Commvault Systems (NASDAQ:CVLT) Surprises With Strong Q1, Growth To Accelerate Next Year

Adam Hejl /
2024/04/30 7:51 am EDT

Data backup provider Commvault (NASDAQ:CVLT) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 9.7% year on year to $223.3 million. Guidance for next quarter's revenue was also better than expected at $214.5 million at the midpoint, 1.9% above analysts' estimates. It made a non-GAAP profit of $0.79 per share, improving from its profit of $0.73 per share in the same quarter last year.

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Commvault Systems (CVLT) Q1 CY2024 Highlights:

  • Revenue: $223.3 million vs analyst estimates of $212.5 million (5.1% beat)
  • EPS (non-GAAP): $0.79 vs analyst estimates of $0.73 (8.2% beat)
  • Revenue Guidance for Q2 CY2024 is $214.5 million at the midpoint, above analyst estimates of $210.5 million
  • Management's revenue guidance for the upcoming financial year 2025 is $909 million at the midpoint, beating analyst estimates by 3.1% and implying 8.3% growth (vs 7% in FY2024)
  • Management's operating margin (non-GAAP) guidance for the upcoming financial year 2025 is 20.5% million at the midpoint, below analyst estimates of 21.6%
  • Gross Margin (GAAP): 82.5%, in line with the same quarter last year
  • Free Cash Flow of $79.13 million, up 85.6% from the previous quarter
  • Market Capitalization: $4.34 billion

"We had an outstanding quarter and a breakout year, highlighted by 10% total revenue growth and 15% total ARR growth in the fourth quarter," 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 three years, growing from $191.3 million in Q4 2021 to $223.3 million this quarter.

Commvault Systems Total Revenue

Commvault Systems's quarterly revenue was only up 9.7% year on year, which might disappoint some shareholders. Additionally, its growth did slow down compared to last quarter as the company's revenue increased by just $6.48 million in Q1 compared to $15.81 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that Commvault Systems is expecting revenue to grow 8.3% year on year to $214.5 million, improving on the 0.1% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $909 million at the midpoint, growing 8.3% year on year compared to the 7% increase in FY2024.

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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 $79.13 million in Q1, up 18.5% year on year.

Commvault Systems Free Cash Flow

Commvault Systems has generated $199.7 million in free cash flow over the last 12 months, an impressive 23.8% 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 Q1 Results

We were impressed by how strongly Commvault Systems blew past analysts' billings expectations this quarter. We were also glad next year's revenue guidance implies robust growth and is above expectations. The only negative was that next year's operating margin guidance came in below expectations. Zooming out, we think this was still a solid quarter that shareholders will appreciate. The stock is up 3.5% after reporting and currently trades at $103 per share.

Commvault Systems may have had a good quarter, but does that mean you should invest 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.