Commvault Systems (CVLT) Achieves $1B ARR Milestone Early
Earnings Release Date: October 28, 2025
Key Points
- Revenue: $276.2 million, up 18% YoY (Q2 FY25: $233.3 million).
- GAAP EPS: $0.33 (vs $0.35).
- Non-GAAP EPS: $0.91 (vs $0.83).
- Operating Income (GAAP): $12 million (margin 4.5%).
- Non-GAAP EBIT: $51 million (margin 18.6%).
- Free Cash Flow: $74 million (+37% YoY).
- Total ARR: $1.04 billion (+22% YoY), surpassing the $1B target two quarters early.
- Subscription ARR: $894 million (+30% YoY).
- SaaS ARR: $336 million (+56% YoY).
Stock Reaction: Shares closed $145.78, down $28.37 (–16.3%) following the results.
Quarter Highlights
- Subscription revenue: $173 million, up 29% YoY, led by SaaS growth of 61% and term-based license revenue up 10%.
- Total ARR: $1.04 billion, with subscription ARR representing 86% of total.
- Geographic mix: Americas $168M (+16% YoY); International $108M (+22% YoY).
- SaaS net dollar retention rate: 125%.
- Gross margin: GAAP 80.1%; non-GAAP 80.5%.
- Cash & equivalents: $1.06 billion, boosted by a $900 million 0% convertible note offering.
Business Developments
- Acquisition: Completed Satori Cyber Ltd., expanding its data and AI security capabilities.
- Product innovation:
- Launched Clumio for Apache Iceberg on AWS for AI data lakehouse protection.
- Introduced HyperScale Edge and HyperScale Flex, extending its cyber resilience portfolio.
- Announced integration with BeyondTrust Password Safe to strengthen credential protection and recovery efficiency.
CEO Statement
“Commvault delivered a strong quarter fueled by solid ARR and SaaS growth that accelerated a key milestone for the company – achieving $1 billion in total ARR two quarters earlier than projected,” said Sanjay Mirchandani, President and CEO.
“Our cloud-first, AI-enabled cyber resilience platform is more relevant than ever as enterprises globally rely on Commvault to remain resilient.”
Guidance & Outlook
Q3 FY26:
- Revenue: $298M – $300M.
- Subscription Revenue: $195M – $197M.
- Non-GAAP EBIT Margin: 18% – 19%.
- Non-GAAP Gross Margin: 80% – 81%.
Full-Year FY26 (raised):
- Revenue: $1.161B – $1.165B (+17% YoY).
- ARR Growth: 18% – 19% YoY.
- Subscription ARR Growth: 24% – 25% YoY.
- Non-GAAP EBIT Margin: 18.5% – 19.5%.
- Free Cash Flow: $225M – $230M.
Financial Summary
| Metric | Q2 FY26 | Q2 FY25 | YoY Change |
|---|---|---|---|
| Total Revenue | $276.2 M | $233.3 M | +18% |
| Subscription Revenue | $172.7 M | $134.0 M | +29% |
| Total ARR | $1.04 B | $853 M | +22% |
| SaaS ARR | $336 M | $215 M | +56% |
| GAAP EPS | $0.33 | $0.35 | –6% |
| Non-GAAP EPS | $0.91 | $0.83 | +10% |
| Non-GAAP EBIT Margin | 18.6% | 20.5% | –190 bps |
| Free Cash Flow | $74 M | $54 M | +37% |
| Cash & Equivalents | $1.06 B | $303 M | +251% |
Capital Return
- Share repurchases: 737K shares for $131M in Q2 FY26.
- Convertible debt: $900M 0% notes issued; $100M capped call purchased to mitigate dilution.
- No dividend declared.
About Commvault
Commvault (NASDAQ: CVLT) is a leader in cyber resilience and enterprise data protection. It serves more than 100,000 organizations globally with a unified hybrid cloud platform for data security, readiness, and recovery. The company offers enterprise-grade protection across on-prem, edge, and cloud environments at scale.
Key Takeaways
- Milestone achieved: Surpassed $1B ARR ahead of schedule, with subscription ARR +30% YoY.
- SaaS momentum: 56% growth; net dollar retention steady at 125%.
- Margin pressure: Non-GAAP EBIT margin slipped to 18.6% vs 20.5% last quarter due to higher costs and integration of Satori Cyber.
- Cash strength: $1.06B balance after convertible issuance provides flexibility for expansion.
- Stock reaction: Despite top-line and ARR growth, shares fell 16% as investors focused on margin compression and rising operating expenses.
- Outlook: Management reaffirmed double-digit ARR and revenue growth with improving efficiency targeted in 2H FY26.