Commvault Systems, Inc. Q4 FY2026 earnings call

Sanjay Merchandani noted strong fiscal year finish, with subscription ARR growth, SaaS business milestone, record free cash flow. Data is key driver, AI is tailwind, Commvault Cloud unifies solutions. Growth drivers include new subscription customers, multi-product adoption, emerging revenue streams like identity resilience. Gary Merrill discussed ARR, free cash flow, income statement performance, financial reporting changes, fiscal 2027 outlook with subscription ARR growth, revenue guidance, EBIT margins, free cash flow, share repurchases.

Subscription ARR increased 27% to $989 million in Q4, led by 42% growth in SaaS business to reach $400 million in ARR. Subscription revenue grew 20% to $208 million. Q4 total revenue increased 13% to $312 million. Subscription revenue grew 20% to $208 million, led by 43% growth in SaaS revenue to $93 million. Current software license revenue grew 6%. Q4 consolidated gross margin expanded 30 basis points sequentially to 81.8%. Q4 operating expenses increased 11% to $187 million. Non-GAAP EBIT in Q4 was $66 million, margin 21.3%. Total ARR increased 21% to $1.12 billion. Q4 free cash flow was a record $132 million, full year 2026 free cash flow $237 million.

Fiscal Q1 2027 expected subscription revenue $263 - $265M, total revenue ~$310M, EBIT margins ~19%, diluted share count ~42M. Full year 2027 subscription ARR growth 18% - 19% to $1.20 - $1.21B, subscription revenue 1.115 - 1.125B, total revenue 1.30 - 1.31B, non-GAAP EBIT margins 20.5%, free cash flow $250 - $260M, weighted to second half, diluted share count ~42M. Board refreshed share repurchase authorization for $250M, expect 60% of annual free cash flow to go to repurchases.

Questions covered sales comp structure for FY27 focusing on new customer acquisition and cross-sell, customer engagement and metrics for Cloud Unity platform, AI commercial opportunity, macro headwinds and memory impact, hardware pricing and deal shifts, partner ecosystem with hyperscalers, seasonality of SaaS business, renewal procurement decisions, AI use cases, identity protection deal sizes and adoption rates, net new ARR and market share gains