Commvault Raises Outlook as Subscription Revenue Hits Record
The data-protection software provider posted a record 22.8% adjusted operating margin.
Commvault Systems (CVLT) reported record subscription revenue and raised its full-year outlook as growth shifted further toward cloud software and support.
The quarter paired stronger profitability with moderating top-line growth. Total revenue growth slowed to 11% from 13% in the preceding quarter and 19% two quarters earlier, while non-GAAP operating margin widened from 21.3% and 19.6% over the same periods.
Revenue rose 11% from a year earlier to $314.1 million, up 0.8% sequentially. Non-GAAP net income increased 30% to $59.2 million, and adjusted diluted earnings rose 41% to $1.42 a share, helped by a lower share count. GAAP net income fell 10% to $21.1 million, or $0.50 a diluted share, as income-tax expense more than tripled.
Subscription revenue increased 16% to $267.0 million, exceeding the company's previous guidance by $2 million to $4 million. SaaS revenue crossed $100 million for the first time, rising 39% to $100.6 million, though its annual growth rate eased from 43% in the prior quarter. Term-based license revenue grew 1%, while term-based support increased 18%, underscoring the shift toward recurring cloud and support sales.
Subscription annual recurring revenue rose 22% to $1.054 billion and increased 3.9% sequentially on a recast basis. SaaS ARR climbed 6% from the prior quarter to $424.3 million, and Commvault reported subscription net dollar retention of 114%.
Commvault raised its fiscal 2027 subscription-revenue forecast to $1.119 billion to $1.129 billion and lifted its adjusted operating-margin outlook to about 21%. The company maintained subscription ARR guidance of $1.200 billion to $1.210 billion and free-cash-flow guidance of $250 million to $260 million. For the second quarter, it expects subscription revenue of $264 million to $268 million and an adjusted operating margin of about 20%, indicating little sequential revenue growth and a step down in margin.
Free cash flow rose 71% from a year earlier to $51.1 million, though it fell 61% from the preceding quarter's record level. Commvault repurchased about 98,000 shares for $10 million and fiscal 2027 buybacks are expected to equal roughly 60% of free cash flow.