The News: Commvault’s fiscal 2024 fourth quarter (Q4) and full-year earnings beat its guidance range, continuing to be fueled by its software as a service (SaaS) business and its investments in cyber-resiliency. More detail is available from Commvault.
By the numbers:
Commvault’s revenue for Q4, ending March 31, 2024, grew 10% year-over-year (YoY) to $223.3 million, exceeding its guidance range of $210-$214 million. For the full fiscal year, revenue was up 7% YoY to $839.2 million, exceeding its guidance range of $826-$830 million.
Cyber-Resiliency Will Fuel Commvault’s Drive to Fiscal 2026 Goals
Analyst Take: Top-line growth remained fueled by the company’s transition to a subscription-led model, with subscription revenue growing 27% YoY to $119.9 million for the quarter, surpassing half of overall revenue, as noted by Commvault CFO Gary Merrill, and 23% YoY to $429.2 million for the year. This transition is supported by Commvault’s lean into adding SaaS delivery, which began in October 2019 with the launch of its Metallic arm (which has since been broadened to also encompass Commvault’s artificial intelligence [AI] initiatives).
Compared with peers, Commvault was early and planted a firm stake in SaaS delivery—but, as noted multiple times on its earnings call by CEO Sanjay Mirchandani, it has done so without abandoning more traditional on-premises hosting. This approach is a smart move, as for most customers, going all-in on SaaS is not feasible for a variety of reasons. This balanced approach helped Commvault to close its fiscal 2024 with SaaS annual recurring revenue (ARR) growing 65% YoY to $168 million for Q4, and counting 5,000 of its 9,300 subscription customers (which were up 26% YoY) as SaaS customers.
Looking ahead, Commvault announced aspirations to achieve $1 billion in ARR in its full fiscal year 2026, 90% of which it expects to come from subscriptions. Double-clicking on cloud, it is driving toward a goal of $310-$320 million in SaaS ARR over that time period, which would reflect 30% of total ARR. I noted a small dip in SaaS net dollar retention rate, from 125% in Q4 2023 to 123%. With Commvault’s emphasis on packaging complete offerings for cyber-resilience, as emphasized at its Shift event in November 2023, I expect this figure to stabilize and experience an uptick moving forward on the back of cross-sell and upsell opportunities. Merrill also noted that the cadence of subscription renewals are expected to remain healthy though normalize moving forward.
Looking Ahead: The Cyber-Resiliency Play
Commvault’s ability to hit its growth projections hinges on its ability to evolve from its roots in data recoverability into the broader cyber-resiliency play it is pursuing. Mirchandani painted a compelling vision of using the Commvault Cloud cyber resilience platform to perform autonomous, AI-enhanced recovery at scale, proactive health checks, and detection of anomalous behavior and threats. Of course, this will take a “walk, crawl, run” approach, whereby customers will need to build trust in the capabilities.
Two recent announcements from Commvault support this vision. First is the expansion of Commvault’s Cleanroom Recovery offering to its SaaS customers. Along the vein of building confidence, the initial use case will be using the cleanroom functionality to allow customers to test cyber-recovery operations at scale. The Futurum Group has touted the value of recovery testing at scale for years now, as the amount of business downtime and data loss that can be tolerated diminish and as attacks continue to grow more sophisticated.
Second is the acquisition of Appranix, which was announced on April 16 and separately covered by The Futurum Group. Appranix brings Commvault into the realm of not only recovering data but also being able to rebuild entire cloud applications—and doing so in minutes or hours, not days or weeks, according to Commvault.
The two announcements demonstrate the balance of risk readiness and reliable recoverability that Commvault is aiming to strike. From that standpoint, it addresses the growing collaboration between the CISO and CIO that I am seeing and that Mirchandani mentioned on the company’s earnings call. Perimeter-based security approaches are no longer sufficient, as cyberattackers are inventive and grow increasingly sophisticated in how they target data. In addition to investments such as the cleanroom capability and Appranix acquisition, Commvault is collaborating with partners such as Palo Alto to round out its approach.
As a final comment, Commvault’s cyber-resiliency narrative continues to be rounded out by its ability to protect any workload and to recover from anywhere, to anywhere. Adoption of hybrid cloud is splintering data environments, and introducing additional tools to already fragmented data protection implementations, as uncovered in joint research that The Futurum Group executed with Commvault.
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 Substantially Beats Fiscal 2024 Q3 Earnings Expectations
Commvault Acquires Appranix to Bolster Cyber-Resiliency
Commvault Cloud, Powered by Metallic AI, Accelerates Cyber-Resilience
Author Information
Krista Case brings over 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.
