Commvault Systems (NASDAQ:CVLT) Q1 Sales Beat Estimates

Jabin Bastian /
2022/07/26 7:54 am EDT
Add to Watchlist

Data backup provider Commvault (NASDAQ:CVLT) reported Q1 FY2023 results topping analyst expectations, with revenue up 7.93% year on year to $197.9 million. Commvault Systems made a GAAP profit of $3.51 million, down on its profit of $13.8 million, in the same quarter last year.

Is now the time to buy Commvault Systems? Access our full analysis of the earnings results here, it's free.

Commvault Systems (CVLT) Q1 FY2023 Highlights:

  • Revenue: $197.9 million vs analyst estimates of $195.2 million (1.41% beat)
  • EPS (non-GAAP): $0.64 vs analyst estimates of $0.63 (1.12% beat)
  • Free cash flow of $21.5 million, down 75% from previous quarter
  • Gross Margin (GAAP): 82.9%, down from 86.2% same quarter last year

"We delivered another quarter of solid results, highlighted by double digit constant currency revenue growth," said Sanjay Mirchandani, President and CEO.

Originally formed in 1988 as part of Bell Labs, Commvault (NASDAQ: CVLT) provides enterprise software used for data backup and recovery, cloud and infrastructure management, retention and compliance.

Data is the lifeblood of the internet and software in general, and the amount of data created is growing at an accelerating pace. Likewise, the importance of storing the data in scalable and efficient formats continues to rise, especially as the diversity of the data and associated use cases expand from analyzing simple, structured data to high-scale processing of unstructured data, images, audio and video.

Sales Growth

As you can see below, Commvault Systems's revenue growth has been unimpressive over the last year, growing from quarterly revenue of $183.4 million, to $197.9 million.

Commvault Systems Total Revenue

Commvault Systems's quarterly revenue was only up 7.93% year on year, which would likely disappoint many shareholders. But the revenue actually decreased by $7.96 million in Q1, compared to $3.56 million increase in Q4 2022. If we take a closer look, we'll observe a similar revenue decline in the same quarter last year, which could suggest the decline is seasonal. However, the management is guiding for a further drop in revenue in the next quarter, so it is definitely worth keeping an eye on the situation.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 6.74% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Large Customers Growth

You can see below that at the end of the quarter Commvault Systems reported 184 enterprise customers paying more than $100,000 annually, a decrease of 42 on last quarter. We have no doubt shareholders would like to see the company regain its sales momentum.

Commvault Systems customers paying more than $100,000 annually

Key Takeaways from Commvault Systems's Q1 Results

With a market capitalization of $2.74 billion Commvault Systems is among smaller companies, but its more than $258.7 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

Commvault Systems topped analysts’ revenue expectations this quarter, even if just narrowly. That feature of these results really stood out as a positive. On the other hand, it was less good to see that the revenue growth was quite weak. Overall, it seems to us that this was a complicated quarter for Commvault Systems. The company currently trades at $61.3 per share.

Commvault Systems may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.