>> Announcer: From around the globe it's theCUBE
with digital coverage of Commvault Future Ready 2020
brought to you by Commvault.
>> Hi and welcome to theCUBE's coverage
of Commvault Future Ready.
I'm Stu Miniman and I'm joined by David Vellante here.
Of course, we just had the keynote
for Commvault Future Ready, Sanjay Mirchandani, CEO.
Dave, he's been there a little bit over a year.
We've been watching the transformation of Commvault
as they are trying to go much deeper in the cloud.
Of course, the space, data protection overall,
backup and recovery, been a super hot one.
Especially, if you talk about everybody accelerating
what they're doing with the cloud, Dave,
from an end user standpoint, as well as for Commvault.
So why don't we start with the company first,
as I said, the move to subscription, the move to cloud,
a lot of change needed, and that's one of the reasons
they brought Sanjay into the company.
Of course, he'd been at Puppet before that,
he was the CIO of EMC before that.
So Dave, tell us your thoughts lately on Commvault.
>> Okay, so Commvault, obviously Stu,
has been around for a long, long time,
and it's kind of a diversified player
in the data protection space.
I've always felt like they've had a more
diversified sort of vision and portfolio.
Sanjay took over, what was it February last year, right?
So he kind of came in and inherited a company in transition.
And transitioning from what has largely been a legacy
sort of on-prem, perpetual software licensed business
to now one that's transferring
into a subscription based model,
obviously a large maintenance base.
I think about 60% of their revenues comes from services,
and most of that is maintenance, okay?
So he's inherited that, and then they're
going into a subscription model.
So that's going to hit the income statement,
and then boom COVID hits.
So Sanjay is getting it all from all sides,
but Commvault is a 670, roughly, million dollar company
on a trailing 12 month basis.
And the market cap's in the 1.7, 1.8 range,
so they trade at about 2.7 times revenue.
So that's much better than a hardware company,
but it should be better than that as a software company.
So the challenge that he has is, okay,
how do we get the company growing again?
How do we transition to that subscription based model?
The good news on Commvault is
their balance sheet is tremendous.
I mean, they have no debt, no debt.
I mean, several hundred million dollars in cash,
over 300 million and zero debt,
which kind of interesting to me, Stu.
Because many companies during this COVID pandemic
have tapped the credit markets, Commvault has chosen not to.
Maybe they should right now with such low interest rates,
and maybe that can help get the growth engine going.
But I think they're very conservative in that standpoint
and obviously very proud of their balance sheet,
but with the likes of Cohesity and Rubrik,
and I know we're going to talk about
that pouring money into the market, trying to attack them,
and we'll talk more about their position
relative to those guys, you might like to see 'em
raise a little bit of money or take on some debt
and really go after some of those opportunities
that you referred to upfront, it is a hot market.
>> Yeah, well, Dave, you talk about some of
the newer entrants raised just insane amounts of money
when you talk about that space.
Not only Cohesity and Rubrik, but also talked about Veem.
Of course, we've watched Veem go from
a change in ownership and how much money they have.
And from a revenue standpoint, Veem actually might be
bigger than Commvault at this point,
I believe, right? >> Yeah, I think so.
I mean, they're billion dollar bookings, they say.
I mean, I believe it, but they're a privately held company.
Commvault, we can tell actually what their numbers are.
Guaranteed Cohesity and Rubrik are losing money.
So their cost of acquiring a customer is huge.
Commvault is, let's face it, it's servicing
its install base, and it's mining that.
And that's why it's, it's cashflow positive.
I mean, it's a very healthy company financially.
The challenge that, again, Sanjay has
is how do you get growth?
They're a company, as I said earlier, in transition.
Let me share with you, if I may, some data
from our friends at ETR.
What we're showing here is the fundamental methodology
of ETR, which is that net score, Stu.
We talk about that all the time,
ETR is, as I say, our data partner,
Enterprise Technology Research.
Every quarter, they go out and they say,
"Based for each company and their various segments,
"are you adopting new?"
That's the lime green, that's the 2%.
"Are you increasing spending?"
That's the 30%, and this is from the July survey
so this is relative to the first half.
"Are you flat?"
You can see that fat middle 56%,
and then you can see decrease is 7%
and that's in the pink, and then 5% replacing.
So good news here is more people are spending more,
more customers spending more, than are spending less.
Net score's the red subtracted from the green,
so it comes out at roughly 20%,
which is that's certainly not terrible.
It's a legacy company that's been around a long time.
So you would see a company that's a newbie, that's hot.
We'd always talked about UI path automation anywhere,
Snowflake, they're in the 70% range,
but they're much, much smaller companies
but they're growing very, very rapidly.
So this is respectable and very common
for a company that has been around as long as Commvault.
>> Yeah, thanks so much for sharing that data, Dave.
Of course, as you said, huge customer base,
they've been around for awhile.
I remember when we first did Commvault GO two years ago,
very excited, very engaged user base.
There was a good strategy discussion and an understanding
for what Commvault needed to do to get to the cloud,
but there was an understanding
that they couldn't keep doing with the same team
what had brought them to the place before.
You always say, Dave, what got you to where you were
isn't going to get you to where you need to go.
Talk a little bit about the keynote.
Last year at Commvault there were a couple of big pieces.
Number one, is they really had
their first SaaS offering with Metallic.
And what the momentum has been on Metallic is,
first of all, they made a big partnership announcement
with Microsoft ahead of this event.
Multi-year, Metallic has a few different solutions.
One of them, of course, is to work on Office 365,
so when we go to SaaS and we go to the cloud,
we understand that data protection isn't something
that just comes inherently.
Some people thought, "Oh hey, I did it
"in my own data center, but once I go to the cloud, well,
"I'm sure it just takes care of things
"like data protection and security."
The answer is I still need to think about it,
and the ecosystem has helped filling that gap.
So Metallic was the first step and what we saw, Dave,
really looks like a holistic refresh of the product line.
Commvault back in recovery, Commvault disaster recovery,
Commvault complete data protection,
all aligning themselves to be more to what
you were talking about, going to that full ratable model,
and the other piece was Hedvig.
So Hedvig software company, helping them to be
in more cloud-native environments.
And they launched a Hedvig X,
so it's the full integration of that solution.
Less than a year from the acquisition
to fully integrating it and making it an offering
that's ready for what they're doing.
>> Is that they're cloud play?
Actually Hedvig is sort of in that space, right?
As with cloud you think subscription,
but also Commvault is basically putting
its stack in the cloud, right?
And taking advantage of cloud services, right?
>> Yeah, absolutely, Dave.
Metallic, specifically is built for the cloud.
>> So let's talk a little bit about cloud,
I have some other data here.
And the cloud, if you pull up that next slide,
the cloud has been eating away at on-prem vendors.
We know it's been growing at 2000, 3000 basis points
higher than the on-prem business.
But what this slide shows is that same net score methodology
that we talked about before, but it's filtering,
you can see in the left hand side here, it's filtering
on AWS, Google and Microsoft.
So there's 585, AWS, Google and Microsoft
customers in the ETR dataset.
There's like about 1200 in the overall survey this quarter.
And this shows the over time the net score of Commvault
in those accounts, so you can see, as I was saying,
go back to 2018, you can see prior to Sanjay taking over
this thing was dipping and dipping,
losing momentum coming into kind of the April survey
and then July survey of 2019, and it's kind of
bouncing off the bottom now.
So it seems like they're making some progress there,
and what we want to see is
that momentum continue to grow.
Again, net score is a measure of spending velocity.
So what you want to see is as that transition occurs
more sort of a net score increases over each quarter.
>> Yeah, well, Dave as you mentioned earlier,
there absolutely are some headwinds potentially there,
but it looks like Sanjay, at least, has stopped
some of the bleeding on this and,
stated goal of course, to return to growth.
And so we would want to see that go from just up one or 2%
to be able to track with the cloud.
Probably a good time for us to talk a little bit
about the competition, Dave,
because if you talk just in cloud markets,
are you tracking along with the cloud?
So the hyperscales themselves, of course,
growing at very huge percent.
A company that's been around as long as Veritas
isn't necessarily going to be doing 35 to 70% growth
as you would see from AWS or Azure.
But what do you see out there
for some of the competition in general,
who were some of the key players that we need to look at?
>> Yeah, so I mean, think about the backup guys.
I mean, the traditional space,
you've mentioned Veritas.
Veritas, by the way, in the ETR survey data
is not playing well, they're in the red.
They've been losing share, the share donors, as they say,
you've got some big players, Dell EMC, obviously,
kind of living off the data domain base.
Remember Dell EMC fell behind,
prior to the Dell acquisition,
they weren't investing heavily
in the data protection business.
They were kind of living milking off that data domain base.
Back when you were there, they had the networker
and they had Avamar, and so there was a bifurcated thing.
Frank Slootman came and he tried to clean some of that up,
but then he was onto his next big thing,
of course, it was ServiceNow.
And so, you know, Dell is a big footprint, obviously,
but they're very hardware centric, as you know,
so they have a big hardware agenda.
IBM with Spectrum Protect, Veem was hurting them.
They did the deal with Catalogic to kind of
stop the bleeding, he kind of did.
Again, big install base,
and then you got the sort of newcomers.
Veem is not really a newcomer anymore.
I think they've been around for 15 years, big acquisition.
Decent momentum in the market,
especially started the Microsoft base,
and they're kind of everywhere, so you see them.
And of course you see Cohesity and Rubrik
spend a lot of money, as you said.
And it's interesting, let me pull up this next data point.
In the ETR data set this past quarter you saw Cohesity
actually overtake Rubrik.
Rubrik was very, very strong earlier on.
They're kind of neck and neck in this chart,
what this chart shows is not net score,
it's now market share.
Now market shares, not real market shares, Stu.
I have to be cautious here
because it's not like IDC tracks market share.
What it is is pervasiveness in the dataset.
So in other words, within this segment,
the number of mentions of the vendor
divided by the total mentions in the segment, okay?
So it's really pervasiveness or presence in the data set.
And what this shows is you can see we've got 65 Commvault
customers in the survey, and it shows the impact
of Veem, Rubrik and Cohesity in the Commvault base.
And you can see up through, let's see,
that's the recent surveys is you see
the increases up to the increasing red line is Veem,
and then you got the Rubrik line and then the Cohesity line,
but they're all recently,
since the October 19th survey, down, trending down.
So that says to me that Commvault is holding serve
within its own base and actually doing better
as these guys are declining in this base.
You can see the comment that ETR made,
"Rubrik, Cohesity and Veeam are all seeing
"market share declines in shared accounts with Commvault,"
so that's good news.
I think this is very important, Stu, and here's why.
Is Commvault has got to hunker down
and maintain those customers.
It does not want to be a share donor
much in the same way that Veritas has been.
So that's a quick scan of the competitive marketplace.
And again, from my standpoint, I'd like to see Sanjay
maybe get a little bit more aggressive.
I liked the acquisitions.
Hedvig, it's great, deal with actually
some more subscription, but I'd like to see
them go hard after a cloud native.
I have to dig into that, maybe you can comment,
but really cloud native and multicloud across clouds
being able to have that same experience on-prem as I do
in the clouds at very high performance, very low latency.
>> Yeah. Well, Dave, first of all, one thing,
talk about the competitive win rate.
That's something you always look at is
how are you doing against the competitors?
Not only did Sanjay come in, but you saw changes along
how the channel chief, I believe, and the salespeople.
So definitely reinvigorating that piece of it,
as well as, Dave we saw, in the keynote.
So the portfolio is updated,
an aggressive engineering investment,
some through acquisition, some through changing the code
and moving in these environments, leveraging partnerships,
great to see the Microsoft one, love to see something
along the lines of Google.
We understand Amazon, you play in that ecosystem,
it is challenging to necessarily partner deeply with AWS,
unless you're one of a few
strong players in the marketplace,
but working closer in cloud.
And Dave, one thing I'd point out,
last year, one of the things that really impressed me
at Commvault GO is they did have
some good developer actions.
So when you talk about cloud native, of course,
enabling developers is one of the key things.
Like many companies out there, inside the company
you've got developers, so how are you unleashing that?
So Hedvig, a good acquisition along those lines,
but you know, in the middle of the show floor,
they had people that you set up
with whiteboards and just go at it.
So, you know, reminds me of days past
when you used to have these engineering-driven shows
where you could go in and really understand that.
So helping to developers, enable them,
backup and recovery just needs to tie into all my DevOps
and IT Ops and all my other environments
to make things just more automated
because also you talk cloud native, Dave,
automation has to be a big piece of it.
And to your point, we actually have
really good guests coming on the program.
Not only will we have Sanjay,
relatively fresh off the keynote,
I've got a panel with the product people
to really dig in and understand that.
We'll poke and prod at some of the cloud native pieces
and understand where that's going,
got their head of strategy also on the program.
>> Yes, I think you're making a great point about automation.
Just speaking about M&A for a moment, I like M&A,
I like growth through M&A, I'm comfortable with that
as long as it fits into the portfolio.
Your point about automation, I see opportunities there
for M&A, things like visibility, observability,
obviously hot analytics, automated operations,
IT Ops, anything that sort of removes labor and complexity
and gives me visibility across clouds.
That I think is something that could be interesting, again,
as long as it fits into the portfolio.
I'll say this, I mean, Sanjay was at EMC and knows M&A
because I've no doubt they were bringing
all their M&A candidates to Sanjay and saying,
"Okay, what do you think of this tech, do you use it?"
Probably kick the tires a little bit,
so he, I'm sure, was a part of those.
I'm sure he saw the good, the bad, and the ugly.
You were there, EMC was pretty good at acquisitions,
but then it got a little out of control.
>> And Dave, talk automation, Sanjay came from Puppet.
Puppet was one of the early companies along helping people
move along from those manual tasks
to how can we automate those?
So, absolutely, Sanjay now a little over a year in there,
starting to see from the product standpoint,
and expect to see some of the trailing results
as to how that moves forward.
>> And then again, blending that,
if it's a tuck in or whatever,
maybe there's some big chess move out there.
I would just suspect given Commvault's
conservative nature you wouldn't see that.
Although, they could do it.
I mean, at their revenue level, their balance sheet
would allow them to raise some debt,
if they wanted to do that now would be the time to do it.
But it's interesting, everybody's doing it and they're not.
So I kind of liked the contrarian play.
Given the opportunity in the market,
given the TAM expansion through,
beyond backup into data management,
and it's a cloud and multicloud,
I do think there's maybe an opportunity
for them to be a little bit more aggressive.
>> All right, well, Dave, thanks so much
for helping us dig in and kick off our coverage.
>> You're welcome, Stu.
>> All right, stay with us.
We have a bunch of interviews here
for Commvault Future Ready.
I'm Stu Miniman, and thank you for watching theCUBE.
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