Commvault CFO: ‘Our Space Can Drive Growth Because Of Its Importance’

‘For us, it’s about being focused on executing where there’s high demand in IT spend. And recovery, resilience, cyber, AI are the areas where companies are still spending, and that’s where we play,’ says Commvault CFO Gary Merrill.

Growth in Commvault’s subscription business led to the data protection technology developer’s overall growth for fiscal 2024.

Gary Merrill, CFO of the Tinton Falls, N.J.-based company, told CRN in an exclusive interview that Commvault had another double-digit revenue growth year from a headline perspective, with fourth fiscal quarter revenue growing by 10 percent to reach an all-time high of $223 million.

“We’re getting that momentum back into our business, and we’re celebrating growth,” Merrill said. “Commvault’s focus on our new [Cleanroom Recovery] cyber resilience platform and related messaging is really resonating in the market. It’s also execution of our field selling teams as well.”

Commvault’s SaaS annualized recurring revenue for its fourth fiscal quarter 2023 is now $168 million, which is up 65 percent over last year, and the company now has 5,000 SaaS customers, Merrill said.

“We’re building an amazing SaaS engine with really some amazing results over the past couple years,” he said. “And it wasn’t that long ago that we were only at $100 million. Now we’re up to $168 million. We’re really pleased with the momentum we’ve seen in the business.”

Commvault’s share price Tuesday rose by $3.04 per share, or 3.1 percent, to $102.47 per share by the end of the trading day.

Looking Ahead

Looking ahead, Commvault is expecting fiscal 2025 revenue to grow 8 percent, which is above the 7 percent growth it experienced in fiscal 2024, Merrill said.

“We’re accelerating revenue growth,” he said. “And we do it responsibly. We generated free cash flows for the year of $200 million. So we’re not only accelerating growth, but we’re also doing it with responsible growth. And we’ll continue to have that operating model, balancing the bottom-line ability to generate earnings for our shareholders, which is important for them, as well as accelerate the top line.”

For fiscal 2025, cyber resilience and data recovery will remain a spending priority for businesses, Merrill said.

“Our results and even what’s happening in our industry with things like the Rubrik IPO is validating that our space can drive growth because of its importance,” he said. “There’s interest rate sensitivity that everybody has to be aware of. Higher interest [rates] may mean maybe shorter-term deals and customers may not commit for as many years as they used to. But we’re managing through that through the near term by driving more customer growth and bigger deals with our installed base. For us, it’s about being focused on executing where there’s high demand in IT spend. And recovery, resilience, cyber, AI are the areas where companies are still spending, and that's where we play.”

The AI boom is also creating a major industry wave that is helping companies like Commvault, said Alan Atkinson, the company’s chief partner officer.

“As you see additional server spend, as you see additional investment into storage to build out labs and that whole, I don't want to call it ‘hype’ because I think it’s actually not hype,” Atkinson said. “I think there’s actually a lot of ‘there’ there. I think it’s having a very positive ripple effect on the industry as a whole.”

That very much includes Commvault, Atkinson said.

“We’re part of that,” he said. “I'm not going to specifically tie anything to that. But I think as you get more infrastructure and more servers and more data and more storage, yes, it affects us all. So from a personal point of view, and I don’t have a crystal ball, I’m optimistic about IT in general.”

Commvault By The Numbers

For its fiscal fourth quarter 2024 ended March 31, Commvault reported revenue of $223.3 million, up 10 percent from the $203.5 million the company reported for its fourth fiscal quarter 2023.

That included subscription revenue of $119.9 million, up from $94.5 million; perpetual license revenue of $15.2 million, down from $17.6 million; customer support revenue of $77.0 million, down slightly from $77.3 million; and other services revenue of $11.2 million, down from $14.0 million.

Revenue for the Americas reached $131.1 million, up 7 percent over last year.

Total annualized recurring revenue (ARR) for the quarter reached $769.9 million, up from last year’s $668.4 million, while subscription ARR reached $596.7 million, up from $477.1 million.

Commvault also reported GAAP net income for the quarter of $126.1 million, or $2.81 per share, much better than the net loss the company reported for the same period last year of $43.5 million, or 98 cents per share. On a non-GAAP basis, the company reported net income of $35.3 million, or 79 cents per share. That beat analysts’ expectations by 6 cents per share, according to Seeking Alpha.

For all of fiscal 2024, Commvault reported revenue of $839.2 million, up 7 percent over the $784.6 million the company reported for fiscal 2023.

That included subscription revenue of $429.2 million, up 23 percent; perpetual license revenue of $57.6 million, down 23 percent; customer support revenue of $307.8 million, down 2 percent; and other services revenue of $44.7 million, down 6 percent.

Revenue for the Americas grew 6 percent over the prior year to reach $498.5 million.

Commvault also reported GAAP net income for the year of $168.9 million, or $3.75 per share, significantly improved over the net loss of $35.7 million, or 80 cents per share, the company reported last year. On a non-GAAP basis, the company reported net income of $134.4 million, or $2.98 per share.

Looking ahead, Commvault expects first fiscal quarter 2025 total revenue to be between $213 million and $216 million, and subscription revenue to be between $116 million and $119 million.

For all of fiscal 2025, Commvault expects total revenue to be between $904 million and $914 million, with total ARR expected to grow 14 percent year over year. Subscription revenue is expected to be between $514 million and $518 million, while subscription ARR is expected to grow between 21 percent and 23 percent.