Core Viewpoint - Commvault Systems (CVLT) reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $0.98 per share, and showing an increase from $0.94 per share a year ago, indicating a positive earnings surprise of +19.39% [1] Financial Performance - The company achieved revenues of $313.83 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 4.96%, and up from $262.63 million in the same quarter last year [2] - Over the last four quarters, Commvault has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Commvault shares have increased approximately 3.2% since the beginning of the year, outperforming the S&P 500's gain of 1.5% [3] Future Outlook - The company's earnings outlook will be crucial for determining the sustainability of its stock price movement, with current consensus EPS estimates at $1.00 for the coming quarter and $3.91 for the current fiscal year [4][7] - The estimate revisions trend for Commvault was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Computer - Software industry, to which Commvault belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable environment for stocks in this sector [8]

Financial Data and Key Metrics Changes - Subscription revenue grew 30% to $206 million, driven by a record addition of 700 new subscription customers [4][13] - Total revenue increased 19% to $314 million, with a 22% growth in term software revenue to $119 million [13][14] - Subscription ARR rose 28% to $941 million, with SaaS ARR increasing 40% to $364 million [15][20] - Gross margins improved 100 basis points sequentially to 81.5% [16] - Non-GAAP EBIT was $61 million, reflecting a margin of 19.6% [16] Business Line Data and Key Metrics Changes - SaaS revenue saw a robust 44% increase, contributing significantly to overall subscription revenue growth [13] - Term software transactions over $100,000 grew 25%, indicating strong performance in large enterprise accounts [14] - ARR from identity resilience offerings doubled year over year, highlighting strong customer adoption [9] Market Data and Key Metrics Changes - Commvault achieved AWS resilience competency in the recovery category and was named the 2025 AWS Global Storage Partner of the Year [10] - The company reported strong growth across all geographies and customer sizes, particularly from large enterprises [14] Company Strategy and Development Direction - Commvault is focusing on innovation through the Commvault Cloud Unity Platform, which integrates data security, identity resilience, and cyber recovery [6][10] - The company aims to capitalize on the growing demand for cyber resilience in an AI-driven, hybrid, and multi-cloud environment [4][11] - Commvault is also addressing data sovereignty requirements by supporting regional sovereign clouds, including a partnership with AWS for the European Sovereign Cloud [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position, citing record customer engagement and adoption [12] - The company anticipates finishing the year with solid results, reflecting its leadership in the market and customer trust [12] - Management noted that the business is in a good place, with strong performance in both software and SaaS customer acquisitions [29] Other Important Information - The company initiated a cost optimization program to align its cost structure with evolving business needs [17] - Commvault repurchased $41 million of stock during the quarter, with a total of $187 million year-to-date [17][21] Q&A Session Summary Question: Free cash flow and accounts receivable increase - Management explained that Q3 typically sees pressure on free cash flow due to sales cycles, with over 60% of deals closing in the last weeks of the quarter [25] Question: Long-term growth narrative and TAM expectations - Management refrained from providing guidance beyond the current fiscal year but indicated confidence in outpacing market growth [28][29] Question: Currency impact on revenue and ARR - Management confirmed that currency was in line with expectations for reported revenue, while ARR guidance is provided on a constant currency basis [36] Question: SaaS net retention rate drop - Management attributed the drop to a larger customer base and strong new customer acquisition, which does not immediately reflect in the NRR [55] Question: Term duration elongation and its impact - Management noted that the increase in term duration was influenced by large new customer deals, which may have affected term ARR [66][110]

Financial Data and Key Metrics Changes - Subscription revenue grew 30% to $206 million, driven by a record addition of 700 new subscription customers [4][13] - Total revenue increased 19% to $314 million, with subscription revenue leading the growth [13] - Subscription ARR rose 28% to $941 million, while total ARR increased by 22% to $1.085 billion [15][20] - Gross margins improved 100 basis points sequentially to 81.5% [16] - Non-GAAP EBIT was $61 million, reflecting a margin of 19.6% [16] Business Line Data and Key Metrics Changes - SaaS ARR increased 40% to $364 million, representing a significant portion of the subscription growth [4][15] - Term software revenue grew 22% to $119 million, indicating strong demand for traditional software offerings [13] - Revenue from term software transactions over $100,000 grew 25%, highlighting strength in large enterprise accounts [14] Market Data and Key Metrics Changes - Strong growth was observed across all geographies and customer sizes, particularly from large enterprises [14] - The company added approximately 700 new subscription customers, ending the quarter with over 14,000 subscription customers [14] Company Strategy and Development Direction - Commvault is focusing on innovation through the Commvault Cloud Unity Platform, which integrates data security, identity resilience, and cyber recovery [6][12] - The company aims to capitalize on the growing need for cyber resilience in an AI-driven, hybrid, and multi-cloud environment [4][11] - Commvault is also addressing data sovereignty requirements by supporting regional sovereign clouds, including a partnership with AWS for the European Sovereign Cloud [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position, citing strong customer engagement and adoption of new platforms [12][20] - The company anticipates finishing the year with solid results, reflecting leadership in the market and customer trust [12] - Management acknowledged the evolving competitive landscape and the importance of maintaining a balance between growth and profitability [16][20] Other Important Information - The company initiated a cost optimization program to align its cost structure with business needs [17] - Commvault repurchased $41 million of stock during the quarter, with a year-to-date total of $187 million [17][21] - The board approved a share repurchase authorization of up to $250 million [21] Q&A Session Summary Question: Free cash flow and accounts receivable increase - Management explained that Q3 typically sees pressure on free cash flow due to sales cycles, with over 60% of deals closing in the last weeks of the quarter [24][25] Question: Long-term growth narrative and TAM expectations - Management refrained from providing guidance beyond the current fiscal year but indicated confidence in outpacing market growth [27][29] Question: Currency impact on revenue and ARR - Currency was in line with expectations for reported revenue, while ARR guidance is provided on a constant currency basis [33][36] Question: SaaS net retention rate drop - Management attributed the drop to a larger customer base and strong new customer acquisition, which does not immediately reflect in NRR [55][56] Question: Impact of Unity on term to SaaS shift - Unity is expected to enhance customer management capabilities, but its impact is still early to quantify [53][91] Question: Term duration elongation - Management noted that large deals influenced term duration, leading to variability in ARR [66][110]

Financial Data and Key Metrics Changes - Subscription revenue grew 30% to $206 million, driven by a record addition of 700 new subscription customers [3][12] - Total revenue increased 19% to $314 million, with a 22% growth in term software revenue to $119 million [12][13] - Subscription ARR rose 28% to $941 million, with SaaS ARR increasing 40% to $364 million [12][14] - Gross margins improved 100 basis points sequentially to 81.5% [15] - Non-GAAP EBIT was $61 million, reflecting a margin of 19.6% [15] Business Line Data and Key Metrics Changes - SaaS revenue saw a robust 44% increase, contributing significantly to overall subscription revenue growth [12] - Term software transactions over $100,000 grew 25%, indicating strong demand from large enterprise accounts [13] - ARR from identity resilience offerings doubled year over year, highlighting growth in this segment [8] Market Data and Key Metrics Changes - Commvault achieved AWS resilience competency in the recovery category and was named the 2025 AWS Global Storage Partner of the Year [9] - The company is a launch partner for the AWS European Sovereign Cloud, addressing regional data sovereignty needs [10][11] Company Strategy and Development Direction - Commvault is focusing on innovation through the Commvault Cloud Unity Platform, which integrates data security, identity resilience, and cyber recovery [4][10] - The company aims to capitalize on the growing demand for cyber resilience in an AI-driven, hybrid, and multi-cloud environment [3][10] - A cost optimization program was initiated to align the cost structure with evolving business needs [15][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position, citing strong customer engagement and adoption [11] - The company anticipates solid results for the year, reflecting leadership in the market and customer trust [11] - Management noted that the business is in a good place, with expectations to outpace market growth [27] Other Important Information - The company repurchased $41 million of stock during the quarter, with a year-to-date total of $187 million [16][19] - Free cash flow for Q3 was impacted by the timing of collections and an additional payroll cycle, but is expected to normalize in Q4 [16][24] Q&A Session Summary Question: Free cash flow and accounts receivable increase - Management explained that Q3 typically sees pressure on free cash flow due to sales cycles, with over 60% of deals closing in the last weeks of the quarter [22][24] Question: Long-term growth narrative and TAM expectations - Management refrained from discussing guidance beyond the fiscal year but acknowledged the total addressable market (TAM) growth expectations [25][26] Question: Currency impact on revenue and ARR - Currency was in line with expectations for revenue, while ARR guidance is provided on a constant currency basis [32][34] Question: SaaS NRR and customer acquisition - Management noted that the increase in new SaaS customers does not immediately reflect in NRR, as those dollars do not show up yet [53][54] Question: Unity platform impact on SaaS growth - The Unity platform is expected to enhance customer capabilities and facilitate cross-selling, although it is still early in its adoption [91][92] Question: Term duration and ARR expectations - Management indicated that longer duration deals impacted term ARR, but emphasized the importance of looking at annualized performance [108][109]

Commvault Fiscal Q3'26 Earnings Presentation JANUARY 2026 © Commvault 2026 2 Key Financial Highlights Forward-Looking Statements This presentation contains forward-looking statements regarding future events or the expected financial performance of our company, including statements about our outlook for future periods and related guidance. Commvault does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not avail ...

Revenue Growth - Total revenue increased by 19% year over year to a record $314 million[5] - Annualized recurring revenue (ARR) reached $1,085 million, up 22% year over year[5] - Subscription revenue grew to $206 million, a 30% increase year over year, with SaaS revenue up 44% year over year to $87 million[5] - Total revenues for the three months ended December 31, 2025, were $313.8 million, a 19.5% increase from $262.6 million in the same period of 2024[22] - Subscription revenues reached $206.3 million for the three months ended December 31, 2025, up 30.3% from $158.3 million in the same period of 2024[22] Financial Performance - Non-GAAP EBIT was $61 million, representing an operating margin of 19.6%[5] - GAAP net income for the three months ended December 31, 2025, was $18 million, or $0.40 per diluted share, compared to $11 million, or $0.24 per diluted share in the same period of 2024[20] - GAAP income from operations for Q3 2025 was $19,770 million, up from $13,615 million in Q3 2024, representing a 45.5% increase[30] - Non-GAAP income from operations for Q3 2025 was $61,455 million, compared to $54,581 million in Q3 2024, reflecting a 12.9% growth[30] - GAAP net income for the nine months ended December 31, 2025, reached $56,008 million, an increase of 24.2% from $45,113 million in the same period of 2024[30] - Non-GAAP net income for the nine months ended December 31, 2025, was $138,904 million, up from $118,591 million in 2024, indicating a 17.1% rise[30] - GAAP diluted earnings per share for Q3 2025 was $0.40, compared to $0.24 in Q3 2024, marking a 66.7% increase[30] - Non-GAAP diluted earnings per share for Q3 2025 was $1.17, up from $0.94 in Q3 2024, representing a 24.4% growth[30] Cash Flow and Liquidity - Operating cash flow was $4 million, with free cash flow of $2 million, affected by the timing of certain working capital items[5] - Cash and cash equivalents totaled $1,026 million as of December 31, 2025, significantly up from $302 million as of March 31, 2025[24] - Free cash flow for the full fiscal year 2026 is expected to be between $215 million and $220 million[9] - Non-GAAP free cash flow for Q3 2025 was $1,926 million, compared to $29,884 million in Q3 2024, showing a significant decrease[32] Cost Management - Operating expenses for the three months ended December 31, 2025, were $234.8 million, an increase from $200.4 million in the same period of 2024[22] - The company initiated a cost optimization program at the end of the third quarter to align its cost structure with evolving business needs[20] - Restructuring plans initiated during fiscal 2026 aim to optimize cost structure and enhance organizational agility, with expected completion during fiscal 2027[50] - The company reported a restructuring cost of $11,885 million in Q3 2025, compared to $3,969 million in Q3 2024, indicating a substantial increase in restructuring efforts[30] Strategic Initiatives - Commvault launched the Commvault Cloud Unity Platform, enhancing data security and cyber recovery capabilities[5] - A new partnership with Delinea was announced to expand unified data security and identity resilience offerings[5] - Commvault's Board of Directors approved a share repurchase program with $250 million available as of January 14, 2026[20] - The company repurchased approximately 327,000 shares of common stock for $41 million during the three months ended December 31, 2025[20] Tax and Legal Matters - The estimated non-GAAP effective tax rate is adjusted to 24% for income tax provisions[51] - A settlement agreement resulted in a payment of approximately $1.5 million to resolve certain legal matters, with $0.7 million recorded in general and administrative expenses for the three months ended June 30, 2024[50] - A $1.3 million loss was recorded from the sale of corporate headquarters, with a net charge of $0.5 million in general and administrative expenses[50] - Noncash impairment charges related to corporate headquarters have been recognized[50] Other Financial Metrics - SaaS net dollar retention rate (NRR) was 121% as of December 31, 2025, indicating strong customer retention and expansion[20] - Annualized recurring revenue (ARR) includes all active contracts and is calculated by dividing the total contract value by the number of days in the contract term, multiplied by 365[48] - SaaS net dollar retention rate (NRR) reflects the percentage of SaaS ARR retained from existing customers, accounting for expansion revenue, churn, and downgrades, and is presented on a constant currency basis[48] - Charges related to acquisition and business development activities are excluded from non-GAAP results to provide clearer insights into operating performance[50] - Noncash stock-based compensation charges are associated with restricted stock units and the Employee Stock Purchase Plan, excluding restructuring-related expenses[48]

Core Insights - Commvault reported an annualized recurring revenue (ARR) of $1,085 million, reflecting a year-over-year increase of 22% [1][5] - The company achieved record customer engagement and adoption, driven by its AI-enabled platform that addresses evolving identity and emerging threats [2][5] - Commvault's total revenues for the fiscal third quarter reached $314 million, up 19% year over year [5][23] Financial Performance - Subscription revenue was $206 million, marking a 30% increase year over year, with term-based license revenue at $119 million (up 22%) and SaaS revenue at $87 million (up 44%) [5][23] - Non-GAAP EBIT was reported at $61 million, with an operating margin of 19.6% [5][23] - GAAP net income for the quarter was $18 million, or $0.40 per diluted share [23] Business Developments - Commvault launched the Commvault Cloud Unity Platform, enhancing data security and cyber recovery across various environments [5][8] - A new partnership with Delinea was announced to expand Commvault's offerings in unified data security and identity resilience [5][8] - Commvault received the 2025 Geography and Global AWS Partner Award, being named the Global Storage Partner of the Year [5][8] Guidance and Outlook - For the fourth quarter of fiscal year 2026, total revenues are expected to be between $305 million and $308 million, with subscription revenue projected between $203 million and $207 million [5][11] - The full fiscal year 2026 guidance anticipates total revenues between $1,177 million and $1,180 million, with subscription revenue expected to be between $764 million and $768 million [11][6] - Non-GAAP gross margin is expected to be approximately 81%, with non-GAAP EBIT margin projected at around 19% to 20% [11][6]

Core Insights - Commvault has expanded its collaboration with Google Cloud to enhance data protection, security, and resilience capabilities for enterprises [1][5]. Group 1: New Capabilities - Commvault introduced new features including immutable protection, rapid recovery of data and cloud applications, and archiving for compliance support, all integrated within a single platform [3][7]. - The new capabilities for Google Cloud users include Air Gap Protect, Cloud Rewind, and enhanced data protection for Google Workspace [4][6]. Group 2: Industry Context - As enterprises migrate workloads to the cloud, the sophistication of ransomware and insider threats is increasing, with 80% of companies reporting more frequent cloud attacks [2]. - The average downtime following a ransomware attack is reported to be 24 days, leading to significant operational gaps for affected organizations [2]. Group 3: Strategic Importance - The expansion of Commvault's collaboration with Google Cloud is seen as a critical advancement for enterprises seeking cyber resilience in cloud environments, particularly in protecting backup infrastructure from ransomware attacks [5][7]. - Commvault's Air Gap Protect enables immutable backups stored in isolated locations, enhancing defenses against cyber threats [7].

Core Viewpoint - Truist has lowered the price target for Commvault (CVLT) to $175 from $210 while maintaining a Buy rating, indicating a cautious outlook for the cybersecurity sector in Q4 [1] Group 1: Price Target and Ratings - The price target for Commvault (CVLT) has been reduced to $175 from $210 [1] - Truist continues to hold a Buy rating on Commvault shares despite the price target adjustment [1] Group 2: Market Outlook - Companies in Truist's coverage are expected to report strong performance in calendar Q4, with a conservative approach to guidance [1] - The analyst anticipates a continued beat-and-raise cadence for 2026 based on current model setups [1] Group 3: Demand and Macro Environment - Conversations with IT budget holders and software sellers suggest that demand and the macro environment remain stable [1] - There is ongoing momentum in Security & AI initiatives, which is a positive sign for the sector [1] Group 4: Sector Challenges - Software equities are facing significant pressure as investors shift focus towards AI hardware [1] - Concerns include AI-driven competitive disruption, slow monetization of AI features, prolonged high interest rates, and geopolitical shocks affecting the sector [1] - The iShares Expanded Tech-Software Sector ETF (IGV) has declined approximately 7% in the first few weeks of trading [1]

Core Insights - Commvault Systems, Inc. (NASDAQ:CVLT) is identified as one of the software stocks with significant upside potential, despite a recent price target reduction by KeyBanc from $185 to $152, which still implies a 22.5% upside from current levels [1] - The company is recognized for its strong position in the cybersecurity sector, with analysts noting its adaptability to modern data protection needs and ongoing transformation towards a Software-as-a-Service model [4][5] Price Target Adjustments - KeyBanc's price target revision reflects a decline in valuation multiples among competitors and increased caution regarding security-related spending budgets [2] - RBC Capital maintained a price target of $167, suggesting a 31.31% upside from current levels, while reaffirming a Buy rating [3] - Stephens initiated coverage with a Buy rating and a price target of $162, indicating a 30.6% upside potential [4] Company Overview - Commvault Systems, Inc. is a cyber-resilience platform provider that focuses on data protection and recovery for cloud-native applications, operating both in the Americas and internationally [5]