 Data protection is becoming a fundamental component of cybersecurity strategies. As organizations move to the cloud and battle increased threats from ransomware, supply chain attacks, and other threats, backup of recovery is not only the last line of defense, it's increasingly becoming a first principle in cyber recovery strategies. A leading company in this space is Commvault which just reported earnings today. Joining me is Commvault CEO and CUBE alum, Sanjay Merchandani. Sanjay, you guys beat estimates this quarter and ended up the year at 785 million in revenue, up 6% in constant currency over a fiscal year 22. Metallic hit the $100 million ARR mark subscription revenue on the way toward 500 million milestones. So congratulations on the beat. What's happening out there? How much of that beat is very sound forecasting by you guys, strong customer demand, product leadership? Give us the rundown. Good to have you. Good to be here, Dave. Good to see you again. And thanks for having me on the show. Well, you know, the team's been working pretty hard for the past, I would say three years, which is what we sort of mark as the anniversary of metallic, as well as our shift from perpetual licensing to a more subscription, repeatable oriented model. And the results we just announced at the show, both of those coming together are SaaS business getting critical, you know, having critical mass and momentum and our subscription business also sort of getting critical mass and momentum. So the two coming together results in a great Q4. And we've also sort of put out some guidance for the year, which we haven't done in a long time for a full year. And both of those are on the uptick. So we also took advantage of this timeframe and the business is coming to size scale to also recast how we show our financials as a company. So lots going on. Yeah, so before we get into the sort of P&L mechanics, I wanted to ask you, got to ask about the macro. I mean, we're probably sick of talking about it at some point, but the conventional narrative from tech CEOs is deals are taking longer. You know, the bigger deals are getting trimmed down or more approvals required to close deals. How would you characterize the macro environment impact for Commvault relative to that narrative? And how are you dealing with the current climate? You know, we sort of called it out, I would say almost early when we saw it in Q3, the quarter that was the past quarter for us Q4 calendar. And we said, you know, we saw bigger deals getting more scrutiny, taking longer, you know, deal sizes being looked at by customers, a general second and third look. And we quickly, you know, we learned from that. We adjusted. We started looking at our forecast and our pipeline very differently. Our data science models that sort of help us get closer to the number. Also, I mean, sort of we've been relearning them, reteaching them with the current situation. So as we went into Q4, we sort of assumed that Q3 would continue. And as we went into fiscal year 24, which is what we're in the throes of, we kind of assumed that it would, it would not necessarily deteriorate, but it would say about the same. One change we did see between Q3 and Q4 for us was Q3, the Americas for a for Compolt was a little soft. And it, thankfully, we're very happy. It's steady quite nicely in Q4. So, you know, otherwise we kind of called that about four months ago. Correct me if I'm wrong, but I thought I saw in your, in your announcement that the percentage of large deals, you know, was sort of suppressing, shifting toward a broader base. Was that deliberate? Was it a function of the macro? Is it a function of just, you know, the metallic is a different sort of ACV? What's going on there? I parse that out. You know, the large, what we consider large business, which is a hundred K and above, from a transaction point of view, you know, year on year, we saw a little change where the number, the volume was probably not the same with a year before, a little less, but the ASP was higher. So, you know, there was a little, there was a little shift there. Metallic is a definitely a lower ASP on average. And we're just seeing a whole, you know, this is the volume of transactions that metallic is bringing into, into Compolt is at a different scale. Hundreds, hundreds of customers every quarter. And the nice part there is those customers very quickly, a large percentage of those customers, very quickly become Compolt customers too. So, there's that piece. Yeah, I got it. Compolt was founded in the late 1980s. There was no SaaS, there was no cloud. So you had to transition the business from, as you mentioned, as perpetual license model to the SaaS subscription and ARR model. So it'd be useful, I think, for the audience. Talk about the challenges of doing that and how should we think about that transition from the sort of legacy on-prem business and the relationship to the new growth areas and particularly, I'm interested, are you building a cloud platform, a hybrid platform? You talk about a single platform. I wonder if you could explain that a little bit. So, you know, as a company, we're about 27 years old and we're, you know, we've, by the pioneers in data protection, we continue to be the largest public, you know, pure play data protection company. And, you know, we have over 1300 patents. You know, we continue to innovate. Innovations at the heart of what we do and protecting customers' data in a difficult world is the only thing we do. And so if you look back as to what it is that Commvault does, it's about making sure that we're one step ahead of our customers' needs and data protection. And along with that, as the industries evolve from a more classic perpetual way of purchasing, buy one's use forever type of approach to more of a subscription model where you have a much more engaged customer experience to a SaaS model where you let, you know, you land small and then you have, you work with the customer to embrace, adopt and expand. We've made, you know, we've made that shift consciously. And today, perpetual is a declining part of our business while subscription and SaaS, I'll be calling our subscription platform is the growing part of our business. I mean, if you think about it, subscription ARR, if you would, for the year grew, you know, 38%. That's, you know, that's evolution and that's good momentum and that's a leading indicator for our business. The way we, you know, the way we're thinking about it is, I don't want the customer to have to choose between, hey, do I need this to be on-premise or do I need this to be on SaaS and can they work? I want the customer to do it as naturally as possible. If they're starting on-premise and moving to the cloud or they're working with us to get a cloud-based data protection strategy, ransomware protection strategy and saying, oh, but you know, we can also do our on-premise stuff with you. And the beauty is our platform, which we're constantly keeping modern, keeping on the bleeding edge is one platform. In our history, we've only acquired two companies, okay? And that's why we're able to really give a consistent user experience, single pane of glass, not just, we don't just use the term, we mean the term. And a customer can start on-premise with their Oracle workloads. They can then add on Office 365. They can bring ransomware to the table and they get everything on one pane of glass. It's one platform that is extremely modern and can render a software-based experience and appliance-based experience or SaaS-based experience all natively. So that's how we've evolved and the licensing and business models that support those ways of consuming have evolved. So doing that transition as a public company, obviously it requires really clear communications to the street, which I think, you know, again, we'll talk about maybe the, if we get time, the P&L sort of mix, but I think people were really pleased your investors with the transparency you guys shared. But we've seen other companies, I mean, Splunk has clearly struggled with this transition that maybe that's product stuff. Tableau did a pretty good job of it, going from sort of, you know, desktop base, Ellipsky took over and figured out how to get to the cloud. There were little bumps there. Yeah, a company like Klick decided to go private. So it seems, my question is, was it that single platform approach that's allowed you to have a somewhat, I don't want to say seamless, but less rocky than some of the ones I've seen before. Is it more of the communications that you're delivering to the street? What would you attribute that to? You know, I would say that we've been very transparent about our intention and even if there were tough decisions to be made when we decided to, you know, really introduce the subscription model which predated me maybe by a year or so. And at some point people said those were headwinds because of the way revenue recognition worked, et cetera. I said, we knew it was the right thing to do. And we've been very, very transparent with our shareholders, with the investor base saying, this is the transition the industry's in, we have to start doing this now. It's a multi-year transition. And there's no ripped the band-aid situation. And then as SAS became real for us, that was accretive. That was additive to that direction. So I don't know if you messaged it well, but we messaged it consistently. And the platform strategy absolutely underrode our conviction around the direction we were going on the business model. The platform had to support it. And if it didn't, you know, you'd be a tangent between your intention and your capabilities. Thankfully, that was not our situation. It was notable in your data this quarter that 70% of the metallic customers claim a new to Commvault. So my question is, where are you getting them from? Where are you stealing share? You know, this is all new to us. And then off that, you know, very quickly about 40% of those of that customer base also quickly embraces another Commvault software product. So there is that reinforcing, you know, single platform capability that you see in the numbers. You know, we're seeing customers of all sizes. You know, when we started Metallic three plus years ago, you know, we thought like an enterprise company, built an enterprise-grade SaaS data protection capability. And over time, we've seen service providers and partners and marketplaces want to, you know, we have the product available through them. And they're bringing us customers and they're bringing us customers with different profile, a different size, a different ASP, and we've evolved very quickly to, you know, to really move into that. And we'll continue doing that. So we're really excited about that. These are customers that, some of them, not all of them are a new profile of customers in the company. Now, because the shift of ARR and subscriptions, it's obviously vital renewals or, you know, the lifeblood, right? It's like, poor renewals is the killer, silent killer of SaaS companies. So you got to have, you know, good, good retention. You shared some metrics this quarter on net dollar retention. I think it was 107% for subscriptions and metallic. For subscription overall and 125% for metallic. So how should we think about these metrics going forward? How confident are you that these KPIs are sustainable or maybe it could even be improved? Well, you know, we took our time to get into the details at this level and these metrics are more or less the ones that we're going to keep sharing some quarterly, some annually, as it makes sense. We have a good degree of confidence now that the business, we've had the SaaS business for three years and really the subscription journey has been on a little longer than that. And given it's almost 50% of our ARR, we feel that it's a good time to, and it's also, we have a good ability to predict the business. So we felt good about it. You know, there's no guarantee but we feel pretty good about where we headed. And I think we feel that we could now give an annual guidance. We haven't given annual guidance for a few years. We've been giving quarterly guidance and we gave a two-year perspective a couple of years ago. And, you know, we feel our technology and our go-to-market ability allows us to do that. So they're very positive about it. It's interesting because I mean, I've been at this for a long time and I feel like visibility has never been, you know, worse, maybe it has been at certain times but it's not great right now but it sounds like you are much more confident on your visibility, you know, because the model's kicking in, you know, obviously giving guidance now, you're sort of updating, beginning to update your two-year outlook, oh, your outlook from two years ago. So is that fair that you feel sort of, maybe more confident than most about your visibility? Is that more business- It's a few things, it's a few things. It's, where's the platform? Where is our ability to deliver what we're promising? And we feel very good about that. Where is our go-to-market capabilities? We've spent three years really building up where the SaaS product is when Metallic is now and as many years, if not more, really getting our subscription motion in place. We've had a couple of, you know, two to three years of renewal capabilities and know what that looks like and sort of the predictability around that. And let's be, you know, the most important thing, what we do matters to customers. You know, with the rise in ransomware, with the rise of, you know, cyber breaches, what we do from a protection point of view is actually front-room stuff, boardroom stuff. And we believe that if you look at that, if you look at the business model that we've put ourselves, you know, the paces, put ourselves through the paces with, the platform itself and our go-to-market readiness, you know, we felt, you know, giving a forecast for the next couple of 12 months was, was probably doable. Is doable. I got a couple more questions before I let you go. There's a lot of talk, hot topic right now about cloud optimization. We've seen slower hyper scale growth rates. I just wrote a piece, don't be fooled by that. You know, but customers are dialing down consumption. My question is, are you shielded from that because you're in such high growth mode with your metallic business? And if so, specifically, I presume your customers are asking you to help them save costs as well. So how are you helping customers optimize cost? So, Dave, I don't know if it's so much about consumption. You know, we help customers, customers consume. And I'd say we probably, you know, we trail a little bit from some of the numbers the hyperscalers put out because customers have already committed and we help customers consume what they've committed as part of that, you know, their agreements. And so, I mean, a data point in the, you know, we've, we think conservatively we've helped customers move over 3.5 exabytes of data into the public cloud. That's a big number, okay? And we're helping customers do that. So as much as, you know, there's this scrutiny right now about, you know, whether the cloud is slowing down, there are still commitments that have been made, agreements that have been signed, and we're helping with our partners to get customers to take advantage of that, value out of that. And we think that's going to continue for a long time. Are you saying that you basically, your customers are using their credits on maybe their savings plans and applying them? So they're basically shifting, and this is the premise that we put forth last week in our breaking analysis is that it's just a shifting of priorities and you're saying you're one of those priorities to help them get into the cloud. Because one of the reasons you might see, you know, one of the reasons that customers may be slowing down is because they're actually taking a step back and saying, hey, what have we committed to? What's already been, you know, in the books that we could utilize better, smarter, and cloud commitments are one of those. And, you know, we're there as part of their strategy to help them with data protection and cloud is part of it. So that is one way that we work with them to really make sure they get advanced to what they've committed to. Yeah, interesting. All right, I'm going to end where I started. You said in the earnings call today that the worlds of data protection and security are blurring. What do you mean by that? And how does it inform your strategy? You know, are you pivoting like some competitors to become a security company? Do you see it as an adjacency? How should we think about that? Hey, Mike, if my data protection platform didn't keep you safe over the past three, four, five years, we didn't do our job. It's implicit, sticking, you know, sticking a security moniker on your tagline or your company name doesn't make you more secure. It's implicit by design. We have, you know, we have customers who use us every single day to recover from ransomware, to recover from natural disasters, to recover from insider issues. And I believe, and I was a CIO, I was a CIO for many years that the discrete worlds of IT security and data protection are blurring because when a ransomware attack happens, you know, the security folks are like, okay, there's been an info, you know, something's happened, something wrong's happening. And the infrastructure guys have to go find a backup. And there's what I call IT collision. And then this policy, do we pay ransom? What does that mean? Who do we need to involve? It becomes very complicated. It's not as cut and dry as all process would have you believe. So, you know, we have to make sure, and we believe this is our responsibility as a data protection company, is to really make sure that the technology we bring to our customers makes their lives easier. So if it means integrating with Microsoft Sentin or CyberArk, you know, we want to make sure that's happening, that's implicit. So they don't have to. We brought technology to market through an acquisition we made. Trapex was the company we bought. The technology is called Threatwise. It's an early warning signal, both for your production environments and for your backup environments to say, hey, read the signal, something's going on. And then you can, with automation and intelligence, bring some policy to play on your backups, on your environment. It's implicit. I'm not going to just stick a security moniker onto something and say, we're a bit more secure. We make our customers more secure. Our products be for themselves, Dave. Well, Sanjay, you are a rare breed in that, you know, most typically CIOs don't become CEOs, although your second one in a couple of weeks, Mike Capone from CLIC was the former CIO. Of course, Michael Capella, you know, remember him. I do? Maybe it's a trend. There's some momentum going on. Sanjay Marchandani, thanks so much for coming to theCUBE. Congratulations on your quarter and look forward to seeing you in the future. Thanks for having me there. All right. And thank you for watching. This is Dave Vellante for theCUBE and we'll see you next time.