Commvault Systems: Share Price Primed to Vault Higher in 2025

Key Points

• Commvault reported another record-breaking quarter, with growth accelerating sequentially compared to last year.
• Guidance for Q4 was well above the consensus forecast. 
• Analysts' trends and institutional buying align with the uptrend and strongly support this market. 

Commvault Systems NASDAQ: CVLT share price trended higher in 2023 and 2024, gaining more than 150% at the movement's peak, and can continue to trend higher in 2025 and beyond. The reason is simple: the company’s unified data management and security approach is easy to use and provides value to businesses.

Commvault reduces the impact, and by extension, the cost, of data-focused cyber attacks and mitigates them quickly. The critical takeaway for businesses is operational continuity, the ability to withstand cyber attacks and bounce back quickly. 

Commvault’s Strong Quarter Compounded by Robust Guidance

Commvault had a solid FQ3/CQ4, with revenue growth outpacing expectations, driving record results, accelerating sequentially and compared to last year. Revenue strength is underpinned by double-digit growth in both segments, led by a 39% increase in core subscriptions. Licenses grew by a slower 10% but are also solid, aiding an 18% systemwide increase in annual recurring revenue. Subscription ARR, a critical growth metric, improved by 29% and is forecasted to continue expanding in F2025. ARR is critical because it provides a visible, stable revenue stream and is growing faster than the consolidated revenue. 

Margin news was also good. The company reported a nearly 21% adjusted operating margin and an 11% free cash flow margin, better than expected, aided by revenue leverage and quality improvements. The net result is $0.94 in adjusted earnings, up nearly 20% compared to the 21.1% top-line advance and nearly 1000 basis points above MarketBeat’s reported consensus. 

Guidance was solid and points to a rising share price. The company’s Q4 F2025 guidance forecasts revenue and earnings well above consensus forecasts and may be cautious. Contrary to the trends, the $260 million low-end is a sequential downturn and slow-down in year-over-year growth compared to Q3. The more likely scenario is results in the high-end range, sufficient for another record quarter and growth acceleration. 

Analysts' Sentiment Drives Price Action in Commvault Shares 

Analysts' trends support the uptrend in Commvault price action and will likely continue to create a strong tailwind in 2025. The trends include increasing coverage, firming sentiment, and a rising price target with revisions suggesting a move into the $190 to $200 range is possible. Institutional activity echoes the analysts, including increasing activity, a high 92% ownership ratio, and buying on balance every quarter in 2024 and the first few weeks of 2025.

Commvault’s growth outlook is why analysts and institutions like this stock; the balance sheet and cash flow are another. The company has no significant long-term debt and is producing sufficient cash flow to sustain its balance sheet while reinvesting in growth and buying back shares. The buybacks aren’t important yet but are expected to increase over time along with earnings. The share count increased by 0.85% in Q3 despite the repurchases but is offset by equity gains. The company increased its shareholder equity by 3.5%. 

Commvault Confirms Support at a Critical Moving Average, Uptrend Can Continue

Commvault’s price action was volatile after the Q3 release but indicates the uptrend is intact. The market may continue sideways from that point, but the odds are high for a new high later this year. The support signal includes the price action, which dipped below a critical moving average and rebounded. The signal also includes the spike in volume, which shows above-average market engagement. The volume spike is essential because it strengthens the signal, which suggests the highs could be reached before mid-year. 

The risk for Commvault is competition. Numerous well-positioned cybersecurity firms, including industry leader Palo Alto Networks NASDAQ: PANW, pose a threat. It is repositioning, unifying its offering into a single platform, and outperforming expectations quarterly. Despite its much larger size, it is forecast to grow more robustly and is positioned to take market share.