Commvault Systems ((CVLT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Commvault Systems’ recent earnings call was marked by a positive sentiment, underscoring significant growth in key financial metrics such as Annual Recurring Revenue (ARR), total revenue, and Software-as-a-Service (SaaS) adoption. The company celebrated surpassing major milestones ahead of schedule. While strategic partnerships and new customer acquisitions were highlighted, challenges related to contract duration and gross margin were also acknowledged.
Record Net New ARR
Commvault achieved a record addition of $47 million in net new ARR on a constant currency basis, showcasing the company’s robust growth trajectory and its ability to capture new business effectively.
Strong SaaS ARR Growth
The company reported a remarkable 56% growth in SaaS ARR, reaching $330 million. This achievement came two quarters earlier than initially projected, indicating a strong market demand for Commvault’s SaaS offerings.
Total Revenue Growth
Commvault’s total revenue saw an 18% increase, amounting to $276 million. This growth reflects the company’s successful strategies in expanding its market presence and enhancing its product offerings.
Surpassing $1 Billion ARR Milestone
The company reached a significant milestone by growing its total ARR by 22% to $1 billion, achieving this target two quarters ahead of the original March 2026 projection.
Continued Cloud Transition
Commvault continued its transition to the cloud, moving and protecting approximately 8 exabytes of customer data. This represents a compound annual growth rate (CAGR) of over 40% over the past five years, highlighting the company’s commitment to cloud solutions.
Strategic Partnership with BeyondTrust
A new partnership with BeyondTrust was announced, aimed at enhancing the Commvault Cloud platform by integrating identity security capabilities, which is expected to bolster the platform’s security features.
New Major Customer Wins
Commvault secured several large contracts, including with a major bank in the Asia Pacific region and BBVA, one of the world’s largest financial institutions, demonstrating the company’s strong market position and appeal to large enterprises.
Recognition by Industry Analysts
The company was recognized as a leader in the Forrester Wave, Gartner Magic Quadrant, and IDC MarketScape on cyber recovery, reinforcing its reputation as a top performer in the industry.
Shift in Term Duration
There was a noted shift in customer preferences towards shorter contract durations to maintain flexibility, which impacted the average deal size, presenting a challenge for the company.
Gross Margin Pressure
Commvault experienced pressure on its gross margins due to the acceleration of SaaS, which has a different margin profile, and the shift in term duration, affecting overall profitability.
Forward-Looking Guidance
Looking ahead, Commvault projects continued strong demand for its Cloud Cyber Resilience platform, driven by hybrid cloud adoption and AI data integration. The company has raised its full-year free cash flow outlook to between $225 million and $230 million, reflecting solid market demand and strategic investments.
In summary, Commvault’s earnings call conveyed a positive outlook with significant achievements in ARR and revenue growth, alongside strategic partnerships and industry recognition. Despite challenges in contract durations and gross margins, the company remains optimistic about future demand and financial performance.