations, Hammer said.

"I wasn't satisfied with the quarter, but the underlying business was strong and still is," Hammer told

Some of the large deals that slipped have been closed this quarter, prompting CommVault to raise its guidance for the fiscal year from $245 million to $250 million, Hammer said. The number of CommVault deals of $100,000 or more this quarter are at more than 85% of the total from all of last quarter, he said.

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Perhaps more important for customers, CommVault is on track to deliver its next major upgrade early next year, Hammer said. Block-level data deduplication is among the major enhancements for Simpana 8. Block-level data dedupe will work more efficiently on databases than the file-level data dedupe that Simpana currently uses.

"We do single instancing today, and we're adding block-level dedupe, which will be quite a bit different," Hammer said. "It will scale better and enable users to add search, encryption and archiving to deduplicated volumes, which we cannot do today."

CommVault added 326 new customers during the quarter, bringing its total to around 8,500. Hammer said the company also extended its reseller deal with Dell for three years and expanded it to include all CommVault products.

Revenue from CommVault's Advanced Data and Information Management products rose 109% year over year, Hammer said. That category includes CommVault's noncore backup products – archiving, e-discovery, single instance storage (data deduplication) and remote office backup.

Although backup software market leader Symantec reported strong financial results last week, Hammer said the deals that slipped had nothing to do with competition or reduced spending. "They were procurement related, mainly deals we thought we would close if we had sufficient time," he said. "For one reason or another, they got stuck and came out on the other side of the quarter. They were in the category of stuff happens."

Analyst Aaron Rakers of Wachovia Capital Markets, maintains that raising guidance indicates CommVault executives are telling the truth about the cause of its revenue slip.

"We believe CommVault provided investors with strong evidence that its underlying business remains healthy [with] no impact from macro or competitive pressures," Rakers wrote in a note to clients, pointing to an upcoming product refresh and expanded deal with Dell as positives.

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