The News: Data security and protection vendor Commvault reported year-over-year (YoY) flat revenue of $198.3 million for Q1 2024, but increased subscription and annual recurring revenue (ARR) in double figures. The full earnings release is available on the Commvault website.

Commvault Reports Q1 2024 Flat Revenues but Recurring Revenues Spike

By the Numbers:

$198.3 million in revenue, flat YoY
$686 million in ARR, up 15% YoY
$97.3 million in subscription revenue, up 11% YoY
$500 million in subscription ARR, up 32% YoY
$32.5 million in non-GAAP net income, up from $29.5 million a year ago
$0.072 non-GAAP earnings per share (EPS), up from $0.64 a year ago
Operating cash flow increased 74% YoY to $39.0 million, with free cash flow (FCF) of $37.9 million

Second Quarter Guidance:

Between $193 million and $197 million in total revenue (up 4% at midpoint of guidance)
Between $95 million and $99 in subscription revenues (up 24% at midpoint)

Commvault also reconfirmed previous guidance for the full fiscal year 2024 of:

13% YoY ARR growth
Between $805 million and $815 million in total revenue (compared to $784.6 million last year)
Between $420 million and $430 million in subscription revenue (compared to $348 million last year)
Approximately $170 million in FCF

Commvault Reports Q1 2024 Flat Revenues but SaaS Backup Is Catching On

Analyst Take: While Commvault’s results showed essentially flat year-over-year growth, the backup vendor held its own in a tough macro environment. Commvault met or exceeded its previous guidance across the board, and beat analysts’ expectations in revenue and earnings.

Commvault executives point to ARR and FCF as the primary key performance metrics of its new subscription-based revenue model. ARR is mainly term-based subscription agreements and SaaS contracts, while subscription revenue is the software portion of term-based licenses and SaaS offerings.

Commvault’s Metallic SaaS data protection platform grew 72% YoY in ARR and is approaching 4,000 customers. Metallic has a 118% net dollar retention rate, and 40% of its customers are new to Commvault.

Q2 is expected to look similar, with revenue guidance showing little growth with a significant increase in subscription revenue.

As we note in the Futurum Group research study, ‘Trends in Enterprise Data Protection 2023,’ this move and use of cloud managed services is one of the strongest public cloud use cases for enterprise IT.

On the earnings call, CEO Sanjay Mirchandani said Commvault is looking to help customers simplify their move to hybrid clouds by streamlining data protection software and SaaS approaches. Commvault Complete data protection software and Metallic SaaS protection are separate products but can be managed under a common Cloud Command interface announced in June. Commvault Command Center provides a unified console for managing backup and recovery, file (through Commvault’s Hedvig software), and email archive.

In June, Commvault also added ThreatWise and Risk Analysis to Metallic. ThreatWise scans for corrupted, encrypted files to identify the last-known good recovery point, and Risk Analysis, which uses metadata-based classification to identify sensitive data.

It also moved to simplify Complete management with AI and machine learning (ML) to analyze and automate tasks required to manage routine data operations.

These recent additions address two significant drivers of data management products: cybersecurity and AI/ML.

Commvault faces tough competition in both the backup software and SaaS protection markets, going up against Dell, Veritas, Veeam, Cohesity, Rubrik, and others. Its recent product additions provide it with necessary features to compete, and its recurring revenue increases show the business model it introduced a quarter ago is working.

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:

Cyber-Detection and Recovery Drive Commvault’s Portfolio Strategy

Veeam Enhances Cyber Security and Data Protection in a Multi-Cloud Era

Searching For That Good Restore Point

Author Information

Daniel Newman

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.