Shares of Commvault Systems Inc. closed nearly 23% higher today after it reported quarterly results that topped the consensus estimate across the board.
The company also shared an upgraded revenue forecast for its current fiscal year, which will end next April.
Tinton Falls, New Jersey-based Commvault is a major provider of data protection technology. It sells software-as-a-service tools for backing up information stored in the public cloud, on-premises environments and applications such as Microsoft 365. Commvault also enables customers to quickly restore backed up files when the original copy becomes unavailable.
One of the newest additions to the company’s SaaS portfolio, Cleanroom Recovery, debuted in late April shortly before its previous earnings report. The offering provides an isolated cloud environment in which enterprises can restore their backed up data after a ransomware attack. Additionally, Cleanroom Recovery can be used to test the effectiveness of a company’s data recovery procedures.
Commvault provides its SaaS applications alongside a number of other products. One of those offerings is an on-premises storage appliance called HyperScale X. According to the company, the system lends itself to tasks such as holding backup copies of the data in a company’s cloud environment.
Strong product demand boosted Commvault’s revenue to $224.7 million in the first quarter, a 13% improvement from the same time a year earlier. Analysts surveyed by Zacks had expected about $10 million less. The main contributor to the company’s sales momentum was its subscription business, which grew 28% year-over-year to $124.1 million.
Commvault generates subscription revenue from two main sources: its SaaS applications and term-based licenses. Those are software licenses that aren’t perpetual but must rather be renewed by customers at set time intervals, which means they provide recurring revenue. The SaaS business is the faster-growing of the two segments, with Commvault disclosing that the annual recurring revenue of its subscription-based cloud applications jumped 66% in the first quarter.
Some of that growth came from existing customers. Commvault says that its SaaS products’ net dollar retention rate, a metric used to track existing customers’ spending, stood at 127% as of June 30. A net dollar retention rate above 100% indicates that users are increasing their spending.
“Our ability to empower customers globally, to regularly test their readiness and quickly recover their data and applications is not only a differentiator, but enabled Commvault to start the fiscal year strong,” said Commvault Chief Executive Officer Sanjay Mirchandani (pictured).
Commvault’s strong top line had a positive effect on its profitability. The company closed the first quarter with adjusted EBIT, or earnings before interest and taxes, of $48.3 million, which translated into adjusted earnings per share of $0.85. That’s 13 cents higher than a year earlier and 10 cents ahead of the Zacks consensus estimate.
For the full fiscal year, the company is projecting sales of between $915 million and $925 million. That’s up from the $904 million to $914 million it had expected previously. At the midpoint of the range, the upgraded revenue guidance forecasts 9.5% revenue growth for Commvault’s 2025 fiscal year.