Investment Thesis
Commvault faces structural headwinds with zero revenue growth and declining profitability (-7.2% net income YoY) despite strong cash generation. The critically impaired balance sheet with only $7.5M equity against $1.9B assets indicates severe leverage and financial distress, likely from past acquisitions or LBOs. While 20% FCF margins show operational cash strength, the lack of top-line growth and margin compression signal deteriorating competitive positioning.
Strengths
- Strong free cash flow generation of $237M (20% FCF margin)
- Excellent gross margins of 81.2% indicating pricing power and product quality
- Substantial cash position of $900M providing financial flexibility
- Asset-light business model with minimal capex of $7.5M
- Healthy liquidity ratios (1.95x current ratio) despite balance sheet stress
Risks
- Zero revenue growth (0% YoY) in software industry signals competitive pressure or market saturation
- Negative earnings momentum with net income declining 7.2% YoY despite flat revenue
- Severely impaired balance sheet with stockholders equity of only $7.5M against $1.9B assets indicating high leverage
- Low operating margin of 6.3% for software sector suggests cost structure or execution issues
- Potential debt covenant risks if unreveal liabilities are substantial relative to cash flows
Key Metrics to Watch
- Revenue growth acceleration (currently 0%)
- Operating margin expansion
- Debt-to-EBITDA ratio and leverage levels
- Customer retention/churn rates and ARR growth
- Free cash flow sustainability and conversion ratio
Financial Metrics
Revenue
1.2B
Net Income
70.7M
EPS (Diluted)
$1.58
Free Cash Flow
237.2M
Total Assets
1.9B
Cash
900.0M
Profitability Ratios
Gross Margin
81.2%
Operating Margin
6.3%
Net Margin
6.0%
ROE
942.8%
ROA
3.7%
FCF Margin
20.0%
Balance Sheet & Liquidity
Current Ratio
1.95x
Quick Ratio
1.95x
Debt/Equity
0.00x
Debt/Assets
0.0%
Interest Coverage
178.29x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-12T06:24:18.189465 |
Data as of: 2026-03-31 |
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