Commvault Systems, Inc. FY 2025 10-K Review: Cyber Resilience at Scale

Decoding the key takeaways from Commvault’s FY25 annual report—growth, profitability, cash flow and strategic outlook.

Investment Score: 7.5/10
Net Income (FY25): $76.1 million

Warren.AI 💰 7.5 / 10

Ticker: CVLT | Exchange: NASDAQ

Contents

1. Executive Summary
2. Business & Strategy
3. Product & Services Portfolio
4. Go-to-Market Model & Partnerships
5. Key Financial Highlights
6. Margin & Profitability Analysis
7. Cash Flow & Balance Sheet Strength
8. M&A and Capital Allocation
9. Risk Factors & Competitive Landscape
10. Valuation & Investment Thesis

11. Conclusion

1. Executive Summary

Commvault Systems, Inc. delivers enterprise cyber-resilience solutions with a focus on data protection, recovery and compliance across on-prem, hybrid and multi-cloud environments. FY25 was a strong year of recurring revenue growth (+37% subscription), stable gross margins (82%) and robust free cash flow ($203 M). Continued investment in R&D (15% of revenue), go-to-market execution and targeted M&A (Appranix, Clumio) positions Commvault to defend and expand market share.

Score: 7.5/10 • Solid financial foundation • High-growth SaaS transition • Competitive pressures remain high • Channel concentration risk

2. Business & Strategy

Mission: Provide enterprise cyber-resiliency via comprehensive data protection, rapid recovery and compliance across all environments.
Corporate Structure:
• Founded in 1996; HQ in Tinton Falls, NJ (assets held for sale)
• 3,300 global employees (63% offshore)
Strategic Pillars:

1. Transition to subscription & SaaS (Commvault Cloud).
2. Expand cloud-native capabilities & automation.
3. Deepen channel partnerships & hyperscaler marketplaces.
4. Selective M&A to enhance portfolio & talent.

5. Maintain margin discipline & healthy free cash flow.

3. Product & Services Portfolio

A. Commvault Cloud Packages

1. Operational Recovery
   – Hybrid enterprise backup & recovery. – Delivery: self-managed software, SaaS or hybrid.
2. Autonomous Recovery
   – Automated failover & disaster recovery orchestration. – Verifiable replicas & business continuity.
3. Cyber Recovery
   – Threat scanning, clean-copy isolation & deception. – Rapid, validated recoveries at scale.

B. Specialty & Add-On Offerings

– Cleanroom Recovery: On-demand recovery environments in the cloud.
– HyperScale X: Integrated scale-out appliance reference architecture.
– AirGap Protect: Cloud-based, immutable backup target.
– Compliance: Built-in data governance, auditing & immutability.
– Cloud Rewind: Automated cloud application rebuild & recovery.
– Clumio Backtrack: Point-in-time rollback for S3 objects.

C. Services & Support

• 24/7 global support, enhanced by AI assistant (Arlie).
• Customer Success & Enterprise Success Programs.
• Technology consulting, professional services & training.

• Managed security & recovery operations.

4. Go-to-Market Model & Partnerships

Sales Channels
– Direct: internal field teams in Americas & International. – Indirect: Resellers, Systems Integrators, OEMs & Arrow distribution (35% of rev). – Cloud Marketplaces: AWS, Azure, Google, Oracle.
Hyperscaler Alliances
– Native integrations & co-selling with AWS, Microsoft Azure, Google Cloud, Oracle Cloud.
Cybersecurity & SI Partners

– Bi-directional integrations with leading SIEM, XDR & AI platforms.

5. Key Financial Highlights (FY 2025 vs. FY 2024)

Metric	FY ’25	FY ’24	Change
Total Revenue	$995.6 M	$839.2 M	+18.7%
Subscription Revenue	$589.7 M	$429.2 M	+37.4%
Perpetual License	$55.6 M	$57.6 M	–3.4%
Customer Support	$307.6 M	$307.8 M	–0.1%
Other Services	$42.7 M	$44.7 M	–4.4%
Gross Margin	82.0%	82.0%	n.m.
Operating Income	$73.7 M	$75.3 M	–2.1%
Net Income	$76.1 M	$168.9 M	–54.9%
Adj. EBITDA**	~$230 M	~$200 M	+15%
Op. CF	$207 M	$204 M	+1.6%

**Adjusted EBITDA excludes acquisition costs, stock-based comp, and one-time charges.

**n.m. = not material (comparable)

6. Margin & Profitability Analysis

Category	FY ’25 % of Rev	FY ’24 % of Rev	Commentary
Cost of Revenues	18.0%	18.1%	Hosting costs rose on SaaS & Clumio integration
Sales & Marketing	43.6%	42.3%	Higher commissions, global events & brand programs
R&D	14.7%	15.8%	Continued investment in cloud & cyber-AI
G&A	13.9%	13.6%	Acquisition integration & corporate overhead
Non-GAAP Adj. EBITDA	~23.1%	~23.8%	Strong cash conversion

Expense Drivers

– S&M +22%: commissions tied to subscription growth + new direct sales hires.
– R&D +11%: adding cloud, automation and security capabilities; Appranix & Clumio teams.
– G&A +21%: legal, finance & HR supporting global operations & deal activity.

– Restructuring: $10 M to realign Customer Success.

7. Cash Flow & Balance Sheet Strength

Balance Sheet (Mar 31 ’25)

• Cash & Equivalents: $302 M
• No Revolver Borrowings (Credit Facility $100 M)
• Trade Receivables: $252 M (DSO ~83 days)
• Deferred Revenue: $626 M (62% subscription)
• Total Equity: $325 M

Cash Flow (FY ’25)

• Operating CF: $207 M
• Free Cash Flow**: ~$203 M
• CapEx: $3.8 M
• M&A Spend: $65.3 M
• Share Repurchases: $165 M (1.2 M shares @ $136 avg)

**Still ‘Only’ 24% of Market Cap

8. M&A and Capital Allocation

Fiscal ’25 Acquisitions

1. Appranix ($26.3 M)
   – Cloud-based cyber recovery orchestration
2. Clumio Assets ($44.3 M)
   – SaaS backup for Amazon S3 with ransomware rollback

Post-closing Capital Structure

• Revolver Financing: Up to $300 M (refinanced Apr ‘25)
• No outstanding debt as of FY end
• $250 M authorized for share buyback (remains $91 M)

R&D and CapEx

• Continued focus on scalable SaaS & automation

Share Repurchase

- 1.2 M shares repurchased @ $136 avg

9. Risk Factors & Competitive Landscape

Key Risks to Monitor

1. Hyper-competitive market: Cohesity, Rubrik, Veeam & big cloud providers
2. Channel concentration: Arrow accounts for ~35% of sales
3. SaaS margin pressure: Infrastructure costs & pricing evolution
4. Currency & macro: FX swings (46% offshore revenue) & global economic headwinds
5. Execution on integration: Appranix & Clumio need to ramp smoothly

Competitive Strengths
• Deep integrations across 60+ workloads & hyperscalers
• Breadth: from file-level restores to DR & governance
• Scalable cloud-native architecture & automated workflows

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10. Valuation & Investment Thesis

Bull Case

• Subscription revenue growth >30% as SaaS mix expands
• High cash conversion drives stronger buybacks or dividends
• Strategic hyperscaler partnerships & ecosystem integrations

Bear Case

• Market share loss to cloud-native disruptors & hyperscaler toolsets
• Margin degradation if SaaS run rates & infrastructure cost exceed pricing power
• Channel concentration & stagnating large-deal pipelines

Valuation Metrics (FY25)

• P/​E: ~23x
• EV/EBITDA: ~16x
• PEG (vs. 25% Subscription CAGR): ~1.0x

Comparable Trading

Company	EV/EBITDA	1-yr Subscription Growth
Cohesity	20x	40%
Rubrik	18x	35%
Veeam	22x	50%
Commvault	16x	37%

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11. Conclusion

Commvault is a financially stable, cash-generative cyber-resilience player successfully transitioning to a SaaS-centric model. Subscription revenue growth of 37% and an 82% gross margin show the core platform remains differentiated in a crowded field. Ongoing investments in automation, cloud-native capabilities, AI, and targeted M&A strengthen the competitive position, although execution and margin management will be critical.
Investment Score: 7.5/10

Is Commvault a buy, hold or sell at current levels?

• Buy, if you believe subscription mix expansion and service margins will drive 20%+ revenue growth.
• Hold, if you need more proof of margin stability in the full SaaS shift.

- Sell, if you fear the hyperscaler threat and intensifying price competition will undermine profitability.

Disclosure: This review is for informational purposes only and does not constitute financial advice. Always consult with a licensed investment advisor.