The Six Five team discusses Commvault Q4/FY24 earnings.
If you are interested in watching the full episode you can check it out here.
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: Commvault.
So the last few weeks, this is a company that probably doesn’t get as much attention as maybe it should get, but with Rubrik’s recent IPO, Cohesity’s recent announcement of making a huge deal with Veritas. Data protection’s hot. Data protection and access to data, security, cybersecurity, cyber resilience as a lot of people are calling it is a hot topic. We saw a blow out IPO from Bipul Sinha and his team at Rubrik, and we’re starting to see a lot of interest. Commvault’s basically got their investment thesis they put into the market. But in case you’re not paying attention, while AI is the red hot attention grabber, cyber resilience spending, the estimate right now is growing by about 78% right now.
So the company basically says there’s a big opportunity in data protection and cyber resilience and they’re here to grab it. And where are they grabbing it? Well, they’re growing everywhere. I mean, that’s the amazing thing about it, Pat. This is a company that’s gone to it from a licensing to a subscription to a SaaS model. They’re growing ARR. They had a subscription revenue growth Pat on a year-over-year basis to 27%. They saw their total ARR grow by 18%, their subscriptions by 25%. And Pat, here’s the killer number. Their SaaS ARR number grew by 65%. People like companies with high durability, high predictable revenue. And that’s where Commvault has moved. And again, moving from a pure data protection to more of a cyber resilience play.
They also saw great customer growth. They grew in quarter to quarter, they added 500 new customers, 9,300 overall. And Pat, they’re getting nice net dollar retention. So they’re basically getting each customer to spend more. They’re up 123% in the quarter on that net dollar net revenue expansion. Pat, this is a company, this is a space that I think is going to continue to grow. As AI grows, risk grows, data protection becomes a bigger opportunity. We’re seeing what Cohesity is doing with RAG. We’re seeing different companies coming out with different plays about how they’re approaching AI and access to the data. There’s different layers of where data accessibility is going to be really important.
And then companies are going to be looking at the speed of recovery, the security levels, the intelligence that’s available, and of course which solution offers the best TCO. Commvault believes that it offers the best TCO. And of course the others would probably tell you the same thing. But strength of growth, strength of ARR, strength of customers, and net revenue expansion were all very, very positive here, Pat. And so I think Commvault is setting up to become much, much more interesting and a company I expect us to talk more about here on the show.
Patrick Moorhead: Yeah, Commvault was one of the original pure plays in backup. And then we saw them move from backup to data resiliency and security. And we’re obviously going to see them very much move into the AI space, which they’ve had a few very interesting announcements out there with Alloy. The most interesting thing is this is a very profitable company and the profits keep going up as opposed to, I think what we saw with Rubrik, which was it’s very much not a profitable company. Being one of the early folks has its benefits and challenges. The benefit is that you have a very large customer set. You have the trust of certain customers and then you can start layering on … Don’t yawn when I’m talking, Dan.
Daniel Newman: So boring.
Patrick Moorhead: It’s not that bad.
Daniel Newman: I’m kidding. I’m kidding. It’s just, anyway, go ahead.
Patrick Moorhead: Okay. But the challenge is that you have to kind of come out and recast yourself as a company. And that’s exactly what the team at Commvault has done with a lot of branding, with a lot of marketing. But it was that type of just marketing without delivering the goods, it would be very different. And like you so suitably said, if you look at the subscription revenue curve, if you look at total ARR on a dollar basis, it is pretty exceptional subscription ARR, SaaS ARR is exceptional. And it looks like the pipeline keeps going on the subs because customer growth has gone from literally 5,600 in the first quarter to 9,300 customers in the fourth quarter. And you don’t know how big those customers are, but when you have nearly every one of your key metrics going up into the right, is a big deal.
Overall the market’s super frothy. Two things going on. Ransomware and the sophistication of hackers and the risk that puts your data at. You’ve got the fractalization of data across on-prem, edge, private cloud, public cloud, and SaaS. So everything just keeps fractalizing. And whenever you fractalize anything, securing it is much more difficult. Next generation for all these companies is being able to put some sort of data analytics on top of it and query it like we’ve seen with the Cohesity. That I think is the holy grail and quite frankly, could move the company’s multiples to AI level multiples if they can make that turn. And here’s the thesis, right? The data is sitting there and the data is mixed, right? You have ERP. You have CX. You have Custard. It’s sitting right there. You have emails. Why not put that data to work with generative AI to be able to query that? So I look forward to researching Commvault more and doing more comparisons to their competitors.
Daniel Newman: Yeah, it’s going to be an interesting category, Pat, something to watch really, really closely is this whole space.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
