Commvault Posts $269 Million in Subscription Revenue, Raises Full-Year Outlook
Key Facts
Commvault reported results on October 27 for its fiscal second quarter ended September 30, 2026, posting subscription revenue of $269 million, up 21% year over year. Total revenue was about $312 million, up 13% from the same period a year earlier. Subscription revenue came in slightly above the company’s previous range of $264 million to $268 million, while adjusted operating margin under the company’s measure also exceeded its prior forecast of about 20%, reaching 21.9%. CEO Sanjay Mirchandani said the acceleration of AI is increasing innovation and risk for companies, and that "resilience remains a business necessity." The company announced the results on the day it was scheduled to hold a call to discuss them at 8:30 a.m. U.S. Eastern time.
Software-as-a-service revenue was $106 million, up 33% year over year, while annual recurring subscription revenue reached $1.104 billion, up 20%. At constant currency, annual recurring revenue was $1.107 billion, and the company added $51 million in new subscriptions during the quarter on that measure. Net subscription revenue retention was 113%, an indicator that reflects the impact of spending expansion or contraction among existing customers. Subscription customers totaled 15,750, up 17% year over year, and annual recurring revenue from SaaS services reached $454 million, up 35%. Quarterly revenue comparisons show subscription revenue rising from $267 million in the first quarter to $269 million in the second, after year-over-year growth of 16% in the first quarter.
On profitability, GAAP operating income was $30 million, for an operating margin of 9.7%. Operating earnings before interest and taxes under the company’s adjusted measure were $68 million, with a 21.9% margin. Operating cash flow was $75 million, while free cash flow was $71 million for the quarter. These figures offer another view of the period’s performance alongside revenue growth, showing profitability and cash flows in parallel with subscription expansion. In the six months ended September 30, 2026, the company repurchased about 906,000 shares for $119 million.
Despite beating analyst estimates cited by Investing.com, Commvault shares fell 9.4% after the company issued its forward outlook. The site reported adjusted earnings per share of $1.38, compared with an average estimate of $1.24, and revenue of $312.39 million, against estimates of $310.24 million. The report attributed the stock’s decline to guidance that disappointed investors, despite the quarter’s results topping their estimates. That puts the market reaction against the period’s figures, which included subscription revenue growth and an expansion in adjusted operating margin. The new guidance for the next quarter is investors’ next focus following the results.
Commvault expects fiscal third-quarter 2027 subscription revenue of $293 million to $297 million and adjusted operating margin of 20.5% to 21.0%. For fiscal 2027, the company raised its subscription revenue range to $1.127–$1.133 billion, from $1.119–$1.129 billion in its previous guidance issued on July 28. It also raised its annual recurring subscription revenue range to $1.205–$1.215 billion from $1.200–$1.210 billion. The updated full-year guidance includes adjusted operating margin of 21.0% to 21.5% and free cash flow of $255 million to $265 million. The outlook links the higher annual revenue range with the company’s estimates for margins and cash flow over the rest of the fiscal year.
Alongside its financial results, the company said it launched a product during the quarter to recover Active Directory environments, designed to cut clean recovery time from hours to minutes. It also expanded its FedRAMP High-authorized services to managed service providers and integrated its threat scanning tool with Google Threat Intelligence. Mirchandani presented these moves in the context of the growing data, identity and complexity challenges facing organizations, saying the company believes its second-quarter results reflect that momentum. The company thus links its data protection and cyber recovery products with the demand described by management, without attributing a specific financial impact to the initiatives in the quarter. The updated quarterly and annual outlook, along with subscription performance, remain the factors that will shape investors’ view of the next phase.