EPS of $0.41 increased by 44.8% from previous year
Gross margin of 82.3%
Net income of 18.53M
""In Q1, we had more conversations with CISOs and CIOs than ever before... contributing to our rapid results and setting the stage for continued momentum through the fiscal year."" - Sanjay Mirchandani
Commvault Systems Inc (CVLT) Q1 2025 Financial Results: Strong Growth in Subscription Services and Cyber Resilience
Executive Summary
Commvault Systems Inc (CVLT) had a compelling start to fiscal year 2025, recording total revenue of $225 million, which represents a 13% year-over-year increase from Q1 2024. The increase was largely fueled by a robust performance in subscription services, particularly within its Software-as-a-Service (SaaS) segment, which surged 66% to reach $188 million. The momentum is reinforced by the company’s strategic initiatives in cyber resilience, positioning Commvault as a key player in the growing demand for data protection solutions amid increasing cybersecurity threats. Management highlighted a strong outlook for Q2 and the full fiscal year, projecting continued revenue growth with an emphasis on sustaining its leadership in the cloud services sector.
Key Performance Indicators
Revenue
224.67M
QoQ: 0.62% | YoY:13.38%
Gross Profit
184.88M
82.29% margin
QoQ: 0.40% | YoY:13.70%
Operating Income
18.43M
QoQ: -18.96% | YoY:-0.28%
Net Income
18.53M
QoQ: -85.31% | YoY:46.70%
EPS
0.42
QoQ: -85.47% | YoY:44.83%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $225 million (up 13% YoY)
**Gross Profit**: $184.9 million (Gross margin: 82.29%)
**Operating Income**: $18.4 million
**Net Income**: $18.5 million (up 46.7% YoY)
**EPS**: $0.42 (up 44.83% YoY)
Financial Highlights
### Financial Metrics (Q1 2025)
- Revenue: $225 million (up 13% YoY)
- Gross Profit: $184.9 million (Gross margin: 82.29%)
- Operating Income: $18.4 million
- Net Income: $18.5 million (up 46.7% YoY)
- EPS: $0.42 (up 44.83% YoY)
- Total Assets: $934.9 million
- Cash & Cash Equivalents: $287.9 million
- Free Cash Flow: $43.8 million (up 16% YoY)
Analysis of Key Changes:
1. Revenue growth largely derives from a 28% increase in subscription revenue, which accounted for over 55% of total revenue, indicating a transition towards recurring revenue streams.
2. Net income rose significantly despite a sequential decline in quarterly net income, highlighting a strong operational control amidst increased investments in growth initiatives.
3. Total Annual Recurring Revenue (ARR) reached $803 million, reflecting a 17% rise, driven by significant customer adoption of new cybersecurity solutions and hybrid cloud offerings.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
224.67M
13.38%
0.62%
Gross Profit
184.88M
13.70%
0.40%
Operating Income
18.43M
-0.28%
-18.96%
Net Income
18.53M
46.70%
-85.31%
EPS
0.42
44.83%
-85.47%
Key Financial Ratios
currentRatio
1.23
grossProfitMargin
82.3%
operatingProfitMargin
8.2%
netProfitMargin
8.25%
returnOnAssets
1.98%
returnOnEquity
6.57%
debtEquityRatio
0.04
operatingCashFlowPerShare
$1.02
freeCashFlowPerShare
$1
priceToBookRatio
18.86
priceEarningsRatio
71.72
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Key Insights from Management: Growth Strategy:
- CEO Sanjay Mirchandani emphasized the company’s commitment to its cybersecurity offerings: "We are rapidly becoming an integral part of the security conversation... The need for resilience is paramount."
- The introduction of innovative solutions such as the Cleanroom Recovery offering allows customers to test their cyber recovery plans regularly, differentiating Commvault in the market.
Operational Excellence:
- Danielle Sheer, COO, noted, "We reached a key inflection point where customer support revenue derived from term software now exceeds 50% of total support revenue."
- The strong performance in both the Americas and international markets points to a balanced and strategic geographic expansion.
"In Q1, we had more conversations with CISOs and CIOs than ever before... contributing to our rapid results and setting the stage for continued momentum through the fiscal year."
— Sanjay Mirchandani
"We help our customers navigate these challenges in three critical areas: risk, readiness and recovery... that’s where our product innovations are focused."
— Sanjay Mirchandani
Forward Guidance
Commvault expects to continue this upward trend, predicting total subscription revenue of $522 million to $527 million for fiscal year 2025, reflecting an expected 22% YoY growth. Management indicated confidence in achieving total ARR of $1 billion by fiscal 2026, fueled by the anticipated acceleration in SaaS contributions and ongoing demand for cyber resilience solutions. Investors should closely monitor the development and market adoption of new products in the cyber resilience category and their impact on customer retention and revenue growth.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CVLT Focus
82.29%
8.20%
6.57%
71.72%
ENV
98.50%
2.68%
0.43%
312.80%
MANH
53.10%
22.60%
22.50%
70.92%
AGYS
61.10%
9.05%
5.55%
49.74%
AZPN
55.80%
-44.50%
-0.47%
-62.45%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Commvault Systems Inc presents a compelling investment opportunity with strong growth in subscription revenue and a robust balance sheet facilitating further strategic initiatives. Investors should watch how the company leverages its innovative products to capitalize on growing cybersecurity demands and whether it can sustain its growth trajectory against competitive pressures in the technology sector. With a continued focus on enhancing customer relationships and product offerings, Commvault is well-positioned for long-term success.
Key Investment Factors
Growth Potential
Strong: Increasing market demand for cybersecurity solutions and cloud services positioned to drive substantial ARR growth. Subscription model creating stable revenue streams.
Profitability Risk
Moderate: Risks related to economic factors that may impact IT spending; competitive pressures from other software and cloud service providers; dependence on new product uptake in a rapidly evolving technology landscape.
Financial Position
Strong: Healthy balance sheet with no debt, significant cash reserves providing flexibility for investments and share repurchases.
SWOT Analysis
Strengths
Strong subscription revenue growth indicating transition to recurring revenue model.
Leader in cyber resilience products as highlighted by significant increase in IT security partnerships and offerings.
Weaknesses
Dependency on the US market and government spending which can be volatile.
Limited reach in some international markets compared to competitors.
Opportunities
Growing demand for cloud-based data protection and recovery solutions.
Expansion in government contracts, particularly post-FedRAMP High authorization.
Threats
Intense competition from other software providers like Dell and Veritas.