Good day, ladies and gentlemen and welcome to the Q4 2016 CommVault Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Michael Picariello, Director of Investor Relations. Sir, please go ahead.

Good morning. Thanks for dialing in today for our fourth quarter 2016 earnings call. With me on the call are Bob Hammer, Chairman, President and Chief Executive Officer; Al Bunte, Chief Operating Officer; and Brian Carolan, Chief Financial Officer. Before we begin, I'd like to remind everyone that statements made during this call, including in the question-and-answer session at the end of the call, may include forward-looking statements, including statements regarding financial projection and future performance. All these statements that relate to our beliefs, plans, expectations or intentions regarding the future are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on our current expectation. Actual results may differ materially due to a number of risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services and general economic conditions. For a discussion of these and other risks and uncertainties affecting our business, please see the Risk Factors contained in our Annual Report in Form 10-K and in our most recent Quarterly Report in Form 10-Q, in other SEC filings and in the Cautionary Statement contained in our press release and on our website. The company undertakes no responsibility to update the information in this conference call under any circumstance. In addition, the development and timing of any product release as well as any of its features or functionality remain at our sole discretion. Our earnings press release was issued over the wire services earlier today and it also has been furnished to the SEC as an 8-K filing. The press release is also available on our IR website. On this conference call, we will provide non-GAAP financial results. Reconciliation between the non-GAAP and GAAP measures can be found in Table IV accompanying the press release and posted on our website. This conference call is also being recorded for replay and is being webcast. An archive of today's webcast will be available on our website following the call. I will now turn the call over to our CEO and President, Bob Hammer.

Thanks, Mike. Good morning, everyone, and thanks for joining our fiscal fourth quarter and FY 2016 year-end earnings call. Let me briefly summarize our Q4 financial results. Software revenues were up 5% year-over-year and 3% sequentially. Total revenues were up 6% year-over-year and 2% sequentially. EBIT was up 29% year-over-year. EBIT margin was 16.4%, or up 290 basis points year-over-year. EPS was $0.36 per share versus $0.27 in Q4 2015. Cash flow from operations was $37.2 million. During the quarter, we repurchased approximately 56.9 million of our common stock. We had solid contribution from all three global theaters. The Americas and EMEA regions had particularly strong results. We are pleased that we achieved a much improved Q4 2016 and second half FY 2016 results. As we had forecasted, FY 2016 was clearly a tale of two halves. The first half to the second half comparisons are as follows; software revenues were up 27% in the second half versus the first half. Total revenues were up 13%. EBIT was up 134%, and EBIT margins for the second half were up 780 basis points versus the first half. The improved results and increased momentum in the second half of FY 2016 were due to the positive financial impacts from fundamental changes we made to the business over the past two years. These impacts include strong sales contribution from a restructured and staffed Americas sales organization, very positive market reception of our CommVault V11 Data Platform which we introduced last fall, high-growth and material contribution from our standalone products such as cloud, mobile and compliance, and meaningful contributions to license revenue from new distribution alliance partners such as Microsoft, AWS, Cisco, Nutanix and Pure as well as the large global systems integrators. The move to the cloud has become a major factor contributing…

Thanks, Bob, and good morning, everyone. I will now cover some key financial highlights for both the fourth quarter and full fiscal year 2016. I will state our as-reported non-GAAP results first and also state the year-over-year results on a constant currency basis where meaningful. Fourth quarter total revenues were $159.6 million, representing an increase of 6% over the prior year period and 2% sequentially. For the full fiscal year, total reported revenues were approximately $595 million, representing a decrease of 2% over fiscal 2015. Total revenues for fiscal 2016 were up 3% year-over-year on a constant currency basis. For Q4 2016, we reported software revenue of $73.3 million, which was up 3% sequentially and 5% year-over-year. Revenue from enterprise deals, which we define as deals over $100,000 in software revenue in a given quarter, represented 58% of total software revenue. The number of enterprise deals increased 13% sequentially. Our average enterprise deal size was approximately $272,000 during the current quarter, which was down 2% from approximately $278,000 in Q3 2016. Americas, EMEA and APAC represented 60%, 30% and 10% of software revenue respectively, for the quarter. On a sequential growth basis, Americas and EMEA software revenue increased 2% and 7%, respectively. APAC software revenue decreased 3% sequentially. The revenue mix for the quarter was split 46% software and 54% services. Please remember, services revenue is a combination of both maintenance and support revenue and professional services revenue. Services revenue for Q4 was $86.2 million, an increase of 2% sequentially and 7% year-over-year. Services revenue for fiscal year 2016 was approximately $336.3 million, an increase of 4% year-over-year, or up 9% on a constant currency basis. Our maintenance and support renewal rates remain strong. We added approximately 450 new customers in the quarter. Our historical customer count now exceeds 22,500…

Thank you, Brian. Our strategy has two key components: one, to increase market share in our core data management business; and, two, expand our market opportunity by using the uniqueness of the CommVault Data Platform to develop high value vertical solutions such as healthcare. I will now provide some additional detail on why we believe our core data management business has become a significant growth opportunity. The management of data is becoming much more complex as companies move to the cloud, deploy next-generation IT infrastructures, manage data from SaaS applications, and have data index secured and accessible for business analytics. It is important to note that data management capabilities from cloud and SaaS vendors does not replace the need for comprehensive data management as delivered by CommVault. For example, replication data protection technologies from cloud and SaaS vendors do not replace the need for a backup copy for critical data needs such as compliance, legal and historical business analytics. They do not provide the data and information management capability to federate the management of data across the proliferating silos of cloud, mobile, SaaS and new IT infrastructures. The management of data has become much more complex and more and more of our customers and partners are looking to CommVault as the key strategic partner as they transition to the cloud, look to reduce costs and ensure they are legally compliant, adopt new IT infrastructures like hyper converged OpenStack, Hadoop, flash and software-defined storage, deploy newly architected cloud-based applications and rely more and more on business analytics. Our platform is becoming the industry standard for enterprises to holistically federate and manage data across all infrastructures. It enables them to have one federated management platform to securely migrate, manage access and derive more value for data holistically across the cloud, traditional and…

Operator, can we please open the line for questions?

Our first question comes from Jason Ader from William Blair. Your line is now open. Jason N. Ader - William Blair & Co. LLC: Yes. Thank you. Bob, you talked about the internal plan being better than consensus in terms of software revenue growth in particular. Can you give us a sense of what that internal growth rate is that you're looking to achieve?

Qualitatively, it's quite a bit higher. Jason N. Ader - William Blair & Co. LLC: Okay. And then, just one for Brian, a follow-up on the model. Brian, 11% operating margin in fiscal 2016, obviously you have some increased investment needs in the first half of the year. Do you think you can exceed the 11% in fiscal 2017?

There's always that potential, Jason. I mean, based on our internal forecast, I mean, we are shooting for, as you noted, higher, more aggressive software growth targets and tied to that is an increased investment strategy but certainly adding some more leverage on the bottom if we are able to achieve our internal forecasts. Jason N. Ader - William Blair & Co. LLC: Okay. But I think the consensus is around for 10%, is that too low, I mean should we be modeling more like 11%?

Well, it's somewhere in between, I believe, that it was closer to 10.6% is what's out there and I think that's reasonable for now. Jason N. Ader - William Blair & Co. LLC: Okay. Thanks, guys.

Our next question comes from Andrew Nowinski from Piper Jaffray. Your line is now open. Andrew James Nowinski - Piper Jaffray & Co. (Broker): Thanks and congrats on a nice quarter. So just first question on software license revenue, it was clearly better than expected. Can you give us any color on how much of that came from V11 versus Version 10 and then what drove the upside if there was any from a specific vertical?

I think, the vast majority of what has shipped is still V10 but the decisions customers are making are clearly on V11. And the pipeline build and recent wins in the pipeline are clearly on V11 and all the things I mentioned about V11's capabilities. So, there is no question that our momentum is a V11 driven momentum, Andrew. And your second question was? Andrew James Nowinski - Piper Jaffray & Co. (Broker): Just wondering on the software license, if there is anything from a vertical perspective that drove some of that upside?

No. We had good, strong performance across all our major verticals, which typically are finance, government and healthcare are the top three vertical markets. And we had strong contributions from every one of those verticals. Andrew James Nowinski - Piper Jaffray & Co. (Broker): Right.

So, there was no vertical in particular that drove the license revenue growth. I can tell you that the win rates are across the board in all industries. Andrew James Nowinski - Piper Jaffray & Co. (Broker): Got it. And then, it's been almost a year since you announced that you were a preferred partner of Cisco. I'm just wondering, if you can give us an update on how that partnership has ramped and whether your Version 11 will accelerate the growth opportunities with Cisco going forward? Thanks.

I would say, on Cisco, that partnership has evolved certainly better than I would have expected. It continues to deepen and broaden and they are bringing material revenue. We are partnering in a lot of major accounts and I think that partnership will continue to expand. I'll just make a note that our Microsoft partnership continues to do well. We're getting a lot of traction with AWS at an accelerating pace. We're doing well with Pure, well with Nutanix and these are partners that really didn't contribute very much to our revenue a year ago. So I think our partners and alliances program is providing us a much broader foundation and routes to market than we had going into FY 2016. Andrew James Nowinski - Piper Jaffray & Co. (Broker): Okay. Keep up the good work. Thanks.

Our next question comes from Abhey Lamba from Mizuho Securities. Your line is now open.

Yeah. Thank you. Congrats, everyone. Good quarter. Bob, can you talk about what type of workloads in cloud are gaining greater traction and as you target these cloud-related workloads, what are you seeing the most in competitive environment?

Yeah, I'll take it. But I'm going to let Al expand on this a little bit, maybe with some customer examples. But clearly our ability to index, understand what data a customer has, put a policy on it, and then securely orchestrate the migration of data to the cloud and then manage it once it's in the cloud, is a significant differentiator. And I'll let Al expand on this a bit. Al?

Yes, Abhey. I think Bob hit a lot of the key points in his script as he went through, and as he just said, more and more and more people want to know what's there, they want to manage it based on content, not just big blobs of data. But to your question in terms of use cases, I think it's still led by backup and archive. I think file share is a big area. However, the interesting thing we're seeing with file share is people want protection for that share, both from a secure access point of view as well as, as Bob indicated, point in time copies and traditional data management protection techniques. DR [disaster recovery] is a big one, dev/test, and the hot thing – and I just talked to couple industry analysts out there, the hot thing we're seeing in the industry that's not exactly to your question but is the term workload portability. So being able to move data around, particularly in heterogeneous environments, is a really, really big deal. And to do that on an automated, orchestrated, under policy management kind of approach is a huge differentiator.

Got it. And Bob, you mentioned your internal plan is somewhat higher than what you've shared with us in terms of consensus and you also mentioned you have a good funnel going into next year. What type of close rates do you need to hit to meet your internal plan? Will the current rate of close rates get you to your internal plan, or do the close rates need to improve to get to your current plan and...

The close rates we are predicting are quite similar to historical. But in order to hit our higher numbers, we've got to do a better job on our sales force productivity. And there's a whole series of initiatives that we have started in FY 2016 to improve the productivity of our sales force, some of them I mentioned in the script. So I think we are well positioned with product line, with staffing and with structures and processes and new alliances and partners to help our sales force be a lot more productive. So those combinations could have a pretty significant impact on the shape of our license revenue growth acceleration.

Our next question comes from Aaron Rakers from Stifel. Your line is now open. Aaron Rakers - Stifel, Nicolaus & Co., Inc.: Yeah. Thanks for taking the questions and congratulations on the quarter as well. Bob, I want to kind of build on that last comment. When you look at your fiscal 2017 plan and even looking back at fiscal 2016, I'm curious of what you've done with regard to sales capacity, what your plan is going into fiscal 2017, and how do you think about productivity? I mean, where are we at today relative to the productivity prior to a lot of the transformational things that you had to do? And do you think we get back to that similar level based on your forecast – your internal plan for fiscal 2017, or do you think we can actually drive similar levels of leverage without getting fully back to that prior productivity level?

Yeah. Understand. So on our sales capacity going into FY 2017 and the structures and the leadership is up – one, the capacity is up significantly from FY 2016. We didn't have the Americas staffed. So that was a major hole we had going into FY 2016, and the opposite situation going into 2017. We added staff to EMEA, and we have got a restructured APAC with new leaders in all segments of the APAC organization. In addition to that, we've staffed up our alliances group, and we've added these field overlay teams to help the field sell these expanded solution sets. So – and we've expanded our capabilities in marketing. So it's dramatically different going into FY 2017 versus 2016 from a capacity structure and I'd say our overall ability to execute. In regard to sales force productivity, we are planning for a good solid increase in productivity in 2017, but that's on our – call it our more aggressive targets but that increase in productivity still does not get us back to where we were before when we were at our peak. And I think we won't get back – I think that will take us another couple, three years to get back to those kind of productivity levels. Could happen sooner, but to your point, we're not planning. We don't need to get back to those kind of levels to hit our more aggressive license revenue targets in FY 2017.

Our next question comes from Srini Nandury from Summit Research. Your line is now open.

All right. Thank you. Congrats on the nice quarter Bob, Brian. I have a bigger picture question if I may. Bob, last three or four years we saw this, the industry move to the virtualized servers, virtualized data centers looks big. It looks like now containers are looking to displace virtualized servers. How do you think the business will change when containers start gaining steam in 2017 and beyond as what many people expect. Do you need to retool your software offerings and perhaps change architecture, how the software is deployed into your customers?

Well, fortunately, on our architecture and functionality is extremely well aligned with the move to containers. So we view that as a major plus for us, not a minus. I'm going to let Al get into this in a little more detail, but we are well positioned now and as we move through the balance of this – not the fiscal year, the calendar year, we will be substantially increasing our solutions based on containerization. So, Al, why don't you expand on that point?

Yeah. We are seeing more and more interest develop particularly from enterprise accounts for the container ideas. It just makes too much sense but as Bob said, to be able to do that you really need to be able to know what's inside the container. And that's where our heritage, our architecture, our history, is all about as Bob said in quite a lot of detail here even on this call is, it's all about the data, it's all about the content. And technologically it revolves around our indexing and almost file-system like capabilities that we've built into our platform. So if you understand what's inside the container, now you can manage not only the containers, where they are, what platforms there are, but use them effectively for many of the use cases beyond just a kind of a quasi-DR type of solution. So, as Bob said, we feel extremely well-positioned for this. We have been working hard on a lot of these capabilities. Not just now but have for a few quarters and we feel really well positioned as the market goes and I think it inevitably will by the way, go in this direction.

Yes, just in the broad summary on workload portability and where containers plays a – will play an increasing role, I don't think there will be anybody – I think there will be CommVault and others. I think we're going to be way out in front of the industry in our ability to manage workloads with a whole series of different techniques and containers will certainly be one of them. And what Al was saying is, if you're just moving a volume and you don't know what objects or files are sitting inside that container, you can't do very much with it. But if you have full understanding of what's inside that container as you move it to these different infrastructures securely – for all the things we talked about, whether it's data protection or secure user access or for business analytics or whatever use case you've got, then you've got a much more powerful solution. So we are enthusiastic supporters, let's put it that way, of the move to containerization.

That's a good term.

Our next question comes from Greg McDowell from JMP Securities. Your line is now open.

Hi. This is Rishi Jaluria dialing in for Greg McDowell. Thank you for taking my question. First question I wanted to dive a little bit into geographies. It sounds like there was relative weakness in APAC at least relative to the Americas and EMEA. Can you dive into what factors drove that, again, relative underperformance?

Well, actually, from an internal standpoint, they over performed on a year-to-year basis. So the issue is we've been completely restructuring APAC; structures, leadership, re-staffing and so we knew on a year-over-year basis it would take them a few quarters to catch up, as they put all this together. But from an internal basis, they significantly overachieved the number we expected from them. So I would say the team in APAC did a really good job. Not only in delivering a higher number than we expected, but also in continuing to build out their leadership team, structures and staff I'd say more appropriately for the current dynamics in the market. So we feel really good about the team and its performance.

Our next question comes from John DiFucci from Jefferies. Your line is now open.

Thank you. First question for I think Bob or Al even, it's on the maintenance repricing. I think you talked last quarter about being most of the way through on the enterprise and beginning to work through the mid-market to lower end. And I assume that has the impact on the guidance you gave for the year for maintenance. But can you tell us do you expect any difference in the behavior or reaction from the mid-market in regards to this? And I guess, Brian, if you could just remind us what percentage, even roughly, of your maintenance revenue is actually mid-market and below? Thanks.

Sure. Hi, John, this is Brian. I'll take this question. So we've been communicating for several quarters now, just about our ongoing pricing realignment and you're right. So at the enterprise level, which encompasses about 75% of our ongoing maintenance and support revenue stream, most of that is behind us. What's in front of us is the remaining 25%, which is at the mid to lower end of the market, where we've instituted a very programmatic approach that we've launched this past quarter. So far so good. It's in its early stages but the market reception has been very good. We believe this is going to accelerate new customer acquisitions. It's going to make it easier to do business with CommVault and it will become a catalyst for us in terms of overall license revenue growth. What's dampening down the FY 2017 services revenue growth is really what you have to look at is FY 2016 license revenue. There will be a lag affect that will impact the services revenue growth rate. Once we get through this year, we should see a period of normalization starting to happen in FY 2018. But until then, it acts as a headwind to our op margin expansion.

Our next question comes from Rajesh Ghai from Macquarie. Your line is now open. Rajesh Ghai - Macquarie Capital (USA), Inc.: Yes. Thanks for taking the question. Bob, my first question is on the macro environment, obviously, you seem to have exceeded expectations in this environment, whereas most of your competitors, especially the on premise license software guys, have either missed numbers or guided down. So I just wanted to understand what you were seeing in terms of the macro? And the second question is around sales and marketing. Obviously, you said you're focused on improving productivity. But I'm just curious this was the first time since 2009 we are seeing a sequential decline in sales in marketing expense in fourth quarter. What drove that? Was that some reduction in-force or was involuntary (52:47) departures, what exactly was the reason for that? I really appreciate it. Thank you.

On macro, I would say we are concerned about it because what we read in the press, but counter to that is we've continued to see good solid funnel growth and we seem to be able to get involved in a sufficient number of large deals. So, right now, I would say the macro is not a factor in our current outlook on a specific basis to CommVault, but we'll continue to monitor it. On the sales marketing productivity, to be direct about it, as we were putting together the plan for FY 2017, we had slowed down our hiring a bit, as we ended the second half of FY 2016, just to make sure that we were going to hit our numbers. And when we went to turn up recruiting, we got a little – we were a little slow off the block. So we underspent on recruiting in the fourth quarter, and we're catching up with it quite quickly here in the first quarter. So it was more a question of cranking up that recruiting engine and getting people in, but right now we're on a pretty fast pace. So I wouldn't read anything into it, except that we underspent.

Our next question comes from Michael Turits from Raymond James. Your line is now open. Michael Turits - Raymond James & Associates, Inc.: Hi, guys. In terms of your rough guidance to consensus being reasonable, what is the – this is sort of a different way of asking the productivity and capacity question – what's embedded there? The software revenues for the Street are up 13% in the next year. You said capacity is up. So is your assumption that capacity is up roughly that amount and productivity is flat, if you get to the Street numbers?

Well, you could make that rough assumption. I think, internally we're trying to do better than that on both sides, both on capacity and productivity. Michael Turits - Raymond James & Associates, Inc.: Okay. And then, I don't mean to put too fine a point on it, but I think it kind of worked out for margins for this full year to be 11.3% and Brian, you said 10.6% was reasonable for next year, which is actually 70 bps down. So again, I don't mean to put too fine a point on it, but should we think of it as flat or 70 bps?

Yeah. Well, I think, slightly down is correct because we kind of over-rotated in Q4. So I think that 10.6% is the right number.

So it's flat on EBIT absolute dollars, Michael, but would be down on a margin percentage, but we're confirming what's already out there as of today preannouncement.

Our next question comes from Siti Panigrahi from Credit Suisse. Your line is now open. Sitikantha Panigrahi - Credit Suisse Securities (USA) LLC (Broker): Hi, guys. Thanks for taking my question. Just wanted to confirm, did you say U.S. software revenue growth 2% and EMEA 7%?

I did. Sitikantha Panigrahi - Credit Suisse Securities (USA) LLC (Broker): Okay. So just wondering, was there any big deals in the quarter that you want to highlight? Did you see anything else, any big deals there? And then also, as you talked about the hiring in next, first half of this year, where are you planning to hire, is it mostly in the U.S. or in any other region and is that mostly on sales marketing or R&D. Could you highlight those?

It's mostly on sales and marketing. Although, we are hiring on R&D and it is pretty much across the board, where last year it was much heavier in the Americas, because we had a hole to fill. Now it is across the theaters. And it's not just in sales head count but from a productivity standpoint, both, I'll call them sales overlay, from our solutions group and our marketing teams investing to support the field. There is more investment going into those areas to ensure much higher productivity from those customer facing assets that we have.

And our last question comes from Stephen Bersey from MUFJ. Your line is now open. Stephen D. Bersey - Mitsubishi UFJ Securities (USA), Inc.: Hey, guys. Just wondering, as you roll some of these subscription-based products out, if you will be breaking out any more SaaS type metrics in the calls?

Yeah, this is Bob. So I would say particularly as we get into the second half of FY 2017 with new SaaS products, pricing models, there is no doubt that the SaaS related or time-based subscription type revenue will accelerate. And when we have a track on it and we have some predictability, we will definitely be breaking it out. But I don't think that would happen in FY 2017 but it's quite likely that we would do it in 2018 because we are really positioning a whole series, again, it's not just SaaS products, but our pricing models are going to lend themselves to more SaaS-based kind of deployments by our customers. So I think of FY 2018 where that would be more relevant than FY 2017. But the programs are significant internally. I mean, Al and the team are working over a year on these. And they'll start to rollout over the near future and will evolve, as we go through this fiscal year.

I am showing no further questions. Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone, have a great day.