Q2 2025 Commvault Systems Inc Earnings Call
Speaker Change: Thank you for standing by. I would like to welcome everyone to the Combo Q2 FY-2025 Ernest Conference call. I would now like to turn the call over to Mike Melnyk, head of Investor Relations. Please go ahead sir.
Mike Melnyk: Good morning and welcome to our earnings conference call. Before we begin, I'd like to remind you that statements made on today's call will include four-learn statements about combat future expectations, plans and prospects.
Mike Melnyk: All such forward-looking statements are subject to risk uncertainties and assumptions.
Mike Melnyk: Please refer to the cautionary language in today's earnings release and count most recent periodic reports filed with the SEC, where discussion of the risk and uncertainties that if it caused the company's actual results, we materially different from those contemplated in these forward-less statements.
Mike Melnyk: Combo does not assume any obligation to update these statements. During its call, Combo's financial results are presented on a non-gap basis. A reconfiliation between a non-gap and gap measures can be found on our website.
Speaker Change: Thank you again for joining us and the Alternate Overseers CEO, Sean James Merchandani, for his opening remarks. Conjette?
Speaker Change: Thanks, Mike. Good morning and thank you for joining today's call. Q2 was an exceptional quarter with momentum once again accelerating across all Afron-RKDIs.
Speaker Change: During the quarter, total revenue increased 16% to 233 million, our fourth consecutive quarter of double digit revenue growth.
Speaker Change: Total ARR accelerated 20% to 853 million. Subscription ARR rose 30% to 687 million.
Speaker Change: SAS ARR jumped 64% to 216 million and now represents 25% of our total ARR.
Speaker Change: and 3 cash flow grew 34% to 54 million, with 97% of that 3 cash flow returned through shared repurchases.
Speaker Change: It has never been clearer that what we do matters.
Speaker Change: In an age of nonstop threats and cyber attacks, organizations need to be ready. And when that moment comes, they need to be able to quickly recover without missing a heartbeat.
Speaker Change: This is even more important in the cloud first world that you live in today. Let me say more on that.
Speaker Change: I think you reported that 73% of all new data will be stored in the cloud, and that spending on public cloud services is expected to double in the next four years.
Speaker Change: However, traditional static approaches to business continuity and outdated point solutions are grossly inadequate for today's dynamic digital cloud force enterprises.
Speaker Change: This is why we've been innovating and re-invitioning a world we call continuous business where resilience and security are implicit. It is built on three fundamental principles.
Speaker Change: First, to be truly resilient organizations must own their cloud-first environment and be able to scale it, shrink it, manage it and secure it any way they want.
Speaker Change: After all, if their businesses in the cloud, then keeping their cloud resilient is their business.
Speaker Change: Next, MultiCloud is now universal.
Speaker Change: So customers needed agility, diversity and portability, the cross clouds to reduce loss in improved their redundancy and embrace scalability to meet the business needs.
Speaker Change: and third, one size does not fit all in today's dynamic environment, so that platform must seamlessly enable resilience across all its clouds, environments, regions, accounts, applications and workloads, and manage it all with a true single pane of glass.
Speaker Change: Combo Cloud is the only platform that can do all of this while providing the breath to support the broadest workloads, clouds and applications, as well as the depth to go deep with Cloud first recovery capabilities.
Speaker Change: At our shift event earlier this month, we announced our next generation of Cloud First Technology Innovations and Partnerships to offer a new state of always on business availability and cyber resilience for the modern Cloud First Enterprise.
Speaker Change: While many competitors of Lane Catchup in terms of the workloads we support, we introduce Combo Cloud Rewind. It's truly unique offering that transforms and simplifies recovery the cloud.
Speaker Change: This technology integrates capabilities from our Aquaramic Acquisition and leverages automation to enable customers to discover, map and recover not just their data but their cloud applications often in minutes.
Speaker Change: Blood Revine also works across the clouds to the breath of the name of the game.
Speaker Change: We're hearing great things from our customers.
Speaker Change: Frontale, a company's feet in e-discovery and digital forensic investigation knows that, quote, new capabilities like resource discovery, dependency mapping, and cloud reconstruction, not only ensure our data is safe, but also pay for clear paths to recovery.
Speaker Change: With Cloud Rewine's simple and efficient Cloud Dashboard Recovery is quick and reliable, drastically reducing cyber recovery complexity.
Speaker Change: These advancements are just one more reason we trust convuls with our cloud.
Speaker Change: In addition, we announced that our platform will help automate the manual and error-cone process of recovering active directories from Iran somewhere incident.
Speaker Change: Active Directory PNCO around which modern identity access management architectures are built. It is often targeted by bad actors because it controls access to an organization's most critical assets.
Speaker Change: Combo Cloud will automate and orchestrate the complex steps required to recover and configure active directory from a previous good state to improve cyber resiliency.
Speaker Change: We expect to release an enhanced afterdreadery offering shortly.
Speaker Change: We also announced at SHIFT Deep Integrations and expanded relationships with strategic cloud partners, AWS and Google Cloud. We're bringing the breadth of the Compau Cloud side of the resilience platform to AWS customers.
Speaker Change: and with our recent colonial acquisition, we're bringing innovative recovery capabilities to Amazon S3. The depth is paramount as many organizations rely on S3 to store large data and going AI data sets.
Speaker Change: With Google Cloud, we're offering comprehensive data protection and cyber-resillience capabilities to Google Workspace customers.
Speaker Change: This includes Gmail, Google Drive and Shared Drive. No email left behind.
Speaker Change: and all of this of course, compliments what we already do today with Microsoft Azure and Oracle Cloud.
Speaker Change: Our multi-cloud strategy is simple. Meet customers where they are and give them the cloud first resilience capabilities in the E. for continuous business. And we're serious when we say no workload, no cloud and no application left behind.
Speaker Change: For example, constellation energy, the nation's largest producer of clean emissions free energy, shows our combat up-up warmth to advance the cyber-residents capabilities, enhance operational efficiency, and further address regulatory requirements across its multiple clouds and on-premise environments.
Speaker Change: This quarter, we also teamed up with Pure Storage to help financial services customers tackle stringent compliance regulations starting with EOS Dora Regulation that takes effect in Jan 2025.
Speaker Change: Our joint offering is focused on two critical areas. First, risk management, including protection, detection, response and recovery.
Speaker Change: Second, operational testing. Together with pure, we deliver the ability to continuously test cyber recovery and secure isolated environments like Tanger.
Speaker Change: In closing, our unique approach to cyber resilience is resonating in the market. Our ability to democratize cloud and on-prem workloads natively has allowed us to land new customers and expand with our existing base be a sense of software.
Speaker Change: All of this gives us confidence that we can continue to deliver solid financial results. With that, I'll introduce our new CFO, Gender Weeko, Jen, we're happy to have you on board, over to you to discuss our results and outlook for fiscal year 25.
Gender Weeko: Thank you Sanjay, it's great to be here and thanks to the entire Commonwealth team for the warm welcome.
Gender Weeko: Hi, I'm you. I was joining a great company, but in a few short months I have been here. It is clear that the team has created something extraordinary. I'm excited to be a part of it. It's also been great to partner closely with Gary during the transition as well as the rest of the leadership team.
Speaker Change: Head Song J shared Q2 with a record quarter across all parts of our business. Our combo cloud platform is resonating as enterprises now more than ever need to be resilient.
Speaker Change: This year, results ahead of the high end of our guidance across all key metrics. And give us confidence in our ability to seize the opportunity to head.
Speaker Change: Today, I will share our Q2 results in operating metrics and then provide our guidance on 23 and FY25. As a reminder, all growth rates are on a year over year basis and let's otherwise noted.
Speaker Change: Our differentiated combo cloud platform continues to gain momentum, especially with the cyber challenges and your prizes are facing today.
Speaker Change: In Q2, we continue to see an acceleration in the monetization of our cyber resiliency offerings. That combined with fields, execution results in total revenue growth of 16% to 233 million dollars.
Speaker Change: This was led by 37% increase in subscription revenue. We are proud to deliver our fourth consecutive quarter of double digit total revenue growth.
Speaker Change: Growth in subscription revenue came from both increased contributions from our staff's portfolio and continued at double-digit growth in term software licenses. Well ahead of the market growth rate.
Speaker Change: The contribution from our term software transactions exceeding $100,000, increased by 23%. And benefited from a 12% increase in the average deal size.
Speaker Change: This expansion reflects a healthy sales mix of our economists and cyber-resilient bundles.
Speaker Change: 22 cost of our sport revenue, which includes support for both turn-based and perpetual stock relations, it's grew 1% to 78 million dollars.
Speaker Change: Customers Support Revents, derives from Terms Software and Related Arrangements. Now represents 54% of customer support revenue. Of 800 basis points compared to only 46% in Q2 of the prior year.
Speaker Change: 2-2 total ARR growth accelerated 20% to $863 million.
Speaker Change: Subscribe to ARR and come to think term-based licenses and fast contracts, increase by 30% reaching $687 million, or 81% of total ARR.
Speaker Change: This includes $215 million in fast-air, which increased 64% year over year, continuing along its hyper-growth trajectory.
Speaker Change: During the quarter, we added approximately 600 new subscription customers and have now surpassed 10,000 subscription customers worldwide including over 6,000 SaaS customers.
Speaker Change: In our existing pressuraries, we continue to see strong trends and multi-product adoption. For example, we close a significant deal with an international energy provider for Plenary Recovery, AirGap Protect, as well as protection for their VMs, Kubernetes, and M365 instance.
Speaker Change: Existing customer expansion remains healthy with a Q2 stats and next dollar retention rate of 1207%. Driven by both Upsel and Prostel.
Speaker Change: Sats are a son notable growth from emerging products such as cleaner recovery, threat-wise, and mission-critical offerings, including active directory.
Speaker Change: These trends continue to support our confidence for further expansion opportunities with the newest products to announce as shift.
Speaker Change: As we think about our future growth opportunities, we recognize the importance of making tea for tissue investments while continuing to demonstrate our responsible growth philosophy. And this quarter was no different. Evidence by our out performance against both our total revenue and profitability targets.
Speaker Change: In fiscal Q2, growth margins improve 20 basis points year over year to 82.2%. As we continue to dread leverage in our fast hosting costs.
Speaker Change: Operating expenses increased 17% to $104,000,000, reflecting our planned investments to accelerate revenue momentum as well as an increase in commissions and bonuses to record revenue growth.
Speaker Change: Non-Gap Executive Group, 14% to 48 million dollars, below our 16% total revenue growth, consistent with our philosophies to drive operating leverage in the model. Non-Gap Edemarsons, or 20.5% 100 basis points higher than the midpoint of our guidance.
Speaker Change: Now, moving to some key balance sheet and cash flow metrics. We end with a quarter with no depth and $33 million in cash. As we continue to invest in our future, we remain opportunistic around technology that further the depth and breadth of our platform.
Speaker Change: On October 1st, we closed our previously announced acquisition of Plumio for approximately $47 million. Funded with cash from our balance sheet, for several weeks in integration, and Sanjay and I look forward to providing an update on our Q3 earnings call in January.
Speaker Change: Our Q2 free cash flow grew 34% to 54 million dollars, reflecting continued growth in fast-of-for-revenue and the strength of our software subscription business, which typically includes upfront payment on multi-year contracts.
Speaker Change: In Q2, we repurchased $52 million a stock representing 97% of free cash flow.
Speaker Change: Disco year-to-date through September 30, 2024, we've repurchased $103 million of stock, representing 106% of free cash flow.
Speaker Change: We plan to research at least 75% of our free cash flows for the full fiscal year.
Speaker Change: As we reflect on the strength we saw in the first half of fiscal 25 and the positive customer reactions to our new offering that shift. We are pleased to share our outlook for fiscal Q3 and once again raise our guidance for fiscal year 25.
Speaker Change: For Fiscal Q3, we expect.
Speaker Change: subscription revenue, which includes both the software portion of turn-based licenses and fast to be in a range of 143 to 147 million dollars. This represents 27% year over year growth at the mid-point.
Speaker Change: We expect total revenue to be in the range of 243 to 247 million dollars with growth of 13% at the midpoint.
Speaker Change: At these revenue levels, we expect two three consolidated gross margins to be in the range of 81 to 82%. Gross margins are by the modest solutions from the acquired clinical assets.
Speaker Change: Even with incremental costs of the Chlumio Acquisition and our customer event in London, we expect 23 non-gast event margins to remain in the range of 20 to 21%.
Speaker Change: Our projected diluted share count for fiscal 23 is approximately 45 million shares.
Speaker Change: With the strong results we've done the first half and the demand we see moving into Q3, we are once again raising our outlook for the full fiscal year 25.
Speaker Change: We now expect fiscal year 25 total ARR growth of approximately 18% year over year.
Speaker Change: We expect subscription ARR to increase in the range of 26 to 28% year-over-year.
Speaker Change: from a school year fiscal 25 revenue perspective.
Speaker Change: We now expect subscription revenue to be in the range of $552 to $5,57 million. Growing 29% at the midpoint with strong contributions for most turn-stopper licenses and SES.
Speaker Change: We now expect total revenue growth to accelerate and be in the range of $952 to $957 million. In increase of approximately 14% at the midpoint.
Speaker Change: Moving to our updated full year fiscal 25 margin, event and national outlook. We continue to expect growth margins to be approximately 81.5 to 82.5 percent, inclusive of the accelerating contribution of our staff business.
Speaker Change: We also continue to expect non-gas evil margins to be in the range of 20 to 21%.
Speaker Change: From a free cash flow perspective, we expect full-year free cash flow to exceed $200 million.
Speaker Change: Lastly, we are currently turning ahead of the targets that we originally shared for FY 26.
Speaker Change: In closing, we are proud of our execution and momentum through the first half of 2020. We are on track for a strong second half of year and are well positioned to see the market opportunity to head. Now, I will turn it back to the operator to open the line for questions.
Speaker Change: i
Speaker Change: Thank you. As a reminder, if you'd like to ask a question, will you express star and the number one on your telephone keypad?
Speaker Change: Thank you, we will begin the question and answer session.
Speaker Change: Your first question comes from the line of Aaron Rakers from Wells Fargo.
Speaker Change: The lines open, yeah, I think.
Aaron Rakers: Yeah, thank you very much. Thanks for taking the questions. I have a couple of year real quick and first of all, congrats on the continued very strong results of very impressive. I guess my first question is, you know, when we look at the subscription business and in particular the fastest, I'm curious if you could unpack a little bit the upsell and maybe proxsell.
Aaron Rakers: You know, motion at the company's been seeing, you know, any changes in this last quarter. I think a couple of quarters ago or so you've given some metrics around, you know, that that ability to have the staff business and cross-selling to the core storage management platform. So any kind of updated metrics around that would be great.
Aaron Rakers: Hey Aaron, Sanjay, thanks. I'm going to hand this over to Jen, our new CFO. I just wanted to welcome her on the call and I'm going to hand it over to her to answer the question. Thanks, Aaron, for the question and thank you Sanjay.
Speaker Change: So, our super really excited about the momentum we're seeing in our staff business over 2015 million in staff ARR, then squirder is a record for us and we're excited about that.
Speaker Change: So we'll mention that we're seeing in our staffs, there are really comes down to the continued executions from those sales teams, as well as the fact that our staffs in our R was 120-7%
Speaker Change: Right, the next year of inter-commonation of Upsell and Cross-Sel. That would be breaking down by one-third Cross-Sel and two-thirds Upsell.
Speaker Change: And we're continuing to see attractions in our cyber-rezygance products and we're excited about the new prize for launching. I would say overall our Merchand Workloads.
Speaker Change: are really creating a medium momentum at Emwork Sanjay Mirchandani.
Speaker Change: Workouts like threat wise, workloads like active directory, clean room, these are all, you know, these have all been launched in the past.
Speaker Change: I don't know, let's say 6 to 12 months.
Speaker Change: and are really seeking into root concepts and being deployed. So, those are the kind of emerging world.
Speaker Change: And then as a quick follow-up question, you mentioned obviously the relationships with AWS and Google on the call.
Speaker Change: Um, that both-
Speaker Change: One other relationship I'm curious about is, you know, how are we thinking about the alignment with gel?
Speaker Change: and I think in particular with maybe the data domain, you know, platform, you know, any update on how that relationships evolved and, you know, whether or not we should think about that as being a, you know, incremental contributor to growth as we look out over the next couple quarters. Thank you.
Speaker Change: Sure, sure. So just on the AWS and Google, you know, it's building on what we've already got. And with AWS, it's bringing some of our core platform capabilities and, you know, to face some customer demand.
Speaker Change: improve multi-cloud environments.
Speaker Change: The Clumio acquisition also underscores our commitment to making sure that we've got the best debris capabilities on all major clouds.
Speaker Change: With Google, it was support for Google Workspace. We've been on this for a while, building this out to bring the capabilities we have on the Microsoft 365 at that level. So now we've got both major suites completely covered.
Speaker Change: Again, these are all incrementally growing our existing partnerships.
Speaker Change: The bit around the Dell Data Domain and our partnership, if you would, is work in progress. When we announced it, Aaron, I was very clear that this is not a short-term thing. Taking out entrenched...
Speaker Change: sort of incumbents.
Speaker Change: needs an overall strategy, needs, you know, needs cyber resilience end to end. And that's exactly the kind of wins we're having. This is work in progress. We're working together, we, you know, it's moving along well, we've got we've got lots of
Speaker Change: Lots of good stuff happening, but I'm not putting out a number in any way around that.
Speaker Change: specifically.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Rudy Kettinger from D.A. Davidson.
Speaker Change: The line is open.
Rudy Kettinger: Hey guys, thanks for taking my questions and I'll add my congrats to another very strong quarter. The stats there are obviously highly impressive. I think equally as impressive or certainly interesting is
Rudy Kettinger: The growth on your term license there has accelerated the past couple quarters. Some of your competitors are pretty much ignoring the on-premise segment of the market at this point. Could you just talk about the competitive landscape there in the on-premise segment of the market and just the opportunity there and what you're seeing from a legacy displacement standpoint?
Speaker Change: Absolutely. You know, Rudy, Sanjay, first and foremost, we've set this
Speaker Change: I've said it as long as I've been here, it's a hybrid world.
Speaker Change: And in the cloud side, you know, on the cloud side, it's truly multi cloud now, and, you know, we're pivoting to saying cloud first. In other words, it doesn't matter if the workload in some ways runs in the cloud or the SAS workload, your data has a high propensity to land in the cloud.
Speaker Change: So having having first-class capabilities on any any cloud being truly multi-cloud matters
Speaker Change: that does not preclude the fact that on-premise capabilities continue to grow.
Speaker Change: Okay, and we are we are I think the broadest capability set of capabilities and we have a platform advantage On premise now from the days of metallic when we launched metallic. I'll take you back a little bit wasn't so long ago We talked about one platform
Speaker Change: Whether it's a SaaS workload, whether it's a cloud workload, or an on-premise workload, you get one pane of glass because workloads should be able to move freely based on customer requirements.
Speaker Change: That strategy, if anything, has helped us
Speaker Change: In good stead, and we are best in class, because customers don't have to make unnatural choices between a workload living here or living there, or in one cloud or the other. With our platform, you get seamless portability across your workloads. And we're continuing to invest on our on-premise capabilities. We announced a bunch of features and capabilities on this at SHIFT a couple weeks ago. And as you can tell, it's not at the cost of cloud.
Speaker Change: Yeah, got it. That's helpful. Um, Jen, if I look at the guide here, you know, in the first half, your net new AR growth is 93% year over year. It's implied
Speaker Change: at, you know, down mid single digits in the second half.
Speaker Change: Even lower than that organically if we assume some contribution from Clumio Was there any large pull forwards or early renewals that contributed in the first half or just how does the second half? Pipeline look relative to the first half just trying to pair What looks like a very very conservative second half guide versus what you just put up in the first half
Speaker Change: Thanks for the question, Rudy. And I would just reiterate, we're really, really proud of the execution that we saw in the first half of the year. It really does a testament to not only what we're seeing from a product perspective, but overall execution through the sales team.
Speaker Change: As we think about the second half of the year, you may have seen in our press release that we had about a 1% FX benefit in our Q2 revenue. On an ARR basis, that equates to a couple of points.
Speaker Change: And so, as I think about it as my first quarter as CFO, I want to continue our responsible growth strategy and also the guidance philosophy that the management team has already put into place.
Speaker Change: And so if you take a look back over the prior four quarters, we're averaging about $29 million in ARR on an average, there's fluctuations to that number. And I think what you'll see is our second half of the year guidance is consistent with that.
Speaker Change: That's helpful. Thank you and congrats again guys.
Speaker Change: Thank you. Our next question comes from the line of James Fish from Piper Sandler.
James Fish: Hey guys, a couple questions here. I know you don't break out with an international exactly between AIPAC and EMEA.
James Fish: But EMEA, let's call it international, has been pretty decent. Obviously, U.S. was really strong this quarter, based on your disclosures, or America's was.
James Fish: Is there any way to understand what you guys are seeing at this point for pipeline related to DORA specifically in EMEA?
Speaker Change: So, you know, with DORA, there's been a lot of work, we've been doing a lot of work leading up to the regulation, which I think kicks in in Jan.
Speaker Change: And we've been working, you know, on our own platform building and, you know, building a regulatory and compliance capability.
Speaker Change: but also partnering with others, whether it be systems integrators who are actually implementing the systems for customers, you know, have been implementing customers and will continue to, or with partners like Pure.
Speaker Change: where, you know, between their platform and ours, we're bringing sort of engineered capabilities for DORA compliance out of the box. So we think, you know, we think DORA has been contributing in Europe to our business and will continue to as customers roll out the full breadth of what's required.
Speaker Change: And then, Jen, for you.
Speaker Change: Building off of Rudy's question a little bit here, can you just unpack on the guide raised?
Speaker Change: How much of it is what you guys are seeing in terms of, call it ELA's or consolidation platformization? How much of it is what you guys are seeing in terms of, call it ELA's or consolidation
Speaker Change: coming in this year versus, you know, I think people are missing that Apranix was helpful in fiscal Q1 as just a reminder as we think about fiscal 26. But how much is coming in for Apranix and Clumio on the ARR side this year?
Speaker Change: and the strength of that came through in the first half of the year. As we think about the second half of the year, we are excited about the acquisitions we've done. Clumio in particular was very much an acquisition for us to broaden the technology and increase the talent here at Commvault and continue to accelerate our innovation and need for customer base.
Speaker Change: As I look to the second half of the year from a guidance perspective, it's very most of this is organic.
Speaker Change: We did share that Kumyo was accretive, but it's not material. And so as you think about the impact in the second half of the year, it's a few million dollars per quarter. But again, I would point you back to the strength of the business from an organic perspective.
Speaker Change: And, you know, we're in the throes of literally spending a few weeks, so we're in the throes of actually starting the integration process with the Plumio team, and we're very hopeful that this thing will get integrated quickly, and their customers will get consolidated and expand nicely.
Speaker Change: We've already got new customers and we've got a very healthy pipeline that's lining up. Again, this isn't the carry-forward piece, this is all organic. I consider it organic because it's now part of the family.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Jason Ader from William Blair.
Speaker Change: The line is open.
Jason Ader: Thanks. Good morning, guys.
Speaker Change: We don't disclose that right now. We focus on the software, the overall software number, which the software number this quarter grew 37%.
Speaker Change: Thank you.
Speaker Change: It's part of subscription.
Speaker Change: And then just as I think about the operating margin outlook, I understand there's some dilution from the acquisitions that you've done.
Speaker Change: How do you feel about that number? I mean, from kind of at scale software companies, that seems low to me. What are your thoughts on kind of where that goes over time? And how do you get there?
Speaker Change: Yeah, great question. Thank you. I would say if we zoom out, we are committed to responsible, profitable growth.
Speaker Change: In 2025, we have shared that we are investing to accelerate our growth.
Speaker Change: and Capture Market Share. All at the same time, we are working to ensure that we increase leverage within the business. You saw that this quarter in the past.
Speaker Change: And ultimately, we're committed to doing both of those things across and we will continue to expand margins over time, while also accelerating growth. And I would just point you back to the guidance that we shared we shared today for the FY25.
Speaker Change: Okay, thank you. And then Sanjay, if I could squeeze one last one in for you. Something that we're hearing about more is consolidation of backup systems.
Speaker Change: where customers have accumulated sort of multiple different products over the years from multiple different vendors. Can you just talk through what you're seeing on that front and how that's
Speaker Change: impacted your business.
Speaker Change: Yeah, I've been
Speaker Change: Over the years, there have been too many bit part programs, there have been too many best-of-breed quote-unquote capabilities that have been inserted into enterprises which
Speaker Change: and I, you know, I think I've said a lot, I said it last quarter, I say it again, you know, in this case, more is not necessarily better.
Speaker Change: And so having an end to end capability that really allows you to see every single workload, every application and every cloud on one pane of glass is the right approach now.
Speaker Change: It's a journey. This is not easy. If you've been in business for 20 years, or 15 years, or 10 years, you've got a little bit of everything. And for customers to really make that call and do that migration.
Speaker Change: needs time and decisions. And our platform is the best suited. That is exactly how we win. No workload left behind. And now we've gone further to say no application and no cloud left behind. We're changing the dynamics.
Speaker Change: because, you know, we were the data guys, we are the data guys, we would always say, you know, we'll bring your data back and then the customer has to go bring the rest of it back. Now we're saying...
Speaker Change: It's a hard science problem, even from that point on, and we want to be part of that.
Speaker Change: And if you look at some of the ambition we have around Plumio, that's exactly where we're going to go with this. We're going to go the entire distance, and one platform allows customers to do any workload, any cloud, any application, whether it starts on premise, on the edge, or in a cloud and wants to move between them. So that's been our stated direction, and we are putting every ounce of engineering energy we've got into that. Thank you. Thank you.
Speaker Change: Thank you.
Speaker Change: Again, if you'd like to ask a question, please press star and the number one on your telephone keypad.
Speaker Change: Our next question comes from the line of Howard Ma from Guggenheim.
Speaker Change: The line is open.
Howard Ma: Thanks, and I want to add my congratulations as well on the exceptionally strong results.
Howard Ma: I want to ask, I guess, for both Sanjay and for Jen, what is driving the strength in your on-premise subscription business? When we think about the upside of the quarters, the Q2 upside and the raised full-year forecast,
Howard Ma: If it is new logos, where is the market shares? Where are the gains coming from? Because I would think that with the acquisition of Veritas by Cohesity and your in your new partnership with Dell, there's, I would think there's less to win going forward from the two biggest share donors.
Speaker Change: It's the latter, Howard. It's Anjay here. Good to hear from you. It's the latter, you know, we're taking share. We're taking share because of the, you know, my earlier response, because of the breadth of our platform, because we democratize the fact that the workload can start anywhere, end anywhere, live anywhere. And we protect it all the way. Now.
Speaker Change: The market if you look at the traditional on-premise market and depending on whose survey you look at it's flat to low single digits of growth Mostly flat. So if we're growing the way they're growing and have been for the past
Speaker Change: We're taking shares from incumbents, and we're an enterprise player at heart.
Speaker Change: So, um, you know, am I taking share from Veritas Cohesity? Absolutely. Am I taking share from some of the other incumbents? Absolutely. And, and we continue to do that because our platform grew out.
Speaker Change: is second to none.
Speaker Change: That's how we went, not subscription versus non-subscription, we leave with subscription. That's what the sales force leads with if it's an on-premise sale.
Speaker Change: Got it. Thank you for the directness. I just have a quick follow-up and when we think about the contribution of Clumio and Enopratix, which Janjay shared some details on, and if we think about the seasonality for NetNew ARR in the SaaS business, should that result in more acceleration this year in the back half than last year?
Speaker Change: You want to repeat the question? Yeah, can you repeat the question? Oh, can you just repeat the question? Sorry, the question is, should we expect more acceleration in a SAS Net New ARR in the back half of this year versus last year, considering the increased contributions from Clumio and Enneaprionics?
Speaker Change: Yeah, I agree.
Speaker Change: Yeah, great question. I think as it relates to the second half of the year guidance, right? The seasonality, the uptick is already implied in the, in the guidance that we've given and I would just go back to my second half answer around the fact that on average over the last 4 quarters, we've seen about 29,000,000 in net new error per quarter.
Speaker Change: And I think that's the right number for you to use for your model. And what I would add is, you know, we see a FranXX pipeline being built up because they've been in the family now for a few months and the product has been, you know, integrated into Commvault Cloud. We expect to see the same process go through with Blumio. And I think you'll see more of the impact in fiscal year 26.
Speaker Change: Thank you.
Speaker Change: Seeing as there are no more questions in the queue, that does conclude our question and answer session. I will now turn the call back over to the Commvault team for closing remarks.
Speaker Change: Thanks everyone for joining our call today. If you need any additional information, please view our investor presentation on the Investor Relations website. We look forward to speaking with you. Thank you.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.