Commvault Systems (CVLT 18.26%), a leader in cyber resilience and cloud data protection, reported its fiscal first quarter 2026 results on July 29, 2025. The most notable news was a record $282 million in GAAP revenue for Q1 FY2026, up 26% from a year earlier, coupled with annualized recurring revenue (ARR) surging to $996 million. Despite this strong year-over-year growth, revenue (GAAP) for Q1 FY2026 fell short of analyst predictions by $17.4 million, and Non-GAAP earnings per share came in at $1.01, missing consensus estimates by $0.09. The overall quarter showed solid momentum in the company's shift toward high-visibility, recurring revenues but also revealed slowing sequential growth and pressure on cash flow.
| Metric | Q1 FY26(Quarter ended June 30, 2025) | Q1 FY26 Estimate | Q1 FY25(Quarter ended June 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.01 | $1.10 | $0.85 | 18.8% |
| Revenue (GAAP) | $282 million | $299.41 million | $224.7 million | 25.4% |
| Annualized Recurring Revenue (ARR) | $996 million | $803 million | 24.1% | |
| Non-GAAP EBIT | $58.3 million | $48.3 million | 20.7% | |
| Non-GAAP Free Cash Flow | $29.8 million | $43.8 million | (32.0%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.
Business Overview and Key Success Factors
Commvault Systems specializes in software for cyber resilience and data protection. Its platform helps organizations back up, recover, and secure vast amounts of data across on-premises, hybrid, and cloud environments. It serves enterprise clients who need to manage, restore, and protect their data from loss, cyber threats, and accidental deletion.
The company’s recent focus is on recurring revenue models, especially software-as-a-service (SaaS) and subscription-based offerings. Key success factors include its investment in technological innovation—like threat detection, automated recovery, and post-quantum readiness—and its ability to foster strategic partnerships with leading technology and cloud providers. This has helped it expand its reach and focus on regulated industries where data integrity and compliance are priorities.
Quarter Highlights: Financial and Strategic Developments
In Q1 FY2026, the company set records in both total revenue (GAAP) and annualized recurring revenue (ARR), with total revenue up 26% year over year and ARR up 24% year over year. The revenue figure (GAAP) came in below Wall Street's expectations, but exceeded the company’s internal guidance. The shortfall to analyst estimates was -5.8% for revenue (GAAP) and -8.2% for Non-GAAP EPS. While total revenue (GAAP) rose sharply from the prior year, sequential growth was modest at 2.5%, an indicator of some deceleration after multiple periods of elevated expansion.
The recurring revenue stream continues to stand out as a main driver. ARR hit $996 million, powered by a surge in subscription-based revenue. Subscription ARR saw 33% growth year over year. SaaS revenue itself jumped 66% year over year, bringing this segment’s share of total company revenue to more than 25%. At the same time, perpetual license revenue (GAAP) fell by 47%, demonstrating a decisive shift away from legacy one-time sales to recurring arrangements.
While international revenues (GAAP) increased 29%, international acceleration included wins in regulated industries, like financial services companies responding to strict data compliance rules in Europe.
Non-GAAP EBIT improved to $58.3 million, up from $48.3 million in Q1 FY2025, but Non-GAAP free cash flow declined to $29.8 million—a decrease of 32.0% compared to the same period last year. Gross margins (non-GAAP) were 82.4%.
On the technology front, Commvault Systems announced upgrades to its cyber resilience platform, including post-quantum computing measures to address future security threats. Its Commvault Cloud SaaS solutions obtained additional government certifications, increasing competitiveness for public-sector contracts. For the 14th time, it was recognized as a leader in the Gartner® Magic Quadrant™ for Backup and Data Protection Platforms—a prominent industry benchmark. However, analysis points out that its artificial intelligence (AI) features remain less advanced compared to some competitors, which could impact future growth as the industry evolves.
Strategic partnerships expanded to include new integrations with CrowdStrike (cybersecurity), Deloitte (consulting), HPE (hardware), and Kyndryl (IT services). These collaborations broaden the scope and market access for Commvault’s solutions, especially for enterprise and government customers. The focus on product innovation and partnership integration was cited by management as key to continued growth and competitive differentiation. The company did not announce or adjust a dividend.
Product Portfolio and Mix Shifts
Commvault’s product family includes its core cyber resilience platform, with tools for operational recovery, automated backup, cyber deception, and advanced threat scanning. Its SaaS products are led by the Metallic platform—a cloud-native data protection suite with AI-powered functions for classification and rapid recovery. While perpetual licenses—now a small and shrinking part of sales—are one-time software purchases.
The pivotal move continues to be the migration of customers from perpetual licenses to term-based subscriptions and SaaS. Subscription revenue now represents 64% of total company GAAP revenue, up from 55% in Q1 FY2025. SaaS now exceeds one-quarter of all revenue (GAAP). Multi-product adoption is also rising, with approximately 30% of SaaS customers now using more than one module.
Looking Ahead: Guidance and Investor Watch Points
Management provided a detailed outlook for both the next quarter and the full fiscal year 2026. For the current quarter ending September 2025, guidance is for revenue between $272 million and $274 million—slightly down from the reported quarter, Subscription revenue is expected between $174 million and $176 million for Q2 FY2026, with Non-GAAP gross margin guidance of 81–82% for FY2026 and Non-GAAP EBIT margin around 20%.
For FY2026, management raised guidance to GAAP revenue of $1.161–$1.165 billion (a 16.8% year-over-year increase at the midpoint compared to fiscal year 2025), Subscription ARR growth of 24% year over year, and free cash flow (non-GAAP) projected at $210–$215 million. The focus will remain on expanding SaaS offerings, integrating new acquisitions such as Satori Cyber, and growing international sales. Investors may want to monitor the sustainability of recurring revenue growth, competitive responses in AI-driven cyber resilience, and improvements in cash generation and margin expansion as the product mix evolves.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
