CommVault Systems (CVLT) Stock Forecast & Price Target

CommVault Systems Inc has demonstrated a significant transition to a subscription model, with its SaaS Annual Recurring Revenue (ARR) increasing from 9% of total ARR at the end of FY22 to 31% by the end of 1Q26, indicating strong adoption of its software solutions. The company's SaaS offerings drove 63% year-over-year growth in ARR during 1Q26, highlighting robust demand and customer retention, as evidenced by a Net Revenue Retention (NRR) rate of 125%, bolstered by upsell and cross-sell activities. Additionally, CommVault’s modern backup and recovery solutions position the company to capture market share even amid fluctuating cybersecurity spending, contributing to a favorable outlook for continued growth in operating margins and top-line metrics.

CommVault Systems's stock outlook is negatively influenced by lower than expected growth in cybersecurity spending, particularly affecting its backup and recovery and data security segments, which could lead to significant revenue shortfalls in future fiscal years. The company reported a gross margin of 82.4%, exceeding expectations, but its operating margin fell slightly below guidance at 20.7%, reflecting increased operating costs, which could hinder profitability. Furthermore, potential declines in subscription and SaaS momentum, combined with a decrease in maintenance annual recurring revenue, pose additional risks to the company's overall revenue and profitability growth, particularly if customer acquisition and retention falter.