Is Commvault Systems, Inc. (CVLT) A Good Stock To Buy Now?

Is CVLT a good stock to buy? We came across a bullish thesis on Commvault Systems, Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on CVLT. Commvault Systems, Inc.’s share was trading at $95.90 as of April 20th. CVLT’s trailing and forward P/E were 49.93 and 19.38 respectively according to Yahoo Finance.

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Commvault Systems, Inc. provides a cyber resilience platform for protecting and recovering data and cloud-native applications in the Americas and internationally. CVLT delivered Q3 FY2026 revenue of $314M, up 19%, driven by subscription revenue of $206M, up 30%, and SaaS growth of 44%, reinforcing continued shift toward recurring revenue.

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Subscription ARR reached $941M, up 28%, SaaS ARR $364M, up 40%, and total ARR $1.085B, up 22%, with subscription 87% of ARR, underscoring increasing predictability. Margins remain strong with gross margin at 81.5% and EBIT margin of 19.6%, consistent with a Rule of 40 profile, while free cash flow of $2M was impacted by timing rather than structural deterioration.

The company’s positioning continues to evolve from legacy backup toward cyber resilience, centered on the Commvault Cloud Unity platform, which integrates data protection, identity security, and recovery within a unified architecture. Enterprise traction remains strong, with 25% growth in >$100K deals and rising $1M transactions, while net retention of 121% reflects strong expansion dynamics. Approximately 30% of net new ARR is driven by identity and resilience offerings, indicating improving mix and higher-value product adoption.

AI-driven data growth is expanding demand for secure recovery, with the Metallic AI fabric enabling automation across anomaly detection and recovery workflows, supported by partnerships with AWS and Pinecone extend reach into AI data pipelines and vector-based architectures. However, net new ARR of $39M came in below expectations due to higher SaaS mix and longer deal cycles, which compress upfront ARR recognition, while retention moderation reflects base scaling effects rather than churn.

Cash flow lumpy with over 60% of deals closing late in the quarter, creating volatility. FY2026 guidance points to revenue of $1.18B, up 18%, subscription growth near 30%, ARR expansion of about 18%, and EBIT margins of 19–20%, with execution dependent on continued platform adoption and expansion in cyber resilience use cases as enterprise data complexity accelerates.

Previously, we covered a bullish thesis on Unity Software Inc. (U) by AlphaSenseInc in May 2025, which highlighted mobile gaming dominance, strong market share, and diversification into enterprise verticals. U’s stock price has appreciated by approximately 21.64% since our coverage. Sergey shares a similar view but emphasizes ARR expansion, cyber resilience transition, and AI-driven SaaS growth in Commvault (CVLT).

Commvault Systems, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held CVLT at the end of the fourth quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of CVLT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVLT and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.