Commvault Systems (NASDAQ:CVLT) Surprises With Q3 Sales, Provides Optimistic Full-Year Guidance

Kayode Omotosho /
2024/01/30 7:49 am EST

Data backup provider Commvault (NASDAQ:CVLT) reported results ahead of analysts' expectations in Q3 FY2024, with revenue up 11.1% year on year to $216.8 million. The company also expects next quarter's revenue to be around $212 million, slightly above analysts' estimates. It made a non-GAAP profit of $0.78 per share, improving from its profit of $0.62 per share in the same quarter last year.

Is now the time to buy Commvault Systems? Find out by accessing our full research report, it's free.

Commvault Systems (CVLT) Q3 FY2024 Highlights:

  • Market Capitalization: $3.57 billion
  • Revenue: $216.8 million vs analyst estimates of $208.1 million (4.2% beat)
  • EPS (non-GAAP): $0.78 vs analyst estimates of $0.73 (6.7% beat)
  • Revenue Guidance for Q4 2024 is $212 million at the midpoint, above analyst estimates of $210.2 million
  • Free Cash Flow of $42.63 million, similar to the previous quarter
  • Gross Margin (GAAP): 82%, in line with the same quarter last year

"This was one of the strongest quarters in our history with double digit ARR and revenue growth, and robust free cash flow generation," 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 Storage

Data is the lifeblood of the internet and software in general, and the amount of data created is accelerating. As a result, the importance of storing the data in scalable and efficient formats continues to rise, especially as its diversity and associated use cases expand from analyzing simple, structured datasets to high-scale processing of unstructured data such as images, audio, and video.

Sales Growth

As you can see below, Commvault Systems's revenue growth has been unimpressive over the last two years, growing from $202.4 million in Q3 FY2022 to $216.8 million this quarter.

Commvault Systems Total Revenue

This quarter, Commvault Systems's quarterly revenue was up 11.1% year on year, above the company's historical trend. We can see that Commvault Systems's revenue increased by $15.81 million quarter on quarter, which is a solid improvement from the $2.85 million increase in Q2 2024. Shareholders should applaud the re-acceleration of growth.

Next quarter's guidance suggests that Commvault Systems is expecting revenue to grow 4.2% year on year to $212 million, improving on the 1.2% year-on-year decline it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 3.7% over the next 12 months before the earnings results announcement.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Commvault Systems's free cash flow came in at $42.63 million in Q3, up 45.1% year on year.

Commvault Systems Free Cash Flow

Commvault Systems has generated $187.4 million in free cash flow over the last 12 months, an impressive 22.9% of revenue. This high FCF margin stems from its asset-lite business model and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a cash cushion.

Key Takeaways from Commvault Systems's Q3 Results

It was good to see Commvault Systems beat analysts' revenue expectations this quarter. We were also glad its full-year revenue guidance came in higher than Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $81.98 per share.

So should you invest in Commvault Systems right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research 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 50% year on year and best-in-class SaaS metrics it should definitely be on your radar.