Commvault Systems (CVLT) Q3 2026 earnings summary

Executive summary

• Q3 FY26 delivered record total revenue of $314 million, up 19% year-over-year, driven by strong subscription and SaaS growth, and record customer acquisition.

• Annualized recurring revenue (ARR) reached $1,085 million, up 22% year-over-year, with subscription ARR at $941 million (+28%) and SaaS ARR at $364 million (+40%).

• The company achieved the Rule of 40, balancing growth and profitability, and continued innovation with the launch of the Commvault Cloud Unity Platform and strategic partnerships.

• Net income for the quarter was $18 million, up from $11 million in the prior year, and the subscription customer base expanded 23% year-over-year to 14,100.

• Completed the acquisition of Satori Cyber, Ltd. for $28.3 million to enhance data security and AI governance.

Financial highlights

• Subscription revenue grew 30% year-over-year to $206 million, SaaS revenue up 44%, and term-based license revenue up 22% to $119 million.

• Non-GAAP EBIT was $61 million (19.6% margin); GAAP EBIT was $20 million (6.3% margin).

• Gross margin improved to 81.5% non-GAAP, with GAAP gross margin at 81.1%.

• Free cash flow for Q3 was $2 million, impacted by late-quarter deal closings and an extra payroll cycle; year-to-date free cash flow reached $105 million.

• Cash and cash equivalents totaled $1,026 million as of December 31, 2025, primarily due to convertible notes issuance.

Outlook and guidance

• Q4 FY26 revenue expected between $305–$308 million; subscription revenue $203–$207 million.

• Full-year FY26 revenue guidance raised to $1,177–$1,180 million (18% growth at midpoint); subscription ARR expected to grow ~24% year-over-year.

• Non-GAAP gross margin expected at 81–81.5% and non-GAAP EBIT margin at 19–20% for FY26.

• Free cash flow for FY26 expected at $215–$220 million, including $12–$15 million in one-time cost optimization payments.

• Approximately 60% of remaining performance obligations ($969 million) are expected to be recognized as revenue over the next 12 months.