Commvault Q1 FY’26 slides: Subscription revenue surges 46%, guidance raised

Introduction & Market Context

Commvault Systems (NASDAQ:CVLT) released its fiscal first quarter 2026 earnings presentation on July 29, 2025, revealing robust performance across key metrics that exceeded guidance and prompted the company to raise its full-year outlook. The data management software provider saw its stock rise 4.63% in premarket trading to $171, reflecting investor confidence in the company’s growth trajectory and strategic positioning in the expanding cyber resilience market.

The presentation highlighted Commvault’s continued momentum in transitioning to a subscription-based business model, with subscription and SaaS revenues driving overall growth. Against a backdrop of increasing ransomware threats and data security challenges, the company emphasized its differentiated position in the $24 billion total addressable market that is projected to grow to $38 billion by 2028.

Quarterly Performance Highlights

Commvault reported total revenue of $282 million for Q1 FY’26, representing a 26% year-over-year increase (23% in constant currency) and significantly exceeding its guidance of $266-$270 million. Subscription revenue was the standout performer, growing 46% year-over-year to $182 million, well above the guided range of $166-$170 million.

As shown in the following chart of total revenue growth over the past five quarters:

The company’s subscription revenue growth has been accelerating, demonstrating the successful execution of its business model transition:

Total (EPA:TTEF) Annualized Recurring Revenue (ARR) reached $996 million, growing 24% year-over-year (21% in constant currency), putting Commvault on pace to exceed its $1 billion ARR target ahead of schedule. Subscription ARR, which the company considers the best measure of its growth, increased 33% year-over-year to $844 million and now represents 85% of total ARR.

The following chart illustrates Commvault’s total ARR growth trajectory:

Subscription ARR has shown consistent growth over the past five quarters:

SaaS ARR was another bright spot, growing 63% year-over-year to $307 million and now accounting for 31% of total ARR. The company maintained a healthy SaaS Net Dollar Retention Rate of 125%, indicating strong customer expansion within its SaaS offerings.

Commvault’s subscription customer base expanded to 12,900, representing 31% year-over-year growth:

Despite the rapid growth, the company maintained profitability with a non-GAAP EBIT margin of 20.7%, slightly below guidance of 21% but still within the company’s target range of 20%+. Free cash flow for the quarter was $30 million, down 32% year-over-year, though the company did not provide specific quarterly guidance for this metric.

Strategic Focus on Cyber Resilience

A significant portion of Commvault’s presentation focused on the growing ransomware threat landscape, which the company described as a "$57 billion global crisis" in 2025, projected to reach $275 billion by 2031. This market dynamic is driving demand for Commvault’s cyber resilience solutions.

The company highlighted its large and growing total addressable market, which is expected to expand at a 12% CAGR from $24 billion in 2024 to $38 billion in 2028, driven by emerging opportunities in data and cloud security:

Commvault emphasized its differentiated approach to cyber resilience, claiming to accelerate recovery from ransomware attacks by 2.7x on average compared to traditional solutions. The company’s platform integrates data security, cleanroom testing, and cyber recovery capabilities:

The presentation outlined key competitive advantages that drive Commvault’s market success, including rebuild automation, cloud resource discovery and mapping, rapid recovery of AI workloads, cloud-scale recovery, and multi-cloud air-gapping for compliance.

Raised Guidance

Based on the strong Q1 performance, Commvault raised its full-year FY’26 guidance across multiple metrics. The company now expects:

• Total ARR growth (constant currency): 18% year-over-year, up from previous guidance of 16-17%
• Subscription ARR growth (constant currency): 24% year-over-year, up from previous guidance of 22-23%
• Total revenue: $1,161-$1,165 million (17% year-over-year at midpoint), up from previous guidance of $1,130-$1,140 million (14% year-over-year at midpoint)
• Subscription revenue: $753-$757 million (28% year-over-year at midpoint), up from previous guidance of $727-$732 million (24% year-over-year at midpoint)

The following table details Commvault’s Q1 FY’26 performance against guidance and its updated outlook:

For the second quarter of FY’26, Commvault expects:

• Total revenue of $272-$274 million (17% year-over-year at midpoint)
• Subscription revenue of $174-$176 million (31% year-over-year at midpoint)
• Non-GAAP gross margin of 81-82%
• Non-GAAP EBIT margin of 20%

Investment Highlights

Commvault summarized its investment thesis around six key pillars: a large and growing market, secular demand trends, recognized innovation leadership, a differentiated hybrid cloud platform, a recurring revenue model, and a proven responsible growth model.

The company highlighted that subscription and SaaS now represent 85% of total ARR, underscoring the successful transition to a recurring revenue business model. Additionally, Commvault noted its consistent achievement of 20%+ non-GAAP EBIT and free cash flow margins, with Q1’26 achieving a 47 on a "Rule of 40" basis (combining growth rate and profit margin).

Conclusion

Commvault’s Q1 FY’26 presentation portrays a company executing well on its strategic priorities, with strong growth across key metrics and particular momentum in high-growth areas like subscription and SaaS. The raised guidance suggests management confidence in continued strong performance throughout the fiscal year.

The company appears well-positioned to capitalize on growing demand for cyber resilience solutions amid increasing ransomware threats and data security challenges. With a clear focus on innovation and a successful transition to a subscription-based business model, Commvault is demonstrating its ability to deliver both growth and profitability in a competitive market landscape.

Investors responded positively to the results, with the stock rising in premarket trading, reflecting confidence in the company’s execution and growth prospects. As Commvault approaches the milestone of $1 billion in ARR, its strategic focus on cyber resilience and cloud-based solutions appears to be resonating with customers and driving sustainable growth.

Full presentation:

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