Commvault shows revenue resilience
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Commvault shows revenue resilience Commvault’s first fiscal 2027 quarter revenues grew nicely compared to last year but are flattish for the second quarter in a row. Total revenues in the quarter ended June 30, 2026, were $314 million, up 11 percent year/year, beating its $311 million high-end guidance, with GAAP net income of $21.14 million down 9.9 percent year/year. Subscription revenues, one of its main internal performance indicators, of $267 million were up 16 percent, again beating high-end guidance of $265 million, and representing 85 percent of Commvault’s total revenues. CEO Sanjay Mirchandani said: “Our platform strategy is delivering results. We added new customers, expanded multi-product adoption, and continued to drive strong SaaS growth, reinforcing our position as a leader in cyber resilience.” He added: “We are scaling this business in a disciplined way. This quarter, strong ARR growth, record profitability, and growing free cash flow came together, demonstrating that Commvault is converting cyber resilience leadership into a highly profitable, cash generative business.” Operating cash flow was $52 million vs $132 million in the last quarter, while free cash flow was $51 million vs $132 million in prior quarter and up 71 percent Y/Y. Commvault’s revenues are increasing nicely on a Y/Y basis, but the three most recent ones are flattish looked at from a Q/Q viewpoint; William Blair analyst Jason Ader recognized this, mentioning “the current revenue growth deceleration trend.” The outlook, which we examine below, is for a fourth flattish quarter. He noted Commvault’s ”platform expansion strategy continues to gain traction, with 49 percent of managed SaaS customers now using two or more products, versus 42 percent a year ago (up one point sequentially), and management highlighted particularly strong growth within the three-to-five product cohort.” One thing we noticed was that the subscription customers count is growing at a steady clip, up 500 this quarter to15,200, but the new (subscription) customers per quarter number is not. In fact it’s declined for two quarters in a row (see chart). This suggests the subscription customer count increase is mainly the installed base converting to subscription deals. That trend will eventually finish, and then new customers will be needed to grow the subscription customer base and hence revenues, or new offerings for the installed subscription base to grow subscription revenues. Gaining 500 new customers in the latest quarter is still impressive, notwithstanding it’s down from 600 in the prior quarter and 700 in the quarter before that. The increase was led by the acquired Clumio SaaS backup capability. SaaS ARR (Annual Recurring Revenue) jumped 38 percent Y/Y to 424 million as a result, and it hit a milestone of $100 million of quarterly revenue. Next quarter’s revenue guidance is $310 million +/- and up 10 percent Y/Y at the mid-point. But the Q/Q difference is a 1.3 percent decrease and will make Q2 fy 2027 the third flat quarter in a row. The subscription revenue outlook for the next quarter is $266 million +/- $2 million, an 18.7 percent Y/Y increase at the mid-point but a Q/Q decrease of 0.4 percent; flat in other words. Q3 fy 2027 will need to show a substantial revenue increase over Q3 fy2026’s $313.8 million in order for Commvault to continue Y/Y revenue growth. The easy compares will be over. Full fy2027 guidance is unchanged at $1.305 billion +/- 5 million; a 10 percent Y/Y rise at the mid-point. Ader noted: “The company continues to anticipate a stronger second half, supported by a growing SaaS mix, larger renewal pools that drive cross-sell opportunities, and stable term software trends.” Bootnote Full fy2027 subscription revenues are expected to be between $1,119 million and $1,129 million; a 16 percent mid-point rise and up 1 percent from the previous guidance last quarter.
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