Total Revenue climbs +19% year over year to a record $314 million
Annualized recurring revenue (ARR)1 reaches $1,085 million, up +22% year over year
Sets high for new customers added in fiscal 2026
TINTON FALLS, N.J., Jan. 27, 2026 /PRNewswire/ -- Commvault (Nasdaq: CVLT) today announced its financial results for the fiscal third quarter ended December 31, 2025.
"Commvault delivered another quarter of healthy growth and profitability driven by record customer engagement and adoption," said Sanjay Mirchandani, President and CEO, Commvault. "Customers and partners are turning to Commvault because they require an AI-enabled platform that addresses rapidly evolving identity and emerging threats, supports compliance, and brings resilience to hybrid and multi-cloud environments."
Notes are contained at the end of this press release
Third Quarter Fiscal 2026 Highlights -
- Total revenues were $314 million, up 19% year over year
- Total ARR1 grew to $1,085 million, up 22% year over year, or 17% on a constant currency basis using March 31, 2025 spot rates
- Subscription revenue was $206 million, up 30% year over year, inclusive of term-based license revenue of $119 million, up 22% year over year, and SaaS revenue of $87 million, up 44% year over year
- Subscription ARR1 grew to $941 million, up 28% year over year, or 24% on a constant currency basis using March 31, 2025 spot rates
- Income from operations (EBIT) was $20 million, an operating margin of 6.3%
- Non-GAAP EBIT2 was $61 million, an operating margin of 19.6%
- Operating cash flow was $4 million, with free cash flow2 of $2 million, impacted by the timing of certain working capital items
Recent Business Highlights -
- Commvault released the Commvault Cloud Unity Platform, unifying data security, cyber recovery and identity resilience across cloud, hybrid and on-premise environments.
- Commvault and Delinea announced a new partnership that expands Commvault's unified data security, identity resilience, and cyber recovery offerings within the Commvault Cloud platform, enabling customers to manage credentials and limit privilege misuse.
- Commvault received a 2025 Geography and Global AWS Partner Award, being named the Global Storage Partner of the Year.
- Commvault announced a partnership with Pinecone, enabling customers to protect and recover vector database workloads that support enterprise AI applications.
Financial Outlook for Fourth Quarter and Full Year Fiscal 20263-
We are providing the following guidance for the fourth quarter of fiscal year 2026, based on current macroeconomic conditions:
- Total revenues are expected to be between $305 million and $308 million
- Subscription revenue is expected to be between $203 million and $207 million
- Non-GAAP gross margin2 is expected to be approximately 81%
- Non-GAAP EBIT margin2 is expected to be approximately 19%
We are providing the following updated guidance for the full fiscal year 2026, based on current macroeconomic conditions:
- Total revenues are expected to be between $1,177 million and $1,180 million
- Total ARR1 is expected to grow approximately 18% year over year
- Subscription revenue is expected to be between $764 million and $768 million
- Subscription ARR1 is expected to grow approximately 24% year over year
- Non-GAAP gross margin2 is expected to be between 81% and 81.5%
- Non-GAAP EBIT margin2 is expected to be between 19% and 20%
- Free cash flow2 is expected to be between $215 million and $220 million, reflecting one-time payments associated with the cost optimization program (restructuring plan) initiated in the third quarter
The above statements are based on the incorporation of actual third quarter results and current targets. These statements are forward-looking and made pursuant to the safe harbor provisions discussed in detail below. We do not undertake any obligation to update these forward-looking statements. Actual results may differ materially from anticipated results.
Conference Call Information
Commvault will host a conference call today, January 27, 2026 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results. The live webcast and call dial-in numbers can be accessed by registering under the "News & Events" section of Commvault's website at ir.commvault.com under the "Investor Events" heading. An archived webcast of this conference call will also be available following the call.
About Commvault
Commvault (Nasdaq: CVLT) is a leader in unified resilience at enterprise scale. In a constantly evolving threat landscape, Commvault keeps customers ready by unifying data security, identity resilience, and cyber recovery, on one cloud-native, AI-enabled platform. Customers trust Commvault to conduct the fastest, most complete recoveries - not just their data, but their entire business. Purpose-built for the agentic enterprise, Commvault also enables organizations to safely embrace AI while protecting against AI-driven threats.
Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as those related to our restructuring plans, competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item 1A. Risk Factors" in our annual report on Form 10-K and "Item 1A. Risk Factors" in our most recent quarterly report on Form 10-Q. Statements regarding Commvault's beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements.
Overview
($ in thousands)
Q3'25 Q4'25 Q1'26 Q2'26 Q3'26
Revenue Y/Y Revenue Y/Y Revenue Y/Y Revenue Y/Y Revenue Y/Y
Growth Growth Growth Growth Growth
Subscription:
Term-based license $97,625 21 % $107,954 33 % $109,282 36 % $92,647 10 % $118,950 22 %
SaaS 60,696 82 % 65,274 69 % 72,445 66 % 80,018 61 % 87,379 44 %
Total subscription 158,321 39 % 173,228 45 % 181,727 46 % 172,665 29 % 206,329 30 %
Perpetual license 16,423 10 % 14,962 (2) % 7,335 (47) % 12,073 15 % 13,675 (17) %
Customer support 77,078 - % 76,509 (1) % 79,021 4 % 80,229 3 % 80,271 4 %
Other services 10,808 (1) % 10,340 (8) % 13,895 31 % 11,221 2 % 13,557 25 %
Total revenues $262,630 21 % $275,039 23 % $281,978 26 % $276,188 18 % $313,832 19 %
Constant Currency - Revenue
($ in thousands)
The constant currency impact is calculated using the average foreign exchange rates from the prior year period and applying these rates to foreign-denominated revenues in the current corresponding period. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations. The non-GAAP financial measures presented in this press release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Q3'25 Q3'26 Constant % Change Y/Y % Change Y/Y
Revenue as Revenue as Currency (GAAP) Constant
Reported Reported Impact Currency
(GAAP) (GAAP)
Subscription:
Term-based license $97,625 $118,950 $(4,483) 22 % 17 %
SaaS 60,696 87,379 (1,733) 44 % 41 %
Total subscription 158,321 206,329 (6,216) 30 % 26 %
Perpetual license 16,423 13,675 (497) (17) % (20) %
Customer support 77,078 80,271 (2,192) 4 % 1 %
Other services 10,808 13,557 (606) 25 % 20 %
Total $262,630 $313,832 $(9,511) 19 % 16 %
Disaggregation of Revenues
($ in thousands)
Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia, and China.
Q3'25 Q4'25 Q1'26 Q2'26 Q3'26
Revenue Y/Y Revenue Y/Y Revenue Y/Y Revenue Y/Y Revenue Y/Y
Growth Growth Growth Growth Growth
Americas $155,435 24 % $169,384 29 % $170,928 23 % $168,125 16 % $178,852 15 %
International 107,195 17 % 105,655 15 % 111,050 29 % 108,063 22 % 134,980 26 %
Total revenues $262,630 21 % $275,039 23 % $281,978 26 % $276,188 18 % $313,832 19 %
Total ARR, Subscription ARR and SaaS ARR1
($ in thousands)
Q3'25 Q4'25 Q1'26 Q2'26 Q3'26
Total ARR(1) $889,628 $930,051 $996,202 $1,043,295 $1,084,880
Subscription ARR(1) $734,212 $780,098 $843,873 $893,707 $940,859
SaaS ARR(1) $258,957 $281,045 $306,874 $335,669 $363,732
Constant Currency - ARR1
($ in thousands)
The constant currency impact on ARR1 is calculated using the foreign exchange spot rates from March 31, 2025 and applying these rates to foreign-denominated results in the periods presented.
Q3'25 Q4'25 Q1'26 Q2'26 Q3'26
Total ARR(1) as Reported $889,628 $930,051 $996,202 $1,043,295 $1,084,880
As Reported NNARR $36,363 $40,423 $66,151 $47,093 $41,585
Total ARR(1) using March 31, 2025 rates $899,365 $930,051 $969,693 $1,016,697 $1,055,806
Constant currency NNARR $61,291 $30,686 $39,642 $47,004 $39,109
Subscription ARR(1) as Reported $734,212 $780,098 $843,873 $893,707 $940,859
As Reported NNARR $47,162 $45,886 $63,775 $49,834 $47,152
Subscription ARR(1) using March 31, 2025 rates $741,526 $780,098 $822,695 $872,065 $916,722
Constant currency NNARR $66,196 $38,572 $42,597 $49,370 $44,657
SaaS ARR(1) as Reported $258,957 $281,045 $306,874 $335,669 $363,732
As Reported NNARR $44,125 $22,088 $25,829 $28,795 $28,063
SaaS ARR(1) using March 31, 2025 rates $261,416 $281,045 $299,017 $327,781 $354,888
Constant currency NNARR $50,831 $19,629 $17,972 $28,764 $27,107
Additional Financial Information
- GAAP net income was $18 million, or $0.40 per diluted share for the three months ended December 31, 2025
- GAAP gross margin was 81.1% and non-GAAP gross margin2 was 81.5% for the three months ended December 31, 2025
- We repurchased approximately 327,000 shares of common stock for $41 million during the three months ended December 31, 2025
- Commvault's Board of Directors approved recommitting our share repurchase program so that $250 million was made available as of January 14, 2026
- Weighted average diluted shares outstanding were approximately 45 million for the period ended December 31, 2025
- Cash and cash equivalents totaled $1,026 million as of December 31, 2025
- SaaS net dollar retention rate (NRR)4 was 121% as of December 31, 2025
- At the end of the third quarter, we initiated a cost optimization program aimed to align our cost structure to the evolving needs of the business. Refer to Note 7 below for further details.
Commvault Systems, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Revenues:
Subscription:
Term-based license $118,950 $97,625 $320,879 $262,457
Software-as-a-service 87,379 60,696 239,842 153,982
Total subscription 206,329 158,321 560,721 416,439
Perpetual license 13,675 16,423 33,083 40,681
Customer support 80,271 77,078 239,521 231,054
Other services 13,557 10,808 38,673 32,406
Total revenues 313,832 262,630 871,998 720,580
Cost of revenues:
Subscription:
Term-based license 2,999 2,653 7,655 6,802
Software-as-a-service 31,587 23,373 86,746 56,296
Total subscription 34,586 26,026 94,401 63,098
Perpetual license 60 410 499 1,188
Customer support 15,428 14,360 44,482 43,934
Other services 9,221 7,823 25,734 23,049
Total cost of revenues 59,295 48,619 165,116 131,269
Gross margin 254,537 214,011 706,882 589,311
Operating expenses:
Sales and marketing 139,314 116,068 384,033 313,965
Research and development 42,230 40,010 122,151 106,953
General and administrative 38,732 35,133 122,555 100,101
Depreciation and amortization 2,606 2,730 7,785 6,671
Restructuring 11,885 3,969 13,551 9,214
Change in contingent consideration - 2,486 (545) 2,486
Impairment charges - 2,910
Total operating expenses 234,767 200,396 649,530 542,300
Income from operations 19,770 13,615 57,352 47,011
Interest income 8,401 1,564 13,497 5,098
Interest expense (1,449) (104) (2,364) (313)
Other income, net 302 31 522 624
Income before income taxes 27,024 15,106 69,007 52,420
Income tax expense 9,242 4,085 12,999 7,307
Net income $17,782 $11,021 $56,008 $45,113
Net income per common share:
Basic $0.40 $0.25 $1.26 $1.03
Diluted $0.40 $0.24 $1.24 $1.00
Weighted average common shares outstanding:
Basic 44,111 43,889 44,281 43,779
Diluted 44,613 45,184 45,063 45,177
Commvault Systems, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, March 31,
2025 2025
ASSETS
Current assets:
Cash and cash equivalents $1,026,346 $302,103
Trade accounts receivable, net 361,846 251,995
Assets held for sale 34,770
Other current assets 56,869 46,189
Total current assets 1,445,061 635,057
Deferred tax assets, net 151,879 133,378
Property and equipment, net 11,140 8,294
Operating lease assets 37,770 10,124
Deferred commissions cost 94,933 79,309
Intangible assets, net 20,971 20,737
Goodwill 210,840 185,255
Other assets 65,540 46,112
Total assets $2,038,134 $1,118,266
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $268 $373
Accrued liabilities 152,636 147,133
Current portion of operating lease liabilities 6,992 4,614
Deferred revenue 456,732 402,930
Total current liabilities 616,628 555,050
Convertible notes, net 879,827
Deferred revenue, less current portion 276,149 223,282
Deferred tax liabilities 1,528 1,384
Long-term operating lease liabilities 31,826 6,338
Other liabilities 15,445 7,090
Total stockholders' equity 216,731 325,122
Total liabilities and stockholders' equity $2,038,134 $1,118,266
Commvault Systems, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Cash flows from operating activities
Net income $17,782 $11,021 $56,008 $45,113
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,782 2,759 9,455 6,758
Noncash stock-based compensation 29,057 31,463 91,461 84,270
Noncash operating lease expense 2,740 1,378 6,150 4,326
Noncash change in fair value of equity securities (207) 167 (406) 32
Noncash change in fair value of contingent consideration - 2,486 (545) 2,486
Noncash adjustment on headquarters sale leaseback - 495
Noncash impairment charges - 2,910
Deferred income taxes 142 2,203 9,718 (6,280)
Amortization of deferred commissions cost 12,137 8,279 34,347 23,756
Changes in operating assets and liabilities:
Trade accounts receivable, net (124,987) (88,550) (100,981) (65,437)
Operating lease liabilities (2,287) (1,200) (5,934) (5,173)
Other current assets and Other assets (12,240) 4,778 (18,143) 436
Deferred commissions cost (21,747) (12,112) (50,531) (29,532)
Accounts payable (59) (1,035) (147) (1,240)
Accrued liabilities 43,453 21,927 (1,777) 10,095
Deferred revenue 55,518 46,080 83,471 57,910
Other liabilities 961 502 (146) (3)
Net cash provided by operating activities 4,045 30,146 112,495 130,427
Cash flows from investing activities
Purchase of property and equipment (2,119) (262) (7,185) (2,973)
Purchase of equity securities (156) (207) (6,782) (788)
Proceeds from sale of headquarters, net - 34,849
Business combination, net of cash acquired - (44,909) (26,015) (65,909)
Net cash used in investing activities (2,275) (45,378) (5,133) (69,670)
Cash flows from financing activities
Repurchase of common stock (40,740) (31,899) (186,813) (135,194)
Proceeds from stock-based compensation plans - 6,974 11,100
Proceeds from issuance of convertible notes - 900,000
Purchase of capped calls - (99,630)
Payment of debt issuance costs (1,158) (23,400)
Other (18) (48)
Net cash provided by (used in) financing activities (41,916) (31,899) 597,083 (124,094)
Effects of exchange rate - changes in cash 2,937 (12,365) 19,798 (5,842)
Net increase (decrease) in cash and cash equivalents (37,209) (59,496) 724,243 (69,179)
Cash and cash equivalents at beginning of period 1,063,555 303,071 302,103 312,754
Cash and cash equivalents at end of period $1,026,346 $243,575 $1,026,346 $243,575
Supplemental disclosures of noncash activities
Issuance of common stock for business combination
$ -
$ -
$ - $4,900
Operating lease liabilities arising from obtaining right-of-use assets $12,916 $220 $35,081 $4,687
Commvault Systems, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Non-GAAP financial measures and reconciliation:
GAAP income from operations $19,770 $13,615 $57,352 $47,011
Noncash stock-based compensation5 27,721 31,156 89,639 79,775
FICA and payroll tax expense related to stock-based compensation6 812 1,557 3,449 3,692
Restructuring7 11,885 3,969 13,551 9,214
Amortization of intangible assets8 1,255 1,383 3,466 2,529
Litigation settlement9 - 675
Business combination costs10 12 415 1,902 2,340
Change in contingent consideration11 - 2,486 (545) 2,486
Adjustment on headquarters sale leaseback12 - 495
Noncash impairment charges13 - 2,910
Other nonrecurring charges14 - 1,805
Non-GAAP income from operations $61,455 $54,581 $171,114 $150,632
GAAP net income $17,782 $11,021 $56,008 $45,113
Noncash stock-based compensation5 27,721 31,156 89,639 79,775
FICA and payroll tax expense related to stock-based compensation6 812 1,557 3,449 3,692
Restructuring7 11,885 3,969 13,551 9,214
Amortization of intangible assets8 1,255 1,383 3,466 2,529
Litigation settlement9 - 675
Business combination costs10 12 415 1,902 2,340
Change in contingent consideration11 - 2,486 (545) 2,486
Adjustment on headquarters sale leaseback12 - 495
Noncash impairment charges13 - 2,910
Other nonrecurring charges14 - 1,805
Non-GAAP provision for income taxes adjustment15 (7,249) (9,373) (30,866) (30,143)
Non-GAAP net income $52,218 $42,614 $138,904 $118,591
GAAP diluted earnings per share $0.40 $0.24 $1.24 $1.00
Noncash stock-based compensation5 0.62 0.69 1.99 1.77
FICA and payroll tax expense related to stock-based compensation6 0.02 0.03 0.08 0.08
Restructuring7 0.27 0.09 0.30 0.20
Amortization of intangible assets8 0.03 0.03 0.08 0.06
Litigation settlement9 - 0.01
Business combination costs10 - 0.01 0.04 0.05
Change in contingent consideration11 - 0.06 (0.01) 0.06
Adjustment on headquarters sale leaseback12 - 0.01
Noncash impairment charges13 - 0.06
Other nonrecurring charges14 - 0.04
Non-GAAP provision for income taxes adjustment15 (0.17) (0.21) (0.69) (0.66)
Non-GAAP diluted earnings per share $1.17 $0.94 $3.08 $2.63
GAAP diluted weighted average shares outstanding 44,613 45,184 45,063 45,177
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Non-GAAP gross margin reconciliation:
GAAP gross margin 81.1 % 81.5 % 81.1 % 81.8 %
Cost of revenues related to noncash stock-based compensation 0.4 % 0.5 % 0.4 % 0.6 %
Non-GAAP gross margin 81.5 % 82.0 % 81.5 % 82.4 %
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Non-GAAP free cash flow reconciliation:
GAAP cash provided by operating activities $4,045 $30,146 $112,495 $130,427
Purchase of property and equipment (2,119) (262) (7,185) (2,973)
Non-GAAP free cash flow $1,926 $29,884 $105,310 $127,454
Use of Non-GAAP Financial Measures
Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations (EBIT), non-GAAP income from operations margin, non-GAAP gross margin, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP free cash flow, annualized recurring revenue (ARR), subscription ARR, SaaS ARR and SaaS net dollar retention rate (NRR). This financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Commvault believes that the use of these non-GAAP financial measures, when used as a supplement to GAAP financial measures, provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault's industry, many of which present similar non-GAAP financial measures to the investment community. Commvault has also provided its revenues, ARR, subscription ARR and SaaS ARR on a constant currency basis. Commvault analyzes revenue growth, ARR, subscription ARR and SaaS ARR on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.
All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are included in this press release.
Non-GAAP income from operations and non-GAAP income from operations margin. These non-GAAP financial measures exclude noncash stock-based compensation charges and additional Federal Insurance Contribution Act (FICA) and related payroll tax expense incurred by Commvault when employees vest in restricted stock awards. Commvault has also excluded restructuring costs, noncash amortization of intangible assets, business combination costs, the change in the estimated fair value of contingent consideration, adjustments from the sale and leaseback of headquarters and other nonrecurring charges from its non-GAAP results. These adjustments are further discussed in the reconciliation of GAAP to non-GAAP financial measures. Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault's core operating results over multiple periods. When evaluating the performance of Commvault's operating results and developing short- and long-term plans, Commvault does not consider such expenses.
Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans. Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault's operating results and those of other companies.
There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin. The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature. Noncash stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault's operating results. In addition, noncash stock-based compensation is an important part of Commvault's employees' compensation and can have a significant impact on their performance. The following table presents the stock-based compensation expense included in cost of revenues, sales and marketing, research and development and general and administrative ($ in thousands):
Three Months Ended Nine Months Ended
December 31, December 31,
2025 2024 2025 2024
Cost of revenues $1,323 $1,465 $3,895 $4,420
Sales and marketing 13,361 13,911 38,704 35,028
Research and development 6,739 7,084 21,561 17,803
General and administrative 6,298 8,696 25,479 22,524
Stock-based compensation expense $27,721 $31,156 $89,639 $79,775
The table above excludes stock-based compensation expense related to the Company's restructuring activities described below in Note 7.
The components that Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures. Due to the limitations related to the use of non-GAAP measures, Commvault's management assists investors by providing a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Commvault's management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.
Non-GAAP net income and non-GAAP diluted earnings per share (EPS). In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporates a non-GAAP effective tax rate of 24%.
Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income. For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages. Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over time, Commvault believes its GAAP and cash tax rates will align.
Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault's use of non-GAAP net income and non-GAAP diluted EPS.
Non-GAAP gross margin. Commvault defines this non-GAAP financial measure as GAAP gross margin adjusted to exclude cost of revenues related to noncash stock-based compensation.
Non-GAAP free cash flow. Commvault defines this non-GAAP financial measure as net cash provided by operating activities less purchases of property and equipment. Commvault considers non-GAAP free cash flow a useful metric for Commvault management and its investors in evaluating Commvault's ability to generate cash from its business operations. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault's use of non-GAAP free cash flow.
Forward-looking non-GAAP measures. In this press release, Commvault presents non-GAAP gross margin, non-GAAP EBIT margin and free cash flow on a forward-looking basis. The most directly comparable GAAP measures are not accessible on a forward-looking basis without unreasonable efforts, because certain items that impact these GAAP measures, cannot be reasonably predicted or quantified. The probable significance of these items may be material, and as a result, the corresponding GAAP measures and a quantitative reconciliation to those GAAP measures are not available on a forward-looking basis.
Notes
- Annualized recurring revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes recurring subscription offerings (including term licenses, SaaS, and utility software), maintenance related to perpetual and term licenses, extended maintenance contracts (enterprise support), and managed services. It excludes non-recurring elements such as perpetual licenses and professional services which are typically delivered at a point in time. ARR is calculated by dividing the total contract value by the number of days in the contract term and multiplying by 365. Subscription ARR includes only term licenses, SaaS, and utility arrangements, calculated using the same methodology as ARR. SaaS ARR includes only the cloud-hosted portion of subscription ARR and is calculated using the same methodology.
These metrics should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and are not intended to be combined with or to replace those items. These metrics are not a forecast of future revenues. Management believes that reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault's recurring revenue streams presented on an annualized basis. There is no direct GAAP comparative to ARR. See "Use of Non-GAAP Financial Measures" for additional explanation.
- A reconciliation of GAAP to non-GAAP results has been provided in the reconciliation of GAAP to non-GAAP financial measures included in this press release. An explanation of these measures is also included under the heading "Use of Non-GAAP Financial Measures."
- 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 available and cannot be reasonably estimated. See "Forward-looking non-GAAP measures" for additional explanation.
- SaaS net dollar retention rate (NRR) is the percentage of SaaS ARR retained from existing customers at the start of an annual period after accounting for expansion revenue, churn, and downgrades. It is presented on a constant currency basis using exchange rates as of March 31, 2025. Acquired SaaS ARR is excluded until the acquisition is fully integrated, which we generally expect to occur twelve months from the close date. We believe our SaaS NRR offers valuable insight into the year-over-year expansion of our existing customer base, reflecting both increased utilization of current products and services as well as the adoption of additional offerings. There is no direct GAAP comparative to NRR. See "Use of Non-GAAP Financial Measures" for additional explanation.
- Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan, exclusive of stock-based compensation expense related to Commvault's restructuring activities described below in Note 7.
- Represents additional FICA and related payroll tax expenses incurred by Commvault when employees vest in restricted stock awards.
- During fiscal 2026, we initiated two restructuring plans designed to optimize our cost structure, enhance organizational agility, align resources with strategic priorities, and reorganize our business technology function. These initiatives include workforce reductions, technology transitions, office lease closures, and the exit of operations in certain jurisdictions. The related charges primarily consist of severance and associated employee termination costs, stock?based compensation expense resulting from modification events, and office closure and exit charges. We expect both restructuring plans to be substantially completed during fiscal 2027.
Restructuring charges incurred in the prior year relate to a plan initiated in the fourth quarter of fiscal 2024 and completed in fiscal 2025. These charges consisted of severance and associated employee termination costs and stock?based compensation expense resulting from modification events.
- Represents noncash amortization of intangible assets.
- During the first quarter of fiscal 2025, we entered into a settlement agreement resulting in a payment of approximately $1.5 million which resolved certain legal matters. For the three months ended June 30, 2024, approximately $0.7 million was recorded in general and administrative expenses and the remaining $0.8 million was incurred in a prior period that is not presented in the consolidated statements of operations.
- These charges relate to acquisition and business development activities, including legal, accounting and advisory services. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to other periods.
- Represents the change in the estimated fair value of the contingent consideration arrangement related to the acquisition of Appranix, Inc.
- During the first quarter of fiscal 2026, we finalized the sale of our corporate headquarters and entered into a lease for a portion of the premises. These noncash charges represent accounting adjustments for a $1.3 million loss associated with the related lease terms and an $0.8 million adjustment to reflect the final sale price of the assets resulting in a net charge of $0.5 million recorded in general and administrative expense on the consolidated statements of operations.
- Represents noncash impairment charges related to our corporate headquarters.
- These primarily legal and consulting expenses are related to our response in the second quarter of fiscal 2026 to a one-time security matter from the first quarter. Given the non-recurring nature of the matter, these costs have been excluded from non-GAAP results to provide a clearer view of ongoing operating performance.
- The provision for income taxes is adjusted to reflect Commvault's estimated non-GAAP effective tax rate of 24%.
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SOURCE COMMVAULT
Investor Relations Contact: Michael J. Melnyk, CFA, 646-522-6160, mmelnyk@commvault.com; Media Contact: Andrea Duffy, 646-295-5241, andreaduffy@commvault.com