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Blue Harbour opens new stake in CommVault Systems

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CommVault Systems position

Blue Harbour Group added a new stake in CommVault Systems Inc. (CVLT) during the third quarter of 2014. The position accounted for 1.24% of the fund’s total portfolio.

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Overview of CommVault Systems

CommVault Systems provides data and information management software applications and related services. The company develops, markets, and sells a unified suite of software applications under the Simpana brand. The Simpana platform delivers a number of capabilities across physical, virtual, and cloud environments:

  • backup
  • recovery
  • archiving
  • replication
  • e-discovery
  • analysis

As of September 30, 2014, CommVault had licensed its software applications to over 20,000 registered customers. CVLT’s peers include backup and archiving software providers such as Symantec, EMC, IBM, and Hewlett-Packard.

Fiscal 2Q15 results

CVLT’s last-reported fiscal 2Q15 results missed on both revenue and earnings estimates. Total revenues were $151.1 million, showing an increase of 7% over the second quarter of fiscal 2014 and a decrease of 1% sequentially. Software revenue fell 2% to $69.4 million due to decreased revenue from domestic operations. Services revenue grew 15% to $81.7 million with an increase in revenue from customer support agreements. This resulted from software sales to new customers and renewal agreements with CVLT’s installed software base.

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CommVault reported net income of $6.5 million, down from $17.4 million in the same period of the prior year.  Non-GAAP (generally accepted accounting principles) net income for the quarter decreased 31% to $16.5 million or $0.35 per diluted share from $23.9 million or $0.48 per diluted share during the same period of the previous year.

CommVault’s planned transformation

On the earnings call, CommVault management said that the 2Q15 results were below expectations. Management added, “We continued to make progress on our planned transformation of CommVault to enhance our product and related go-to-market initiatives, strengthen our strategic partner programs, and have additional field-selling capacity.”

Other Blue Harbour positions

During 3Q14, Blue Harbour added new positions in Blackhawk Network Holdings Inc. (HAWK), CommVault Systems and Juniper Networks Inc. (JNPR). It exited positions in Urban Outfitters Inc. (URBN) and Telephone and Data Systems Inc.

Positions that underwent change via 13D amendments include CACI International Inc. (CACI), the Babcock & Wilcox Company (BWC), and Investors Bancorp Inc. (ISBC).

The next part of this series will discuss Blue Harbour’s new position in Juniper Networks Inc. (JNPR).

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