A maker of cyber-resiliency software, Commvault helps businesses back up, protect, and recover their data through its Commvault Cloud platform, which includes tools for ransomware recovery and isolated "cleanroom" testing. Its roots trace to 1988, when it began as a data-management group inside Bell Labs before spinning off as an independent company in 1996. The name is a portmanteau of "communication" and "vault," reflecting its telecom heritage and its job of safely storing data.
SaaS revenue rose 39% to $100.6M and gross margin improved, but operating income fell 38% as sales and marketing costs climbed.
SaaS growth accelerated to 39% and its rose 6.4 points, a clear shift in the business's profitability profile. Total rose 13% to $311.7M, but fell 38% to $16.6M as a 14% increase in sales and marketing expense absorbed the subscription gains. The core recurring engine is strengthening, but the cost to feed it is still rising faster than the top line.
Key takeaways
SaaS rose 39% to $100.6M, accelerating from the 30% growth rate in the prior quarter, and SaaS improved 6.4 points to 70.5% as infrastructure costs grew more slowly than SaaS revenue for the first time in several quarters.
Subscription rose 16% to $267.0M and now represents 85% of total revenue, up from 64% a year ago, as the company's shift toward recurring arrangements continues to reshape the revenue base.
fell 38% to $16.6M and contracted 4.4 points to 5.3%, as sales and marketing expense rose 14% to $139.8M on higher compensation and commissions, and G&A rose 13% to $46.8M partly due to a strategic pricing and packaging initiative.
Section summaries
Management's Discussion and Analysis
Total revenue grew 11% to $314.1M driven by 39% SaaS growth; Subscription ARR rose 22% to $1.05B.
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Total revenues increased 11% to $314.1M, led by a 16% rise in subscription to $267.0M, which now represents 85% of total revenue.
Total grew 22% to $1,054.3M, with SaaS ARR up 38% to $424.3M, and Subscription NRR held at 114%, indicating that existing customers continue to expand their spending.
rose 72% to $132.2M and rose 73% to $131.8M, a sharp recovery from the prior quarter's $4.0M and $1.9M, respectively, which had been depressed by restructuring payouts and timing.
Cash and equivalents stood at $900.0M, down 12% sequentially from $1,026.3M, with no borrowings on the $300M , while fell to $7.5M, reflecting the ongoing accounting impact of the $900M and .
What changed
The central margin question flagged in prior filings was whether subscription would stabilize or continue to decline as SaaS infrastructure scaled. This quarter, SaaS gross margin rose to 70.5% from 64.1% a year ago, the first meaningful expansion in the table, suggesting the trend may be inflecting as growth begins to outpace infrastructure cost growth.
The yield from the $32.2M in FY2026 restructuring charges was flagged as a key watch item. This quarter, operating expenses continued to rise — sales and marketing up 14% and G&A up 13% — and contracted 4.4 points, indicating that headcount reductions have not yet produced visible operating expense .
The Tinton Falls headquarters sale, overdue by multiple quarters and flagged repeatedly, remains unaddressed in this filing, with no mention of a closing, leaseback, or further adjustment.
Share repurchases, which totaled $446.1M in FY2026 and reduced to $7.5M, were not disclosed as a material activity this quarter, suggesting a moderation in pace after the convertible note proceeds were partially deployed.
What to watch
Whether the 6.4-point improvement in SaaS to 70.5% is sustained in the next quarter, confirming that the multi-quarter trend has reversed, or whether it was a one-quarter benefit from a specific cost timing or mix shift.
Whether the 14% growth in sales and marketing expense continues to outpace the 16% subscription growth, or whether the ratio improves and allows to widen from 5.3%.
The status of the Tinton Falls headquarters sale and any leaseback arrangement, now overdue by at least three quarters, and whether further or a is required.
Any conversion activity or impact from the $900M , particularly whether the conditional conversion feature is triggered as the stock price approaches the $357.56 per share cap.
SaaS surged 39% to $100.6M, with up 38% to $424.3M, reflecting strong new and existing customer adoption and improved SaaS to 70.5% from 64.1%.
Subscription grew 22% to $1,054.3M and Subscription NRR remained at 114%, indicating healthy expansion within the existing customer base.
Sales and marketing expenses rose 14% to $139.8M on higher compensation and commissions, while G&A increased 13% to $46.8M partly due to a strategic pricing and packaging initiative.
improved to $51.7M from $31.7M; the company holds $929.8M in cash and equivalents with no borrowings on its $300M .
Quantitative and Qualitative Disclosures About Market Risk
About 45% of sales are outside the U.S., with primary currency exposure to the Euro, and the company does not use hedging instruments.
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Approximately 45% of sales for the three months ended June 30, 2026 were outside the United States.
Primary foreign-currency exposure is to the U.S. dollar versus the Euro, with secondary exposure to the British pound, Australian dollar, Canadian dollar, Indian rupee, Korean won, and Singapore dollar.
The company states it does not maintain excess cash balances in foreign accounts and has historically adjusted foreign pricing rather than using financial hedges.
Transaction gains and losses arise mainly from net denominated in currencies other than the subsidiaries' .
Net foreign currency transaction gains were approximately $0.1 million in the current quarter, compared to losses of approximately $1.2 million in the prior-year quarter.
From time to time, we are subject to claims in legal proceedings arising in the normal course of business. Except as discussed in Note 6 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we do not believe that we…
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From time to time, we are subject to claims in legal proceedings arising in the normal course of business. Except as discussed in Note 6 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we do not believe that we are currently party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, operating results, or financial condition.
The information required by this item is incorporated herein by reference to Note 6, "Commitments and Contingencies," of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which are incorporated herein by reference, and could…
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In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which are incorporated herein by reference, and could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the risks actually occur, our business, financial condition, or results of operations could be negatively affected. In that case, the trading price of our stock could decline, and our stockholders may lose part or all of their investment. There have been no material changes from the risk factors set forth in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.