Good morning and welcome to the Second Quarter 2015 CommVault Earnings Conference Call. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded and I will now turn it over to Michael Picariello. You may begin, sir.

Good morning. Thanks for dialing in today for our fiscal second quarter 2015 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 the question-and-answer session at the end of the call, may include forward-looking statements including statements regarding financial projections and future performance. All these statements that relate to our beliefs, plans, executions 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 expectations. 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 on Form 10-K and our most recent quarterly report on Form 10-Q and our other SEC filings and in the cautionary statement contained in our press release and on our Web-site. 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 its features or functionality remain on our sole discretion. Our earnings press release was issued over the wire services earlier today and it has also been furnished to the SEC as an 8-K filing. The press release is also available on our Investor Relations Web-site. On this conference call, we will provide non-GAAP financial results. The reconciliation between the non-GAAP and GAAP measures can be found on Table IV accompanying the press release and posted on our Web-site. This conference call is also being recorded for replay and is being webcast. An archive of today's webcast will be available on our Web-site following the call. I will now turn the call over to our CEO and President, Bob Hammer.

Thank you, Mike. Good morning everyone and thank you for joining our fiscal second quarter 2015 earnings call. As I noted on our last earnings call, we knew this quarter would be challenging given the size of our funnels and visibility entering Q2 and that it would take us several more quarters to get back to sustainable consistent high-growth trajectory. There were some bright spots to report such as our growth in EMEA and our Cloud Services group. Throughout the second quarter we continued to make progress on our planned transformation of CommVault to enhance our product and related go-to-market initiatives, strengthen our strategic partner programs and had additional field selling capacity. However, despite the strength of our strategic position, the depth and differentiation of our technology and our strong financial position, we did not execute well enough to meet our own expectations for the quarter. The good thing about execution issues are that they are within our control. Over the next few minutes, I'll have more to say about these issues, the specific actions implemented already on the way to address them, and the reasons we remain confident about CommVault's return to growth. Let me briefly summarize our Q2 financial results. Total revenues were $151.1 million, up 7% year-over-year and down 1% sequentially. Software revenue was $69.4 million, down 2% year-over-year and 4% sequentially. Services revenue was $81.7 million and grew 15% year-over-year and 1% sequentially. And from an earnings perspective for the quarter, non-GAAP operating income or EBIT was $26.2 million, down 31% year-over-year and 21% sequentially, non-GAAP EBIT margins were 17.3%, diluted earnings per share were $0.35. We generated approximately $32.2 million of cash flow from operations during Q2, ending the quarter with approximately $415 million of cash and short-term investments. CommVault has a proud history of…

Thanks, Bob, and good morning everyone. I will now cover some key financial highlights for the second quarter of fiscal year 2015. Total revenues for the quarter were $151.1 million, representing an increase of 7% over the prior year period and a decline of 1% sequentially. For the quarter, we reported software revenue of $69.4 million, which was down by 2% over the prior year period and down 4% sequentially. Revenue from enterprise deals, which we define as deals over $100,000 in software revenue in a given quarter, decreased by 5% over the prior-year period and 14% sequentially. Our average enterprise deal size was approximately $281,000 during the current quarter compared to $295,000 in the prior year period and $356,000 in the prior quarter. We continue to see strong utilization of our capacity-based licensing models, which has a direct correlation to the underlying volume of data under management. Capacity-based license sales represented 82% of our Q2 software revenue compared to 80% of software revenue in the prior year period. For the quarter, software revenues derived from indirect distribution channels decreased 8% over the prior-year period and represented 88% of software revenue. As a reminder, most sizable deals are driven by our direct sales force even though they are often transacted through the channel. The revenue mix for the quarter was 46% software and 54% services. Please remember, services revenue is a combination of both maintenance and support revenue and professional services revenue. From a services revenue perspective, our maintenance attach rates and renewal rates remained strong. Services revenue for Q2 was $81.7 million, an increase of 15% year-over-year and 1% sequentially. For the quarter, total revenue from U.S. operations generated 58% of total revenues resulting in a 5% year-over-year increase, while revenue from international operations generated the balance resulting in…

Thanks, Brian. As I already provided an overview of our strategy, I will now provide a brief overview of the changes in our organization required to successfully execute that strategy as well as more detail of our near-term initiatives towards improving near-term performance. We have strengthened our organization structure to successfully achieve our goals, improve performance and take advantage of the opportunities that lie in front of us. These changes include a new business unit structure which we have been working on for approximately a year; moving from a product management structure to a business unit structure to better focus on each unique market segment. We recruited business unit heads who have very specific expertise in our key target market areas. We just appointed a new chief technology officer, [indiscernible], who will support our business unit structure from a technology perspective. As we already reported, we have a new Chief Marketing Officer. Our introduction of stand-alone products has enabled us to develop much more targeted go-to-market strategies which are being driven by our new CMO. We have established a much more sophisticated pricing function. We've established a new program management function to ensure better alignment for broad Company-based initiatives. We also increased investment in our distribution organization which will establish tighter alliances with certain strategic partners, build a growth foundation with the MSP and cloud providers, establish a much stronger foundation with major systems integrators and establish much more proactive relationship with the public cloud providers. I want to talk about our business unit structure which has replaced the existing product management function within CommVault. The business unit structure is responsible not only for the technical roadmap but to also make sure that all the elements are in place to ensure that the strategic and revenue objectives of that unit…

Thanks, Bob. Operator, can we please open the line for questions?

(Operator Instructions) From BMO Capital Markets, we have Joel Fishbein online. Please go ahead.

Just, Bob, on one thing, last quarter you guys implemented a new or increased buyback program and I noticed in this quarter you didn't buy back any stock. Was there any reason for that?

We always take an opportunistic approach on our share buyback, Joel, and we certainly have the wherewithal to do it, and using some common sense I would say that given that opportunistic approach we will act appropriately.

Okay, and then one follow-up for Brian. Brian, deferred revenue was up nicely. I know majority of that is driven by services and maintenance, but was there anything specific in there that drove the 14% growth in deferred?

I'd say in the long-term maintenance contracts, we saw a tick up there nicely this quarter, so we had the sale of multiyear maintenance contracts this past quarter.

Would that be new sales or was that on existing customers that just renewed?

That will be both new sales and existing.

Okay. And then one just quick follow-up for Bob. Bob, so clearly you outlined some initiatives to obviously reaccelerate the growth and position the Company. What gives you the confidence that this is not a secular issue and more an execution issue internal to CommVault?

One, it is an execution issue if you think about it. We've been highly focused on the enterprise and the cloud and move resources there. The cloud business is going pretty well and the buying for the big enterprise deals clearly has been off industry-wide. That's not an excuse, it's just a fact. And we left ourselves more wide open both from a resource standpoint and from a product standpoint in the mid-market, and we knew that, there's nothing new there. I mentioned it a year ago. It has just taken us a long time to get these products to market, change our pricing, change our packaging, build our appliances and get all that out to market which is rolling out this quarter. In addition to that, when you're making substantial changes, we had to put the organizational structures in place to execute all that and we're doing all that in parallel, [inaudible] we're doing a knee surgery on ourselves while we're running a marathon. The good news is that all that's in place and now all that is rolling out and we're getting good response from our customers and partners, and the proof of all that is how we do. I mean internally for the management team, we don't like the numbers but we're really – we feel really good about where we are in the industry and our ability to bring products to market with this structure significantly faster than we have before because it's all in place and we're moving right now. So the odds are certainly way with us versus against us right now and I think you can tell from just our attitude here that we [indiscernible] planning, we know exactly where we're going, we know how to get there, and we've got all the capabilities to do that. So again, not happy about the numbers but we're feeling really good about where we are from a strategic and tactical position.

From William Blair, we have Jason Ader on line. Please go ahead.

Bob, if you kind of zoom out and look at last several years, what do you think went wrong to get you to the point where you need to do such a significant reset in the business?

I mean clearly we should be growing north of 20% not 7%, and we knew we had to make these changes, Jason, we've been talking about it, it just took us too long. So I mean what I'm summarizing is we shifted resource as the enterprise left the mid-market open, so we became more vulnerable there, didn't get our products out in time and didn't get the growth in the mid-market that we had previously. So it's just a question of it's tech and if you're not moving extremely quickly when you see these things you will run into some issues, and we did.

In the large enterprise, what do you think has gone wrong in the last – I guess it's been more mixed in the large enterprise but is there something that you need to fix there?

I think on the large enterprise in certain segments of our theaters, we're doing extremely well in the enterprise and when you get underneath the numbers I know it doesn't show up in just how we report but underneath our enterprise business in general is okay. There are clearly some things we can do better on execution there, we've got the platform, we've got the people in place. And the other thing we have now which we didn't have is a much better ability to gain [inaudible]. When enterprise spending slows down, which it is right now, there's still lots of business in the enterprise, it may be in to solve discrete problems, and when we had our capacity-based pricing model and didn't have standalone products and didn't get our messaging crisp, it was more difficult for us to get business for those discrete standalone customer, solve those customer issues. Now we've got the product. So it allows – whether it's mobile or whether it's in the virtualization space or whether it's for native copy, for things like dev test, now we've got the ability to give our sales teams standalone solutions that they can build within an enterprise account without just doing a major rip and replace. So I mean I don't think there's anything really fundamentally wrong with our enterprise strategy, we just enhanced it, and now we're going to be a lot more aggressive in mid-market. And if you look at the numbers, in our round numbers, 60% of our business comes from enterprise and 40% comes from the mid-market, and the issue if you get underneath it is not been so much an enterprise problem, it's been a mid-market problem and what we're doing now is enhancing our ability to improve growth in both those segments.

From Stifel we have Aaron Rakers on line. Please go ahead.

When I look at the commentary with regard to the current quarter expectations being flat to slightly up, it would seem to imply that you're assuming as much as a double-digit year-over-year decline in software license revenue. So how do I think about that relative to what was the prior expectation of building your pipeline and funnel for the second half of the year, what has changed relative to that commentary coming out of the June quarter, and then I do have a follow-up?

Good question, Aaron. Clearly we have seen strong pipeline build early in Q2 and we saw that decelerate as we came out of the quarter, and so our outlook for Q3, Q4 changed, negatively changed as a result of that lack of significant pipeline growth which was surprising to us. [Indiscernible] We started to see it late, sometime in the late August-September timeframe, that funnel growth momentum slowed down. It's now picking back up again by the way but we had that period of slower growth and that changed our outlook. So, that few months of not achieving our funnel objectives was a surprise.

And, Bob, so with that you would say that your funnel and your pipeline is equally down double digits year-on-year, is that a fair assessment?

No, it's not. No, that is not correct. In fact, I think our funnel is starting to pickup and improve year-on-year now. I'm just looking at the numbers. So our funnel if you look back a year ago it's I'd say relatively flat but it's improved, and our funnel for the third quarter, it's flat but it was declining now it's improving I guess would be the best way to describe it.

Okay. As a follow-up to that and I think tied to that, clearly we've had now three quarters where you've reignited or focused on reigniting your sales hiring which looks like it's showing up. So two questions with that. Are you not seeing necessarily the productivity ramp albeit understanding it's a 12 month ramp to get to full productivity but are you not seeing those hires start to contribute to that pipeline and funnel? And then on top of that, is there anything to be said about possibly whether or not there's some churn within the Company and any kind of commentary on that would be helpful?

In regard to productivity, you're correct. We did not see the normal productivity gain in our sales force, and if you get underneath it, given the current market dynamics out there this is not – the underlying cause is primarily in product pricing and packaging and tied to shifts in the market versus poor sales execution. So from a senior management team, we are trying to look at this fundamentally on how do we solve the fundamentals and enable our sales team to be more productive and now we just rolled out a series of products and initiatives that help them do that. So we're on the path of seeing funnel turnaround and the outlook improve but until we validate all that with hard performance we're resetting expectations what I would say is realistically and how we see it right now.

From Piper Jaffray we Andrew Nowinski on line. Please go ahead.

I'm just wondering where you're at with regards to your hiring in your baseline, going to your baseline sales capacity level. I understand the productivity isn't quite there yet but are you done with the hiring phase yet or are you at the baseline where you want to be at?

Globally, we have made progress for our global sales force. International sales force, we are pretty much there but to hit our numbers we'll be continuing to hire. In the Americas we made progress but not enough and we'll be continuing to hire in the Americas. The pace of hiring however relative to what we did in Q2 will decline corporate-wide pretty significantly over the next two quarters. We'll be hiring but at a lower pace.

Okay. And then in the mid-market space, you noted that you're more vulnerable there. Which vendors do you think works making that vulnerability making it more difficult on CommVault in that market?

There are a lot of new vendors in that market and what's disappointing internally is our technology on a relative basis is significantly better than anybody else out there. So it was a packaging, pricing, go-to-market issue not a technology issue. And I'm not going to go through them all but there are a number of smaller competitors that have done pretty well in the mid-market and now we're moving ever-aggressively not only on the product side but on the go-to-market side to make sure we achieve our mid-market growth objectives. It's very doable because we got the channel partners, we got the products now and we got the sales force and now we just got to execute.

From Pacific Crest we have Brent Bracelin on line. Please go ahead.

Couple of questions from me, one on the quarter and then on the outlook pipeline funnel. On the quarter itself, I wanted to kind of better understand and decompose what exactly happened, and as I look at license revenue down for two straight quarters first time since kind of the banking crisis, I get the external environments during that period, but as we think about this environment the last six months, two straight quarters of license declines, how much of it is tied to internal sales execution, two, a change in packaging, pricing, or three, other external factors be it large enterprise deals down ticking here or the mid-market kind of erosion?

My view is that in spite of some decline in corporate spending on big deals and things like that, the bigger issues are CommVault's as we own it their execution issues. It has nothing to do with our underlying technology or strategy. Clearly we could have done a much better job faster in bringing to market standalone products that are priced and packaged the way customers want to buy, make it easier for channel partners to sell, and this is both in the mid-market and as entry points in the enterprise. So this was I'll call it 90% a CommVault product pricing, packaging, marketing, go-to-market issue, and then these other issues are secondary to that.

That's helpful. And then on the outlook, as a corollary to that, obviously 20% increase in sales and marketing over the last six months, little surprised you're not seeing the normal productivity gains given the level investments you're making in sales and marketing. How do you know the change in product pricing and packaging isn't resulting in a lower net spend by your customers? I'm just trying to understand here that…

Okay, let's just separate that because we knew when we did this that we would take some risk because we had to make very significant change in the Company in terms of just how we approach our market and not the underlying technology build which is still really awesome, but in order to do this we knew we had to change the way we develop products not the underlying technology and move that to business units so individuals who really understood how to take that technology, package it, price it right and then bring all the other elements to drive revenue in these different market segments. We didn't have that here, we had to build that. We had to build a much more sophisticated pricing function. We had it but to do this across four or five business units you needed to bring additional expertise in here, we had to make that investment. The go-to-market, once you have standalone products like this and additional platform, our whole way we manage our go-to-market capability had to change. So, with Chris Powell we have a CMO that [talk] (ph) to those initiatives. Our alliances and how our partner programs were had to change. So those are big fundamental core investments. Look, I knew there was some risk that we make the investments and our product won't catch up, that's not what our plan said but there was some risk attached to that. Those products and those initiatives are starting to roll out this quarter, all those capabilities. So the expense is there and the sales teams are there, now the products are there and they are starting to roll out at a pretty fast cadence. The other thing we wanted to do by the way is basically significantly increase the pace of product introduction to the market much more faster, much faster than we've been doing. That's all in place. The initial response to those product, and they haven't been out very long, we're talking about weeks not months, so if you think about the initial response has been outstanding and it's going to take us a couple of three quarters to put all that together so it turns up in license revenue, growth and productivity growth.

From Raymond James we have Michael Turits on the line. Please go ahead.

You've gone over this I think in a number of ways but if you could again at a high level, could you just be as clear and simple as possible about exactly what you saw change in the market in terms of pricing and packaging that you needed to respond to and which specifically are the standalone products that you felt like you needed to get out sooner?

Okay, I'm going to summarize it and then I'm going to let Al talk for a minute. It was in the midmarket and some entry points in the enterprise. If you look at the big enterprise account dynamics and we compete against, fundamentally it's Symantec, IBM, EMC, the dynamic there has not changed very much and fundamentally our opposition with time has really strengthened. So it's the entry points whether it's mobile or it's compliance or it's virtualization or native copy capability, it is those discrete areas where we didn't have standalone capability and we were selling everything as I've been talking about over the last couple three quarters, everything is in a capacity-based platform model. That model does not work very well when you're competing against a competitor who was pricing on – like in mobile on a price per user per month or a virtualized competitor who is pricing by socket and we're trying to price the capacity-based platform by price per terabyte. I said this a year ago. That model just doesn't work and we got caught in two ways, one, we didn't have very many resources focused there and we didn't have the products that hit that market and we didn't move quickly enough. And I'll let Al kind of take it from here and give you a little more color on this.

Michael, one, what Bob just said, one, it doesn't work particularly in midmarket. I would argue it continues to work fairly well in enterprise sectors where they are interested in a combination of used cases. And as Bob said, the ones that are coming out are primarily the virtualization products, both protection and a broader [data] (ph) management capabilities, those we move from a terabyte front-end, metered and licensing model to a VM or socket perspective. We made some slight changes to our staff management program, we changed the mobile pricing from again terabytes to per user per month, and even on our e-mail archiving we changed that again from front-end terabytes to number of users, number of mailboxes. Bob also alluded to some of the products we're going to launch next quarter, dev test, DR, et cetera. Most likely most of those will have different metering than just front-end terabyte. The other last piece I'll mention is the appliance products that are coming out this quarter, obviously when you're bundling the pricing if you will to the backend appliance it tends to be backend capacity is what the metering will shift to. We've always been in the mode of front-end terabytes and again that's one of those practical fears of the market, particularly midmarket who wants to [buy that] (ph).

From Summit Research we have Srini Nandury on the line. Please go ahead.

Bob and Brian, I got a question on sales productivity with your legacy sales force, we have seen anecdotal reports that some of your best salespeople have been siphoned off by the upstarts in the industry. First, the question is, I mean is that true? And then the second thing is that, with all this new licensing, pricing, solution bundles you put in, are the sales force adequately trained and it looks like to me that the sales process has become a lot more cumbersome for these people to be effective?

I think those two statements are accurate. One, when you don't have the product that fit the market and it's difficult for those midmarket sales teams, and this is upper midmarket now this is not the lower end of the market, to achieve their objectives then they are going to look elsewhere to make money. It's pretty simple, it's the way sales works. So I think that is true. On educating the sales force, it is a lot easier now to enable the sales force when you're dealing with discrete products with a discrete message in that midmarket. It's just a much simpler process. So to your point, not only these products coming out but there's a lot more aggressive enablement tied to these launches and these are rolling out this quarter, so I'd say there's still work to do there but we're well on the path on both of those. So I think, Srini, I think your comments are absolutely correct and the good news here is we've been working on this, it's just taken us a long time to put all these pieces in place but is rolling out now and we're not starting from zero, we've been at this for quite a while and all the elements are in place and now we're regaining momentum which is critical.

From Mizuho Securities we have Abhey Lamba on the line. Please go ahead.

Bob, I know you've spent a lot of time discussing this, you've discussed a lot about your internal factors that you're changing and part of the placement and how you're changing that, but are there really no external issues like customer demand or competitive landscape or move to the cloud and demand for new functionality, anything like that that's acting as a headwind to your business which is really making it harder for all these internal changes to take effect?

I might look at it a little differently. Clearly there are big changes in the competitive environment and landscape. The move to the cloud we've been working on that for a long time, we've put together about a year and a half ago our Cloud Services Group, they are doing really well. So that initiative with our MSPs and combined with that we've had a much stronger focus on the systems integrators, those programs down the line growth there looks really good. In the big enterprise, fundamentally we've got reasonably good growth there when you get underneath it in terms of what is going on, and the funnel for big enterprise looks pretty good. We just needed to get it to be better but it is not bad. The dynamic in the midmarket clearly changed, we had a lot new competitors coming in there, and as I said earlier we left it wide open, wide open meaning we didn't have as much resource focused on it and we didn't have the products that I'll call it fit the market price the market and go-to-market capabilities in that area until just now, and again it's not something we didn't understand, it just took us too long to put all this together along with all new organization changes to have an impact on our license revenue growth. It is there now and we're rolling it out now, but you are correct, I mean these were – it's tech, stuff changes and if you're not on top of it and you're not moving really aggressively to address changes like that, you got issues and we did. So, yes, there is certainly a market shift competitive element to this, but the other point I made is, it's not that we don't have underlying technology to address all of this, we are technically more advanced than anybody but that's really nice but if you don't take that technology and package it right and tie to these shifts, you're not going to get revenue, and now we're in a position to do that. But clearly – look, I identified it a year ago. I said if we don't change how we price, how we package, how we market, we're going to run – and everybody said, but you guys are on autopilot; I said, yes, but if we don't make these changes we're going to run into some trouble, and we did make the change we just didn't make it quite fast enough and now we're back on the path.

From Macquarie we have Rajesh Ghai on the line. Please go ahead.

I had a couple of questions related to the product strategy and business unit changes that you have rolling out. You're launching standalone products, you are instituting module specific business units. I think you essentially targeted at addressing your midmarket woes. What gives you the confidence that this is the right strategy for the midmarket? Also how do you make sure that this new business unit structure does not hurt your execution at the enterprise and positioning related to a single platform architecture that has worked really well in the past?

That is a really, really good question. I'm going to answer and I'm going to let Al also. So number one, I'll be really clear here, our core strategy on our singular platform innovation to the enterprise remains and a lot of the underlying structure that we put in place deals with the platform itself and I will talk about that in a minute. So in our Simpana 11 which is going to beta next quarter, has a significant amount of new technology changes tied to the platform approach. So the point of that is we do not want to lose and we're going to continue to emphasize that singular platform, and a lot of the moves in these business units also include platform initiatives, like our vertical solution initiative. So clearly that is still a foundation point. With that, I'm going to turn this over to Al and let him give you more color on the structure.

A couple of more points, Rajesh. First of all, the business unit structure is not intended for just midmarket, it's across the Company, enterprise, midmarket, even SMB. So the individuals in those groups have responsibility for product lines or vertical solution sets again across the spectrum. The other piece that Bob didn't mention on the platform side because he's right, we're very insistent on you have to market standalone products and packages as well as you can still buy all these capabilities through platform bundles and packages. Technically, we also as we said are moving Mr. Brockway to the CPO function and there's a number of people on our product organization that will simply focus on the platform, it's technology, the opening up of the platform, the APIs, all those elements that are beyond the scope of just standalone product set.

From Sterne Agee we have Alex Kurtz on the line. Please go ahead.

Just two real quick ones. Get a lot of questions from investors about VM software, could you just tell us what percentage of your midmarket deal flows seeing VM and win rates of deals above $1 million, so if you could give us some color on either of those that would be great?

We see VM in the midmarket in the virtualization space. They are at lower and midsize of the market. I'll let Al talk about the technology positioning versus VM. So clearly they have done well in that market segment. Our technology is significantly broader, it's got much lower cost of ownership and better functionality than VM, we just haven't packaged it to compete against them until recently. And with that, I'll turn it over to Al.

Yes, I think that [hit it] (ph) pretty well, Bob, and a couple more points there. One, they are not our biggest competitor even in the mid-market space. Some of our bigger, the traditional top three guys, are still bigger in terms of size there. And on the enterprise level, I don't recall seeing them at all, a larger scale environment or proposal. Again as Bob mentioned, we generally scale better, we have more automation or a much better fit solution-wise for large organisations than those folks. So those are generally the differences.

You're big market, you're dealing with many, many petabytes, 10 petabyte, 20 petabytes, 50 petabytes, you don't see these new competitors in those kind of big environments and where users don't want to consolidate multiple use cases, that's where our big multimillion-dollar deals comes from. We don't see guys like that in those deals. I think the other point Al made, it's not just VM but you've got other competitors, for example, appliances there's a lot of use cases out there where customers want to use appliances for consolidated infrastructure, makes it easier for them to deploy. We're just rolling out our appliances. But we didn't want to be in the hardware business. So it took us more time to put those programs together with our hardware and distribution partners, so we could bring world-class technology in the market and set up all the distribution capabilities tied to it. Took us a long time but now we have.

And lastly, we also don't tend to see the new guys in the cloud space or the managed service provider space very often, because again that space it looks like a big organisation, number one. Number two, there's an intense focus on operational and labor efficiency. So again, those type of solutions usually are not too popular in the larger service providers.

From Oppenheimer we have Ittai Kidron on the line. Please go ahead.

A lot of the questions have been asked but I do want to focus again, Bob, on the competitive point. Can you tell us if there were some notable customer losses in this quarter or long-standing big customers of yours where you've seen competitors make their way in and eat a little bit of the pie that up until now has been potentially exclusive to you?

Our competitive loss has not changed per se. Our competitive loss statistics are pretty consistent. It's just that to your point on these midmarket deals that are mainly driven through channel, we don't see them because we didn't have products or the channel programs to compete against them or we didn't have those products in the hands of our sales teams that focus on the higher end of the midmarket. So the answer to your question is, yes. I mean it's not a question of competitive loss, it's just a question of not being positioned to win. And clearly there is no question that some of those products have gotten into our installed base on a departmental basis where we don't even see it. We're changing that now because we've put all this together, but clearly that did happen, it is happening out there. That's being shut down pretty quickly by the way as we bring these products out but it was an issue.

From Credit Suisse we have Philip Winslow on line. Please go ahead.

This is [indiscernible] for Phil. Just since you missed your internal expectations, just wondering how much of that miss in license revenue attributed to your [indiscernible] in spending prior to the new release of your Simpana and the new pricing model? And also as a follow-up, like what sort of feedback have you got so far with your Simpana release and that new pricing model?

The miss had nothing to do with new products coming out, I mean zero, had nothing to do with that. It was the other things I was talking about. And in terms of the initial impact from our customers and partners on these new products, they've been extremely good but it's very early. What I said in the earnings script is we expect to see some good uptick in the next quarter as we build momentum and clearly these products combined with the new products we're introducing next quarter will set the foundation for growth for the first half of FY '16 and build – and there's new additional products coming out that will establish a foundation for growth for the second half of '15. So the plan is all there, the models are reasonable, we've got enough sales capacity in place to do that, and now it's executing the plan. So we got lots of ways to succeed here now, if that answers your question.

From JMP Securities we have Greg McDowell on line. Please go ahead.

This is Rishi Jaluria dialing in for Greg McDowell. Two quick questions for you. First, you had mentioned the appointment of Pete Kobs as VP of Global Accounts, just wanted to get your feedback, how do you expect this to change your go-to-market strategy and maybe help with some of the issues that you've discussed on this call? And second you had mentioned 300 new customers in the quarter. Can you give us some color on these customers, maybe in terms of geography, U.S. versus international, as well as customer type, enterprise versus midmarket? Thank you.

On Pete, we are still doing quite well with big large global enterprise accounts, we're seeing more and more of them. As we tie into the global systems integrator, they are adding to a pipeline of global accounts. In managing these global accounts across our different theaters, we've done okay with it but as the number of those accounts increases we just needed a lot more senior management oversight and structure in dealing with accounts that are rolling out significant amounts of our technology across the globe. So there is no question in my mind with Pete's skills and the increased momentum in that area that we'll see good growth in these, and these are deals – we want to focus on the seven and eight figure deals here and they are there. So we're happy to have Pete in that position. In terms of the number of new accounts, I'll let Brian Carolan give you a perspective on that.

Just in terms of new customer growth, we saw a better relative quarter out of EMEA and APAC than the Americas.

And from Lake Street Capital Markets we have Eric Martinuzzi on line. Please go ahead.

You referred to historical growth rates in some of your prepared remarks. When you speak of historical growth rates, what's the number that you're thinking of?

High teens, 20%.