Commvault Systems (NASDAQ:CVLT) Surprises With Q4 Sales

Radek Strnad /
2022/05/03 7:57 am EDT

Data backup provider Commvault (NASDAQ:CVLT) reported Q4 FY2022 results topping analyst expectations, with revenue up 7.63% year on year to $205.9 million. Commvault Systems made a GAAP profit of $7.98 million, improving on its profit of $6.26 million, in the same quarter last year.

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Commvault Systems (CVLT) Q4 FY2022 Highlights:

  • Revenue: $205.9 million vs analyst estimates of $201.9 million (1.96% beat)
  • EPS (non-GAAP): $0.75 vs analyst estimates of $0.64 (18.1% beat)
  • Free cash flow of $86.5 million, up from $25.4 million in previous quarter
  • Customers: 226 customers paying more than $100,000 annually
  • Gross Margin (GAAP): 84.4%, in line with same quarter last year

"We are pleased to have delivered another record quarter to cap off the best year in our history," 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 $191.3 million, to $205.9 million.

Commvault Systems Total Revenue

Commvault Systems's quarterly revenue was only up 7.63% year on year, which would likely disappoint many shareholders. But the growth did slow down compared to last quarter, as the revenue increased by just $3.56 million in Q4, compared to $24.5 million in Q3 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

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Large Customers Growth

You can see below that at the end of the quarter Commvault Systems reported 226 enterprise customers paying more than $100,000 annually, an increase of 1 on last quarter. That is a bit less contract wins than last quarter and also below what we have typically seen over the past couple of quarters, suggesting that the sales momentum with large customers is slowing down.

Commvault Systems customers paying more than $100,000 annually

Key Takeaways from Commvault Systems's Q4 Results

With a market capitalization of $2.7 billion Commvault Systems is among smaller companies, but its more than $267.5 million in cash and positive free cash flow over the last twelve months give us confidence that Commvault Systems has the resources it needs to pursue a high growth business strategy.

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, this quarter's results could have been better. The company is flat on the results and currently trades at $60.72 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.

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