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CS

COMMVAULT SYSTEMS INC (CVLT)·Q4 2025 Earnings Summary

Executive Summary

  • CVLT delivered a clean beat: revenue $275.0M (+23% y/y) vs S&P Global consensus $262.4M*, and non-GAAP diluted EPS $1.03 vs $0.93*; subscription revenue grew 45% y/y to $173.2M .
  • KPIs accelerated: Total ARR hit $930.1M (+21% y/y), Subscription ARR $780.1M (+31% y/y), and SaaS ARR $281.0M (+68% y/y); gross margin improved to 83.1% and non-GAAP EBIT margin to 21.5% .
  • FY26 initial guide implies durable growth: revenue $1.13–$1.14B (~+14% y/y), non-GAAP op margin ~21%, FCF $210–$215M; Q1 FY26 revenue guided to $266–$270M with non-GAAP op margin ~21% .
  • Catalysts: hypergrowth in SaaS, deeper hyperscaler/partner traction (marketplace transactions +50% q/q, +250% y/y), growing cross-sell of cyber offerings (Active Directory, Cleanroom, Cloud Rewind, Clumio Backtrack) .

What Went Well and What Went Wrong

What Went Well

  • “Record-breaking” quarter and year; subscription up 45% y/y, Total ARR +21% to $930M; SaaS ARR +68% to $281M .
  • Strong demand/land-and-expand: 700 new subscription customers in Q4; SaaS NDR 127% driven by upsell/cross-sell; double-digit improvement in sales productivity .
  • Ecosystem momentum: hyperscaler marketplace transactions +50% q/q and +250% y/y; record partner contribution to land business (Hitachi, Pure, HPE, Kyndryl) .

What Went Wrong

  • Margin trade-off from growth investments and SaaS mix; management guiding flat non-GAAP op margin ~21% despite topline strength (prior comments emphasize “balanced” growth vs margin) .
  • Near-term acquisition dilution: Clumio integration cited as dilutive to margins for a few quarters (1–2 pts discussed previously), and ~100 bps revenue contribution embedded in FY26 outlook (not broken out going forward) .
  • Legacy lines continued to drift: perpetual license revenue -2% y/y; customer support -1% y/y, underscoring mix shift dependency on subscription/SaaS .

Financial Results

MetricQ2 2025Q3 2025Q4 2025Q4 2025 Consensus*
Total Revenues ($USD Millions)$233.278 $262.630 $275.039 $262.378*
GAAP Diluted EPS ($)$0.35 $0.24 $0.69 n/a
Non-GAAP Diluted EPS ($)$0.83 $0.94 $1.03 $0.9278*
Gross Margin %82.2% 82.0% 83.1% n/a
Non-GAAP EBIT Margin %20.5% 20.8% 21.5% n/a

Note: Consensus estimate values retrieved from S&P Global.*

Segment revenue mix ($USD Thousands):

SegmentQ2 2025Q3 2025Q4 2025
Subscription$134,038 $158,321 $173,228
Perpetual license$10,522 $16,423 $14,962
Customer support$77,688 $77,078 $76,509
Other services$11,030 $10,808 $10,340
Total revenues$233,278 $262,630 $275,039

Key KPIs ($USD Thousands unless noted):

KPIQ2 2025Q3 2025Q4 2025
Total ARR$853,265 $889,628 $930,051
Subscription ARR$687,050 $734,212 $780,098
SaaS ARR$214,832 $258,957 $281,045

Cash and capital return highlights:

  • Q4 operating cash flow $77.0M; free cash flow $76.2M; Q4 buybacks $30M (~182k shares at ~$163.73 avg) .
  • FY25 FCF $203.6M; FY25 buybacks $165M (~1.215M shares at ~$135.77 avg); cash & equivalents $302.1M at March 31, 2025 .

Non-GAAP adjustments and tax:

  • Non-GAAP EPS excludes stock-based comp, FICA/payroll taxes on SBC, restructuring, intangible amortization, litigation, business combination costs, impairment, contingent consideration changes; applies a 24% non-GAAP tax rate (reduced from 27% starting FY25) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total revenuesQ1 FY26n/a$266M–$270M New
Subscription revenueQ1 FY26n/a$166M–$170M New
Non-GAAP gross marginQ1 FY26n/a81%–82% New
Non-GAAP operating marginQ1 FY26n/a~21% New
Total revenuesFY26n/a$1.130B–$1.140B New
Total ARR growth (y/y)FY26n/a16%–17% New
Subscription revenueFY26n/a$727M–$732M New
Subscription ARR growth (y/y)FY26n/a22%–23% New
Non-GAAP gross marginFY26n/a81%–82% New
Non-GAAP operating marginFY26n/a~21% New
Free cash flowFY26n/a$210M–$215M New

Earnings Call Themes & Trends

TopicQ2 2025 (prior)Q3 2025 (prior)Q4 2025 (current)Trend
AI/technology initiativesLaunched Cloud Rewind; expanded AWS/Google; Active Directory recovery planned Highlighted Active Directory, Cloud Rewind; Clumio Backtrack vision for S3 Emphasized AD forest-level recovery, Cloud Rewind, Clumio Backtrack scaling to hundreds of PB; Atlassian S3 example Increasing focus/traction
Supply chain/opsn/an/aMinimal hardware dependency; optionality with SaaS Stable
Macro/tariffsn/an/aMacro “prudent” but demand for resilience steady; guidance balances prudence and opportunity Stable
Product performanceSubscription rev +37% y/y; cyber offerings gaining traction Subscription rev +39% y/y; land/expand accelerating; SaaS NDR 127% Subscription rev +45% y/y; SaaS NDR 127%; 700 new subs customers Accelerating
Regional trendsAmericas solid; EMEA preparing for DORA Balanced growth; Europe strong; DORA tailwinds Balanced across regions; strong EMEA; DORA still a driver Stable to improving
Regulatory/legalDORA partnerships (Pure Storage) Regulatory momentum; DORA contributing Supporting GDPR/DORA and other regimes; wins in FIs Stable
Partnerships/ecosystemExpanded AWS/Google; Dell initiative underway Alliance momentum (Hitachi/HPE/Dell); marketplace transactions doubled Record partner contribution; marketplace +50% q/q, +250% y/y Accelerating
R&D executionShift event features; innovation cadence Innovation underpins ARR growth; Rule-of-40 emphasis “Record-breaking” innovation year; Rule of 41 FY, Rule of 45 in Q4 Strong/consistent

Management Commentary

  • CEO: “Another record-breaking Q4 and full fiscal year 2025… Total revenue increased 23% to $275 million… Total ARR… $930 million, and SaaS ARR jumped 68% to $281 million.”
  • CFO: “Q4 was another excellent quarter… we added 700 new subscription customers, surpassing 12,000 worldwide… SaaS net dollar retention rate steady at 127%.”
  • CEO on partners/hyperscalers: “Marketplace transactions grew nearly 50% quarter-on-quarter and over 250% year-on-year.”
  • CFO on profitability: “Q4 gross margins were 83.1%… Non-GAAP EBIT… margins up to 21.5%… Free cash flow of $76M in Q4 and $204M for the year.”
  • Non-GAAP policy: 24% tax rate; excludes SBC, restructuring, amort., litigation, M&A costs, impairment, contingent consideration .

Q&A Highlights

  • Macro/guide philosophy: Demand for cyber resilience remains priority; guidance balances prudence and opportunity; no notable change in sales cycles vs Q4 .
  • Margin vs growth: Flat y/y non-GAAP op margin by design to invest behind secular tailwinds; SaaS mix dilutes margins .
  • Clumio: No longer broken out; ~100 bps in FY26 revenue outlook; strategic differentiator for S3/AI data sets .
  • ARR cadence: Baseline net new ARR ~$30–35M per quarter; seasonality consistent with FY25 .
  • Competitive landscape: Taking share versus legacy/on‑prem incumbents; resilience platform breadth cited as differentiator .
  • Packaging/bundling: Moving customers to resilience “outcome” bundles (Air Gap Protect, Cleanroom, AD recovery); hybrid approach spans SaaS/software .
  • Regional/DORA: Growth balanced across regions; DORA not “one-and-done” and continues to drive opportunities .

Estimates Context

Q4 FY25 actuals vs S&P Global consensus:

MetricConsensus*ActualResult
Revenue ($USD Millions)$262.378*$275.039 Beat
Non-GAAP (Normalized) Diluted EPS ($)$0.9278*$1.03 Beat
# of estimatesRev: 9*, EPS: 9*——

Note: Consensus estimate values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat and higher profitability: Revenue and non-GAAP EPS beats, with gross margin expansion to 83.1% and non-GAAP EBIT margin to 21.5%; momentum is broad-based across SaaS and term software .
  • Guidance supports durable double-digit growth: FY26 revenue $1.13–$1.14B (~14% growth), ARR +16–17%, FCF $210–$215M; near-term Q1 guide also strong with ~19% revenue growth at midpoint .
  • SaaS engine scaling: SaaS ARR +68% y/y to $281M; 127% SaaS NDR; multi-product adoption and cyber modules (AD, Cleanroom, Threat Scan, Cloud Rewind, Backtrack) driving mix .
  • Ecosystem leverage as catalyst: Hyperscaler marketplaces and key alliances contributed to record land activity; sustained partner momentum can compound pipeline conversion .
  • Investment vs margin trade-off persists: Management reiterates flat non-GAAP op margin ~21% to fund growth initiatives and absorb SaaS mix; watch for operating leverage once SaaS scales further .
  • M&A integration near-term dilutive but strategically accretive: Clumio contributes to cloud data/AI recovery leadership; expect 1–2 pt margin drag in integration window (prior commentary), but strengthened competitive moat .
  • Trading setup: Narrative anchored on resilience/AI data recovery, regulatory (DORA) tailwinds, and visible ARR build; beats plus confident initial FY26 guide are supportive near-term catalysts, with multiproduct cross-sell the medium‑term thesis driver .

Other Relevant Q4 FY25 Press Releases (Strategic Context)

  • Expanded partnership with CrowdStrike for integrated incident response and clean recoveries (showcased at RSAC 2025) .
  • GovRAMP Authorization (High) for Commvault Cloud, alongside FedRAMP High and FIPS 140‑3 validation, bolstering SLED/public sector credibility .
  • Cleanroom Recovery enhancements (Factory Reset/pave‑repave and Threat Scan integration) to reduce infrastructure/data reinfection risk and accelerate time-to-recovery .
  • Industry recognition: “Outstanding Cyber Resilience” Global InfoSec Award at RSAC 2025 .

Appendix: Prior Quarters (for context)

  • Q3 FY25: Revenue $262.6M (+21% y/y), non-GAAP EBIT margin 20.8%, Total ARR $889.6M, Subscription revenue $158.3M (+39% y/y) .
  • Q2 FY25: Revenue $233.3M (+16% y/y), non-GAAP EBIT margin 20.5%, Total ARR $853.3M, Subscription revenue $134.0M (+37% y/y) .