8-K: Commvault Reports Record Q3 Revenue, ARR Driven by Cloud & AI

Commvault announced strong third fiscal quarter 2026 financial results, with total revenue climbing 19% year-over-year to a record $314 million and annualized recurring revenue reaching $1.085 billion.

Summary

• Total revenues reached a record $314 million for the third fiscal quarter ended December 31, 2025, marking a 19% year-over-year increase.
• Annualized Recurring Revenue (ARR) grew to $1,085 million, up 22% year-over-year, or 17% on a constant currency basis.
• Subscription revenue increased 30% year-over-year to $206 million, inclusive of term-based license revenue of $119 million (up 22%) and SaaS revenue of $87 million (up 44%).
• Subscription ARR grew 28% year-over-year to $941 million, or 24% on a constant currency basis.
• Non-GAAP EBIT was $61 million, representing an operating margin of 19.6%.
• GAAP net income was $18 million, or $0.40 per diluted share.
• The company set a new high for new customer additions in fiscal year 2026.
• Cash and cash equivalents totaled $1,026 million as of December 31, 2025.
• SaaS net dollar retention rate (NRR) was 121% as of December 31, 2025.

Sentiment

Score: 8

Explanation: The company reported strong financial results with record revenue and ARR, significant growth in subscription and SaaS segments, and positive strategic developments like new platform releases and partnerships. While operating cash flow was low due to working capital timing, the overall outlook and growth trajectory are very positive, indicating strong business momentum and market relevance.

Positives

• Record total revenues of $314 million, up 19% year-over-year, demonstrating strong market demand.
• Record total Annualized Recurring Revenue (ARR) of $1,085 million, up 22% year-over-year, indicating robust recurring business.
• Significant subscription revenue growth of 30% year-over-year to $206 million, primarily driven by 44% growth in SaaS revenue to $87 million.
• Subscription ARR grew 28% year-over-year to $941 million, highlighting the success of subscription-based models.
• A high SaaS net dollar retention rate (NRR) of 121% signifies strong customer satisfaction and expansion within the existing customer base.
• Achieved a new high for new customer additions in fiscal 2026, indicating effective sales and marketing strategies.
• Released the Commvault Cloud Unity Platform, unifying data security, cyber recovery, and identity resilience, addressing critical market needs.
• Formed strategic partnerships with Delinea and Pinecone, expanding offerings in identity resilience and AI application protection.
• Received a 2025 Geography and Global AWS Partner Award, being named the Global Storage Partner of the Year, validating cloud capabilities.
• The Board of Directors approved recommitting $250 million to the share repurchase program, signaling confidence in future performance and commitment to shareholder returns.

Negatives

• Perpetual license revenue declined 17% year-over-year to $13.675 million, continuing a trend away from one-time license sales.
• Operating cash flow was $4 million and free cash flow was $2 million, which were significantly impacted by the timing of certain working capital items.
• GAAP income from operations (EBIT) was $20 million, representing a 6.3% operating margin, which is considerably lower than the non-GAAP EBIT margin of 19.6% due to various adjustments.

Risks

• Risks and uncertainties related to the company's restructuring plans.
• Competitive factors within the data management and cybersecurity markets.
• Difficulties and delays inherent in the development, manufacturing, marketing, and sale of software products and related services.
• Impact of general economic conditions on business operations and customer spending.
• Potential outcomes of litigation and other legal matters.

Future Outlook

Commvault expects total revenues for the fourth fiscal quarter of 2026 to be between $305 million and $308 million, with subscription revenue projected between $203 million and $207 million. For the full fiscal year 2026, updated guidance anticipates total revenues between $1,177 million and $1,180 million. Total Annualized Recurring Revenue (ARR) is expected to grow approximately 18% year-over-year, and Subscription ARR is projected to grow approximately 24% year-over-year. Non-GAAP EBIT margin is expected to be between 19% and 20% for the full year, and free cash flow is forecast to be between $215 million and $220 million, reflecting one-time payments associated with the cost optimization program.

Management Comments

• "Commvault delivered another quarter of healthy growth and profitability driven by record customer engagement and adoption."
• "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."

Industry Context

The announcement highlights Commvault's strategic alignment with critical industry trends, including the increasing demand for AI-enabled data security, cyber recovery, and identity resilience solutions. The focus on hybrid and multi-cloud environments directly addresses the complex infrastructure needs of modern enterprises. Partnerships with Delinea for identity resilience and Pinecone for vector database protection demonstrate proactive engagement with emerging threats and AI application support, positioning Commvault as a key player in the evolving cybersecurity and data management landscape. The AWS Partner Award further solidifies its standing in cloud storage solutions.

Comparison to Industry Standards

• Commvault's SaaS net dollar retention rate (NRR) of 121% is a strong indicator of customer satisfaction and expansion, generally considered excellent within the SaaS industry, often benchmarked against top-tier cloud companies.
• The Global Storage Partner of the Year award from AWS positions Commvault favorably against other cloud storage providers and partners in the AWS ecosystem, such as NetApp, Dell Technologies, or Pure Storage, indicating strong performance and integration within a leading cloud platform.
• The partnerships with Delinea (a privileged access management provider) and Pinecone (a vector database company) demonstrate Commvault's ability to integrate with specialized, cutting-edge technologies, comparable to how other enterprise data protection vendors like Veeam or Rubrik might form alliances to broaden their ecosystem and address specific customer needs in areas like identity or AI data protection.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, record revenue and ARR, increased EPS, and a recommitted share repurchase program of $250 million.
• Customers: Benefit from new product releases like the Commvault Cloud Unity Platform and enhanced offerings through partnerships with Delinea and Pinecone, focusing on data security, cyber recovery, and AI application protection.
• Employees: Impacted by a cost optimization program (restructuring plan) initiated in Q3 FY26, which includes workforce reductions.

Next Steps

• Host a conference call on January 27, 2026, at 8:30 a.m. Eastern Time to discuss quarterly results.
• Substantially complete the cost optimization program (restructuring plans) during fiscal 2027.

Key Dates

Recommendation

The company demonstrates robust financial health with record revenue and ARR, driven by strong subscription and SaaS growth. The 121% SaaS NRR indicates excellent customer retention and expansion. Strategic initiatives, including the launch of an AI-enabled cloud platform and key partnerships, position Commvault well in the growing data security and cyber recovery markets. While operating cash flow was temporarily low due to working capital, the overall growth trajectory, positive future guidance, and share repurchase program signal strong confidence from management and potential for continued shareholder value creation.

Keywords

Commvault, CVLT, Financial Results, Q3 2026, Revenue Growth, ARR, Subscription Revenue, SaaS, Data Security, Cyber Recovery, AI, Cloud, Enterprise Software, Earnings