This Data-Protection Provider Is Ready for the Rise in Cyberthreats

In the digital age, there's nothing more valuable than data...

Our finances, health care, entertainment, education, transportation, work, and social lives are stored as ones and zeros in data centers worldwide.

IT professionals are increasingly concerned with protecting all of that data and software. After all, a data center might fail for any number of reasons, ranging from natural disasters to hackers, terrorist attacks, or simply human error. And these risks are growing...

In an interview with CNBC last week, CrowdStrike (CRWD) CEO George Kurtz said that cyberthreats have increased in recent weeks as hackers try to take advantage of the Russian invasion of Ukraine.

This confirms what Kurtz had predicted last month... In an earlier interview, he noted that financial executives were concerned about an increase in cyberthreats as retaliation for sanctions placed on Russia. Those fears have only grown in the weeks since – and for good reason...

Cybercriminals can cause huge damage with their attacks. For example, an outage at one of Amazon Web Services' ("AWS") data centers in Northern Virginia disrupted everything from cloud software – like Netflix (NFLX), Roku (ROKU), and Airbnb (ABNB) – to Internet-connected Ring security cameras.

Outages at Alphabet's (GOOGL) data centers could suspend access to Gmail, YouTube, Google Docs, and other services globally.

Today's company helps businesses manage these outages...

Commvault (Nasdaq: CVLT) offers the most innovative technology for reliable data backup and recovery.

Commvault develops and sells software designed to protect and manage enterprise data. Its services include backup, archiving, data replication, disaster recovery, and search.

More than 100,000 organizations rely on Commvault. It has customers in nearly every industry – including financial services, health care, manufacturing, utilities, and many government agencies – use the company's software. It has multiple products to meet its diverse clientele's needs...

Its Commvault Complete Data Protection is a comprehensive backup and recovery software designed for any sized business with nearly any type of IT infrastructure. It's used in hybrid environments where both on-premises and multiple cloud providers house company data. This platform also includes disaster-recovery capabilities and snapshot management (i.e., restoring a system based on a previous time point), among other protections.

Commvault Activate is the company's newest line of data-analytics tools. The software analyzes and extracts new business insights from data. It optimizes data storage and helps businesses meet compliance requirements. The software also identifies and locks data containing sensitive information – namely personal information about customers.

Commvault also offers other products like HyperScale X (which delivers cloud-like infrastructure on company premises) and Hedvig data storage (which helps scale data-storage needs quickly and easily across multiple storage points).

These are all mission-critical offerings if companies want to protect their data from server outages. Through Commvault's products, businesses can back up their data in case of an outage, protect valuable customer data, and even prepare to grow their data-storage needs. That should continue to support demand for Commvault's products in the long term.

In addition to the demand, there's another tailwind boosting Commvault's business...

You see, it's transitioning from a "perpetual" software model (where companies collect an upfront fee for their software) to a Software as a Service ("SaaS") model.

We last covered a company shifting from perpetual licensing to SaaS with cybersecurity company Splunk (SPLK) in October. In short, here's what the change means...

With SaaS, the software is stored in the cloud... It's installed on remote computers in giant server farms and accessed over the Internet. So it doesn't have to be installed at thousands of customer sites. And customers don't own it... They rent it, paying for it over time as they use it.

The SaaS model lowered the cost of software and made it available to many more customers. And it made software much easier to install and begin using.

So for companies switching to a SaaS business model like Commvault, this means higher margins.

In turn, this should lead to higher free cash flow, which, given its pristine balance sheet, Commvault can use to reinvest in the business or reward shareholders with dividends or buybacks. Commvault is still undergoing this transition, but its SaaS revenue has just surpassed its perpetual licensing sales. And that trend will only continue from here.

Data security is more important than ever. Whether it's protecting the data we send or protecting the data we store, companies need to ensure that they're equipped with the necessary protocols to deal with outages. And that's where Commvault comes in.

Sometimes investing is simple.