Commvault Systems, Inc. (NASDAQ:CVLT) Q3 2023 Earnings Call Transcript

Sanjay Mirchandani: Tom, Sanjay here. Just a little more color. I mean, the margin conversation is the number one priority for my engineering organization on how we optimize the service. So it’s a young service. It’s doing very well. It’s growing very quickly. It’s coming at scale. We’ve got a host of services that we keep adding. So there’s a lot of work that we’re doing proactively to be best of class. So rest assured that we’ll share more, but more importantly, it is the top priority for my engineering team and my operations team on how we get better at that. It’s also scale. This is a business where we’ve got to scale it up. That’s why Gary’s point on needing 12 to 24 months to be truly best of class on that is a very normal journey. And if you look at what it took us to get to, let’s say, when we get to $100 million, we’re amongst the fastest-growing SaaS businesses in the history of SaaS businesses in the infrastructure space. So there’s a lot there.

Thomas Blakey: It’s a good point, and you don’t want to not invest against this opportunity. Two years ago, this business was $0 on a revenue basis. So give or take, along those lines, when do you expect — will you just — will you break this revenue out when it’s 10% Metallic?

Gary Merrill: Where we’re headed is that more to come when we get to our next earnings call at the end of fiscal Q4, I think there’s a lot of interest in the Metallic business, not just from a revenue but a margin and introductory standpoint. So I think we’ll work towards that at a future call.

Thomas Blakey: Okay. And just my last question on churn. I know it’s early in Metallic, but have there been any impacts on churn with the macro?

Gary Merrill: No. No. Our renewal rates are very strong both from a gross renewal rate and a net dollar retention, very strong rates and really are pleased with where we’re headed on those as well.

Thomas Blakey: Excellent. Thank you, guys.

Operator: Now I’m showing no further questions at this time.

Sanjay Mirchandani: Thank you, everyone, for joining the call today. We look forward to speaking with you following our fiscal year-end usually in the May time frame. Thank you.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.