Commvault Systems Inflates Operating Income 8.6% With Sales Commission Change
Data management firm now amortizes certain sales commissions it previously did not.
May 26, 2022
In modifying its sales commission plan, Commvault Sustems (CVLT), a data protection and management firm, will now capitlaize the commissions for software updates and customer support related to initial customer transactions.The company suggests the change brings commissions for these transactions in line with those related to the initial purchase.
The new commissions will be amortized over a period Commvault says is “approximately five years” which the company says is consistent with the the accounting for costs associated with perpetual licenses. The change in commission plans resulted in a change in Commvault’s estimate of the amortization period of its existing deferred commissions cost associated with term licenses.
By lengthening the amortization period, Commvalut reduced sales and marketing expense by $3.57 million, or 8.6% of FY22 operating income.
The change was originally announced in July 2021 and quantified in the company’s annual report, which was filed three days after Comvault’s CFO announced his resignation.
Related: DELL, VMW, IBM
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