The directors present the strategic report for the year ended 31 March 2023.
Fair review of the Company's business
The Company derives its primary income from Cloud Data Management and Resiliency solutions. The prevailing trends of Cloud-based workloads, business continuity plans, and stringent data protection regulations contribute to expanding its total addressable market. With global cloud spending projections indicating rapid growth, Druva is strategically poised to capitalize on this trend, driving potential revenue and profit generation.
The Company is on a mission to make data resilient, secure, accessible, and actionable for organizations around the world.
The Druva Group pioneered a revolutionary approach to data resiliency with its purpose-built platform that brings the scalability, elasticity, agility, and simplicity of the public cloud to data protection and management. Unlike legacy, hardware-based solutions, the Druva Data Resiliency Cloud is an at-scale Software-as-a-Service (“SaaS”) platform that enables organizations of all sizes to protect and manage all their data across every application, location, and cloud.
Radical operational simplicity is a cornerstone of the Company’s value proposition. The Druva Group’s autonomous platform can be deployed in as few as 20 minutes and does not require its customers to manage data protection hardware and software. The platform’s cloud-native architecture, on-demand scaling, and automated solutions reduce the total cost of ownership for the Company’s customers and empower developers to build and deploy applications faster.
The Company’s business model
The Company generates substantially all of its revenue through the sale of its cloud-based data protection and management solutions, which it offers as a service via the Druva Data Resiliency Cloud on either a subscription or consumption basis. The Company typically invoices its subscription-based customers annually in advance and the Company recognizes subscription-based revenue ratably over the term of the contract. The Company’s subscription contracts are predominantly non-cancelable with terms of one year or longer. Similarly, the Company typically invoices consumption-based customers annually in advance based on their upfront commitments for volume of data to be protected during the contract term, but it does not recognize consumption-based revenue until actual usage of the solution.
The Company’s transparent pricing with multi-tiered packages is designed to encourage customers to expand their adoption of its platform by providing them with the flexibility to protect growing volumes of data and numbers of users and workloads, as well as offering them access to a broad suite of add-on features and functionalities. For most of the Company’s consumption-based customers, consumption accelerates over the course of the contract term, and many frequently exceed the upfront commitment before the end of the term. When this occurs, the customer typically has the option to amend its existing contract to commit to additional volume for the existing term or to request an early renewal of the contract. When actual consumption during the contract term is less than the upfront commitment, the Company’s consumption-based customers generally have the option to roll over a specified percentage of the unused commitment volume to a future term.
Demand and other concerns
Acknowledging the necessity for constant innovation to meet evolving customer needs and industry standards, the Druva Group remains committed to excellence. The Company takes pride in its high customer satisfaction metrics, boasting a recent Net Promoter Score (“NPS”) of 89 and the Druva Group’s net revenue retention above 100% for the fiscal year ended March 31, 2023. Rigorous market and usability studies guide the Company’s innovation process. The central challenge lies in the Company’s agility to innovate swiftly, aligning with market trends and outpacing competitors.
Factors affecting performance
Acquiring New Customers
The Company’s future growth depends, in part, on new customers adopting its platform. The Company’s ability to acquire new customers will depend on several factors, including its success in recruiting and scaling its sales and marketing organization and competitive dynamics in its industry and target markets. To capitalize on the Company’s market opportunity and industry trends driving increased adoption of cloud-native data protection and management solutions, the Company intends to make significant investments in sales and marketing and the continued development of its platform. The Company expects to grow its direct and partner sales force, focusing on increasing sales to enterprise and mid-market organizations in both its current and new markets. The Druva Group also intends to dedicate additional resources to developing and introducing new features and functionality that enhance the value of its platform.
Expanding Within Existing Customer Base
The Company’s future growth also depends, in part, on the continued success of its land-and-expand strategy. New customers often initially adopt the Company’s platform for a specific use case and thereafter increase their adoption as they realize the benefits and flexibility of its platform, by adding more users, data and workloads as well as additional platform capabilities. The Company has been successful in expanding its existing customers’ adoption of its platform and the Company believes its large base of existing customers represents a significant opportunity to continue to grow its business. The Company plans to continue investing in sales and marketing and platform development to encourage increased adoption by its existing customers and, in particular, its enterprise customers.
The degree of the Company’s success in expanding the adoption of its platform among existing customers depends on several factors, including its customers’ satisfaction with its platform, competition, pricing, overall changes in its customers’ spending levels, the effectiveness of its efforts to help its customers realize the benefits of its platform, and the extent to which customers protect more of their workloads using its platform over time.
Leveraging and Expanding the Partner Network
The Company plans to continue to leverage and expand its industry-leading alliances and strategic reseller relationships, including value-added and corporate resellers, system integrators, partners that white-label its solutions, and managed service providers. The Company believes that increasing channel leverage by investing in sales enablement and co-marketing with its partners will extend and improve its engagement with a broad set of customers. As the Company has expanded its partnerships over time, it has generated an increasing portion of the Company’s revenue, and the continued success in leveraging and expanding its partner network may significantly affect its business and operating results.
Continued Investment in Innovation and Technology Leadership
The Company’s success depends, in part, on its ability to sustain innovation and technology leadership to maintain a competitive advantage. The Druva Group believes that it has built a differentiated data protection and management platform, and it intends to continue to invest in developing and enhancing its features and functionality to further increase and extend the adoption of its platform. Additionally, the Druva Group will continue to evaluate opportunities to acquire or invest in businesses, solutions, technologies or talent that it believes could complement or expand its platform, enhance its technical capabilities or offer growth opportunities.
On behalf of the board
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditor of the company will be put at a General Meeting.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
Druva Europe Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor, 9 Appold Street, London, EC2A 2AP.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Druva Holdings, Inc. These consolidated financial statements are available from its registered office, 2051 Mission College Blvd, Santa Clara, CA 95054.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
The fair value of equity-settled share based payments to employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period based on the company’s estimate of shares or options that will eventually vest.
The directors believe that the costs of issuing options is not material and therefore no costs have been recognised.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Tax losses available to the group total £8,730,972 (2022 - £9,413,281). A deferred tax asset has not been recognised on these losses on the basis that profits are not certain.
Deferred income is included in the financial statements as follows:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company has taken advantage of the exemption available within FRS 102 Section 33 not to disclose transactions with wholly owned companies within the group.
The immediate parent company is Druva Singapore Pte. Ltd, a company incorporated in Singapore, and ultimate controlling party is Druva Holdings Inc, a company incorporated in the United States of America and registered at 800 W. California Avenue, Suite 100, Sunnyvale, CA 94086. Druva Holdings Inc, is the only group of undertakings for which group accounts are drawn up. These accounts are available from its registered office.