Shares of Commvault Systems Inc. rose more than 8% this morning on its third-quarter financial results, which beat both profit and revenue estimates thanks partially to strong growth in the company’s cloud business.

Tinton Falls, New Jersey-based Commvault is a major provider of data protection software that also competes in adjacent areas such as storage management. The 32-year-old company has experienced several quarters of revenue decline because of slowing demand for its legacy products.

This past quarter was no exception in that regard, but Commvault’s financial results show that it’s making progress in its quest to return to growth. 

Software and products revenue fell 9%, to $76.6 million, in the three months ended Dec. 31. But the annual value of Commvault’s “subscription and utility” contracts soared 56% in the same period. The subscription and utility category encompasses the company’s expanding lineup of software-as-a-service products, which stand at the center of its push to rekindle revenue growth. Chief Financial Officer Brian Carolan noted that subscription-based revenue now stands at 40% of the total, up from only 10% in 2017.

“We turned the corner,” Chief Executive Sanjay Mirchandani (pictured) said in an interview with SiliconANGLE.

Adding everything up, total sales for the quarter came in at $176.35 million. The figure represents a 4% year-over-year decrease but comes in 2% higher than what analysts polled for the Zacks Consensus Estimate expected.

Commvault’s turnaround effort is led by Mirchandani, who came aboard last February from Puppet Inc. to implement a new growth strategy. He oversaw the launch of a new cloud-based data protection platform called Metallic this past October.

Also under his tenure, Commvault in September acquired software-defined storage startup Hedvig Inc. for $225 million in a bid to open new revenue opportunities.

The Hedvig deal did put a dent in a company’s bottom line last quarter. Commvault reported a net loss of $0.7 million on a net basis for the three months ended Dec. 31 versus a profit of $13.4 million a year  ago. But excluding nonrecurring items, the company generated earnings before interest and taxes of $28.9 million and earnings per share of 47 cents, well above the 40-cent average estimate of analysts polled by Zacks.

Mirchandani sounded a positive note for the coming year.

“This year was when we put the LEGO blocks in place,” he told SiliconANGLE. “Now it’s about putting our heads down and getting all this into the hands of customers.”

Commvault’s earnings report also reveals that it has made some staff cuts as part of the turnaround effort, though most of that came in the second quarter. The company said it spent $8 million during the third quarter on “severance payments related to recent restructuring actions.”

Mirchandani also joined theCUBE, SiliconANGLE’s livestreaming video studio, at the Commvault GO conference in October in Aurora, Colorado, to talk about how it’s trying to help customers become “data-ready”:

With reporting from Robert Hof

Photo: Commvault