COMMVAULT SYSTEMS INC Q3 FY2025 earnings call

• Q3 was a record-breaking quarter with total revenue up 21% to $263 million, subscription revenue up 39% to $158 million, and total ARR up 21% in constant currency. • Growth drivers include the dynamic cyber resilience market, Commvault Cloud platform innovations (e.g., cloud rewind, Active Directory recovery, Backtrack), and a strong go-to-market motion with a growing partner ecosystem. • Gross margins were 82%, operating expenses were $160 million (61% of total revenue), non-GAAP EBIT was $55 million with margins of 20.8%. • Ended Q3 with no debt and $244 million in cash, and progress in integrating Clumio.

Total revenue increased 21% to $263 million. Subscription revenue grew 39% to $158 million. Total ARR improved 21% in constant currency. SaaS ARR jumped 75% in constant currency. Subscription ARR, which includes term-based licenses and SaaS contracts, increased by 29%, reaching $734 million, accounting for 83% of total ARR. SaaS ARR was $259 million, growing 71%.

• Fiscal Q4 subscription revenue expected to be $160 million to $164 million (35% Y/Y growth midpoint), total revenue $250 million to $264 million (18% Y/Y growth midpoint). • FY25 total ARR growth expected 19% to 20%, subscription ARR 28% to 30%, total revenue $980 million to $985 million (17% Y/Y growth midpoint). • Full year free cash flow expected $170 million to $200 million.

• Cyber threats and increasing ransomware attacks pose challenges. • Foreign exchange headwinds. • Regulatory changes (e.g., DORA in Europe) could impact business. • Integration risks related to acquisitions like Clumio.

Q: Aaron Rakers with Wells Fargo asked about SaaS customer base acceleration, Clumio contribution, and multi-SaaS product customers.

A: Jen DiRico responded that ~200 of the 1,000 new subscription customers came from Clumio, and ~30% of customers have two or more SaaS products with opportunities in emerging products like Active Directory and Cloud Rewind.

Q: Eric Heath with Keybanc Capital Markets asked about acceleration drivers (external factors vs. internal execution).

A: Sanjay Mirchandani said it's a combination of solving a hard problem with a strong platform and executing well on go-to-market alignment.

Q: Jason Ader with William Blair asked about operating leverage and revenue contribution from acquisitions.

A: Jen DiRico explained investments in SaaS, Clumio dilution, sales/marketing commissions, and that Clumio contributed $24 million in ARR.

Q: Param Singh with Oppenheimer asked about SaaS module expansion and M&A.

A: Sanjay Mirchandani discussed the secure Commvault Cloud platform, built-in security features, and ongoing innovations like integration with Crowdstrike.

Q: Rudy Kessinger with DA Davidson asked about cross-sell room and FX impact.

A: Sanjay Mirchandani and Jen DiRico talked about cross-sell opportunities in the platform and FX headwinds affecting ARR guidance.

Q: James Fish with Piper Sandler asked about consolidation and Europe growth.

A: Sanjay Mirchandani discussed consolidation in the space and Europe's growth, while Jen DiRico mentioned organic growth rates.

Q: Thomas Blakey with Cantor Fitzgerald asked about term license renewals and margin impact.

A: Jen DiRico and Sanjay Mirchandani talked about healthy renewal conversations and margin dilution from Clumio, with focus on responsible growth.

Q: Aaron Rakers with Wells Fargo asked about partner ecosystem ramp and competitive landscape.

A: Sanjay Mirchandani discussed the ramp of partner ecosystem opportunities and differentiation in the market with unique technologies like Clean Room and Backtrack