CVLT

Commvault is a cyber-resilience and data-protection software vendor that has substantially completed its transition from perpetual licenses to a subscription/SaaS model. The growth and unit economics are compelling: FY2026 revenue rose 18.9% to $1.18B (accelerating from $996M and $839M in the prior two years), gross profit grew 17.6% to $961M, and gross margin is a software-grade 81.2%. The company sits in a structurally growing market — management cites 'accelerating data growth, increasingly sophisticated cyberattacks, the rapid adoption of AI, and the expansion of hybrid, multi-cloud' environments as demand drivers, with ~90% of revenue flowing through indirect channels and a heavy recurring-subscription mix.

Cash generation is the proof point that the low GAAP profit understates the business: operating cash flow grew 18.0% to $245M, far above the $70.7M of GAAP net income, with the gap reflecting the typical software pattern of heavy stock-based compensation and the deferred-revenue dynamics of a subscription transition. The balance sheet is strong — cash nearly tripled to $900M — and management is returning capital aggressively, with $446M of buybacks (up 170.3%) reducing shares 6.5%. (The 942.8% ROE and negative retained earnings are artifacts of cumulative buybacks against thin book equity, not a quality signal.)