Commvault Systems Inc. reported a strong start to fiscal year 2026, with total revenue growing by 26% year-over-year to $282 million and a noteworthy increase in annual recurring revenue (ARR) by 24% to $996 million. The company’s focus on subscription-based services is evident, with subscription revenue rising by 46% to $182 million, showcasing the successful execution of their 'land and expand' business model. CEO Sanjay Mirchandani emphasized the company's positioning within the booming cyber resilience market, stating, "We had our best land and expand quarter ever, highlighting our strategic partnerships and market adaptability." With a solid foundation established in Q1, Commvault is optimistic about its growth trajectory, particularly in light of expected continued demand for data security and resilience solutions.
Key Performance Indicators
Revenue
281.98M
QoQ: 2.52% | YoY:25.51%
Gross Profit
231.20M
81.99% margin
QoQ: 1.73% | YoY:25.05%
Operating Income
25.09M
QoQ: -6.12% | YoY:36.16%
Net Income
23.50M
QoQ: -24.19% | YoY:26.82%
EPS
0.53
QoQ: -24.29% | YoY:26.19%
Revenue Trend
Margin Analysis
Key Insights
Total Revenue: $282 million (+26% YoY)
Subscription Revenue: $182 million (+46% YoY)
Total ARR: $996 million (+24% YoY)
SaaS ARR: $307 million (+63% YoY)
Net Income: $23.5 million (+26% YoY)
Financial Highlights
Financial Highlights:
- Total Revenue: $282 million (+26% YoY)
- Subscription Revenue: $182 million (+46% YoY)
- Total ARR: $996 million (+24% YoY)
- SaaS ARR: $307 million (+63% YoY)
- Net Income: $23.5 million (+26% YoY)
- Free Cash Flow: $30 million
The substantial growth in the subscription segment underscores Commvault's transition towards recurring revenue sources, aligning with management's strategic directive to capitalize on evolving market dynamics, particularly in the cyber resilience domain.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
281.98M
25.51%
2.52%
Gross Profit
231.20M
25.05%
1.73%
Operating Income
25.09M
36.16%
-6.12%
Net Income
23.50M
26.82%
-24.19%
EPS
0.53
26.19%
-24.29%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Themes from the Earnings Call:
1. Growth in Subscription Services:
- Sanjay Mirchandani stated, "Subscription ARR grew 33% to $844 million, representing 30% growth on a constant currency basis."
2. Market Insights:
- The company is seeing growth in the cybersecurity resilience market, driven by increasing customer demand. Mirchandani highlighted, "CISOs can enhance resilience by proactively assessing risks, scenario planning, and running simulations as part of our platform."
3. Strategic Partnerships:
- Increased collaboration with partners like Deloitte and CrowdStrike enhances Commvault's market presence and capabilities.
"Our execution has never been better across the business. We continue to see hyper growth with our SaaS platform."
— Sanjay Mirchandani
"The strength we demonstrated in Q1 provides us with a solid foundation for the rest of the fiscal year."
— Sanjay Mirchandani
Forward Guidance
Commvault anticipates continued strong performance in fiscal Q2 2026, forecasting subscription revenue growth of 31% year-over-year, aiming for total revenue between $272 million and $274 million. Management raised FY '26 guidance, projecting an 18% total ARR growth with strong contributions from both SaaS and term software licenses. They emphasize the significance of ongoing demand for cyber resilience solutions as a key growth driver for the company moving forward. Jen DiRico, CFO, noted, "Our Q1 results underscore the strong and accelerating demand for our cyber resilience platform," indicating confidence in achieving these targets despite potential macroeconomic pressures.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CVLT Focus
81.99%
N/A
N/A
N/A
ENV
98.50%
2.68%
0.43%
312.80%
MANH
56.40%
24.00%
21.50%
50.08%
AGYS
61.10%
9.05%
5.55%
49.74%
AZPN
55.80%
-44.50%
-0.47%
-62.45%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the strong performance metrics for Q1 2026, Commvault Systems Inc. presents an appealing investment case. The company's strategic focus on subscription growth and its strong positioning in the cyber resilience market suggest substantial long-term growth potential. Furthermore, ongoing partnerships and product innovations place Commvault well to address evolving market demands. While competition remains a pressing concern, the company’s robust balance sheet and promising growth trajectories provide a favorable outlook for investors looking for exposure in the technology sector.
Key Investment Factors
Growth Potential
Strong growth potential exists due to a booming demand for data protection and cyber resilience solutions, particularly in the SaaS market, which saw a 63% increase in ARR.
Profitability Risk
Potential risks include competition from larger tech companies and challenges posed by economic downturns which could affect IT spending.
Financial Position
Commvault's financial position remains robust, with no long-term debt and substantial cash reserves of $363 million, allowing for further investment and growth opportunities in the cybersecurity market.
SWOT Analysis
Strengths
Robust growth in subscription services with a 46% increase in subscription revenue.
Strong market position in the growing cyber resilience market.
No long-term debt providing financial flexibility.
Weaknesses
High dependency on subscription revenues which are subject to market fluctuations.
Operating expenses have remained consistent, potentially limiting immediate profitability improvements.
Opportunities
Expansion in emerging cloud marketplaces and strategic alliances enhancing customer reach.
Increasing cyber threats driving demand for innovative data protection solutions.
Threats
Intense competition from major software vendors in cybersecurity and data management.
Economic uncertainties potentially affecting IT budget allocations.
Evolving regulatory requirements impacting operational costs and product offerings.