Improved predictability in IT spending led to strong growth in revenue for storage software vendor CommVault for its first fiscal quarter, although the company saw its earnings drop year-to-year, the company reported on Tuesday.
CommVault also cited strong interest in its data dedupe and storage virtualization technologies as drivers for its business growth, which was especially strong in the U.S. market.
CommVault reported revenue of $60.2 million for its first quarter, ended June 30. That was up over 9 percent from the $55 million the company reported in the same quarter last year.
However, the company earned $2.4 million, or 6 cents per share, during its first quarter, down 31 percent from the $3.5 million, or 8 cents per share, it reported last year.
The U.S. market accounted for about 61 percent of the company's total revenue, and was up 19 percent from last year.
About 48 percent of the company's revenue came from software sales, and 52 percent from services. However, with the recent introduction of CommVault's Simpana 8 data protection software, the company expects software licensing to increase as a percentage of revenue going forward, said Louis Miceli, CFO.
Larger deals are starting to move forward in a more predictable way, and business with the federal government is improving due to stimulus spending, both of which contributed to the growth in revenue, said N. Robert Hammer, chairman, president and CEO of CommVault.
Still, Hammer declined to give guidance going forward, other than to say that the company should gain market share and expects double-digit growth in the second half of the year. "We're still in a challenging IT environment," he added.
All the recent buzz about data dedupe surrounding EMC and NetApp's bidding war over dedupe appliance pioneer Data Domain has helped customers better understand how the technology can cut storage capacity requirements. That should be good for CommVault going forward.
EMC on July 8 entered into a definitive agreement to acquire Data Domain for $2.1 billion after beating NetApp in the prolonged bidding war for the company.
Dedupe, along with storage virtualization, has been a major driver in the adoption of Simpana 8 because of its ability to reduce the amount of disk and tape storage capacity by up to 90 percent, Hammer said.
While Hammer did not mention Data Domain by name, he did say Simpana's dedupe sales grew because of lower cost and the ability to work with tape compared to the competition. "The market is responding to our end-to-end offering vs. hardware appliances," he said.
Strategic alliances with other vendors were important, Hammer said.
Dell, because of its OEMing of CommVault data protection software, now accounts for 23 percent of CommVault's total revenue, and sales through Dell increased 17 percent compared to the first quarter of 2008, Hammer said.
Dell in June updated its PowerVault DL2000 disk-based backup appliance with new CommVault software that includes block-level data deduplication.
CommVault's relationship with security software vendor McAfee is developing well, and business from the agreement between the two should ramp up during the second half, Hammer said.
CommVault and McAfee in October said they are working together to integrate a data and security management solution featuring McAfee's ePolicy Orchestrator (ePO) security risk management software and CommVault's Simpana 8 suite of backup, replication, archive and storage resource management software.
Accelerating customer interest in cloud computing, which helps increase the utilization of existing resources, will help increase CommVault's Simpana 8 business over the long term given the amount of automation built into the software, Hammer said.
"I believe that the changes in the market represent interesting opportunities for CommVault going forward," he said "We have the wherewithal to continue to be a disruptive force in the industry," he said.