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Commvault Systems's (NASDAQ:CVLT) Posts Q2 Sales In Line With Estimates


Petr Huřťák /
2022/11/01 7:50 am EDT
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Data backup provider Commvault (NASDAQ:CVLT) reported results in line with analyst expectations in Q2 FY2023 quarter, with revenue up 5.74% year on year to $188 million. Commvault Systems made a GAAP profit of $4.51 million, improving on its profit of $1.73 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) Q2 FY2023 Highlights:

  • Revenue: $188 million vs analyst estimates of $186.5 million (0.81% beat)
  • EPS (non-GAAP): $0.57 vs analyst estimates of $0.50 (14% beat)
  • Free cash flow of $49.3 million, up 128% from previous quarter
  • Gross Margin (GAAP): 82.8%, down from 85% same quarter last year

"Our fiscal Q2 record results and double-digit constant currency growth reinforce that customers see the value of Commvault's software and SaaS solutions," 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 two years, growing from quarterly revenue of $171.1 million in Q2 FY2021, to $188 million.

Commvault Systems Total Revenue

Commvault Systems's quarterly revenue was only up 5.74% year on year, which might disappoint some shareholders. But the revenue actually decreased again in Q2 by $9.92 million, compared to $7.96 million decrease in Q1 2023. While one-off fluctuations don't always have to be concerning, we have no doubt that shareholders would like to see the revenue rebound soon.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 4.8% 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 173 enterprise customers paying more than $100,000 annually, a decrease of 11 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 Q2 Results

With a market capitalization of $2.72 billion Commvault Systems is among smaller companies, but its more than $262.4 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.

We struggled to find many strong positives in these results. 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 is flat on the results and currently trades at $60.89 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.