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COMMVAULT SYSTEMS INC (CVLT)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 delivered $276.2M revenue (+18% y/y), record net new ARR, and surpassed $1.0B total ARR two quarters early; non-GAAP EPS of $0.91; sequential gross margin compression reflected rising SaaS mix and shorter term license duration .
  • Versus consensus, revenue modestly beat while non-GAAP EPS was slightly below; SPGI consensus revenue $273.3M* vs actual $276.2M and Primary EPS $0.94* vs actual $0.91; EBITDA consensus $57.1M* vs actual $18.2M*, noting the company reports non-GAAP EBIT rather than EBITDA .*
  • FY26 guidance raised for ARR growth and free cash flow (to $225–$230M) but lowered for margins (non-GAAP EBIT margin 18.5%–19.5% vs prior ~20.5%); total revenue and subscription revenue maintained .
  • Catalysts: early $1B ARR milestone, strong SaaS ARR growth (+56% y/y), identity/data security momentum (~40% of net new ARR), and product/partner updates (Satori Cyber, BeyondTrust, HyperScale Edge/Flex, Clumio for Apache Iceberg) .

What Went Well and What Went Wrong

What Went Well

  • Achieved $1.043B total ARR (+22% y/y; +21% cc), reaching $1B milestone two quarters ahead of plan; subscription ARR $894M (+30% y/y), SaaS ARR $336M (+56% y/y) .
  • Identity and data security offerings grew double-digit sequentially and ~40% of net new ARR; Active Directory/Entra ID rapid restore saw usage more than triple y/y; “Commvault delivered a strong quarter ... achieving $1 billion in total ARR – two quarters earlier than projected” — Sanjay Mirchandani (CEO) .
  • Strong cash generation and capital flexibility: Q2 operating cash flow $76.8M; free cash flow $73.6M; $900M 0% convert raised; $131M buybacks executed; cash >$1.0B .

What Went Wrong

  • Margin compression: GAAP gross margin 80.1% (down from prior quarter), non-GAAP gross margin 80.5%; non-GAAP EBIT margin 18.6% (down from 20.7% in Q1), driven by higher SaaS mix and shorter term duration .
  • Term-based license duration shortened (~9% q/q), reducing average deal size despite strong volume; customers preserving flexibility between software and SaaS as they time cloud transition .
  • Non-GAAP EPS of $0.91 slightly below SPGI consensus $0.94*, and EBITDA far below consensus ($18.2M* vs $57.1M*), underscoring estimate-model differences given company’s EBIT/non-GAAP focus .*

Financial Results

Revenue, EPS, Margins (chronological: oldest → newest)

MetricQ2 2025Q1 2026Q2 2026
Revenue ($USD Millions)$233.3 $282.0 $276.2
GAAP Diluted EPS ($)$0.35 $0.52 $0.33
Non-GAAP Diluted EPS ($)$0.83 $1.01 $0.91
GAAP Gross Margin (%)81.6% 82.0% 80.1%
Non-GAAP Gross Margin (%)82.2% 82.4% 80.5%
Non-GAAP EBIT ($USD Millions)$47.7 $58.3 $51.4
Non-GAAP EBIT Margin (%)—20.7% 18.6%

Segment Breakdown ($USD Millions)

SegmentQ2 2025Q1 2026Q2 2026
Term-based License$84.4 $109.3 $92.6
SaaS$49.6 $72.4 $80.0
Total Subscription$134.0 $181.7 $172.7
Perpetual License$10.5 $7.3 $12.1
Customer Support$77.7 $79.0 $80.2
Other Services$11.0 $13.9 $11.2
Total Revenues$233.3 $282.0 $276.2

Geography Breakdown ($USD Millions)

RegionQ2 2025Q1 2026Q2 2026
Americas$144.4 $170.9 $168.1
International$88.9 $111.1 $108.1
Total Revenues$233.3 $282.0 $276.2

KPIs

KPIQ2 2025Q1 2026Q2 2026
Total ARR ($USD Millions)$853.3 $996.2 $1,043.3
Subscription ARR ($USD Millions)$687.1 $843.9 $893.7
SaaS ARR ($USD Millions)$214.8 $306.9 $335.7
SaaS NRR (%)——125%
Cash & Cash Equivalents ($USD Millions)—$363.2 $1,063.6
Share Repurchases ($USD Millions, Quarter)—$15.1 $131.0
Net New ARR ($USD Millions, cc)——$47.0
Net New SaaS ARR ($USD Millions, cc)——$29.0

Actual vs Wall Street Consensus (Q2 FY26)

MetricSPGI ConsensusActual
Revenue ($USD Millions)$273.3*$276.2
Primary EPS ($)$0.94*$0.91
EBITDA ($USD Millions)$57.1*$18.2*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD Millions)FY26$1,161–$1,165 $1,161–$1,165 Maintained
Subscription Revenues ($USD Millions)FY26$753–$757 $753–$757 Maintained
Total ARR Growth (cc, y/y)FY2618% 18%–19% Raised (midpoint +50 bps)
Subscription ARR Growth (cc, y/y)FY2624% 24%–25% Raised (midpoint +50 bps)
Non-GAAP Gross Margin (%)FY2681%–82% 80.5%–81.5% Lowered
Non-GAAP EBIT Margin (%)FY26~20.5% 18.5%–19.5% Lowered
Free Cash Flow ($USD Millions)FY26$210–$215 $225–$230 Raised
Total Revenues ($USD Millions)Q3 FY26—$298–$300 New
Subscription Revenues ($USD Millions)Q3 FY26—$195–$197 New
Non-GAAP Gross Margin (%)Q3 FY26—80%–81% New
Non-GAAP EBIT Margin (%)Q3 FY26—18%–19% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25 and Q1 FY26)Current Period (Q2 FY26)Trend
AI/Tech initiativesPost-quantum cryptography enhancements; GovRAMP authorization; partner updates (CrowdStrike, Deloitte, HPE, Kyndryl) Satori Cyber acquisition; HyperScale Edge/Flex; Clumio for Apache Iceberg; Conversational AI, Data Rooms; platform recognized by IDC MarketScape Expanding capabilities and recognition
Cloud migrationSubscription revenue +46% (Q1); strong cloud adoption narrative SaaS ARR +56%; nearly 9,000 SaaS customers (+40% y/y); Plumio adds Fortune customers, cost savings Accelerating
Identity & resilienceSecurity partnerships, resilience messaging Identity/data security ~40% of net new ARR; AD/Entra ID usage >3x y/y; BeyondTrust integration Strong momentum
Contract durationNot highlightedTerm duration down ~9% q/q, reducing average deal size; customers preserving flexibility amid cloud transition Normalizing lower duration
Capital allocationShare repurchase program increased to $250M (Apr) $131M buybacks; $900M 0% convert; share count ~45M Active buybacks and financing
Regulatory/complianceGovRAMP; industry leadership BBVA case (DORA compliance) Ongoing focus
Regional trendsAmericas and International growth across periods Americas +16% y/y; International +22% y/y Broad-based growth

Management Commentary

  • “Commvault delivered a strong quarter fueled by solid ARR and SaaS growth that accelerated a key milestone for the company – achieving $1 billion in total ARR – two quarters earlier than projected.” — Sanjay Mirchandani (CEO) .
  • CFO on margins: “Fiscal Q2 gross margins were 80.5%... Non-GAAP EBIT was $51M, margin of 18.6%, which reflects the increased mix of SaaS bookings and the integration costs from Satori.” .
  • CEO on competitive landscape: “SaaS market’s growing double digits and we’re fast outpacing it at 55% ARR growth this quarter… software business is growing at healthy double digits… we’re taking share.” .
  • CFO on term duration: “Customers chose shorter contract duration to maintain flexibility between software and SaaS as they evaluate the timing of their transition to cloud.” .
  • Product/identity momentum: “Identity and data security-focused offerings… represented nearly 40% of net new ARR. Our fastest growing SaaS offering rapidly restores Active Directory and Entra ID.” .

Q&A Highlights

  • Term duration shift: Management quantified ~9% q/q decline in term duration, impacting average deal size but accompanied by strong term volume (second-best quarter; >17% increase in $100K+ deals) .
  • Investment vs margins: Raised ARR growth by 50 bps while lowering margin guidance 150 bps vs prior, reflecting deliberate investment to out-innovate and capture share; reiterated FY26 as an investment year .
  • Competitive dynamics: Commvault views landscape as increasingly competitive with cyber and AI visibility; strategy is to out-innovate and meet customers across hybrid environments .
  • SaaS trajectory: Expect ~60% of net new ARR to be SaaS in 2H; strong NRR (125%) and multi-product adoption in large SaaS accounts .
  • Capital allocation: $118M buybacks executed with the convert; model assumes diluted share count ~45M; opportunistic and active repurchasing .

Estimates Context

  • Q2 FY26 revenue modestly beat consensus ($276.2M actual vs $273.3M estimate*), while Primary EPS was slightly below ($0.91 actual vs $0.94 estimate*). EBITDA missed materially ($18.2M actual* vs $57.1M estimate*), but note the company emphasizes non-GAAP EBIT and does not provide EBITDA in disclosures, limiting direct comparability .*
  • Guidance implies analysts may lift ARR growth and free cash flow estimates, while trimming margin assumptions given SaaS mix and duration trends; total revenue and subscription revenue outlook held steady .
  • SPGI consensus target price: $193.7*; no consensus recommendation text returned [GetEstimates].*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Growth quality remains high: ARR surpassed $1B early; subscription ARR now 86% of total and SaaS ARR grew +56% y/y, supporting durable top-line expansion and multi-year visibility .
  • Near-term margin pressure is a byproduct of mix: rising SaaS adoption and normalized shorter term durations compress gross and EBIT margins; management is prioritizing share capture and platform leadership .
  • Guidance mix shift: FY26 ARR growth and free cash flow raised; margins lowered; revenue maintained—expect estimate revisions to reflect stronger cash generation and slightly lower margin profile .
  • Identity resilience is a differentiator: identity/data security now ~40% of net new ARR with AD/Entra ID recovery usage >3x y/y; strengthens cross-sell and defense against emerging AI-driven threats .
  • Product velocity and partnerships: Satori Cyber integration, BeyondTrust tie-in, HyperScale Edge/Flex and Clumio for Apache Iceberg broaden TAM and deepen platform advantages across hybrid cloud .
  • Capital flexibility: $900M 0% convert and >$1B cash provide dry powder for M&A, buybacks, and investment; Q2 buybacks of $131M signal commitment to capital returns .
  • Trading lens: Expect positive reaction to ARR milestone and FCF raise; watch margins and term duration commentary in Q3 as the key swing factors; SaaS momentum and identity wins are likely multiple drivers .