Q4 2025 Earnings Summary
- High Customer Stickiness & Revenue Recurrence: Management highlighted that the company’s SaaS net dollar retention remains at 127%, driven by a balanced mix of upsell and cross‐sell opportunities. This strong retention indicates satisfied customers with a high propensity to expand their usage over time.
- Differentiated Hybrid Platform & Market Share Gains: Executives emphasized that their unique, true hybrid multi‐cloud approach in delivering cyber resilience is a key differentiator. This strategy is helping them win share in a competitive landscape where traditional solutions lag, and it is fueling robust double-digit growth.
- Stable Guidance & Consistent Execution Amid Macro Uncertainties: In discussions with analysts, management expressed confidence in their guidance and in sustaining typical seasonality—with a baseline of $30–$35 million net new ARR quarterly—despite macro challenges. This consistent pipeline and execution strengthens the bullish outlook.
- Flat operating margins despite robust revenue growth: Guidance indicates margins remain flat year-over-year while sustaining heavy investments for growth, raising concerns about potential cost pressures and profitability compression.
- Integration uncertainty with recent acquisitions: The lack of specific guidance on Clumio’s performance and its integration into the broader platform creates uncertainty around its revenue contribution, which could impact overall growth momentum.
- Uncertain macro environment and sales cycle dynamics: Despite current indications, the reliance on steady customer conversations with no significant change so far might not hold if macro headwinds intensify, potentially slowing sales cycles and new ARR generation.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenues | +23% YoY ($275.04M vs. $223.29M) | Total Revenues surged by 23% YoY, largely due to a robust expansion in subscription revenue that increased by 44.5% YoY, which helped offset the marginal declines in other segments. This strong recurring revenue performance builds on previous period momentum and reflects successful execution in high-value software deals. |
Subscription Revenue | +44.5% YoY ($173.23M vs. $119.87M) | The 44.5% YoY gain in Subscription Revenue is driven by aggressive customer acquisition, greater volume in both SaaS and term software transactions, and continued product innovations that boosted recurring revenue—continuing the trends established in prior periods. |
Perpetual License Revenue | -1.5% YoY ($14.96M vs. $15.20M) | A slight decline of 1.5% YoY reflects the company’s ongoing strategic shift toward subscription-based models, with perpetual licenses already being downplayed in previous periods, especially as focus shifts to higher-margin recurring revenue streams. |
Other Services Revenue | -7.6% YoY ($10.34M vs. $11.20M) | Other Services Revenue dropped by 7.6% YoY, primarily due to variations in the timing of delivering professional services. This segment has historically seen period-to-period fluctuations, and the current decline aligns with previous trends where timing issues impacted revenue. |
Operating Income | +47% YoY ($26.73M vs. $18.19M) | Operating Income increased by 47% YoY as a result of enhanced operational leverage from high-margin subscription revenue and efficient cost management. Continued focus on large enterprise deals and disciplined expense control, as seen in previous quarters, has driven this significant improvement. |
Net Income | -75% YoY ($30.99M vs. $126.12M) | Net Income fell by approximately 75% YoY primarily due to a normalization effect after a one-time significant tax benefit in Q4 2024. Although operational performance remained strong, the previous quarter’s anomaly in tax benefits led to an exceptionally high net income that was not repeated in Q4 2025. |
Gross Margin | ~82.6% of revenue in Q4 2025 | Gross Margin remained strong at about 82.6%, underpinned by the high-margin nature of subscription revenue and stable cost management. This consistent margin performance builds on improvements from previous periods, demonstrating that cost controls and revenue mix enhancements have been sustained. |
Cash & Cash Equivalents | -3.4% YoY ($302.10M vs. $312.75M) | Cash & Cash Equivalents saw a modest decrease of 3.4% YoY, which is likely a consequence of increased share repurchases or higher investing outflows. Despite robust operational results, this slight decline suggests a strategic re-allocation of capital when compared to the previous quarter’s higher cash levels. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Subscription Revenue | Q1 2026 | no prior guidance | $166 million to $170 million, representing 35% year-over-year growth | no prior guidance |
Total Revenue | Q1 2026 | no prior guidance | $266 million to $270 million, with growth of 19% at the midpoint | no prior guidance |
Consolidated Gross Margins | Q1 2026 | no prior guidance | 81% to 82% | no prior guidance |
Non-GAAP EBIT Margins | Q1 2026 | no prior guidance | Approximately 21% | no prior guidance |
Diluted Share Count | Q1 2026 | no prior guidance | Approximately 45 million shares | no prior guidance |
Total ARR Growth | FY 2026 | no prior guidance | Expected to grow 16% to 17% year-over-year | no prior guidance |
Subscription ARR Growth | FY 2026 | no prior guidance | Expected to increase in the range of 22% to 23% year-over-year | no prior guidance |
Subscription Revenue | FY 2026 | no prior guidance | Expected to be in the range of $727 million to $732 million, growing 24% at the midpoint | no prior guidance |
Total Revenue | FY 2026 | no prior guidance | Expected to be $1.13 billion to $1.14 billion, an increase of 14% at the midpoint | no prior guidance |
Gross Margins | FY 2026 | no prior guidance | Expected to be 81% to 82% | no prior guidance |
Non-GAAP EBIT Margins | FY 2026 | no prior guidance | Expected to be approximately 21% | no prior guidance |
Free Cash Flow | FY 2026 | no prior guidance | Projected to be $210 million to $215 million | no prior guidance |
Capital Allocation Priorities | FY 2026 | no prior guidance | Strategic M&A, share repurchases, and reinvestment in the business | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Subscription Revenue | Q4 2025 | $160M to $164M | $173.27M | Beat |
Total Revenue | Q4 2025 | $260M to $264M | $275.02M | Beat |
Gross Margin | Q4 2025 | 81% to 82% | ~82.6% (derived from Total RevenueOf $275.04M and Cost of RevenuesOf $47.77M) | Beat |
Subscription Revenue | FY 2025 | $575M to $580M | ~$589.67M (sum of Q1, Q2, Q3, Q4) | Beat |
Total Revenue | FY 2025 | $980M to $985M | ~$995.62M (sum of Q1, Q2, Q3, Q4) | Beat |
Gross Margin | FY 2025 | 81% to 82% | ~82.1% (derived from the sum of FY 2025 Total RevenuesAnd Cost of Revenues) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Customer Retention & Cross-sell Expansion | Consistently highlighted in Q1–Q3 with strong SaaS NRR (127%), healthy renewal conversations, and growing multi-product adoption | Q4 call reiterates steady customer retention with 700 new subscription customers and product examples driving cross‐sell | Steady performance with an increased strategic push to drive cross‐sell and multiproduct adoption |
ARR Growth & SaaS Revenue Momentum | Q1–Q3 discussed robust ARR increases, strong subscription and SaaS revenue growth, and impressive year-over-year jumps (e.g. 66% in Q1 and 71% in Q3) | Q4 call reports total ARR up 21% YoY and SaaS ARR growing 68%, reflecting continued strong subscription momentum | Consistent acceleration and further expansion in SaaS revenue, underscoring a successful subscription transition |
Cyber Resiliency & Hybrid Multi-cloud Platform Innovation | Across Q1–Q3, discussed innovative recovery capabilities (e.g. clean room recovery, Active Directory recovery, Cloud Rewind) and robust multi-cloud support | Q4 emphasizes cyber resilience as a top priority with hybrid solutions that simplify on-prem and cloud recovery, reinforcing their integrated approach | A continued and deepening focus on innovative recovery and hybrid multi-cloud strategies that address evolving cyber threats |
Margin Pressure & Profitability Challenges | Q1 was notably positive with record free cash flow margins; however, Q2 and Q3 began addressing margin impacts from increased SaaS mix, higher sales costs, and acquisition dilution | In Q4, margin pressure is clearly discussed with flat operating margins and a deliberate choice to invest in growth despite lower gross margins from SaaS | A growing and cautious emphasis on balancing growth investments with profitability as SaaS expands, marking an evolving risk |
Acquisition Integration & Execution Risks | Not mentioned in Q1; in Q2 and Q3, acquisitions like Clumio, Appranix (rebranded as Cloud Rewind), and others were noted with some execution risk and dilution discussed | Q4 covers integration of recent acquisitions (notably Clumio) and execution risks while expressing confidence in strategic integration to drive growth | Emerging as a key focus area with increasing scrutiny of integration execution, reflecting a shift from earlier periods |
Macro Environment & Foreign Exchange Volatility | Minimal discussion in Q1 and slight FX benefits noted in Q2; Q3 mentioned FX headwinds affecting ARR growth and cash flow | Q4 provides detailed commentary on macro guidance, balancing regulatory tailwinds (e.g. DORA) and FX adjustments with ARR reported at both FX-adjusted and reported levels | An evolving narrative with greater depth, showing heightened awareness and management of FX volatility and macro uncertainties |
Market Share Gains & Differentiated Hybrid Strategies | Q1 included early discussion on hybrid workloads and cloud modernization; Q2 emphasized capturing market share from incumbents through broad platform capabilities | Q3 and Q4 reinforce competitive differentiation via hybrid strategies and strong customer wins, highlighting double-digit growth and a unique hybrid multi-cloud proposition | Consistent and positive with growing emphasis on winning market share through a well-differentiated hybrid platform |
Slower Adoption of New Cloud & SaaS Offerings | There was no significant mention of concerns about slower adoption in Q1–Q3; adoption and momentum were generally portrayed as strong | Q4 explicitly indicates that worries about slower adoption are absent, with strong growth and customer expansion in SaaS and cloud segments | No negative sentiment observed – adoption remains robust, reinforcing overall growth and confidence |
Evolving Strategic Partnerships & Investment Return Uncertainties | Q1 and Q2 featured strategic partnerships (e.g. Dell, Carahsoft) and contained cautious language about the uncertain timing of returns from investments in government and international markets | Q4 details an expanded partner ecosystem (with security, hyperscalers, and financial services partners) while maintaining a balanced view on investment returns amid ongoing growth investments | An ongoing, strategic emphasis on expanding partnerships with a measured acknowledgment of return uncertainties – the focus remains long term |
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Clumio Contribution
Q: What is Clumio’s revenue impact?
A: Management noted that Clumio, now fully integrated, adds about 100 bps to total revenue, offering unique scale for large data sets and AI applications. -
ARR Seasonality
Q: What net new ARR is expected quarterly?
A: They expect a baseline of $30–35 million net new ARR per quarter, consistent with FY '25 seasonality. -
Operating Guidance
Q: How balance growth versus margin?
A: The team is investing strategically in growth opportunities while carefully maintaining profitability, having met key Rule of 41 targets. -
SaaS Cross-sell
Q: What is the SaaS cross/upsell mix?
A: With a SaaS net dollar retention of 127%, about two-thirds is upsell and one-third is cross-sell, driving multi-product adoption. -
International Growth
Q: How did EMEA and APAC perform?
A: Q4 delivered balanced regional growth, with particularly strong performance in EMEA and a robust, durable pipeline internationally. -
Competitive Advantage
Q: How is competition being tackled post-acquisition?
A: They emphasize a resilient, hybrid solution that is capturing double-digit growth and winning market share, underscoring their differentiated approach. -
Macro Outlook
Q: Any changes in customer behavior with the macro?
A: Conversations indicate that cyber resilience remains a priority with no significant shifts in sales cycles or close rates despite broader macro concerns. -
Future Investment Focus
Q: Where will future investments go?
A: The focus will be on enhancing recovery capabilities—including scaling technologies for rapid data recovery and supporting AI applications—to fortify resilience. -
Bundling Packages
Q: How will product packaging evolve?
A: They plan to offer a unified resilience platform by bundling diverse recovery tools seamlessly, ensuring customers get integrated protection irrespective of deployment model.