You should read the following discussion and analysis along with our
consolidated financial statements and the related notes included elsewhere in
this quarterly report on Form 10-Q. The statements in this discussion regarding
our expectations of our future performance, liquidity and capital resources, and
other non-historical statements are forward-looking statements. These
forward-looking statements are subject to numerous risks and uncertainties,
including, but not limited to, changes in demand as well as the risks and
uncertainties described under "Risk Factors" in our Annual Report on Form 10-K
for the fiscal year ended March 31, 2022. Our actual results may differ
materially from those contained in or implied by any forward-looking statements.

Overview

Incorporated in Delaware in 1996, Commvault Systems, Inc. is a global data management company offering customers enterprise level, intelligent data services via a single platform and unified code base.



We believe in solving hard problems for our customers by enabling our customers
to accelerate their digital transformation in today's ever-evolving workforce.
Our product portfolio includes tools and machine learning technology that drives
automation, reduces complexity, reigns in data fragmentation, and accelerates a
customer's cloud journey. Our product functionality share the same back-end
technologies to deliver the benefits of a holistic approach to protecting,
managing, and securing data. Our products address many aspects of data
management, from data protection and security, to data governance,
transformation and insights, while providing scalability. We believe our
technology and professional services provide the broadest set of capabilities in
the industry, which enables customers to efficiently and cost-effectively scale
their data on premises or in the cloud.

Sources of Revenues



We derive a significant portion of our total revenues from sales of licenses of
our software applications. We do not customize our software for a specific
end-user customer. We sell our software applications to end-user customers both
directly through our sales force and indirectly through our global network of
value-added reseller partners, systems integrators, corporate resellers and
original equipment manufacturers. Our software and products revenue was 46% and
45% of our total revenues for the nine months ended December 31, 2022 and 2021,
respectively.

We continue to focus on subscription and other recurring revenue arrangements
and continue to generate revenue from the renewals of subscription licenses sold
in prior years. Any of our licensing models (capacity, instance based, etc.) can
be sold via a subscription arrangement. In these arrangements, the customer has
the right to use the software over a designated period of time. The capacity of
the license is fixed and the customer has made an unconditional commitment to
pay. Software revenue in these arrangements is generally recognized when the
software is delivered. During the nine months ended December 31, 2022 and 2021,
approximately 78% and 65% of software license revenue was sold under a
subscription model, respectively. We also sell to some customers, primarily
managed service providers, via utility, or pay-as-you-go models. In these
arrangements, there is no minimum commitment and actual usage is regularly
measured and billed. Revenue in these utility arrangements is recognized as the
software is used.

Our total software and products revenue in any particular period is, to a
certain extent, dependent upon our ability to generate revenues from large
customer software and products deals, which we refer to as larger deal
transactions. Larger deal transactions (transactions greater than $0.1 million
of software and products revenue) represented 73% and 71% of our total software
and products revenue in the nine months ended December 31, 2022 and 2021,
respectively.

Software and products revenue generated through indirect distribution channels
accounted for approximately 90% of total software and products revenue in both
the nine months ended December 31, 2022 and 2021. Software and products revenue
generated through direct distribution channels accounted for approximately 10%
of total software and products revenue in both the nine months ended
December 31, 2022 and 2021. Deals initiated by our direct sales force are
sometimes transacted through indirect channels based on end-user customer
requirements, which are not always in our control and can cause this overall
percentage split to vary from period-to-period. As such, there may be
fluctuations in the dollars and percentage of software and products revenue
generated through our direct distribution channels from time-to-time. We believe
that the growth of our software and products revenue, derived from both our
indirect channel partners and direct sales force, are key attributes to our
long-term growth strategy. We intend to continue to invest in both our channel
relationships and direct sales force in the future, but we continue to expect
more revenue to be generated through indirect distribution channels over the
long term. The
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failure of our indirect distribution channels or our direct sales force to effectively sell our software applications could have a material adverse effect on our revenues and results of operations.



We have a non-exclusive distribution agreement with Arrow Enterprise Computing
Solutions, Inc. ("Arrow"), a subsidiary of Arrow Electronics, Inc. Pursuant to
this distribution agreement, Arrow's primary role is to enable a more efficient
and effective distribution channel for our products and services by managing our
reseller partners and leveraging their own industry experience. We generated 37%
and 36% of our total revenues through Arrow for the nine months ended
December 31, 2022 and 2021, respectively. If Arrow were to discontinue or reduce
the sales of our products or if our agreement with Arrow were terminated, and if
we were unable to take back the management of our reseller channel or find
another distributor to replace Arrow, there could be a material adverse effect
on our future business.

We have an original equipment manufacturer agreement with Hitachi Vantara
("Hitachi") which allows them to market, sell and support our software
applications and services on a stand-alone basis and/or incorporate our software
applications into their own hardware products. Hitachi has no obligation to
recommend or offer our software applications exclusively, or at all, and they
have no minimum sales requirements and can terminate our relationship at any
time.

Our services revenue was 54% and 55% of our total revenues for the nine months
ended December 31, 2022 and 2021, respectively. Our services revenue is made up
of fees from the delivery of customer support and other professional services,
which are typically sold in connection with the sale of our software
applications. Customer support agreements provide technical support and
unspecified software updates on a when-and-if-available basis for an annual fee
based on licenses purchased and the level of service subscribed. Metallic, our
as-a-service solution, allows customers to use hosted software over the contract
period without taking possession of the software. Revenue related to Metallic is
also included in services revenue and is generally recognized ratably over the
contract term. Other professional services include consulting, assessment and
design services, implementation and post-deployment services and training, all
of which to date have predominantly been sold in connection with the sale of
software applications.

Foreign Currency Exchange Rates' Impact on Results of Operations



Sales outside the United States were 47% of our total revenue for the nine
months ended December 31, 2022 and 49% of our total revenue for the nine months
ended December 31, 2021. 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 revenue, operating expenses and income from
operations for our non-U.S. operations. Similarly, our revenue, 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, 2021, our software and products revenue would have been higher by
$4.4 million, our services revenue would have been higher by $5.3 million, our
cost of sales would have been higher by $1.1 million and our operating expenses
would have been higher by $5.4 million from non-U.S. operations for the three
months ended December 31, 2022. Using the average foreign currency exchange
rates from the nine months ended December 31, 2021, our software and products
revenue would have been higher by $12.7 million, our services revenue would have
been higher by $16.3 million, our cost of sales would have been higher by $3.5
million and our operating expenses would have been higher by $14.9 million from
non-U.S. operations for the nine months ended December 31, 2022.

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 losses of approximately
$0.3 million and $0.1 million for the three and nine months ended December 31,
2022, respectively. We recognized net foreign currency transaction losses of
approximately $0.3 million and $0.5 million for the three and nine months ended
December 31, 2021, respectively.



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Critical Accounting Policies



In presenting our consolidated financial statements in conformity with U.S.
generally accepted accounting principles, we are required to make estimates and
judgments that affect the amounts reported therein. Some of the estimates and
assumptions we are required to make relate to matters that are inherently
uncertain as they pertain to future events. We base these estimates on
historical experience and on various other assumptions that we believe to be
reasonable and appropriate. Actual results may differ significantly from these
estimates. To the extent that there are material differences between these
estimates and actual results, our future financial statement presentation,
financial condition, results of operations and cash flows will be affected.

In many cases, the accounting treatment of a particular transaction is
specifically dictated by GAAP and does not require management's judgment in its
application, while in other cases, significant judgment is required in selecting
among available alternative accounting standards that allow different accounting
treatment for similar transactions. We consider these policies requiring
significant management judgment to be critical accounting policies. These
critical accounting policies are:

•Revenue Recognition

•Accounting for Income Taxes

•Goodwill

There have been no significant changes in our critical accounting policies during the nine months ended December 31, 2022 as compared to the critical accounting policies and estimates disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" included in our Annual Report on Form 10-K for the year ended March 31, 2022.

Results of Operations

Three months ended December 31, 2022 compared to three months ended December 31, 2021



Revenues (in millions)

[[Image Removed: cvlt-20221231_g1.jpg]][[Image Removed: cvlt-20221231_g2.jpg]][[Image Removed: cvlt-20221231_g3.jpg]] -Total revenues decreased $7.3 million, or 4% as a result of the following:



•A decrease in software and products revenue which was significantly impacted by
the year over year strengthening of the US dollar, particularly the Euro and
Pound. Using the average foreign currency exchange rates from the three months
ended December 31, 2021, our total revenues would have increased 1% compared to
the three months ended December 31, 2021.

•Software and products revenue represented 46% of our total revenue in the three
months ended December 31, 2022 and 49% of our total revenue in the three months
ended December 31, 2021.

•Services revenue represented 54% of our total revenue in the three months ended December 31, 2022 and 51% of our total revenue in the three months ended December 31, 2021.

-Software and products revenue decreased $9.0 million, or 9%, as a result of the following:



•A decrease of $10.4 million, or 14%, in larger deal revenue (deals greater than
$0.1 million). Larger deal revenue represented 72% of our software and products
revenue in the three months ended December 31, 2022 and 76% of our software and
products revenue in the three months ended December 31, 2021.
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•The average dollar amount of larger deal revenue transactions was approximately
$312 thousand and $332 thousand for the three months ended December 31, 2022 and
2021, respectively, representing a 6% decrease. There were 206 larger deal
revenue transactions for the three months ended December 31, 2022, compared to
225 deals for the three months ended December 31, 2021.

•This decrease was partially offset by an increase of $1.4 million in transactions less than $0.1 million.



•Using the average foreign currency exchange rates from the three months ended
December 31, 2021, our software and products revenue would have decreased 5%
compared to the three months ended December 31, 2021.

-Services revenue increased $1.7 million, or 2%, primarily due to the following:



•An increase in other services revenue, driven primarily by the year over year
increase in revenue from Metallic as-a-service arrangements, partially offset by
a decrease in revenue from customer support agreements.

•Using the average foreign currency exchange rates from the three months ended
December 31, 2021, our services revenue would have increased 7% compared to the
three months ended December 31, 2021.

We track software and products revenue on a geographic basis. During the fourth
quarter of fiscal 2022, we combined the management of our EMEA and APJ field
organizations into our International region (Europe, Middle East, Africa,
Australia, India, Japan, Southeast Asia, China). Our Americas region includes
the United States, Canada, and Latin America. Americas and International
represented 51% and 49% of total software and products revenue, respectively,
for the three months ended December 31, 2022. Software and products revenue
decreased year over year by 20% in the Americas and increased 6% in
International.

?The decrease in Americas software and products revenue was primarily due to a
27% decrease in larger deal transactions revenue, driven by a decrease in the
average dollar amount of larger deal transactions as a result of slower buying
patterns and lower close rate execution. This decrease was partially offset by
an increase of $1.7 million in transactions less than $0.1 million.

?The increase in International software and products revenue was primarily due
to an 11% increase in larger deal transactions revenue. Using the average
foreign currency exchange rates from the three months ended December 31, 2021,
our International software and products revenue would have increased 17%
compared to the three months ended December 31, 2021.

Our software and products revenue in International is subject to changes in foreign exchange rates as further discussed above in the "Foreign Currency Exchange Rates' Impact on Results of Operations" section.


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Cost of Revenues and Gross Margin ($ in millions)

[[Image Removed: cvlt-20221231_g4.jpg]][[Image Removed: cvlt-20221231_g5.jpg]][[Image Removed: cvlt-20221231_g6.jpg]] [[Image Removed: cvlt-20221231_g7.jpg]][[Image Removed: cvlt-20221231_g8.jpg]][[Image Removed: cvlt-20221231_g9.jpg]] -Total cost of revenues increased $4.5 million, and represented 18% and 15% of our total revenues for the three months ended December 31, 2022 and 2021, respectively.



-Cost of software and products revenue decreased $1.2 million and represented 3%
of our total software and products revenue for the three months ended
December 31, 2022 compared to 4% for the three months ended December 31, 2021.
The decrease is related to a decline in hardware as part of our transition to a
software model for appliances and the reduction in third party royalties
associated with the current version of our Hyperscale software.

-Cost of services revenue increased $5.7 million, representing 30% of our total
services revenue for the three months ended December 31, 2022 compared to 25%
for the three months ended December 31, 2021. The increase in cost of services
revenue primarily related to an increase in the cost of infrastructure related
to Metallic as-a-service offering as they continue to scale.









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Operating Expenses ($ in millions)

[[Image Removed: cvlt-20221231_g10.jpg]][[Image Removed: cvlt-20221231_g11.jpg]][[Image Removed: cvlt-20221231_g12.jpg]]

[[Image Removed: cvlt-20221231_g13.jpg]][[Image Removed: cvlt-20221231_g14.jpg]][[Image Removed: cvlt-20221231_g15.jpg]] -Sales and marketing expenses decreased $1.8 million, or 2%, primarily due to decreases in employee compensation and sales commissions associated with decreased revenue relative to the same period in the prior year.



-Research and development expenses decreased $6.8 million, or 17%, primarily due
to decreases in employee compensation and related expenses, including a $3.1
million decrease in stock-based compensation, and the completion of payments
related to key employees of Hedvig, Inc., which ended in the fourth quarter of
fiscal 2022. Investing in research and development has been a priority for
Commvault, and we anticipate continued spending related to the development of
our data and information management software applications.

-General and administrative expenses decreased $5.1 million, or 18%, primarily due to the following:

•Decreases in employee compensation and related expenses, including a $2.4 million decrease in stock compensation expense.

•A decrease in legal costs relative to the same period of the prior year.



-Restructuring: Our restructuring plan, initiated in the fourth quarter of
fiscal 2022, is aimed to increase efficiency in our sales, marketing and
distribution functions as well as reduce costs across all functional areas. The
plan also included a reorganization to combine our EMEA and APJ field
organizations. Restructuring expenses were $9.2 million for the three months
ended December 31, 2022. There were no restructuring charges for the three
months ended December 31, 2021. These restructuring charges relate primarily to
severance and related costs associated with headcount reductions. These charges
include $1.0 million of stock-based compensation related to modifications of
existing awards granted to certain employees included in the restructuring for
the three months ended December 31, 2022. We cannot guarantee the restructuring
program will achieve its intended result. Risks associated with this
restructuring program also include additional unexpected costs, adverse effects
on employee morale and the failure to meet operational and growth targets due to
the loss of key employees, any of which may impair our ability to achieve
anticipated results of operations or otherwise harm our business.

-Depreciation and amortization expense was $2.5 million for both the three months ended December 31, 2022 and 2021.


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Income Tax Expense



Income tax expense was $5.7 million in the three months ended December 31, 2022
compared to expense of $3.0 million in the three months ended December 31, 2021.
The increase in income tax expense relative to the prior year relates primarily
to current federal and state taxes driven by the effects of capitalization and
amortization of research and development expenses starting in fiscal year 2023
as required by the 2017 Tax Cuts and Jobs Act. Given we have recorded a
valuation allowance against our deferred tax assets, there is no corresponding
deferred tax benefit related to the current tax expense associated with the
capitalization of research and development expenses.

Nine months ended December 31, 2022 compared to nine months ended December 31, 2021



Revenues (in millions)

[[Image Removed: cvlt-20221231_g16.jpg]][[Image Removed: cvlt-20221231_g17.jpg]][[Image Removed: cvlt-20221231_g18.jpg]] -Total revenues increased $17.5 million, or 3% as a result of the following:

•An increase in software and products and Metallic as-a-service revenues.



•Software and products revenue represented 46% of our total revenue in the nine
months ended December 31, 2022 and 45% of our total revenue in the nine months
ended December 31, 2021.

•Services revenue represented 54% of our total revenue in the nine months ended December 31, 2022 and 55% of our total revenue in the nine months ended December 31, 2021.



•Using the average foreign currency exchange rates from the nine months ended
December 31, 2021, our total revenues would have increased 8% compared to the
nine months ended December 31, 2021.

-Software and products revenue increased $8.8 million, or 3%, as a result of the following:



•An increase of $12.1 million, or 7%, in larger deal revenue (deals greater than
$0.1 million). Larger deal revenue represented 73% of our software and products
revenue in the nine months ended December 31, 2022 and 71% of our software and
products revenue in the nine months ended December 31, 2021.

•The average dollar amount of larger deal revenue transactions was approximately
$344 thousand and $317 thousand for the nine months ended December 31, 2022 and
2021, respectively, representing a 9% increase. There were 563 larger deal
revenue transactions for the nine months ended December 31, 2022, compared to
573 deals for the nine months ended December 31, 2021.

•This increase was partially offset by a decrease of $3.2 million in transactions less than $0.1 million.



•Using the average foreign currency exchange rates from the nine months ended
December 31, 2021, our software and products revenue would have increased 8%
compared to the nine months ended December 31, 2021.

-Services revenue increased $8.7 million, or 3%, primarily due to the following:



•An increase in other services revenue, driven primarily by the year over year
increase in revenue from Metallic as-a-service offerings, partially offset by a
decrease in revenue from customer support agreements.

•Using the average foreign currency exchange rates from the nine months ended
December 31, 2021, our services revenue would have increased 8% compared to the
nine months ended December 31, 2021.
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Americas and International represented 60% and 40% of total software and
products revenue, respectively, for the nine months ended December 31, 2022.
Software and products revenue increased year over year by 3% in the Americas and
by 3% in International.

?The increase in Americas software and products revenue was primarily the result of a 6% increase in larger deal transactions revenue driven primarily by an increase in the average dollar amount of larger deal transactions.



?The increase in International software and products revenue was primarily the
result of a 7% increase in larger deal revenue driven by an increase in the
average dollar value of larger deal transactions. Using the average foreign
currency exchange rates from the nine months ended December 31, 2021, our
International software and products revenue would have increased 15% compared to
the nine months ended December 31, 2021.

Our software and products revenue in International is subject to changes in foreign exchange rates as more fully discussed above in the "Foreign Currency Exchange Rates' Impact on Results of Operations" section.

Cost of Revenues and Gross Margin ($ in millions)

[[Image Removed: cvlt-20221231_g19.jpg]][[Image Removed: cvlt-20221231_g20.jpg]][[Image Removed: cvlt-20221231_g21.jpg]] [[Image Removed: cvlt-20221231_g22.jpg]][[Image Removed: cvlt-20221231_g23.jpg]][[Image Removed: cvlt-20221231_g24.jpg]] -Total cost of revenues increased $18.8 million, and represented 17% and 15% of our total revenues for the nine months ended December 31, 2022 and 2021, respectively.

-Cost of software and products revenue increased $0.8 million and represented 4% of our total software and products revenue for both the nine months ended December 31, 2022 and 2021.



-Cost of services revenue increased $18.0 million, representing 29% of our total
services revenue for the nine months ended December 31, 2022 compared to 24% for
the nine months ended December 31, 2021. The increase in cost of services
revenue primarily related to an increase in the cost of infrastructure related
to Metallic as-a-service offering as they continue to scale.


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Operating Expenses ($ in millions)

[[Image Removed: cvlt-20221231_g25.jpg]][[Image Removed: cvlt-20221231_g26.jpg]][[Image Removed: cvlt-20221231_g27.jpg]]

[[Image Removed: cvlt-20221231_g28.jpg]][[Image Removed: cvlt-20221231_g29.jpg]][[Image Removed: cvlt-20221231_g30.jpg]] -Sales and marketing expenses increased $5.1 million, or 2%, primarily due to a $4.7 million increase in stock-based compensation and an increase in travel expenses versus the same period of the prior year.



-Research and development expenses decreased $3.4 million, or 3%, primarily due
to a $1.7 million decrease in stock-based compensation and the completion of
payments related to key employees of Hedvig, Inc., which ended in the fourth
quarter of fiscal 2022. Investing in research and development has been a
priority for Commvault, and we anticipate continued spending related to the
development of our data and information management software applications.

-General and administrative expenses decreased $4.4 million, or 5%, primarily due to the following:

•A decrease in legal costs relative to the same period of the prior year.

•A $1.1 million decrease in stock-based compensation relative to the same time in the prior year.

•Partially offset by an increase in employee compensation and related expenses.



-Restructuring: Our restructuring plan, initiated in the fourth quarter of
fiscal 2022, is aimed to increase efficiency in our sales, marketing and
distribution functions as well as reduce costs across all functional areas. The
plan also included a reorganization to combine our EMEA and APJ field
organizations. Restructuring expenses were $11.4 million and $2.1 million for
the nine months ended December 31, 2022 and 2021, respectively. These
restructuring charges relate primarily to severance and related costs associated
with headcount reductions. These charges include $2.3 million and $0.4 million
of stock-based compensation related to modifications of existing awards granted
to certain employees included in the restructuring for the nine months ended
December 31, 2022 and 2021, respectively. We cannot guarantee the restructuring
program will achieve its intended result. Risks associated with this
restructuring program also include additional unexpected costs, adverse effects
on employee morale and the failure to meet operational and growth targets due to
the loss of key employees, any of which may impair our ability to achieve
anticipated results of operations or otherwise harm our business.

-Depreciation and amortization expense increased $0.5 million, from $7.1 million
in the nine months ended December 31, 2021 to $7.6 million in the nine months
ended December 31, 2022, as a result of the acquisition of an intangible asset
in the fourth quarter of fiscal year 2022.


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Income Tax Expense

Income tax expense was $14.6 million in the nine months ended December 31, 2022
compared to expense of $5.6 million in the nine months ended December 31, 2021.
The increase in income tax expense relative to the prior year relates primarily
to current federal and state taxes driven by the effects of capitalization and
amortization of research and development expenses starting in fiscal year 2023
as required by the 2017 Tax Cuts and Jobs Act. Given we have recorded a
valuation allowance against our deferred tax assets, there is no corresponding
deferred tax benefit related to the current tax expense associated with the
capitalization of research and development expenses.

Liquidity and Capital Resources



As of December 31, 2022, our cash balance was $273.5 million. The amount of cash
and cash equivalents held outside of the United States by our foreign legal
entities was $156.6 million. In recent fiscal years, our principal source of
liquidity has been cash provided by operations. These balances are dispersed
across 35 international locations around the world. We believe that such
dispersion meets the current and anticipated future liquidity needs of our
foreign legal entities. In the event we need to repatriate funds from outside of
the United States, such repatriation would likely be subject to restrictions by
local laws and/or tax consequences including foreign withholding taxes.

On December 13, 2021, we entered into a five-year $100 million senior secured
revolving credit facility (the "Credit Facility") with J.P. Morgan. The Credit
Facility is available for share repurchases, general corporate purposes, and
letters of credit. The Credit Facility contains financial maintenance covenants
including a leverage ratio and interest coverage ratio. The Credit Facility also
contains certain customary events of default which would permit the lender to,
among other things, declare all loans then outstanding to be immediately due and
payable if such default is not cured within applicable grace periods. The Credit
Facility also limits our ability to incur certain additional indebtedness,
create or permit liens on assets, make acquisitions, make investments, loans or
advances, sell or transfer assets, pay dividends or distributions, and engage in
certain transactions with foreign affiliates. Outstanding borrowings under the
Credit Facility accrue interest at an annual rate equal to Secured Overnight
Financing Rate plus 1.25% subject to increases based on our actual leverage. The
unused balance on the Credit Facility is also subject to a 0.25% annual interest
charge subject to increases based on our actual leverage. As of December 31,
2022, there were no borrowings under the Credit Facility and we were in
compliance with all covenants.

On April 21, 2022, the Board of Directors approved a new share repurchase
program of $250.0 million. The Board's authorization has no expiration date. For
the nine months ended December 31, 2022, we have repurchased $90.1 million of
our common stock. As a result, $159.9 million remains available under the
current authorization.

Our summarized cash flow information is as follows (in thousands):

Nine Months Ended December 31,


                                                                           2022                   2021
Net cash provided by operating activities                           $       102,455          $     90,064
Net cash used in investing activities                                        (4,147)               (6,355)
Net cash used in financing activities                                       (80,902)             (242,335)
Effects of exchange rate - changes in cash                                  (11,444)               (4,920)
Net increase (decrease) in cash and cash equivalents                $

5,962 $ (163,546)


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[[Image Removed: cvlt-20221231_g31.jpg]][[Image Removed: cvlt-20221231_g32.jpg]][[Image Removed: cvlt-20221231_g33.jpg]]

-Net cash provided by operating activities was impacted by net income adjusted for the impact of non-cash charges, an increase in accounts receivable and deferred commission costs and a decrease in accrued liabilities.

-Net cash used in investing activities was related to $2.0 million for the purchase of equity securities and $2.2 million of capital expenditures.

-Net cash used in financing activities was the result of $90.1 million of repurchases of common shares partially offset by $9.2 million of proceeds from the exercise of stock options.



Working capital increased $25.5 million from $90.0 million as of March 31, 2022
to $115.5 million as of December 31, 2022. The net increase in working capital
was primarily driven by cash provided by operating activities and was impacted
by the fluctuations in exchange rates on foreign currency balances.

We believe that our existing cash, cash equivalents and our cash from operations
will be sufficient to meet our anticipated cash needs for working capital,
income taxes, capital expenditures and potential stock repurchases for at least
the next twelve months. We may seek additional funding through public or private
financings or other arrangements during this period. Adequate funds may not be
available when needed or may not be available on terms favorable to us, or at
all. If additional funds are raised by issuing equity securities, dilution to
existing stockholders will result. If we raise additional funds by obtaining
loans from third parties, the terms of those financing arrangements may include
negative covenants or other restrictions on our business that could impair our
operational flexibility, and would also require us to fund additional interest
expense. If funding is insufficient at any time in the future, we may be unable
to develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on our business, financial condition and results of
operations.

Off-Balance Sheet Arrangements

As of December 31, 2022, we did not have off-balance sheet financing arrangements, including any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Impact of Recently Issued Accounting Standards

See Note 2 of the notes to the unaudited consolidated financial statements for a discussion of the impact of recently issued accounting standards.

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