Commvault’s latest quarter was marked by strong top-line growth and a notable shift toward SaaS-based customer acquisitions, yet the market reacted sharply negative. Management attributed the quarter’s results to record additions of new subscription customers and continued expansion of its cloud and identity resilience offerings. CEO Sanjay Mirchandani emphasized the company’s best-ever term software new customer quarter and robust cloud-native adoption, particularly for products like Clumio. However, CFO Daniel Abrahamson acknowledged that a higher mix of SaaS deals, landed at lower average selling prices, diluted annual recurring revenue (ARR) growth compared to prior quarters. Management cited the impact of elongated deal durations in large enterprise accounts as another factor influencing ARR performance.
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Commvault (CVLT) Q4 CY2025 Highlights:
- Revenue: $313.8 million vs analyst estimates of $299.1 million (19.5% year-on-year growth, 4.9% beat)
- Adjusted EPS: $1.17 vs analyst estimates of $0.98 (19.2% beat)
- Adjusted Operating Income: $61.46 million vs analyst estimates of $55.71 million (19.6% margin, 10.3% beat)
- Revenue Guidance for Q1 CY2026 is $306.5 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 6.3%, up from 5.2% in the same quarter last year
- Annual Recurring Revenue: $1.08 billion vs analyst estimates of $1.08 billion (21.9% year-on-year growth, in line)
- Billings: $371.2 million at quarter end, up 24.7% year on year
- Market Capitalization: $3.84 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Commvault’s Q4 Earnings Call
- Aaron Rakers (Wells Fargo) questioned the sharp increase in days sales outstanding (DSO) and its impact on free cash flow. CFO Daniel Abrahamson explained the pressure was due to late-quarter deal closings and an additional payroll cycle, expecting normalization next quarter.
- Jason Ader (William Blair) asked if the mix shift toward SaaS and elongated deal durations were behind lower-than-expected ARR adds. Abrahamson confirmed SaaS deals landed at lower prices and longer enterprise software deals diluted near-term ARR.
- James Fish (Piper Sandler) pressed on why SaaS net dollar retention declined sequentially. Abrahamson cited the rapid expansion of the SaaS base and product mix shifts among early adopters, with new customer ARR not yet reflected in retention metrics.
- Howard Ma (Guggenheim) probed whether restructuring was focused on R&D and how it would impact growth. CEO Sanjay Mirchandani clarified restructuring was broad-based and aimed at strengthening—not reducing—growth capabilities.
- Rudy Kessinger (D.A. Davidson) wanted clarity on whether term license ARR was below expectations and the impact of large multi-year deals. Abrahamson acknowledged longer deal durations pressured ARR but emphasized strong customer additions and variability inherent in deal mix.
Catalysts in Upcoming Quarters
In the coming quarters, our team will closely monitor (1) Unity platform adoption rates and resulting cross-sell success, (2) the trajectory of SaaS ARR growth and its impact on overall recurring revenue, and (3) the effectiveness of recent cost optimization efforts on operating margins. Progress in integrating new cyber resilience features and customer feedback on hybrid cloud deployments will also be important indicators.
Commvault currently trades at $88.23, down from $129.36 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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