Commvault Systems Inc. today reported $188 million in revenue for its third fiscal quarter ended Dec. 31, a 7% improvement from the same time a year earlier and a new all-time record for the company. 

Adjusted earnings per share set a record as well.

Commvault provides data protection software and appliances that enable organizations to ensure their business information remains accessible in the event of an outage. Over the last two years, the company has worked to shift from selling perpetual software licenses to a business model centered on recurring revenue and subscriptions. That effort is a major driver behind today’s earnings results.

Of the $188 million in revenue Commvault generated last quarter, $88.6 million came from its Software and Products segment, which was up 16% compared with the same time a year ago. Within that segment, the share of revenues generated by subscription products jumped from 41% to more than 55%.

The increase in recurring revenues also boosted Commvault’s bottom line. Adjusted earnings before interest and taxes surged 29%, to $37.3 million, lifting adjusted earnings per share to 57 cents on a fully diluted basis. The latter figure represents yet another all-time record for the company.

Analysts polled by Zacks were looking for 48 cents per share. Including today’s earnings report, Commvault has surpassed the consensus earnings per share estimate in three of the last four quarters.

Selling software on a subscription basis can be more profitable than perpetual licenses. It’s not uncommon for companies that derive the bulk of their revenues from software-as-a-service products, such as Salesforce.com Inc. and Slack Technologies Inc., to have gross margins of about 80% or more.

Commvault is growing its subscription business partially with new products such as Metallic, a backup and recovery service it introduced just over a year ago. The service was originally targeted mainly at smaller companies. Soon, however, Metallic started drawing interest from large enterprises as well, and it’s now an important element of Commvault’s customer acquisition strategy.

“We originally targeted Metallic and the SMB midmarket,” Commvault executive Mark Jow explained in an interview on SiliconANGLE Media’s theCUBE last October. “The massive drive to protect endpoints and to maintain compliance and control of data there is driving large enterprise customers to Commvault and Metallic as a solution for protecting not hundreds of endpoints, not thousands or tens of thousands, but hundreds of thousands of endpoints.”

In a public letter today, Commvault Chief Executive Sanjay Mirchandani (pictured) disclosed that nearly 40% of Metallic customers were net new accounts last quarter. The CEO also pointed to Commvault’s HyperScale X data protection appliance, another newly launched product, as an offering with which the company believes it has an “early mover advantage.” HyperScale X uses technology brought over from the 2019 purchase of startup Hedvig Inc., the first acquisition the company made after Mirchandani took over as CEO.

“The strategic moves we made over the past two years are delivering results,” Mirchandani said in a statement today.

Founded in 1988, Commvault is one of several established, publicly traded information technology providers refocusing from software licenses to cloud subscriptions. That group also includes SAP SE and Citrix Systems Inc, among other industry players. Citrix hit a notable milestone in its efforts this month when it disclosed that subscriptions contributed 85% of total product bookings for the first time last quarter.

Image: Commvault