Commvault Announces Third Quarter Fiscal 2026 Financial Results

Rhea-AI Summary

Commvault (NASDAQ: CVLT) reported third quarter fiscal 2026 results for the period ended December 31, 2025. Total revenue was $314 million, up 19% YoY. Annualized recurring revenue (ARR) reached $1,085 million, up 22% YoY, and subscription ARR was $941 million, up 28% YoY. Subscription revenue was $206 million, up 30% YoY. GAAP income from operations was $20 million (6.3% margin); non-GAAP EBIT was $61 million (19.6% margin). Operating cash flow was $4 million and free cash flow was $2 million, affected by working capital timing. Product and partner highlights include the Commvault Cloud Unity Platform and new partnerships with Delinea and Pinecone. Q4 revenue guidance is $305–308 million; full-year revenue guidance is $1,177–1,180 million with expected FY free cash flow of $215–220 million.

Positive

• Total revenue +19% YoY to $314M
• ARR +22% YoY to $1,085M
• Subscription revenue +30% YoY to $206M
• Subscription ARR +28% YoY to $941M
• Non-GAAP EBIT margin of 19.6%

Negative

• Operating cash flow only $4M in the quarter
• Free cash flow only $2M in the quarter
• GAAP operating margin 6.3%, materially below non-GAAP margin
• Full-year free cash flow guidance $215–220M reflects one-time restructuring payments

Market Reaction

-32.17% $87.75 5.4x vol

15m delay 87 alerts

-32.17% Since News

$87.75 Last Price

$84.44 $106.44 Day Range

-$1.84B Valuation Impact

$3.87B Market Cap

5.4x Rel. Volume

Following this news, CVLT has declined 32.17%, reflecting a significant negative market reaction. Our momentum scanner has triggered 87 alerts so far, indicating high trading interest and price volatility. The stock is currently trading at $87.75. This price movement has removed approximately $1.84B from the company's valuation. Trading volume is exceptionally heavy at 5.4x the average, suggesting significant selling pressure.

Data tracked by StockTitan Argus (15 min delayed). Upgrade to Silver for real-time data.

Key Figures

Q3 FY26 total revenue: $314 million Total ARR: $1,085 million Subscription revenue: $206 million +5 more

8 metrics

Q3 FY26 total revenue $314 million Up 19% year over year; record quarterly revenue

Total ARR $1,085 million Up 22% year over year in Q3 FY26

Subscription revenue $206 million Up 30% year over year in Q3 FY26

SaaS revenue $87 million Up 44% year over year in Q3 FY26

Subscription ARR $941 million Up 28% year over year in Q3 FY26

EBIT margin 6.3% Q3 FY26 GAAP income from operations of $20 million

Non-GAAP EBIT margin 19.6% Q3 FY26 non-GAAP EBIT of $61 million

FY26 FCF guidance $215–$220 million Full-year FY26 free cash flow outlook including one-time payments

Market Reality Check

Price: $129.36 Vol: Volume 1,042,471 is 1.8x ...

high vol

$129.36 Last Close

Volume Volume 1,042,471 is 1.8x the 20-day average of 580,631, signaling elevated interest into earnings. high

Technical Shares at $129.36 are trading below the 200-day MA of $161.06 and 35.54% under the 52-week high.

Peers on Argus

CVLT gained 4.45% on strong earnings while close peers like NICE, OTEX, and PEGA...

CVLT gained 4.45% on strong earnings while close peers like NICE, OTEX, and PEGA showed modest gains under 1% and SRAD/IDCC were slightly negative, pointing to a stock-specific reaction rather than a sector-wide move.

Previous Earnings Reports

5 past events · Latest: Oct 28 (Positive)

Same Type Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Oct 28	Q2 2026 earnings	Positive	-16.3%	Reported 18% revenue growth and ARR above $1B but shares fell sharply.
Jul 29	Q1 2026 earnings	Positive	+18.3%	Strong revenue and ARR growth with robust subscription and SaaS momentum.
Apr 29	Q4 2025 earnings	Positive	+1.7%	Delivered solid Q4 and FY25 growth and raised fiscal 2026 revenue outlook.
Jan 28	Q3 2025 earnings	Positive	+1.1%	Posted 21% revenue growth and higher margins with stronger subscription mix.
Oct 29	Q2 2025 earnings	Positive	+24.0%	Reported double-digit revenue and ARR growth and raised FY25 guidance.

Pattern Detected

Earnings releases have generally produced positive price reactions, with one notable selloff despite strong fundamentals. Average absolute move around earnings has been meaningful.

Recent Company History

Over the last five earnings cycles, Commvault has consistently reported double-digit revenue and ARR growth, alongside expanding subscription and SaaS contributions. Q2 FY2026 saw revenues of $276M and ARR above $1B, while prior quarters in fiscal 2025 delivered steady ARR gains and rising operating margins. Price reactions have mostly been positive, including moves of 18.26% and 23.96%, though one Q2 FY2026 report saw a -16.29% drop, showing that strong fundamentals have not always translated into upside.

Historical Comparison

earnings

+12.3 %

Average Historical Move

Historical Analysis

In the past five earnings reports, CVLT moved an average of 12.26%. Today’s 4.45% post-earnings move sits below that typical volatility range for this news type.

Typical Pattern

Recent earnings have shown steady revenue and ARR growth, rising subscription and SaaS contributions, and improving non-GAAP margins, with this quarter extending those trends alongside updated FY2026 guidance.

Market Pulse Summary

The stock is dropping -32.2% following this news. A negative reaction despite strong headline metric...

Analysis

The stock is dropping -32.2% following this news. A negative reaction despite strong headline metrics would fit the prior Q2 FY2026 pattern, when shares fell 16.29% even as revenues and ARR grew solidly. This quarter again delivered 19% revenue growth and 22% ARR growth with a 19.6% non-GAAP EBIT margin. Historically, large post-earnings swings have reflected shifting expectations around guidance and profitability rather than clear operational deterioration.

Key Terms

annualized recurring revenue (arr), subscription arr, saas, non-gaap ebit, +1 more

5 terms

annualized recurring revenue (arr) financial

"Annualized recurring revenue (ARR)1 reaches $1,085 million, up +22% year over year"

Annualized recurring revenue (ARR) is the predictable amount of income a business expects to earn from ongoing customer subscriptions or contracts over a year. It provides a clear picture of the company's steady revenue stream, much like estimating the annual salary based on consistent monthly pay. Investors use ARR to gauge the company's growth and stability over time.

subscription arr financial

"Subscription ARR1 grew to $941 million, up 28% year over year"

Subscription ARR (Annual Recurring Revenue) is the predictable income a company expects to earn each year from customers who subscribe to its services or products. Think of it like a subscription to a magazine—once you sign up, you pay regularly, and the company can count on that steady income. Investors pay attention to subscription ARR because it shows the company's ongoing revenue strength and growth potential.

saas financial

"SaaS revenue of $87 million, up 44% year over year"

SaaS, or Software as a Service, is a way of delivering computer programs over the internet, allowing users to access and use them through a web browser without needing to install or maintain the software themselves. For investors, it highlights a business model where companies generate recurring revenue by providing ongoing access to their software, often leading to predictable income and growth potential.

non-gaap ebit financial

"Non-GAAP EBIT2 was $61 million, an operating margin of 19.6%"

Non-GAAP EBIT is a company-reported measure of operating profit that starts with earnings before interest and taxes (EBIT) under standard accounting rules and then removes or adds back items the company considers unusual or non-recurring. Investors use it like a cleaned-up scorecard to see underlying business earnings without one-off swings, but because companies choose which items to adjust, it should be compared with the standard (GAAP) figure to judge consistency and potential bias.

free cash flow financial

"Free cash flow2 is expected to be between $215 million and $220 million"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

AI-generated analysis. Not financial advice.

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 Growth		Revenue	Y/Y Growth		Revenue	Y/Y Growth		Revenue	Y/Y Growth		Revenue	Y/Y 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  Revenue as Reported (GAAP)		Q3'26  Revenue as Reported (GAAP)		Constant Currency Impact		% Change Y/Y (GAAP)		% Change Y/Y Constant Currency
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 Growth		Revenue	Y/Y Growth		Revenue	Y/Y Growth		Revenue	Y/Y Growth		Revenue	Y/Y 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 ARR1	$        889,628		$        930,051		$        996,202		$     1,043,295		$     1,084,880
Subscription ARR1	$        734,212		$        780,098		$        843,873		$        893,707		$        940,859
SaaS ARR1	$        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 ARR1 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 ARR1 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 ARR1 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 ARR1 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 ARR1 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 ARR1 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 December 31,				Nine Months Ended 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 December 31,				Nine Months Ended 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 December 31,				Nine Months Ended 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 December 31,				Nine Months Ended 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 December 31,				Nine Months Ended 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 December 31,				Nine Months Ended 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

1. 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.
    
2. 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."
    
3. 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.
    
4. 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.
   
   
5. 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.
    
6. Represents additional FICA and related payroll tax expenses incurred by Commvault when employees vest in restricted stock awards.
    
7. 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.
   
   
8. Represents noncash amortization of intangible assets.
    
9. 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.
    
10. 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.
     
11. Represents the change in the estimated fair value of the contingent consideration arrangement related to the acquisition of Appranix, Inc.
     
12. 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.
     
13. Represents noncash impairment charges related to our corporate headquarters.
     
14. 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.
    
    
15. 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

FAQ

What revenue did Commvault (CVLT) report for Q3 FY2026?

Commvault reported $314 million in total revenue for Q3 FY2026, up 19% YoY.

How large is Commvault's ARR and how did it change in Q3 FY2026 (CVLT)?

Annualized recurring revenue was $1,085 million, an increase of 22% YoY.

What guidance did Commvault (CVLT) give for Q4 FY2026 revenue?

Commvault guided Q4 FY2026 total revenues of $305–308 million.

Why was Commvault's free cash flow low in Q3 FY2026 (CVLT)?

Free cash flow was $2 million, impacted by the timing of certain working capital items.

What margin figures did Commvault (CVLT) report for Q3 FY2026?

GAAP operating margin was 6.3% (income from operations $20M) and non-GAAP EBIT margin was 19.6%.

What full-year FY2026 guidance did Commvault (CVLT) update?

Full-year revenue guidance is $1,177–1,180 million; subscription ARR growth is expected ~24% YoY; free cash flow guidance is $215–220 million.