Company: CVLT
Filing Date: 2025-05-05
Form Type: 10-K
Source: 0001169561-25-000034
Chunk: 20

Company: COMMVAULT SYSTEMS INC
Filing Date: 2025-05-05
Form: 10-K
Item: Item 1A
Chunk 20
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We are preparing to migrate a significant amount of customers from Red Hat environments, and any disruption, delay, or failure in executing this transition effectively could have a material adverse impact on our business operations and customer relationships.

Any delays or issues in the execution of this migration may expose us to financial and operational risks. Additionally, ongoing support and coordination during the transition may result in higher operating costs. If we are unable to successfully complete the migration, our operations and reputation could be materially adversely affected.

Borrowing against our revolving credit facility could adversely affect our operations and financial results.

We have a $100 million revolving credit facility. As of March 31, 2025, there were no borrowings under the credit facility. If we were to borrow substantially against this facility the indebtedness could have adverse consequences, including requiring us to devote a portion of our cash flow from operations to payments of indebtedness, which would reduce the availability of cash flow to fund working capital requirements, capital expenditures and other general purposes; limiting our flexibility in planning for, or reacting to, general adverse economic conditions or changes in our business and the industry in which we operate in; placing us at a competitive disadvantage compared to our competitors that have less debt; and limiting our ability to fund potential acquisitions.

The credit facility also contains financial maintenance covenants, including a leverage ratio and interest coverage ratio, and customary events of defaults. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations. For further discussion on our revolving credit facility, see Note 17 of the notes to the consolidated financial statements.

Risks Related to our International Operations

If we are unable to effectively manage certain risks and challenges related to our India operations, our business could be harmed.

Our India operations are a key factor to our success. We believe that our significant presence in India provides certain important advantages for our business, such as direct access to a large pool of skilled professionals and assistance in growing our business internationally. However, it also creates certain risks that we must effectively manage.  As of March 31, 2025, approximately 39% of our employees were located in India. Wage costs differentiate depending on regions throughout the world. Wages in India are increasing at a faster rate than in the many other countries, including the United States. These increases could result in us incurring increased costs for technical professionals and reduced margins. There is intense competition in India for skilled technical professionals, and we expect such competition to increase