Commvault Systems, Inc. Q3 FY2026 earnings call

• Reinforced innovation leadership, garnered accolades, and was awarded 1,600th lifetime patent.
• Commvault Cloud Unity platform launched in November, bringing data security, identity resilience, and cyber recovery on one platform enabled by Metallic AI fabric.
• Res ops discipline unifies operations, security, and infrastructure. Addressed data security, identity resilience, and recovery capabilities.
• Highlighted growth in subscription customers, with 700 new subscription customers added and over 14,000 subscription customers by quarter end.
• Focus on data and cloud sovereignty, including being a launch partner for AWS European sovereign cloud.

For Q3, total revenue grew 19% to $314 million. Subscription revenue increased 30% to $206 million, led by a 44% growth in SaaS revenue and 22% growth in term software revenue to $119 million. Subscription ARR rose 28% to $941 million, with SaaS ARR growing 40% to $364 million. Subscription ARR represents 87% of total ARR, which increased 22% to $1,085 million. Existing customer expansion was strong with SaaS net dollar retention at 121%. The identity and resilience offerings collectively made up approximately 30% of net new ARR.

• Q4 2026: Subscription revenue expected $203-207M, total revenue $305-308M.
• FY2026: Subscription revenue raised to $764-768M (30% growth), total revenue $1,177-1,180M (18% growth). Gross margins expected 81%-81.5%, non-GAAP EBIT margin 19%-20%, free cash flow $215-220M.
• Board of Directors re-committed share repurchase authorization to $250 million.

Q: Could you unpack the free cash flow, particularly accounts receivable increase and DSO increase in the quarter?

A: Daniel Abrahamson said Q3 is often a pressured free cash flow quarter due to deals closing late and additional payroll cycles. Over 60% of deals closed in last few weeks of quarter, and there was an additional payroll cycle for US and Canada.

Q: Was currency in line with expectations for revenue and ARR?

A: Daniel Abrahamson said on reported basis, currency was in line with expectations for revenue; ARR guidance is on constant currency basis.

Q: How does Unity impact the shift from term to SaaS?

A: Sanjay Mirchandani said Unity brings workloads under one control plane, and customers choose deployment based on their journey, with the product standing on its own merits.

Q: What drove term duration elongation this quarter?

A: Sanjay Mirchandani said term duration was heavily influenced by large new customer deals, with median duration remaining in normal range.

Q: How should we think about constant currency net new ARR?

A: Daniel Abrahamson explained SaaS customer base growth, strong new SaaS customer quarter, and mix shift in product capabilities among early adopter customers affect net new ARR.

Q: How does Satori influence customer adoption and deal sizes?

A: Sanjay Mirchandani said Satori is being integrated into the platform to provide compliance and policy-related capabilities, enhancing value without additional infield integrations.