Commvault Systems, Inc.

Q1 subscription ARR increased 22% year over year to $1.05 billion, with net new subscription ARR of $39 million. SaaS ARR grew 38% to $424 million, subscription revenue rose 16% to $267 million, and total revenue increased 11% to $314 million. Gross margin was 82.1%, SaaS gross margin was 70.6% (up 635 basis points year over year), and non-GAAP EBIT was $71 million, for a margin of 22.8% (up 210 basis points year over year). Free cash flow was $51 million, up 71% year over year. For Q2, Commvault guided to subscription revenue of $264 million to $268 million, total revenue of $310 million, EBIT margin of about 20%, and diluted share count of about 42 million. For FY27, the company guided to subscription ARR of $1.20 billion to $1.21 billion, subscription revenue of $1.119 billion to $1.129 billion, total revenue of $1.30 billion to $1.31 billion, non-GAAP EBIT margin of about 21%, and free cash flow of $250 million to $260 million.

Sanjay Mirchandani framed AI as a tailwind because it increases both data growth and cyber risk, making Commvault’s resilience platform more important. He emphasized that customers are asking for trusted recovery, governance, and protection across hybrid and cloud environments, and pointed to new customer wins in identity resilience and cloud-native protection as evidence that the platform is resonating. His tone was confident and strategic, stressing that Commvault is becoming the foundational platform for AI resilience.

Gary Merrill emphasized that Q1 exceeded guidance across all fiscal Q1 metrics and highlighted the key drivers as new customer additions, upsell/cross-sell, and new product momentum. He cited subscription ARR of $1.05 billion, free cash flow of $51 million, gross margin of 82.1%, SaaS gross margin of 70.6%, and non-GAAP EBIT margin of 22.8%, calling it the best quarterly EBIT margin in over a decade. On capital allocation, he said the company bought back approximately 98,000 shares for $10 million and expects repurchase activity to increase, with a goal of returning at least 60% of annual free cash flow to shareholders while maintaining balance sheet flexibility.

Analysts focused on demand trends, hardware supply constraints, deal duration, and whether customers are shifting from on-premise to SaaS because of higher hardware prices. Management said demand remains strong, hardware constraints are being managed deal by deal, and any FX and hardware effects were baked into guidance; Gary also said Q1 term length saw mid-single-digit sequential pressure and that Q2 should see a modest step-up with most net new ARR weighted to the second half. Questions also centered on the Microsoft partnership, Clumio, identity resilience, and multiproduct adoption, with management saying Microsoft deepens engineering, marketplace reach, and executive alignment, while Clumio and identity offerings are driving cross-sell and new customer growth.