Commvault Systems, Inc (CVLT): what the price requires
At today's price, Commvault Systems, Inc (CVLT) is priced for today's economics sustained for ~5.4 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/CVLT
Headline
| Field | Value |
|---|---|
| Ticker | CVLT |
| Company | Commvault Systems, Inc |
| Current price | $147.17/sh |
| Composition | Term-based license 37% / Software-as-a-service (SaaS) 28% / Perpetual license 4% / Customer support 27% / Other services 4% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin today | 6.3% |
| Must persist for | 5.4y |
| Multiple paid | 85x operating income |
Solve inputs: computed at a 8.7% cost of capital; growth searched up to the 50% self-funding ceiling; each 1pp moves the implied horizon ~0.8 years.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +1.13σ |
| cohort percentile (of 178 peers) | 96 |
| sustained it ~5.4 years at this level | 25% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.91x | 3 | expensive |
| Earnings | 5.42x | 5 | expensive |
| Relative | 3.14x | 5 | expensive |
| Growth | 0.73x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.1%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $226.79 | 0.65x | yes | FCF base $0.3B, growth 19% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection |
| DCF Exit Multiple | Growth | $200.67 | 0.73x | yes | Exit EV/EBITDA: 76.1x / 78.1x / 80.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $87.98 | 1.67x | yes | P/E 52.38x (blended: static sector reference 35x + trailing (TTM) 93x), scenarios: 42.8x / 52.4x / 61.9x (bear / base = reference held flat / bull), EV/EBITDA 40.92x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $17.12 | 8.60x | yes | BV/sh $0.17, ROE (TTM) 942.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $2943.40 | 0.05x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $169.33 | 0.87x | yes | Rev $1.2B, growth 19% (input: historical growth; tapered), Terminal P/S: 4.5x / 5.5x / 6.6x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $18.96 | 7.76x | yes | EPS $1.58, growth 9% (input: historical EPS growth), PEG=10.24 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $11.17 | 13.18x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.06B × (1−37%) / WACC 8.1% → EPV (no growth) |
| Residual Income | Asset | $29.99 | 4.91x | yes | BV $0.17 + 5yr PV of (ROE (TTM) 942.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $2.44 | 60.32x | yes | √(22.5 × EPS $1.58 × BVPS $0.17) — Graham's conservative floor (excluded from median) |
| EV/EBITDA Relative | Relative | $46.87 | 3.14x | yes | EBITDA $0.08B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $57.07 | 2.58x | yes | FCF $237.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $27.17 | 5.42x | yes | SBC-adj FCF $0.11B (FCF $0.24B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $35.30 | 4.17x | yes | EPS $1.58 × (8.5 + 2×9.1%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $0.87 | 169.16x | yes | BV $0.17 × (ROIC 42.2% / WACC 8.1%) (excluded from median) |
| P/Sales Sector | Relative | $212.26 | 0.69x | yes | Revenue $1.18B × sector P/S 8.0x |
| PEG Fair Value | Relative | $21.51 | 6.84x | yes | EPS $1.58 × (PEG 1.5 × growth 9.1% (input: historical EPS growth)) → PE 13.6x |
| Earnings Yield | Earnings | $17.08 | 8.62x | yes | EPS $1.58 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $19.1m |
| Net debt / NOPAT (after-tax) | -0.43x (net cash) |
| Net debt / operating income (pre-tax) | -0.27x (net cash) |
| Interest coverage | 28.8x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
Bullet Takeaways
Commvault is a data-protection and cyber-resilience software business mid-transition to subscription and SaaS. Total ARR reached $1.12 billion, up 21%, with SaaS ARR up 42% to $400 million and SaaS net dollar retention of 122%, while free cash flow hit $237 million.
The valuation is demanding. GAAP operating margin is only 6.3% because the model is still converting, so the inversion reads as a high implied-growth bet, and only the growth-DCF method reaches the price. Asset, earnings-power, and peer-multiple methods all say richly valued, and the fair-value read carries low reliability.
The live overhang is legal: a Q3 fiscal 2026 ARR shortfall triggered a sharp share-price drop and multiple securities class-action lawsuits centered on how the company disclosed ARR and deal mix.
Bull Case
The competitive position is the foundation, and the recurring-revenue data shows the moat is real even if the GAAP margin hides it. Commvault's business depends on continued growth in organizations adopting data protection and cyber-resilience solutions (FY2025 10-K, accession 0001169561-25-000034), and the company is capturing that demand: total annual recurring revenue reached $1.12 billion, up 21%, with subscription ARR up 27% to $989 million and SaaS ARR up 42% to $400 million. The quality signal is SaaS net dollar retention of 122%, meaning existing customers spend 22% more each year, the hallmark of a sticky platform with expansion built in. And 48% of managed SaaS customers now use more than one Commvault offering, up 500 basis points, which is the cross-sell that deepens switching costs.
The business is also moving up the value chain into cyber and identity resilience, where the demand is most urgent. Identity resilience and data-security offerings made up 33% of net new ARR in the most recent quarter, and Active Directory was one of the fastest-growing SaaS offerings, with its ARR more than doubling year over year. As ransomware and identity attacks proliferate, a vendor that protects, recovers, and secures both data and identity is selling into a structurally growing need, not a commoditizing one. That is what lets Commvault hold its ground against newer entrants in an intensely competitive, highly fragmented market.
The cash economics are stronger than the income statement suggests. Free cash flow reached $237 million even as GAAP operating margin sat at 6.3%, the gap reflecting the deferred-revenue dynamics and stock compensation of a subscription transition rather than weak underlying profitability. The company added over 2,500 subscription customers in the fiscal year and guides to 18% to 19% subscription ARR growth in fiscal 2027, with SaaS ARR expected to exceed $500 million. Only the growth-DCF method reaches the price precisely because the static frames cannot capture a recurring-revenue base compounding in the high teens to low 20s with expanding retention. The bull case is a durable, cash-generative cyber-resilience platform whose moat lives in ARR and retention, not in the trailing GAAP margin.
Bear Case
The structural fragility is that the entire valuation rests on ARR being high-quality and durable, and that exact assumption is now under legal challenge. Commvault faces multiple securities class-action lawsuits after a fiscal Q3 2026 report revealed a shortfall in net new ARR and a sharp slowdown in SaaS ARR growth, which triggered an roughly 31% share-price drop. The lawsuits center on whether the company adequately disclosed how deal mix and discounting affect ARR growth, and the disclosure that about 70% of net new ARR came from SaaS deals landing at average selling prices two to three times lower than term licenses. That is the crux: as the mix shifts to SaaS, each new dollar of ARR is being bought at a lower price point, so headline ARR growth can mask a deceleration in the economics underneath it. When the headline metric a stock is valued on is the subject of a fraud suit, the multiple is exposed.
The balance-sheet and margin profile leaves little room for that uncertainty. GAAP operating margin is just 6.3%, so the company is not yet converting its revenue into reported profit at a level that would cushion a slowdown, and the inversion implies a growth rate the static methods cannot support. The fair-value read itself carries low reliability, with a blended band from about $30.54 to $103.36, an enormous spread that reflects how uncertain the value is when the business is mid-transition and the central metric is contested. If ARR growth slows toward the lower end of guidance, or if the SaaS price-point compression accelerates, the methods anchored to current earnings, which already say the stock is richly valued, become the honest read.
Competition compounds the risk. The data-protection and cyber-resilience market is intensely competitive and highly fragmented, with principal competitive factors including functionality, performance, integration, scalability, and price (FY2025 10-K, accession 0001169561-25-000034). The field has consolidated and sharpened: Rubrik went public marketing zero-trust data security and has pushed Commvault to accelerate its cyber-resilience features, the Cohesity-Veritas combination created enterprise scale, and Veeam's channel ecosystem displaces Commvault in virtualized and SMB environments. Price competition in a fragmented market is exactly what drives the SaaS discounting at the heart of the lawsuit. Analysts have cut targets sharply, from $217 to $167 in one case, citing shorter contract durations and a lower margin outlook. The bear case is that a richly-valued transition story is facing slowing ARR economics, a legal cloud over its key metric, and intensifying competition all at once.
Valuation
Invert the price and the demand is steep. The market pays a high multiple of company-wide operating income, which inverts to an implied operating-profit growth rate well above what the trailing financials show, computed at an 8.5% cost of capital. The reason the implied figure is so high is the denominator: GAAP operating margin is only 6.3% because Commvault is mid-transition to subscription and SaaS, with deferred revenue and stock compensation suppressing reported profit. So the inversion is really pricing a margin-and-ARR ramp, not literal near-term operating compounding, and the priced-in assumption reads as elevated, above what the fundamentals comfortably support.
The valuation X-ray is lopsided: only the growth-DCF family reaches the price, while asset, earnings-power, and peer-multiple methods all say the stock is richly valued. That is the signature of a software business priced for durable recurring-revenue compounding the static frames cannot capture. But here the read comes with an unusual caveat: the fair-value reliability is low, and the blended band is extremely wide, from about $30.54 to $103.36 with a $75 midpoint. That spread is the model telling you the value is genuinely uncertain because the business is mid-transition and the key metric, ARR, is both decelerating and legally contested.
The synthesis is that Commvault should be valued on ARR, retention, and free cash flow rather than GAAP margin, and on those measures the recurring base is real, $1.12 billion of ARR, 122% SaaS retention, and $237 million of free cash flow. But the price has historically embedded a premium for that ARR growing faster and at better economics than the recent SaaS-mix shift suggests. If subscription ARR holds the guided 18% to 19% growth and the legal overhang clears, the growth-DCF read justifies a premium. If ARR economics keep compressing, the static methods near the lower half of the band are the honest anchor. This is a software name where the verdict turns on the quality and durability of ARR, which is precisely the question the securities litigation has put in play.
Catalysts
The dominant catalyst is the legal and disclosure overhang. After fiscal Q3 2026 results on January 27, 2026 showed net new ARR of $39 million against a $45 million projection, and revealed that about 70% of net new ARR came from SaaS deals at average selling prices two to three times lower than term licenses, the stock fell roughly 31% and multiple securities class-action lawsuits followed. The lawsuits focus on whether Commvault adequately disclosed how deal mix and discounting affect ARR growth. Any development in that litigation, and the next few quarters of net-new-ARR prints, are the events that will most directly reframe the stock, because they go to the credibility of the metric the valuation rests on.
On fundamentals, fiscal Q4 2026 results reported April 28, 2026 were stronger: total ARR of $1.12 billion up 21%, subscription ARR up 27% to $989 million, SaaS ARR up 42% to $400 million, SaaS net dollar retention of 122%, and record free cash flow of $237 million, with over 600 subscription customers added in the quarter. Fiscal 2027 guidance targets 18% to 19% subscription ARR growth and SaaS ARR exceeding $500 million, with AI and identity resilience as key drivers. The trajectory of SaaS ARR and net dollar retention is the operating signal that matters most. Competition from Rubrik, the Cohesity-Veritas combination, and Veeam is a persistent backdrop. Analyst sentiment is mixed: a Buy-leaning consensus but with sharp target cuts, including a reduction from $217 to $167, on shorter contract durations and a lower margin outlook. The next earnings report, ARR-quality disclosures, and the path of the litigation are the events most likely to move the thesis.
Sources: Commvault Q4 FY2026 results (Commvault), Commvault Q4 FY2026 highlights (GuruFocus), CVLT securities class action after 31% drop (PR Newswire), Are CVLT's ARR lawsuits reframing recurring-revenue quality (Simply Wall St).
Peer Cohorts (Per Segment, With Filing Citations)
Data protection software & services (Commvault consolidated) (reported)
- RBRK (RUBRIK, INC.)
- FY2025 10-K: …be expensive and complex and will require the dedication of significant management time and attention. We could also face inefficiencies, vulnerabilities, or service disruptions as a result of our efforts to scale our internal infrastructure, which may result in extended outages, loss of customer trust, and harm to…
- FY2025 10-K: …platform to deliver comprehensive data security products to our customers and partners. We intend to continue to pursue strategic teams, technologies, and products to accelerate time-to-market for new data security capabilities and widen the competitive moat for our products and solutions. Our Customers We sell to…
- AVPT (AvePoint, Inc.)
- FY2025 10-K: …and recovery services : Backup architecture, recovery workflows, ransomware recovery/testing (where applicable). ■ Analytics/insights : Risk posture, usage optimization, compliance reporting. Security, Compliance, and Trust We support customer requirements for security and compliance through our operational controls,…
- FY2025 10-K: (RBAC), continuous vulnerability scanning, and a secure software development lifecycle (SDLC) to minimize risk and ensure auditability across all platform operations. 8 Table of Contents PART I ITEM 1 Customer Support and Success Our customer success approach is proactive and relationship-focused, designed to help…
- NTNX (NUTANIX, INC.)
- FY2025 10-K: …data in core data centers, at the edge, and in public clouds, while supporting customer choice across server platforms, storage options, public and managed clouds, and container and virtualization platforms. The Nutanix Cloud Platform supports a wide variety of workloads with varied compute, storage, and network…
- FY2025 10-K: Inc., NetApp, Inc., and Huawei Technologies Co., Ltd., many of which offer integrated systems that bundle servers, storage and networking solutions, as well as standalone server and storage products. Competition generally varies by workload and customer segment, and customers often evaluate multiple alternatives…
- DT (Dynatrace, Inc.)
- FY2025 10-K: …including Ahead, Computacenter, Trace3, and World Wide Technology, that help joint customers integrate our offerings into their multicloud ecosystems. These partners extend our scale and reach and collaborate with our direct sales teams, bringing domain expertise in technologies and industries along with additional…
- FY2025 10-K: …factor in our industry, we make statements in our privacy policies, our online product documentation, and in our marketing materials describing the security of our platform, including descriptions of certain security measures we employ or security features embedded within our offerings. In addition, our customer…
- ESTC (Elastic N.V.)
- FY2025 10-K: …and we may lose revenue and profits as a result of our inability to timely produce, distribute, invoice and collect payments for our products and services. In addition, many of our customers may use our software for processing their confidential information, including business strategies, financial and operational…
- FY2025 10-K: …our customers' data, including sensitive and personal information. Further, threat actors may attempt to deploy malicious code to users of the open source libraries leveraged by our products, which could negatively affect us and those users. Techniques used to sabotage or obtain unauthorized access to systems or…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.