CommVault Systems (NASDAQ:CVLT) reported first-quarter fiscal 2027 results that exceeded its expectations, driven by continued growth in subscription and software-as-a-service offerings, while the company raised its full-year non-GAAP EBIT margin outlook and subscription revenue guidance.
Chief Executive Officer Sanjay Mirchandani said subscription annual recurring revenue, or ARR, rose 22% year over year to $1.05 billion. SaaS ARR increased 38% to $424 million, while subscription revenue grew 16% to $267 million. SaaS revenue surpassed $100 million for the quarter, and the company expanded its EBIT margin by more than 200 basis points to approximately 23%.
Subscription growth and profitability
Chief Financial Officer Gary Merrill said Commvault added $39 million in net new subscription ARR during the quarter, with SaaS growth supported by new customers and expansion among existing customers. The company exceeded 10,000 active SaaS customers, and subscription net dollar retention was 114%, unchanged from the prior quarter.
Identity resilience and data security offerings accounted for more than one-third of net new subscription ARR, Merrill said. The company also cited growth in emerging SaaS offerings including Clumio S3 protection, Google Workspace and Azure DevOps. Among Commvault Managed SaaS customers, 49% used two or more products, up from 42% a year earlier.
- Total revenue increased 11% year over year to $314 million.
- Subscription revenue represented 85% of total revenue, compared with 81% in the prior-year period.
- Gross margin reached 82.1%, while SaaS gross margin rose 635 basis points year over year to 70.6%.
- Non-GAAP EBIT was $71 million, producing a 22.8% margin, up 210 basis points year over year.
- Free cash flow increased 71% year over year to $51 million.
Merrill said the quarter’s non-GAAP EBIT margin was Commvault’s strongest quarterly performance in more than a decade. Operating expenses increased 7% to $185 million, while headcount was roughly flat from a year earlier. He said the company’s scale and gross-margin gains provide room to continue investing in sales, marketing and research and development while expanding profitability.
The company repurchased about 98,000 shares for $10 million during the quarter. Merrill said Commvault intends to return at least 60% of annual free cash flow to shareholders through repurchases while preserving balance-sheet flexibility.
AI resilience and platform strategy
Mirchandani said enterprise AI adoption remains in an early, experimental phase, but customer discussions increasingly center on AI data workloads, non-human identities, access controls and the ability to identify and reverse compromised changes. He said Commvault’s platform is designed to protect hybrid environments spanning on-premises infrastructure, cloud services, SaaS applications, legacy systems and AI workloads.
The company discussed new AI-oriented capabilities, including AI Studio, which is intended to enable agentic use of core product capabilities; Data Activate, which is designed to classify and curate protected data for AI training and learning systems; and AI Protect, which is intended to help customers assess agent-driven changes and recover affected applications. Mirchandani said the offerings are expected over the coming months.
Commvault also expanded its Microsoft partnership during the quarter. Its cyber-resilience capabilities will be available as a native independent software vendor service on Microsoft Azure, which Mirchandani said should make it easier for customers to use Commvault within Azure workflows and the marketplace.
The company highlighted Clumio as one of the fastest-growing components of its SaaS portfolio. Mirchandani said the cloud-native offering is aimed at organizations with large cloud data sets and workloads across services such as Amazon S3, Snowflake and Google Cloud. Merrill added that 40% of SaaS customers are new to Commvault, with SaaS serving as the company’s principal new-customer acquisition engine.
Hardware constraints and outlook
Management said hardware availability constraints remain a factor for some on-premises software deals, but characterized the impact as manageable. Merrill said term subscription lengths faced a mid-single-digit sequential impact as customers assessed hardware and storage plans, though Commvault’s cloud and SaaS offerings provide flexibility for customers facing supply constraints. Term software net new ARR was sequentially flat, he said.
Foreign exchange also created a small-to-modest headwind to first-quarter ARR. Using beginning-of-quarter exchange rates, Merrill said net new subscription ARR would have been in the low-$40 million range rather than $39 million.
For fiscal 2027, Commvault reiterated its subscription ARR outlook of $1.20 billion to $1.21 billion, representing approximately 19% growth at the midpoint. It expects SaaS ARR to exceed $500 million by year-end.
- Full-year subscription revenue guidance increased to $1.119 billion to $1.129 billion, or about 16% growth at the midpoint.
- Total revenue guidance was maintained at $1.30 billion to $1.31 billion.
- Full-year non-GAAP EBIT margin guidance increased by 50 basis points to approximately 21%.
- Free cash flow guidance remained $250 million to $260 million, weighted toward the second half of the fiscal year.
For the fiscal second quarter, Commvault expects subscription revenue of $264 million to $268 million, total revenue of about $310 million and a non-GAAP EBIT margin of approximately 20%.
About CommVault Systems (NASDAQ:CVLT)
Commvault Systems, Inc is a global provider of data protection and information management software designed to help organizations manage, protect, and activate data across on-premises and cloud environments. Founded in 1996 and headquartered in Tinton Falls, New Jersey, Commvault offers a suite of integrated products and services that enable enterprises to back up, recover, archive, and analyze data. Its flagship solutions include Commvault Complete Data Protection, Commvault HyperScale, and the SaaS-based Metallic portfolio, which deliver scalable and automated data management capabilities across hybrid infrastructure environments.
Commvault’s platform is built on a unified architecture that allows customers to streamline operations, reduce complexity, and ensure data resiliency.
