Q3 2022 Commvault Systems Inc Earnings Call
Good day and welcome to Commvault Q3 fiscal year 2020 earnings Conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
Can I ask a question. During this session you will need to press Star then one I guess had some telephone if anyone should require assistance during the conference. Please press Star then two.
As we can operator as a reminder, this call is being recorded I would now like to turn the call over to Michael Melnyk Investor Relations you may begin.
Good morning, and welcome to our earnings Conference call I'm, Michael Melnyk, and I'm joined by Sanjay Mirchandani, Commvault, CEO and Brian Carolyn Commvault CFO .
Statements made on today's call will include forward looking statements about commvault future expectations plans and prospects all such forward looking statements are subject to risks uncertainties and assumptions. Please refer to the cautionary language in today's earnings release and Commvault. Most recent periodic reports filed with the SEC for a discussion of the.
Risks and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward looking statements Commvault does not assume any obligation to update. These statements. During this call Commvault financial results are presented on a non-GAAP basis, a reconciliation between the non-GAAP and GAAP measures.
Can be found on our website.
Thank you again for joining us I will now turn it over to Sanjay for his remarks Sanjay.
Mike Good morning, and thank you for joining us to discuss our fiscal third quarter results are.
Our team executed well in this breakout quarter and the headlines speak for themselves.
Software and products revenue meaningfully outpaced the market growth rate, increasing 11% year over year to a record $99 million.
We exceeded $200 million quarterly total revenue for the first time in company history.
And non-GAAP EBIT was a record $43 million.
While proud of these results I'm, even more excited about the quality of the metrics that underpin our financials and our accelerated journey to a cloud recurring revenue model.
81% of total revenue was recurring in nature compared to 74% a year ago.
Total <unk> grew 11% year over year to $561 million.
Subscription and SaaS AOR grew 45% year over year to $309 million and now represents 55% of total IRR.
We had the best quarter for new customer additions in years, including several fortune 500 words.
We've moved nearly two five extra bytes of customer data to the cloud representing approximately a five time growth.
In the past three years and.
And metallic continue to set new financial and operating milestones.
We could not have achieved these milestones without the hard work and dedication of our employees worldwide.
We also remain optimistic about Q4 and beyond for several reasons.
First we are winning and taking share.
Core software is performing well with software and products revenue growing 13% when adjusted for pass through appliance revenue.
And in aligning with customers consumption patterns subscriptions represented a record 71% of software and products revenue.
We're seeing broader product adoption with new and existing customers across every single product category and are setting all time highs with Hyperscale X.
This is largely because we support the broadest workloads and provide the security scalability and simplicity customers need to advance the cloud transformations.
In most cases, we're displacing incumbents, often multiple legacy and upstart vendors to provide customers a single future proof data management solution.
I'll share a few examples shortly.
The second reason for our optimism is that metallic our hyper growth data management as a service offering continues to gain momentum.
As more applications are born in.
Mike Great to the cloud, it's clear that SaaS is the future of the industry and for that matter the future of Commvault.
Customers are demanding scalable cost efficient enterprise grade SaaS based solutions and we couldnt be more pleased with the traction because the numbers are staggering.
We added over 400, new metallic logos, 60% of which were net new to Commvault.
Total customers increased approximately 40% quarter over quarter nearly 1500.
And metallic landed its first ever seven figure ACB deal. This is a major milestone for metallic and for Commvault as deals like this are driving our growth.
Which is why we remain bullish about the trajectory of our metallic business. We have a clear first mover advantage and we will continue to invest to further metallics growth and solidify our differentiated leadership position.
This growth has compounded as customers increasingly embraced both commvault software and metallic SaaS, which what we call the power of hand.
Over 40% of Q3 deals involved more than one product.
Over 50% of metallic customers are using another commvault product and approximately 30% of metallic customers are using multiple metallic offerings.
What better way to demonstrate this then with a global materials company that added inefficient multi vendor environment.
This fortune 500 company wanted a single layer of data protection flexible reporting and Swift recoverability across its myriad of workloads.
This is why they chose Hyperscale <unk> and Commvault complete with Ransomware protection.
And numerous metallic offerings.
We're the only company to provide this breadth of solutions.
Ease of use and the future proof architecture to meet their needs today and tomorrow.
This is our competitive advantage.
Our third reason for optimism is that we're also leveraging our partners and the MSP community to drive new growth opportunities.
Elaborate a partner engagement model is helping us win more business globally.
For example, working with one of the world's largest systems integrators, we closed a seven figure transaction with a leading global auto manufacturer they needed they needed a scalable backup solution for their on Prem.
Premise data centers with a broad list of workloads certified object storage system for compliance and ransomware resiliency.
After evaluating numerous vendors they switched from their legacy solution. The hyperscale apps with Commvault complete data protection. Once again, we were the only company that could meet all these requirements with centralized workload management.
Another reason for our optimism is our ability to help customers with their most strategic and.
Pressing business needs for.
For instance, the relentless rise us a ransomware and other security threats are no longer just CIO or CTO concerns their CEO and board level priorities.
You'll see these threats or bridge the traditional siloed whirls of data protection and security, adding even more complexity complexity cost and risk.
Rather than a multi vendor patchwork of point solutions.
Security and it professionals alike are increasingly looking for a unified architecture and approach to help protect prevent and recover from these.
And tomorrow threat vectors.
We do this today.
In Q3, our partners presented us with an opportunity with a fortune 500 Telecom company, resulting in a seven figure deal Commvault was the only vendor that could meet the companys ransomware, multi cloud automation and integration needs.
The legacy and upstart competitors Couldnt, even meet the initial round of requirements.
Folks. These threats are not going away, which is why we also continue to innovate our leading edge ransomware offerings. In fact, we entered into an agreement to acquire an overseas technology company to further our innovation in this space. We believe this technology and talent will broaden metallics ransomware detection and prevention capabilities.
And help customers further reduce their ransomware risks.
Looking ahead I believe we are uniquely positioned in a large and growing market. Our teams are executing well and.
And the strength of our core software offerings is allowing us to invest and innovate for the future.
<unk> continues to play a critical role in customers it transformation projects, which gives us confidence in the long term opportunity for our business.
Now I'll turn it over to Brian for a closer look at the financials Bryan. Thanks, Sanjay and good morning, everyone. Hope you had a chance to review the results. We released this morning, I will briefly recap and provide some additional color on the quarter.
In fiscal Q3, 'twenty two we reported total revenue of $202 million, an increase of 8% year over year.
Q3 marked the first time in company history that we exceeded $200 million in quarterly revenue.
Millstone for Commvault.
Software and products revenue increased 11% year over year to approximately $99 million as a reminder, in FY 'twenty. Two we've moved primarily to a software only model in Q3 software only growth excluding appliance pass through revenue was approximately 30.
18% year over year.
Revenue from software transactions over $100000 increased 24% year over year and represented a record 76% of software revenue.
The volume of these transactions grew 20% year over year.
The average deal size increased 3% to approximately $332000.
As Sanjay noted we closed numerous seven figure deals in the quarter.
In Q3, we had the highest number of new customer additions and years across all products driven by our Americas and EMEA regions.
In addition to our new customer success business from existing customers reached an all time high during the quarter.
Taken together the pace of both new and existing business further validates the success of our emerging land and expand motion.
Let me now discuss our accelerating transition to a recurring revenue based model.
Third quarter subscription software revenue increased 45% year over year.
To approximately $70 million.
Subscription licenses represented 71% of total software revenue increased from 63% last quarter and 55% a year ago.
We're clearly benefiting from the tailwind of our subscription transition and our growing recurring revenue model.
Total annual recurring revenue or <unk> increased 11% year over year to approximately $561 million on a constant currency basis.
Was up 13% year over year.
Our growth is being driven by new subscription customers and metallic.
As Sanjay noted earlier subscription and metallic.
<unk> grew 45% year over year to $309 million and now represents 55% of total.
<unk> up from 51% last quarter, and 46% a year ago.
This is an important proof point in the transformation of our company.
We believe <unk> is a good measure of the underlying health of the business.
It represents the strength of our land expand and renewal motions and as a barometer of our potential for future growth.
Total recurring revenue, which includes subscription software maintenance support services and SaaS grew 17% year over year to $164 million.
Recurring revenue represented 81% of total revenue in the quarter, an increase from 79% last quarter and 74% a year ago.
Now I'll discuss expenses and profitability.
We reported fiscal third quarter gross margins of approximately 86% and.
An increase of 40 basis points year over year.
The expansion of gross margin was the result of the decrease in pass through hardware and royalties associated with the legacy version of our Hyperscale products.
These savings were partially offset by an increased mix of metallics, SaaS revenue, which carries a higher cost of sales, we expect metallic gross margins to improve over time with increased economies of scale.
Total expenses, including both cost of sales and operating expenses increased approximately 6% year over year to $157 million.
<unk> growth was driven by increased third party marketing spend field compensation on record bookings and strategic investments in metallic.
non-GAAP EBIT was a record $43 million and non-GAAP EBIT margins improved 150 basis points year over year to 21, 3%.
Now I'll discuss cash flows and the balance sheet.
For the quarter, we generated approximately $26 million of free cash flow.
We ended the quarter with approximately $234 million in cash of which over 70% sits overseas.
As Sanjay mentioned, we announced a technology and talent driven acquisition of an overseas firm to enhance our ransomware protection capabilities.
The purchase price is approximately $17 million and will be funded entirely from our foreign cash balance.
We expect the deal to close in fiscal Q4.
We currently have no debt on the balance sheet.
During the quarter, we opened a new $100 million revolving credit facility to provide additional financial flexibility.
In Q3, we repurchased approximately one 3 million shares of our common stock for $85 million.
Since our Investor event in January 2021 through December 31.
We repurchased approximately four 6 million shares for $328 million exceeding our initial guidance of $200 million.
Plus 75% of free cash flow.
Now I'll discuss our financial outlook for Q4, FY 'twenty two.
We saw accelerating momentum throughout Q3.
As Sanjay articulated we believe that the industry and our business are healthy.
At this point in the quarter our pipeline is in good shape and it's always an area of focus for us.
Working diligently to further our market share gains and leadership position.
Against this backdrop, we are raising fiscal Q4 revenue guidance, we expect Q4 software revenue of approximately $97 million and total revenue of approximately $202 million.
Now, let's shift to expenses.
We expect Q4 gross margins to be flat year over year or approximately 85%.
We expect total expenses, including cost of sales and operating expenses to be up approximately 6% year over year.
Q4 expenses reflect a seasonal FICA tax reset.
Annual Merit increases and go to market investments.
We anticipate that this will result in EBIT margins of approximately 20%.
Our projected share count for Q4 is approximately $46 5 million shares with that I'll now turn things back over to Sanjay for some closing remarks Sanjay. Thank you Brian .
The past few years have been anything but normal while we ongoing pandemic and the unpredictability in the supply chain continues to create uncertainty we've adapted and delivered results.
As data continues to grow in both quantity and importance. So too has the need to secure and protect that data.
Is our sweet spot our message is resonating in the market and our products are making a difference for our customers.
We're excited about the opportunity and confident in our path forward with that I'll open the call up to Q&A.
Operator.
As a reminder to ask a question. Please press Star then one.
If your question has been answered and you'd like to move yourself from the queue.
Okay.
Our first question comes from Jason Ader with William Blair. Your line is open.
Yes, hi, guys.
Good quarter.
Question for me is.
On the metallic versus the Commvault classic how much overlap in use cases are you guys seeing in the field are there situations where.
Sales person.
Is struggling to figure out what fits best or is it pretty are the lines of demarcation pretty clear in terms of use cases.
I think it's very clear our we've got a very clear playbook.
Metallic supports.
<unk> supports mostly different workloads office 365 endpoints containers cloud native applications.
And there's a little overlap on Vms, because we wanted to give customers the flexibility but.
I would say to you that most of the workload and most of the work we do with metallic is incremental.
Complementary.
The power and just further on that question the power of and our ability to give customers value on both the on premise.
And.
And through metallic is increasing roughly I think about over 40%, 41% of our bookings had more than one product.
Okay and that includes Hyperscale that includes metallic different thoughts.
Got you and then just a follow up for Brian .
Kind of along those lines do you have a sense of let's say just fiscal 'twenty two.
Much of a headwind to your growth.
Has come from the shift to more ratable Rev. Rec, so not just the talent, but also kind of more activity with MSP.
Where you would have had kind of an upfront Rev rec, but thats that shifted over to <unk>.
<unk>.
I think it's somewhat.
<unk> at this point Jason.
<unk> said its really complementary at this point.
The time Youre investing in a SaaS business, it's going to have a headwind in terms of the in period recognizable revenue, but by and large this has been a very much of the power of both succeeding together in the market.
And we're not seeing it as a huge headwind.
Alright, Thank you very much good luck.
Our next question comes from Ann Rakers with Wells Fargo. Your line is open.
Yes, thanks for taking the questions and congrats on the quarter a couple for me as well I guess the first question is if we looked at the set up in the quarter and obviously impacting what was the September quarter as well you guys have discussed those supply chain challenges impacting some deal closures and just the ability to do.
Clearly at some of the customers.
Where do we stand today has that has that lifted out of the the narrative with the customers or is there still some conservatism going into the March quarter guidance based on those dynamics.
No.
Like we said, we said last quarter.
We sort of saw the supply chain headwind increasing over the course of our second quarter. So it wasn't it happened over time.
And when we when we spoke in October we sort of said we're going to land.
<unk> said, we were going to land because there were ongoing risks and we were trying to normalize for them I think what we've done this quarter Erinn as we've really got ahead of it we're managing it well the team is executing the products are working well because customers are using the power of <unk> in some cases, you're using the cloud directly so we're seeing I'm not saying we're out of it but I am saying.
At least in our pipeline management, we normalized for it.
Okay.
Just a couple of other quick questions on the on the Metallics business I mean, I think it was $309 million that you disclosed on the subscription and SaaS.
Speaker 1: It looks like based on how we think about the ramp of metallic from a revenue standpoint, you saw a very, very strong quarter. I think you actually introduced or…
Looks like based on how we kind of think about the ramp of the talent from a revenue standpoint.
You saw very very strong quarter, I think you actually introduced or commenced availability of metallic in October in Asia Pac. So I'm curious is there any way for us to kind of think about the SaaS component of that subscription and SaaS AAR momentum that youre seeing.
Speaker 1: commenced availability of Metallic in October and Asia pack. So I'm curious, is there any way for us to kind of think about the SaaS component of that subscription and SaaS ARR momentum that you're seeing? How do we think about that piece because Metallic becomes a much more visible growth driver as we move forward?
How do we think about that piece, because because metallic becomes a much more visible growth driver as we move forward.
I mean.
Speaker 2: I mean, you know, in all honesty, we're, we're really pleased with the progress we're making with Metallic, the RevRamp is, you know, I call it hyper growth. And that's how I think about it. There's a strong demand on SaaS from customers, enterprise grade SaaS, not necessarily in lieu of on-premise, but in most cases with on-premise. So the power of end is very important.
In all honesty.
Pleased with the progress, we're making with metallic the Rev ramp as I.
Call It hyper growth and that's how I think about it there's a strong demand on SaaS from customers enterprise grade SaaS not necessarily in lieu of on premise, but in most cases with on premise. So the power of and is very important where they only want to do this it's a big contributor I think Brian and I both said.
Speaker 2: we're the only ones that do this. It's a big contributor like I think Brian and I both said. You know, the subscription and SaaS ARR is a 45% growth year on year and it's 55% of the total. So it's, you know, it's handsome. Now, we're not
The subscription and SaaS.
As a 45% growth year on year and 55% of the total so.
Now we're not we're not.
Speaker 2: unwrapping the numbers just yet. And then, you know, like I said earlier, we'll call out more specifics over time. Right now, we're just focused on doing everything we can to grow this business as fast as possible.
Unwrapping the numbers just yet.
Like I said earlier.
A lot more specifics over time right now we're just focused on doing everything we can to grow this business as fast as we can.
Speaker 1: Okay. And then the final quick question is, you know, going back to the analyst day, you know, early part of 2021, you outlined kind of some, you know, growth expectations, you know, both total revenue as well as software. And then, you know, also, you know, progressions of, of EBIT, you know, I believe towards into that mid 20% range, if correct me if I'm wrong, I think out to 2024 fiscal year, you know, Brian , just curious, I mean, you know, any thoughts, you know, are you sticking by that at this point, you know, any thoughts relative to what was outlined, you know, a year ago?
Okay and then a final quick question is going back to the analyst day in early part of 2021, you outline kind of some.
Growth expectations, both total revenue as well as software and then.
Also progression of EBIT I believe for us into that mid 20% range.
Correct me, if I'm wrong, I think out to 2020 for fiscal year, Brian just curious I mean any thoughts are you sticking by that at this point.
That's relative to what we've outlined a year ago.
Speaker 2: Good morning, Eric. As you know, back in January 2021, that was a two-year perspective we gave. And I think that we've proven that we're tracking toward those targets, especially on revenue and software growth, and in particular, ARR is ahead of those targets.
Hey, good morning.
Yes, as you know that back in January 2021 that was a two year perspective.
We gave and I think that we've proven that we're tracking towards those targets, especially on revenue and software growth and in particular <unk> is.
Ahead of those targets.
Speaker 2: We've also done a sizable amount of share repurchases that are well ahead of what we messaged. We're focused on balancing growth and profitability at the same time. We said rule 32 in a couple years, I think we're approaching now the rule of 30. Keep in mind that just a couple years ago we were at a rule of nine, so we've made substantial progress since then. And we're focused on that. The mix might change a little bit between growth and margin, but our direction absolutely does not change. We're driving towards that combination.
We've also done so.
Sizeable amount of share repurchases that are well ahead of what the message we're.
We're focused on balancing growth and profitability at the same time that we said rule 32 in a couple of years I think we're approaching now the rule 30 keep in mind that just a couple of years ago, where the role of nine so we've made substantial progress since then and.
And we're focused on on that mix might change a little bit between growth and margin, but our direction absolutely does not change we're driving towards that combination and right. Now we believe <unk> is a great metric to measure ourselves, we'll continue to manage our growth while investing in the business such as metallic.
Speaker 2: And right now we believe ARR is a great metric to measure ourselves. We'll continue to manage ARR growth while investing in a business such as Metallic. And with that I just want to add one comment.
And.
Leave it at that.
Just want to ask one I just want to add one comment or.
Our core software business is healthy it's growing we're taking share and that was the first bullet I sort of enumerated in my in my comments earlier.
Speaker 2: Our core software business is healthy. It's growing, we're taking share. And that was the first bullet I sort of enumerated in my comments earlier. And that is allowing us to really fuel and grow metallic.
That is allowing us to really fuel and grow.
Metallic.
Speaker 2: Okay, and so as new workloads happen in the cloud, are born in the cloud, move to the cloud, we're all over it. And it's the combination that's causing customers to give us a serious look and to adopt this because it's a no compromise architecture. This is sort of a really important way to think about it. It's not where one is poking into the other. They're working together, complimentary, power of and to really deliver the value.
Okay, and so as new workloads.
Happened on the cloud are born in the cloud move to the cloud.
We're all over it and its the combination.
That's causing customers to give us a serious look into and to adopt this because.
Its a no compromise architecture. This is sort of a really important way to think about it it's not where one is.
Poking into the other they're working together complementary power and to really deliver the value.
Thank you guys.
Welcome.
Sure.
Speaker 3: Our next question comes from James Fish with Piper Sandler. Your line is open.
Our next question comes from James Fish with Piper Sandler Your line is open.
Speaker 1: Hey guys, thanks for the questions. Great quarter. Kind of going off of Aaron's questions there because I think they're important. Brian , you made the comment there about the mix maybe changing a little bit behind growth and margin, but you're driving towards that rule of 32 or so. I guess why not invest for more growth at this point, especially on the metallic side where you're just seeing tremendous success and kind of take down margins for fiscal 23 and potentially be out here.
Hey, guys. Thanks for the questions great quarter.
Kind of going off of Aaron's questions. There because I think are important.
Brian you made the comment there about the mix may be changing a little bit behind growth in margin, but youre driving towards that.
Rule of 32, or so I guess why not invest for more growth at this point, especially on the metallic side, where youre just seeing tremendous success.
And kind of take down margins for fiscal 'twenty, three and potentially the out years.
Hey, good morning, James.
Speaker 1: Hey, good morning, James. Good to hear from you. Yeah, I mean, the good news is that Metallic is experiencing hyper growth. I mean, you're seeing that the key driver of ARR, the market's moving in that direction. Customers are demanding enterprise scale SaaS solutions. You know, we believe we have the early mover advantage. And really, the differentiator for us is the power of both Commvault software and our SaaS software.
To hear from you.
The good news is that metallic is experiencing hyper growth youre seeing that the key driver of the market's moving in that direction customers are demanding.
Enterprise scale SaaS solutions, we believe we have the early mover advantage.
And really a differentiator for US is the power of both Commvault software and our SaaS offerings.
Speaker 1: And I think it's well known that when you're dealing with SAS margins, they're going to look a little different from software margins. We understand those dynamics.
And I think it's well known that when you when youre dealing with SaaS margins Theyre going to look a little different from software margins, we understand those dynamics.
Speaker 2: We're working hard to get to economies of scale. And we'll call out more specifics in due course, but we're squarely focused on growing both top and bottom. And I'll just jump in here.
We're working hard to get to economies of scale.
We'll call out more specifics in due course, but we are squarely focused on growing both top and bottom.
I'll just jump I'll just jump in here.
<unk>.
Speaker 2: At no point have you compromised the growth of Metallic. I mean, Metallic's been something we've been sharing with you over the past, like, I don't know, six, seven quarters. And it's a business we're very happy with. It's a business that we're investing in. It's a business that leans in very nicely with our core. Our sales force knows how to take both of them to market. Our partners love it.
At no point have a compromise the growth of metallic metallic has been something we've been sharing with you.
Over the past six seven quarters and it's.
It's a business, we're very happy with the business that we're investing in it's a business that leans in very nicely with our core our salesforce knows how to take both of them to market our partners love It.
Speaker 2: MSPs are adopting it. So we are investing in it. And we've done a lot of investment and just our Q4 guidance, for example, you know, approximately about 20% of FY22 EBITS margin. That's up 700 basis points from fiscal year 20. Okay. And that's up.
MSP that are adopting it so we are investing in it.
And we've done it we've done we've done a lot of investment and just our Q4 guidance for example.
Approximates about 20%.
FY 'twenty EBIT margin, that's up 700 basis points from fiscal year 'twenty.
Okay and Thats up.
Speaker 2: roughly 900 basis points since fiscal year 18. So we're delivering the results, we're growing ARR, which is a key metric for us, and we're delivering...
Roughly 900 basis points since fiscal year 2018, so.
So we are delivering the results we are growing <unk>, which is a key which is a key metric for us okay and we're delivering.
Speaker 2: you know, healthy even margin. So, and growing it. And as Brian said a couple years ago, in the rule of X, we were at 9. Okay, so on all fronts we are investing, we're making, we're hopefully making the right choices, and most importantly, most importantly, customers are breaking.
Healthy EBIT margin, so and growing it and as Brian said, a couple of years ago and the rule of X weave at night.
Okay. So on all fronts, we are investing we're making we're hopefully making the right choices and most important most importantly customers are embracing it.
Speaker 4: Makes sense, guys. And maybe on the go-to-market aspect of it, I mean, you know, great, great quote on the top line. It seemed like we spent some of the upside in SG&A. And Brian , you gave us some details there. But has there been a change in the incentives for the Salesforce to sell more subscription or metallic or is it just the factor of, you know, investing behind the growth overall and adding more head-
Makes sense guys and maybe on the on the go to market aspect of it.
Great quarter on the topline and so you might be spent some of the upside in SG&A.
Brian you gave us some details there but has there been a change in the incentives for the sales force to sell more subscription or metallic or is it just the factor of.
Investing behind the growth overall on adding more head count.
Speaker 2: Without giving too much away, our results are commensurate with how we're prioritizing things for the field, whether it be compensation, playbooks, focus, product.
And without giving too much away our results are commensurate with how we are.
Prioritizing thanks for the field, whether it be compensation Playbooks focused product.
Speaker 2: The good news is, when you've got something that the customers appreciate, it makes things better. So, everything's aligned hopefully in that direction.
The good news is when <unk> got something that the customers appreciate it make things make things better so.
Everything's aligned hopefully in that direction.
Thanks, guys.
Speaker 3: Our next question comes from Eric Martinuzzi with Lake Street. Your line is open.
Our next question comes from Eric Martin <unk> with Lake Street. Your line is open.
Speaker 5: Yeah, I wanted to delve into the buyback. I understand that you guys were pretty aggressive here and actually exceeded the original outlook. At the board level, have we talked about kind of a reload or a new plan given that we've exceeded the one that we laid out a year ago?
Yes, I wanted to delve into the buyback I understand that you guys were pretty aggressive here and actually exceeded the original outlook.
At the board level have we talked about kind of a reload or a new plan given that we've exceeded the one that we laid out a.
A year ago.
Speaker 1: Good morning, Eric. It's Brian here. Yes, we laid that out in January 2021. The commitment was $200 million plus 75% of free cash flow starting in FY22. And that's the plan we're executing against right now.
Yes, good morning, Eric It's Brian here, Yes, we laid that out in January 2021, the commitment was $200 million plus 75% of free cash flow starting in FY 'twenty two and that's the plan we're executing against right now.
Speaker 5: Okay, maybe, maybe I'm not following here because
Okay.
Maybe I'm not following here.
Speaker 1: There's no change to that plan. There's no immediate change to that plan.
There is no change to that plant are there is no. There is no immediate change to that plan.
Speaker 1: OK. So we should anticipate a smaller number in the current quarter. It will be opportunistic, and we commit it to 75% of free cash flow moving forward.
Okay. Okay. So we should anticipate a smaller number in the current quarter.
We will be opportunistic and we committed to 75% of free cash flow moving forward.
Okay Alright.
Speaker 5: All right, and then I had a question regarding the large deal pricing, specifically pricing on renewals. You guys now have, you're into your second year of renewals on the install base, and I was wondering how that pricing discussion has been going.
Alright, and then I had a question regarding the large deal pricing specifically pricing on renewals you guys now have here.
And to your second year of renewals on the installed base and I was wondering how that pricing discussions have been going.
Speaker 1: Well, I think we've been we've been pleased with the performance that we've seen on our renewal business. And as we've been forecasting that.
Well I think we've been we've been pleased with the performance that we've seen on our renewal business and as we've been forecasting that.
Speaker 1: You know, this is now a tailwind for us as a company. But I'd like to emphasize that it's not just about the renewal.
This is now a tailwind for us as a company, but I'd like to emphasize that it's not just about the renewal.
Speaker 1: It's very much of a complementary motion for us. It's land adopt.
It's very much of a complimentary motion for us its land adopt expand and renew all those things have to kind of work in conjunction with one another and we're often seeing that that's opening up more and more conversations where in fact, we're seeing at the time of renewal.
Speaker 1: expand and renew, all those things have to kind of work in conjunction with one another. And we're often seeing that, you know, that's opening up more and more conversations where in fact we're seeing at the time of renewal, you know, the culmination of many discussions we've had with the customer and we're seeing large deal sizes as a result.
It's the culmination of many discussions we've had with the customer and we're seeing large deal sizes as a result.
Speaker 1: We just demonstrated that we had a record percentage of deals greater than $100,000 for the quarter that encompassed 76% of our software revenue.
We just demonstrated that we had a record percentage of deals greater than $100000 for the quarter that encompassed 76% of our software revenue that was up 24% year over year. The volume of those deals was up 20%. So one continues to feed the other again its a land adopt expand and renew all in one motion.
Speaker 1: That was up 24% year over year. The volume of those deals was up 20%.
Speaker 1: So one continues to feed the other. Again, it's a land, adopt, expand, and renew, all in one motion. Got it.
Yes.
That's on the quarter and the outlook.
Thank you Eric.
Speaker 3: This concludes the Q&A session. Thank you for participating in today's conference. You may now disconnect. Everyone, have a great day.
That concludes the Q&A session. Thank you for participating in today's conference you May now disconnect everyone have a great day.
Okay.
Sure.
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Speaker 6: you
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