Company: CVLT
Filing Date: 2025-01-29
Form Type: 10-Q
Source: 0001169561-25-000007
Chunk: 72

Company: COMMVAULT SYSTEMS INC
Filing Date: 2025-01-29
Form: 10-Q
Item: Item 2
Chunk 72
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, including consultation, assessment and design, installation services, and customer education. Revenues from other services can vary period over period based on the timing services are delivered and are typically recognized as the services are performed.

Foreign Currency Exchange Rates’ Impact on Results of Operations

Sales outside the United States were 47% of our total revenues for both the nine months ended December 31, 2024 and 2023. The income statements of our non-U.S. operations are translated into U.S. dollars at the average exchange rates for each applicable month in a period. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions generally results in increased revenues, operating expenses and income from operations for our non-U.S. operations. Similarly, our revenues, operating expenses and net income will generally decrease for our non-U.S. operations if the U.S. dollar strengthens against foreign currencies.

Using the average foreign currency exchange rates from the three months ended December 31, 2023, our total revenues would have been higher by $1.6 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been higher by $0.6 million from non-U.S. operations for the three months ended December 31, 2024. Using the average foreign currency exchange rates from the nine months ended December 31, 2023, our total revenues would have been higher by $1.0 million, our cost of revenues would have been higher by $0.2 million and our operating expenses would have been lower by less than $0.1 million from non-U.S. operations for the nine months ended December 31, 2024. 

In addition, we are exposed to risks of foreign currency fluctuation primarily from cash balances, accounts receivables and intercompany accounts denominated in foreign currencies and are subject to the resulting transaction gains and losses, which are recorded as a component of general and administrative expenses. We recognized net foreign currency transaction gains of approximately $0.3 million and insignificant losses for the three and nine months ended December 31, 2024, respectively. We recognized net foreign currency transaction losses of approximately $1.6 million and $1.8 million for the three and nine months ended December 31, 2023, respectively.

Critical Accounting Policies

In presenting our consolidated financial statements in conformity with U.S. GAAP, we are required to make estimates and judgments that affect the amounts reported therein.