Analyst(s): Krista Case
Publication Date: October 30, 2024
Commvault’s Q2 fiscal 2025 results indicate a transition to a SaaS model, with growth to annual recurring revenue (ARR) and subscription revenue. In response to evolving cyber threats, the company emphasizes multi-hybrid cloud data resilience and protection for identity-based systems, such as Active Directory. Recent acquisitions and ongoing product innovation contribute to Commvault’s position in the hybrid cloud data resilience sector.
What is Covered in this Article:
- Financial highlights and ARR growth in Q2 2025
- Commvault’s evolution into a provider of multi-hybrid cloud cyber resilience
- New ability to protect Active Directory and identity-based security
- Strategic acquisitions enhancing cloud data protection and disaster recovery offerings
- Market positioning for cross-selling and upsell expansion in existing accounts
The News: Commvault’s Q2 fiscal 2025 results indicate a 16% year-to-year increase in revenue, with ARR rising to $853 million, representing a 20% year-over-year growth. Subscription revenue reached $134 million, marking a 37% increase year-to-year.
Commvault projects its total ARR to grow by 18% for the fiscal year, driven by demand for Commvault’s cyber resilience solutions in multi-hybrid cloud environments, which are enhanced by the company’s transition to a SaaS-based model, alongside its acquisitions of Clumio and Appranix. Additionally, there is a focus on Active Directory and identity-based security to address identity-related threats and the need for data protection in multi-cloud settings.
Commvault’s Q2 Earnings – SaaS Evolution Meets Multi-Hybrid Cloud Cyber Resilience
Analyst Take: Commvault’s transition to Software as a Service (SaaS) and cloud-native services marks a notable shift in its operations. Additionally, its recent acquisitions enhance its ability to provide data resilience and disaster recovery services in a market, increasingly prioritizing cloud security and identity protection.
Commvault aims to address a key security concern by targeting Active Directory sec. Identity is often a primary focus for modern cyber-at, and this strategy could improve its cybersecurity offerings, particularly as clients emphasize identity security in multi-cloud environments.
Commvault’s strategy to leverage cross-sell and upsell opportunities within existing accounts reflects an effort to cater to diverse customer needs, ranging from backup-as-a-service to disaster recovery. The company’s Q2 results indicate benefits from its long-term SaaS strategy, as well as its shift toward a more comprehensive approach that embraces enterprise-caliber resiliency for multi-hybrid cloud environments, which The Futurum Group anticipates will facilitate ongoing growth.
Commvault’s Q2 FY2025 Financial Highlights
Commvault reported a revenue of $233.3 million for the quarter, reflecting a 16% increase year-over-year. Its annualized recurring revenue (ARR) reached $853 million, representing a 20% rise compared to the previous year. Subscription revenue grew by 37%, totaling $134 million, and subscription ARR increased by 30%, attributed to demand for Commvault’s SaaS solutions. The company’s operating cash flow was $55.6 million, with free cash flow at $53.7 million. Commvault also conducted a share repurchase program, acquiring approximately 363,000 shares for $51.9 million.
Commvault projects revenues between $243 million and $247 million for the next quarter and has raised its full-year outlook to an expected revenue range of $952 million to $957 million. It anticipates that subscription revenue will fall between $552 million and $557 million. These figures reflect Commvault’s continued strong financial performance and strategic focus on SaaS offerings.
Beyond SaaS: The Move Toward Multi-Hybrid Cloud Cyber Resilience
Commvault’s transition from traditional backup services to a multi-hybrid cloud cyber resilience platform signifies a significant transformation. This shift extends beyond adopting backup-as-a-service and focuses on providing data protection, continuity, and security across hybrid environments. Commvault is capturing cross-sell and upsell opportunities, helping the company to expand within existing customer accounts while attracting new clients.
This evolution positions Commvault to respond to the growing demand for cloud-native and cross-cloud connectivity solutions – as well as the requirements to minimize potential data loss and downtime from cyber-attacks. Specifically, Commvault aligns its offerings with requirements for flexibility and operational continuity.
Emphasis on Active Directory Protection and Identity-Based Security
Commvault has demonstrated an understanding of evolving cyber threats, as evidenced by its recent announcements around protecting Active Directory (AD) systems. Specifically, Commvault’s Cloud Cleanroom capability can be used to restore AD environments. This announcement highlights the challenges associated with securing identity frameworks and addressing identity-based attack vectors that have become more prominent in recent years. As cybersecurity concerns increase, AD has emerged as a target for cybercriminals, making its protection important for enterprise security.
Strategic Acquisitions: Enhancing Cybersecurity and SaaS
Commvault has focused on targeted acquisitions this year, including its April Appranix, Inc. and October Clumio, Inc purchases. These acquisitions have expanded Commvault’s data protection portfolio, enhancing its SaaS, disaster recovery, and business continuity capabilities. The integration of Appranix’s application resilience capabilities and Clumio’s backup-as-a-service technology supports Commvault’s cyber resilience framework by offering comprehensive solutions for data protection.
Clumio is also significant for Commvault’s SaaS and multi-hybrid cloud growth. Clumio’s cloud-native backup and recovery technology specifically is helping to expand Commvault’s footprint in AWS S3 environments, addressing these modern data requirements by providing efficient data protection options.
Revenue Growth Drivers: Expanding Market Presence
Commvault’s revenue growth can be attributed to several key factors. The company emphasizes ARR and subscription-based revenue, as creating a recurring revenue model contributes to financial stability and predictability. The reported 37% growth in subscription revenue and a 30% increase in subscription ARR suggest strong customer adoption of Commvault’s SaaS offerings.
Additionally, Commvault engaged in share repurchases totaling $51.9 million this quarter, indicating a focus on shareholder value. The correlation between subscription growth and operational cash flow reflects Commvault’s capital allocation strategy, which aims to foster innovation while addressing stakeholder interests.
Cyber Resilience and Hybrid Cloud Demand: Trends and Outlook
Commvault is positioned to address the increasing demand for hybrid cloud solutions. As organizations move toward multi-cloud and hybrid infrastructures, they encounter challenges securing and managing data across various platforms. Commvault’s cyber resilience platform offers a solution designed to function in multi-cloud environments.
The company’s outlook indicates potential growth, with projections of 18% ARR growth and 26-28% subscription ARR growth for the full fiscal year. These estimates reflect the company’s alignment with market trends and ability to navigate a changing cybersecurity environment. Commvault’s emphasis on multi-cloud cyber resilience and its ongoing transition to software as a service (SaaS) may provide a basis for future growth and development.
Looking Forward
Commvault’s fiscal 2025 second-quarter results reflect its strategic focus on cyber resilience, SaaS transformation, and innovation centered around customer needs. The company has expanded its subscription-based offerings and maintains a position in hybrid and multi-cloud data protection. Its focus on Active Directory protection and identity-based security addresses evolving cybersecurity requirements.
As Commvault continues to develop its cyber resilience platform, it aims to respond to the increasing demand for comprehensive multi-cloud data protection solutions. This strategy will contribute to revenue growth and customer retention. Commvault’s footing in the cybersecurity and SaaS sectors will continue to expand through its acquisitions, innovation efforts, and understanding of market trends.
What to Watch:
- Competitors including Veeam, Rubrik, and Cohesity are also investing in their SaaS and multi-cloud capabilities to capture market share in the cyber resilience sector.
- Advancements in AI-driven threat detection and response will likely become increasingly integrated within multi-cloud data protection platforms, including Commvault’s solutions.
- Given the onslaught of identity-based attacks, it is likely that competitors will also invest to address Active Directory protection environments.
- Companies’ growing preference for flexible, subscription-based services will not only benefit Commvault’s ARR-driven approach but also increase pressure to innovate in identity-based and multi-cloud security solutions continuously.
See the complete Commvault Q2 FY2025 earnings release on the Commvault website.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
Commvault’s Shift to Cloud-First Resilience: A Strategic Move
Commvault Acquires Clumio to Strengthen AWS Cyber Resilience Capabilities
Rubrik’s Q2 FY2025: Cyber Resiliency Fuels Impressive ARR Growth
Author Information
With a focus on data security, protection, and management, Krista has a particular focus on how these strategies play out in multi-cloud environments. She brings approximately 15 years of experience providing research and advisory services and creating thought leadership content. Her vantage point spans technology and vendor portfolio developments; customer buying behavior trends; and vendor ecosystems, go-to-market positioning, and business models. Her work has appeared in major publications including eWeek, TechTarget and The Register.
Prior to joining The Futurum Group, Krista led the data protection practice for Evaluator Group and the data center practice of analyst firm Technology Business Research. She also created articles, product analyses, and blogs on all things storage and data protection and management for analyst firm Storage Switzerland and led market intelligence initiatives for media company TechTarget.