COMMVAULT SYSTEMS INC

Previous wording

We sell 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, original equipment manufacturers, and marketplaces. Subscription revenue generated through indirect distribution channels accounted for approximately 90% of total subscription revenue in both the six months ended September 30, 2024 and 2023. Subscription revenue generated through direct distribution channels accounted for approximately 10% of total subscription revenue in both the six months ended September 30, 2024 and 2023. 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 subscription revenue generated through our direct distribution channels from time-to-time. We believe that the growth of our subscription revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy. We intend 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 products and services could have a material adverse effect on our revenues and results of operations.

Current wording

We sell 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, original equipment manufacturers, and marketplaces. Subscription revenue generated through indirect distribution channels accounted for approximately 90% of total subscription revenue in both the nine months ended December 31, 2024 and 2023. Subscription revenue generated through direct distribution channels accounted for approximately 10% of total subscription revenue in both the nine months ended December 31, 2024 and 2023. 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 subscription revenue generated through our direct distribution channels from time-to-time. We believe that the growth of our subscription revenue, derived from both our indirect channel partners and direct sales force, are key attributes to our long-term growth strategy. We intend 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 products and services could have a material adverse effect on our revenues and results of operations.

Previous wording

We have a non-exclusive distribution agreement with Arrow pursuant to which Arrow's primary role is to enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience. We generated 36% of our total revenues through Arrow for both the six months ended September 30, 2024 and 2023. If Arrow were to discontinue or reduce the sales of our solutions or if our agreement with Arrow were terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace Arrow, there could be a material adverse effect on our future business.

Current wording

We have a non-exclusive distribution agreement with Arrow pursuant to which Arrow's primary role is to enable a more efficient and effective distribution channel for our solutions by managing our resellers and leveraging their own industry experience. We generated 35% and 36% of our total revenues through Arrow for the nine months ended December 31, 2024 and 2023, respectively. If Arrow were to discontinue or reduce the sales of our solutions or if our agreement with Arrow were terminated, and if we were unable to take back the management of our reseller channel or find another distributor to replace Arrow, there could be a material adverse effect on our future business.

Previous wording

Sales outside the United States were 46% of our total revenues for both the six months ended September 30, 2024 and 2023. 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 revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenues, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Current wording

Sales outside the United States were 47% of our total revenues for both the nine months ended December 31, 2024 and 2023. 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 revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenues, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Previous wording

Using the average foreign currency exchange rates from the three months ended September 30, 2023, our total revenues would have been lower by $1.8 million, our cost of revenues would have been lower by $0.1 million and our operating expenses would have been lower by $1.0 million from non-U.S. operations for the three months ended September 30, 2024. Using the average foreign currency exchange rates from the six months ended September 30, 2023, our total revenues would have been lower by $0.6 million, our cost of revenues would have been higher by less than $0.1 million and our operating expenses would have been lower by $0.7 million from non-U.S. operations for the six months ended September 30, 2024.

Current wording

Using the average foreign currency exchange rates from the three months ended December 31, 2023, our total revenues would have been higher by $1.6 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been higher by $0.6 million from non-U.S. operations for the three months ended December 31, 2024. Using the average foreign currency exchange rates from the nine months ended December 31, 2023, our total revenues would have been higher by $1.0 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been lower by less than $0.1 million from non-U.S. operations for the nine months ended December 31, 2024.

Previous wording

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 $0.3 million for both the three and six months ended September 30, 2024. We recognized net foreign currency transaction losses of approximately $0.1 million and $0.2 million for the three and six months ended September 30, 2023, respectively.

Current wording

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 gains of approximately $0.3 million and insignificant losses for the three and nine months ended December 31, 2024, respectively. We recognized net foreign currency transaction losses of approximately $1.6 million and $1.8 million for the three and nine months ended December 31, 2023, respectively.

Previous wording

There have been no significant changes in our critical accounting policies during the six months ended September 30, 2024 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, 2024.

Current wording

Other than the addition of purchased intangible assets, there have been no significant changes in our critical accounting policies during the nine months ended December 31, 2024 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, 2024.

Previous wording

–Total revenues increased $32.3 million, or 16% year over year, driven prim arily by an increase in subscription revenue, partially offset by decreases in perpetual license and other services revenues. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Current wording

–Total revenues increased $45.8 million, or 21% year over year, driven prim arily by increases in subscription and perpetual license revenues. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Previous wording

–Subscription revenue increased $36.3 million, or 37% year over year, driven primarily by a 75% increase in our SaaS revenue. Term-based license revenue increased 22%, primarily due to an increase in the number of larger term-based license transactions (deals greater than $0.1 million) period over period and an increase in the average selling price of these transactions. Subscription revenue accounted for 57% of total revenues for the three months ended September 30, 2024 compared to 49% for the three months ended September 30, 2023.

Current wording

–Subscription revenue increased $44.1 million, or 39% year over year, driven primarily by an 82% increase in our SaaS revenue. Term-based license revenue increased 21%, primarily due to an increase in the number of larger term-based license transactions (deals greater than $0.1 million) period over period. Subscription revenue accounted for 60% of total revenues for the three months ended December 31, 2024 compared to 53% for the three months ended December 31, 2023.

Previous wording

–Perpetual license revenue decreased $3.9 million, or 27% year over year. Our preferred route to market is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies. Perpetual license revenue accounted for 5% of total revenues for the three months ended September 30, 2024 compared to 7% for the three months ended September 30, 2023.

Current wording

–Perpetual license revenue increased $1.5 million, or 10% year over year. Our preferred route to market is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies. Perpetual license revenue accounted for 6% of total revenues for the three months ended December 31, 2024 compared to 7% for the three months ended December 31, 2023.

Previous wording

–Customer support revenue was flat compared to the same period of the prior year, driven by a $12.4 million increase in customer support revenue related to term-based license arrangements, offset by a $12.4 million decrease in support attached to perpetual license support renewals.

Current wording

–Customer support revenue was flat compared to the same period of the prior year, driven by a $6.6 million increase in customer support revenue related to term-based license arrangements, partially offset by a $6.3 million decrease in support attached to perpetual license support renewals.

Previous wording

–Other services revenue decreased $0.8 million, or 7% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Current wording

–Other services revenue decreased $0.1 million, or 1% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Previous wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 62% and 38% of total revenues, respectively, for the three months ended September 30, 2024. Total revenues increased 20% and 10% year over year in the Americas and International, respectively.

Current wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 59% and 41% of total revenues, respectively, for the three months ended December 31, 2024. Total revenues increased 24% and 17% year over year in the Americas and International, respectively.

Previous wording

▪The increase in International total revenues was primarily due to increases of 32% and 3% in subscription and customer support revenues, respectively, offset by decreases of 34% and 2% in perpetual license and other services revenues, respectively, as compared to the same period of the prior year.

Current wording

▪The increase in International total revenues was primarily due to increases of 30%, 20% and 2% in subscription, perpetual license and customer support revenues, respectively, partially offset by a decrease of 14% in other services revenue, as compared to the same period of the prior year.

Previous wording

–Total cost of revenues increased $5.0 million, representing 18% of our total revenues for the three months ended September 30, 2024 compared to 19% for the three months ended September 30, 2023.

Current wording

–Total cost of revenues increased $9.6 million, representing 19% of our total revenues for the three months ended December 31, 2024 compared to 18% for the three months ended December 31, 2023.

Previous wording

–Cost of subscription revenue increased $10.1 million and represented 14% of our total subscription revenue for both the six months ended September 30, 2024 and 2023. The year over year increase is primarily the result of an increase in the cost of infrastructure related to growth in our SaaS offerings.

Current wording

–Cost of subscription revenue increased $10.1 million and represented 16% of our total subscription revenue for the three months ended December 31, 2024 compared to 14% for the three months ended December 31, 2023. The year over year increase is primarily the result of incremental hosting costs associated with the Clumio acquisition and an increase in the cost of infrastructure related to growth in our SaaS offerings.

Previous wording

–Cost of perpetual license revenue decreased $0.2 million and represented 4% of our total perpetual revenue for both the three months ended September 30, 2024 and 2023.

Current wording

–Cost of perpetual license revenue decreased $0.4 million and represented 2% of our total perpetual revenue for the three months ended December 31, 2024 compared to 5% for the three months ended December 31, 2023.

Previous wording

–Cost of customer support revenue increased $0.4 million, representing 20% of our total customer support revenue for the three months ended September 30, 2024 compared to 19% for the three months ended September 30, 2023.

Current wording

–Cost of customer support revenue decreased $0.7 million, representing 19% of our total customer support revenue for the three months ended December 31, 2024 compared to 20% for the three months ended December 31, 2023.

Previous wording

–Cost of other services revenue decreased $0.1 million, representing 69% of our total other services revenue for the three months ended September 30, 2024 compared to 65% for the three months ended September 30, 2023. The decrease in cost of other services revenue was driven by timing of the delivery of certain professional services.

Current wording

–Cost of other services revenue increased $0.6 million, representing 72% of our total other services revenue for the three months ended December 31, 2024 compared to 67% for the three months ended December 31, 2023. The increase in cost of other services revenue was driven by timing of the delivery of certain professional services.

Previous wording

–Sales and marketing expenses increased $17.2 million, or 20%, driven by a $14.1 million increase in employee compensation and sales commissions associated with increased revenues relative to the same period in the prior year, including an increase of $1.7 million in stock-based compensation.

Current wording

–Sales and marketing expenses increased $24.4 million, or 27%, driven by an $18.8 million increase in employee compensation and sales commissions associated with increased revenues relative to the same period in the prior year, including an increase of $3.7 million in stock-based compensation.

Previous wording

–Research and development expenses increased $2.6 million, or 8%, driven by increases in employee compensation and related expenses, including an increase of $0.2 million in stock-based compensation. The increase in employee compensation and related expenses is primarily driven by additional headcount, including the headcount related to the Appranix, Inc. ("Appranix") acquisition completed in April 2024. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.

Current wording

–Research and development expenses increased $5.6 million, or 16%, driven by increases in employee compensation and related expenses, including an increase of $1.6 million in stock-based compensation. The increase in employee compensation and related expenses is primarily driven by additional headcount, including the headcount related to the Appranix and Clumio acquisitions completed in April 2024 and October 2024, respectively. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.

Previous wording

–General and administrative expenses increased $10.0 million, or 18%, driven by increases in accounting and legal expenses related to the acquisitions of Appranix and Clumio, and increases in employee compensation and related expenses, including an increase of $0.2 million in stock-based compensation year over year.

Current wording

–General and administrative expenses increased $6.0 million, or 21%, driven by increases in accounting and legal expenses related to the acquisitions of Appranix and Clumio, and increases in employee compensation and related expenses, including an increase of $1.7 million in stock-based compensation, which includes an adjustment for the estimated achievement of certain financial performance goals for PSUs, year over year.

Previous wording

–Restructuring: Our restructuring plan, initiated in the fourth quarter of fiscal 2024, is intended to enhance customer satisfaction through the reorganization and redesign of our customer success functions. The realignment of the customer success structure aims to optimize operational efficiency and improve continuity for our customers through the pre-sales and post-sales experience. Restructuring expenses were $0.6 million for the three months ended September 30, 2024. These charges relate primarily to severance and related costs associated with headcount reductions. These expenses included $0.2 million of stock-based compensation related to modifications of existing awards granted to certain employees impacted by the plan. We anticipate the restructuring plan will be completed in the second half of fiscal 2025. There were no restructuring expenses in the three months ended September 30, 2023.

Current wording

–Restructuring: Our restructuring plan, initiated in the fourth quarter of fiscal 2024, is intended to enhance customer satisfaction through the reorganization and redesign of our customer success functions. The realignment of the customer success structure aims to optimize operational efficiency and improve continuity for our customers through the pre-sales and post-sales experience. Restructuring expenses were $4.0 million for the three months ended December 31, 2024. These charges relate primarily to severance and related costs associated with headcount reductions. These expenses included $0.3 million of stock-based compensation related to modifications of existing awards granted to certain employees impacted by the plan. We anticipate the restructuring plan will be completed by the end of fiscal 2025. There were no restructuring expenses in the three months ended December 31, 2023.

Previous wording

–Depreciation and amortization expense increased $0.5 million, driven by the acquisition of intangible assets in the first quarter of fiscal 2025.

Current wording

–Depreciation and amortization expense increased $1.2 million, driven by the acquisition of intangible assets in fiscal 2025.

Previous wording

Interest income increased $0.4 million, from $1.4 million in the three months ended September 30, 2023 to $1.7 million in the three months ended September 30, 2024, primarily as a result of the amount of invested funds subject to interest income.

Current wording

Interest income increased $0.2 million, from $1.4 million in the three months ended December 31, 2023 to $1.6 million in the three months ended December 31, 2024, primarily as a result of the amount of invested funds subject to interest income.

Previous wording

Income tax expense was $1.1 million in the three months ended September 30, 2024 compared to expense of $5.7 million in the three months ended September 30, 2023. The decrease in income tax expense compared to the same period in the prior year relates primarily to the recognition of deferred tax assets that were not recognized in prior years due to the Company’s valuation allowance, as well as windfalls from stock compensation.

Current wording

Income tax expense was $4.1 million in the three months ended December 31, 2024 compared to expense of $5.2 million in the three months ended December 31, 2023. The decrease in income tax expense compared to the same period in the prior year relates primarily to the recognition of deferred tax assets that were not recognized in prior years due to the Company’s valuation allowance, as well as windfalls from stock compensation.

Previous wording

–Total revenues increased $58.8 million, or 15% year over year, driven prim arily by an increase in subscription revenue, offset by decreases in perpetual license and other services revenues. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Current wording

–Total revenues increased $104.6 million, or 17% year over year, driven prim arily by an increase in subscription revenue, offset by decreases in perpetual license and other services revenues. We remain focused on selling subscription arrangements through both term-based software licenses and SaaS offerings.

Previous wording

–Subscription revenue increased $63.1 million, or 32% year over year, driven primarily by a 72% increase in our SaaS revenue. Term-based license revenue increased 17%, primarily due to an increase in the number of larger term-based license transactions (deals greater than $0.1 million) period over period and an increase in the average selling price of these transactions. Subscription revenue accounted for 56% of total revenues for the six months ended September 30, 2024 compared to 49% for the six months ended September 30, 2023.

Current wording

–Subscription revenue increased $107.1 million, or 35% year over year, driven primarily by a 76% increase in our SaaS revenue. Term-based license revenue increased 18%, primarily due to an increase in the number of larger term-based license transactions (deals greater than $0.1 million) period over period. Subscription revenue accounted for 58% of total revenues for the nine months ended December 31, 2024 compared to 50% for the nine months ended December 31, 2023.

Previous wording

–Perpetual license revenue decreased $3.3 million, or 12% year over year. Our preferred route to market is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies. Perpetual license revenue accounted for 5% of total revenues for the six months ended September 30, 2024 compared to 7% for the six months ended September 30, 2023.

Current wording

–Perpetual license revenue decreased $1.7 million, or 4% year over year. Our preferred route to market is led by the sale of term-based licenses. Perpetual licenses are generally only sold in certain verticals and geographies. Perpetual license revenue accounted for 6% of total revenues for the nine months ended December 31, 2024 compared to 7% for the nine months ended December 31, 2023.

Previous wording

–Customer support revenue increased $0.7 million, or 1% year over year, driven by a $6.8 million increase in customer support revenue related to term-based license arrangements, partially offset by a $6.1 million decrease in support attached to perpetual license support renewals.

Current wording

–Customer support revenue was flat compared to the same period of the prior year, driven by a $19.1 million increase in customer support revenue related to term-based license arrangements, offset by an $18.7 million decrease in support attached to perpetual license support renewals.

Previous wording

–Other services revenue decreased $1.0 million, or 5% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Current wording

–Other services revenue decreased $1.1 million, or 3% year over year. Changes in other services revenue can vary period over period, primarily due to the timing professional services are delivered.

Previous wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 62% and 38% of total revenues, respectively, for the six months ended September 30, 2024. Total revenues increased 17% and 12% year over year in the Americas and International, respectively.

Current wording

We track total revenues on a geographic basis. Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia and China. Americas and International represented 61% and 39% of total revenues, respectively, for the nine months ended December 31, 2024. Total revenues increased 19% and 13% year over year in the Americas and International, respectively.

Previous wording

▪The increase in Americas was primarily due to a 33% increase in subscription revenue, offset by a 3% decrease in perpetual license revenue, driven by the shift from selling perpetual licenses to subscription arrangements. Customer support and other services revenues declined 2% and 6%, respectively.

Current wording

▪The increase in Americas total revenues was primarily due to a 37% increase in subscription revenue, partially offset by a 7% decrease in perpetual license revenue, driven by the shift from selling perpetual licenses to subscription arrangements. Customer support and other services revenues declined 2% and 1%, respectively.

Previous wording

▪The increase in International total revenues was primarily due to a 31% increase in subscription revenue, offset by a 16% decrease in perpetual license revenue. Customer support revenue increased 2% year over year. Other services revenue decreased 2% year over year due to a decrease in the delivery of professional services for the region as compared to the same period of the prior year.

Current wording

▪The increase in International total revenues was primarily due to a 31% increase in subscription revenue, offset by a 3% decrease in perpetual license revenue. Customer support revenue increased 2% year over year. Other services revenue declined 6% year over year due to a decrease in the delivery of professional services for the region as compared to the same period of the prior year.

Previous wording

–Total cost of revenues increased $9.2 million and represented 18% of our total revenues for both the six months ended September 30, 2024 and 2023.

Current wording

–Total cost of revenues increased $18.8 million and represented 18% of our total revenues for both the nine months ended December 31, 2024 and 2023.

Previous wording

–Cost of subscription revenue increased $4.9 million and represented 15% of our total subscription revenue for both the three months ended September 30, 2024 and 2023. The year over year increase is primarily the result of an increase in the cost of infrastructure related to growth in our SaaS offerings.

Current wording

–Cost of subscription revenue increased $20.2 million and represented 15% of our total subscription revenue for the nine months ended December 31, 2024 compared to 14% for the nine months ended December 31, 2023. The year over year increase is primarily the result of incremental hosting costs associated with the Clumio acquisition and an increase in the cost of infrastructure related to growth in our SaaS offerings.

Previous wording

–Cost of perpetual license revenue decreased $0.3 million, representing 3% of our total perpetual revenue for the six months ended September 30, 2024 compared to 4% for the six months ended September 30, 2023.

Current wording

–Cost of perpetual license revenue decreased $0.7 million, representing 3% of our total perpetual revenue for the nine months ended December 31, 2024 compared to 4% for the nine months ended December 31, 2023.

Previous wording

–Cost of customer support revenue decreased $0.3 million and represented 19% of our total customer support revenue for both the six months ended September 30, 2024 and 2023.

Current wording

–Cost of customer support revenue decreased $1.0 million and represented 19% of our total customer support revenue for both the nine months ended December 31, 2024 and 2023.

Previous wording

–Cost of other services revenue decreased $0.3 million, representing 70% of our total other services revenue for the six months ended September 30, 2024 compared to 68% for the six months ended September 30, 2023. The decrease in cost of other services revenue was driven by timing of the delivery of certain professional services.

Current wording

–Cost of other services revenue increased $0.3 million, representing 71% of our total other services revenue for the nine months ended December 31, 2024 compared to 68% for the nine months ended December 31, 2023. The increase in cost of other services revenue was driven by timing of the delivery of certain professional services.

Previous wording

–Sales and marketing expenses increased $29.1 million, or 17%, primarily due to a $20.2 million increase in employee compensation and sales commissions associated with increased revenues relative to the same period in the prior year, including an increase of $1.5 million in stock-based compensation. In addition, there was an increase year over year in expenses related to a live sales kickoff event and participation in certain strategic conferences, including the RSA conference during the period. These events did not occur in the same period in the prior year.

Current wording

–Sales and marketing expenses increased $53.4 million, or 21%, primarily due to a $39.1 million increase in employee compensation and sales commissions associated with increased revenues relative to the same period in the prior year, including an increase of $5.2 million in stock-based compensation. In addition, there was an increase year over year in expenses related to a live sales kickoff event and participation in certain strategic conferences, including the RSA conference during the period. These events did not occur in the same period in the prior year.

Previous wording

–Research and development expenses increased $4.3 million, or 7%, driven by increases in employee compensation and related expenses resulting from additional headcount related to the Appranix acquisition completed in April 2024. Expenses related to stock-based compensation were flat compared to the same period of the prior year. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.

Current wording

–Research and development expenses increased $9.9 million, or 10%, driven by increases in employee compensation and related expenses resulting from additional headcount related to the Appranix and Clumio acquisitions completed in April 2024 and October 2024, respectively. Expenses related to stock-based compensation increased $1.6 million compared to the same period of the prior year. Investing in research and development remains a priority for Commvault and we anticipate continued responsible spending related to the development of our software applications and hosted services.