Commvault’s Metallic backup a surprise hit with enterprise, says CFO

Metallic was created as an internal startup effort at Commvault and introduced in late 2019.

A year and a half after storage stalwart Commvault unveiled its cloud-based backup, Metallic, the company is pleasantly surprised to find that the software is a hit not only with down-market customers but also among enterprises.

"Going into this a year ago, I'll be honest, we were slightly worried, were we doing something to cannibalize ourselves," said Commvault's chief financial officer, Brian Carolan, in a chat with ZDNet via Zoom. "Are we just going to be selling a cheaper SaaS version to our customer base that would cannibalize our on-premise version of the same product."

"We've been pleasantly surprised," he said, to find that Metallic is not only appealing to the mid-market. "About a third of our Metallic customers are really enterprise-grade customers, so it's resonating with them as well. Half of Metallic customers also use a Commvault product on-prem, said Carolan.

Carolan was speaking to ZDNet following Commvault's fiscal Q4 report, Tuesday morning, when the company beat expectations and forecast this quarter's revenue higher as well. 

Metallic is a service that lets one back-up and restore data without having to install and maintain traditional backup software. Commvault is letting customers use it with both storage based in the cloud that Commvault provides, and with local storage systems owned by the customer.

Also: 'Never has data been more valuable nor more vulnerable,' says Commvault CEO Mirchandani

The Metallic program is designed to be used in a more nimble fashion than monolithic backup systems. It can provide coverage of fine-grained assets, such as backing up individual user accounts in Microsoft Office 365.

The product, which was developed as an "internal startup," is part of a transformation of the twenty-five-year-old company under chief executive Sanjay Mirchandani, who took the top spot in February of 2019.

Metallic is important to Commvault's mission to sustain higher growth and to have more recurring revenue. 

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CFO Brian Carolan said Metallic is among newer products contributing to rising annualized recurring revenue at Commvault.

Commvault

"It's contributing meaningfully to our sequential ARR growth," Carolan told ZDNet, referring to annualized recurring revenue, a measure of products purchased the revenue of which is recognized ratably over time. 

Commvault reported annualized recurring revenue in the quarter of $517 million, up 15% from the prior-year period. Recurring revenue was 76% of the company's revenue in the quarter, up from 75% last quarter, up a point from the prior quarter. 

Metallic, along with other products such as Hedvig, is boosting the subscription portion of the company's software and products revenue. Subscriptions were 59% of the software and products total this quarter, up from 55% in the prior quarter. 

Carolan and Mirchandani have told the Street that Commvault's recurring revenue, as a proportion of total revenue, will rise to 80% to 85% by 2023, and that subscription revenue will rise to 75% of software and products revenue by that time.