Q4 2025 Commvault Systems Inc Earnings Call

Thank you for standing by.

Thank you for standing by at this time I would like to welcome everyone to the Commvault Q4 fiscal year 'twenty 25 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's your likes there will be a question and answer session. If you would like to ask a question. During this time simply.

Unknown Executive: At this time, I would like to welcome everyone to the CommVault Q4 Fiscal Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Unknown Executive: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you.

Speaker Change: Restaurant I felt it would be the number one on your telephone keypad. If you would like to withdraw your question again, that's just started but thank you I would now like to turn the conference over to Mike Nally head of Investor Relations. Please go ahead.

Mike Melnyk: I would now like to turn the conference over to Mike Melnyk, Head of Investor Relations. Please go ahead.

Unknown Executive: 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 forward-looking statements about CommVault's future expectations, plans, and prospects. All such forward-looking statements are subject to risks, uncertainties, and assumptions.

Mike Nally: Good morning, and welcome to our earnings Conference call.

Mike Nally: Before we begin I'd like to remind you that statements made on today's call will include forward looking statements about commvault future expectations plans and prospects all such forward looking statements are subject to risks uncertainties and assumptions. Please refer to the cautionary language in today's earnings release and Commvault. Most recent periodic reports filed with the SEC.

Unknown Executive: Please refer to the cautionary language in today's earnings release and CommVault's most recent periodic reports filed with the SEC for a discussion of the risks and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward-looking statements. CommVault does not assume any obligation to update these statements.

Mike Nally: For a discussion of the risks and uncertainties cause the company's actual results.

Mike Nally: Very different from those contemplated any forward looking statements Commvault does not assume any obligation to update these statements. During this call Commvault financial results are presented on a non-GAAP basis.

Unknown Executive: During this call, CommVault's financial results are presented on a non-GAAP basis. A reconciliation between the non-GAAP and GAAP measures can be found on our website.

Mike Nally: Conciliation between non-GAAP and GAAP measures can be found on our website.

Sanjay Mirchandani: Thank you again for joining us, and now I'll turn it over to our CEO, Sanjay Mirchandani, for his opening remarks. Thanks, Mike. I apologize if I'm a bit raspy. I'm recovering from flu.

Speaker Change: Thank you again for joining US now I will turn it over to our CEO Sanjay Mirchandani always opening remarks Sanjay.

Speaker Change: Thanks, Mike.

Mike Nally: I apologize if I'm a bit raspy I'm recovering from flu.

Sanjay Mirchandani: Good morning, and thank you for joining today's call. I'm excited to share the results from another record-breaking Q4 and full fiscal year 2021. First, let's talk about the quarter. Total revenue increased 23% to $275 million. Subscription revenue grew 45% to 173 million. Total ARR improved 21% to 930. and SAS ARR jumped 68% to 281.

Speaker Change: Good morning, and thank you for joining today's call I'm excited to share the results of another record breaking Q4 and full fiscal year 2025.

Mike Nally: First let's talk about the quarter.

Mike Nally: Total revenue increased 23% to $275 million.

Mike Nally: Subscription revenue grew 45% to $173 million.

Mike Nally: It'll improve.

Mike Nally: Improved 21% to $930 million and.

Mike Nally: <unk> SaaS AAR jumped 68% to $281 million.

Sanjay Mirchandani: Fiscal Year 25 was a pivotal year. We reimagined resiliency for a cloud-first world. We doubled down on innovation and a and we firmly positioned ourselves as a growth company. We deliver highly differentiated data security and recovery offerings that make customers more resilient, including CleanRoom, Active Directory, Forest Level Recovery, and Cloud Rewind. We extended our partner ecosystems. including integrations with leading security players like Acante, Dethera, Google Threat Intelligence, Splunk, and Waze. We integrated two acquisitions that expand the breadth and depth of our platform, reaching new cloud buyers and serve new markets, notably with AWS 4.0. We reignited growth in our land business, adding nearly 3,000 subscription customers.

Mike Nally: Fiscal year 'twenty five was a pivotal year for.

Mike Nally: We re imagined resiliency for a cloud first world with.

Mike Nally: We doubled down on innovation and execution.

Mike Nally: And we firmly positioned ourselves as a growth company.

Mike Nally: We delivered highly differentiated data security and recovery offerings that make customers more resilient.

Mike Nally: <unk> clean room active directory forest level recovery and cloud reward.

Mike Nally: We extended our partner ecosystem.

Including integration with leading security players like a campaign to Farah, Google threat intelligence Splunk and ways.

Mike Nally: We integrated two acquisitions that expand the breadth and depth of our platform, reaching new car buyers and serve new markets, notably with AWS footprints.

Mike Nally: We reignited growth in our land business, adding nearly 3000 subscription customers.

Sanjay Mirchandani: We drove a double-digit improvement in sales productivity and under a rule of 40 bases, we achieved 41 for the full facility.

We drove a double digit improvement in sales productivity.

Mike Nally: And the rule of 40 basis, we achieved 41 for the full fiscal year.

Sanjay Mirchandani: As you begin fiscal year 26, CommVault has never been better positioned to succeed and win.

Mike Nally: As we begin fiscal year 2006 combo has never been better positioned to succeed and win.

Sanjay Mirchandani: Let me talk about our three fundamental growth drivers. First, we expect to benefit from strong secular tailwinds tied to cyber results. Second, in a cloud-first world, our approach to continuous business is second to none. Third, we're executing both internally and with our growing partner. I'll discuss each driver in more detail. First, cyber resilience remains a top strategic priority for organizations. Ransomware and sophisticated cyber attacks are increasing in frequency. Cloud environments are more complex, and there are emerging use cases around AI. As such, organizations are increasingly turning to CommVault to keep their business continuing. Some recent notable customer wins include American Tower, Cinemark Holdings, Janus International, McGraw Hill, and Blue Origin, among others.

Mike Nally: Let me talk about our three fundamental growth drivers.

Mike Nally: First we expect to benefit from strong secular tailwind tied to cyber resilience.

Mike Nally: Second in a cloud first world our approach to continuous business is second to none.

Third we're executing both internally and with our growing partner ecosystem.

I'll discuss each driver in more detail.

Mike Nally: First cyber resilience remains a top strategic priority for organizations ransomware and sophisticated cyber attacks are increasing in frequency cloud.

Mike Nally: Cloud environments are more complex and there are emerging use cases around AI.

Mike Nally: As such organizations are increasingly turning to commvault to keep that business continues.

Mike Nally: Some recent notable customer wins include American tower.

Cinemark Holdings, Jonathan International Mcgraw Hill, and Blue origin among others.

Sanjay Mirchandani: Whether it's on-prem or in the cloud, CommVault gives customers the flexibility to choose the best resilient solution at the lowest total cost of ownership. For example, this quarter we helped one of Europe's largest financial institutions enhance its resilience while consolidating multiple data By deploying CommVault Hyperscale X, this customer significantly reduced the TARPA cost. Simplified as a day-to-day operation. and enhance this overall cyber resilience posture. As customer threats grow and become more sophisticated, we're supporting GDPR and DORA in the EU, and SOCHI and APRA in Australia. Our ability to support compliance is contributing to strong growth internationally.

Whether it's on prem or in the cloud Commvault gives customers the flexibility to choose the best resilient solution at the lowest total cost of ownership.

Mike Nally: For example, this quarter, we helped one of Europe's largest financial institutions enhance its resilience, while consolidating multiple data centers.

Mike Nally: By deploying Commvault hyperscale ex this customer significantly reduce its hardware costs.

Mike Nally: Provided the day to day operations.

Mike Nally: And enhance this overall cyber resilience posture.

Mike Nally: As customers grow and become more sophisticated we're supporting GDP and Dora in the EU and stocky and opera in Australia.

Mike Nally: Our ability to support compliance is contributing to strong growth internationally.

Sanjay Mirchandani: For example, in EMEA, we partnered with Accenture Italia to support a leading Italian banking group with DORA compliance. The same bank transitioned away from two legacy vendors and consolidated on CommVault to enhance its cyber resilience posture. And at APAC, a large global financial services company chose CommVault to protect its AWS workloads using an air-gapped immutable copy of its data to support compliance requirements. We also offer this customer a more elegant solution at a lower total cost of ownership than the incumbent provider.

Mike Nally: For example, <unk>.

Mike Nally: We partnered with Accenture Italia to support a leading Italian banking group of Dora compliance the.

Mike Nally: The same bank transitioned away from two legacy vendors and consolidated commvault to enhance cyber resilience posture.

Mike Nally: And in APAC, a large global financial services company chose Commvault to protect its AWS workloads using an aircraft immutable coffee if it's data to support compliance requirements. We also offered this customer more elegant solution.

Mike Nally: Lower total cost of ownership than the incumbent provider.

Sanjay Mirchandani: Our success extended into highly regulated industries like healthcare and financial services. This was evident in Q4 when we landed one of America's largest financial institutions. We had a number of big wins with banks this quarter, and you'll hear more examples of that throughout my prepared remarks.

Mike Nally: Our success extended into highly regulated industries like healthcare and financial services. This is evidenced in Q4, and we landed one of America's largest financial institutions, we had a number of big wins with banks this quarter and Youll hear more examples of that throughout my prepared remarks.

Sanjay Mirchandani: These strong customer testimonials reflect current tailwinds in the industry and lead us to our second growth strike. Our unique approach to continuous business, a state of always-on business availability and resilience for the modern enterprise. With continuous business, traditional backup and disaster recovery solutions are no longer enough. Customers require a platform with the breadth and depth that can help them rapidly recover their entire business, data, applications, and infrastructure together. That's what CommVault's offerings you need to provide.

Mike Nally: These strong customer testimonials reflect current tailwind in the industry and lead us to our second growth driver our.

Mike Nally: <unk> unique approach to continuous business a state of always on business availability and resilient for the modern enterprise.

Mike Nally: With continuous business traditional backup and disaster recovery solutions and no longer enough customers require a platform with the breadth and depth that can help them rapidly recover their entire business data applications and infrastructure together.

Mike Nally: Commvault offerings uniquely provide.

Sanjay Mirchandani: Let's look at a few examples, starting with Active Directory. often called the backbone of enteroprotein. It's estimated that Active Directory and EnterID manage authentication for more than 600 million users worldwide and controls access to critical business systems, protecting everything from workstation logins to physical building access. If Active Directory goes offline, business operations can grind to a halt. It's no surprise that bad actors make Active Directory a primary target in 9 out of 10 cyber attacks. and the CommVault. CommVault recently introduced Active Directory force level recovery, automating rapid recovery of everything from users, groups and permissions to domain controllers across the organization.

Mike Nally: Let's look at a few examples starting with active directory.

Mike Nally: Often called the basketball of enterprise Heidi.

Mike Nally: It's estimated that active directory and enter IV manage authentication for more than 600 million users worldwide.

Mike Nally: And controlled access to critical business systems, protecting everything from workstation logins to physical building access.

Speaker Change: In fact, it directly goes offline business operations Congrats to all it's no surprise that bad actors can make active directory, a primary target and nine out of 10 cyber attacks.

Mike Nally: The combo.

Mike Nally: <unk> recently introduced active directory forest levels of coupling automating rapid recovery of everything from users groups and permissions to domain controllers across the organization.

Sanjay Mirchandani: What could take days to recover, not days of fractures. In Q4, Active Directory was one of the company's fastest-growing SaaS offices.

Mike Nally: What could take days to recover now takes a fraction of the time in.

Mike Nally: In Q4 active directory was one of the company's fastest growing SaaS offerings.

Sanjay Mirchandani: A second example of how we're enabling continuous business is Cloud V1. After a cyber attack, one of the most complex, costly, and time-consuming steps in the recovery process is rebuilding cloud-native applications that power and run their data. This can take weeks, a luxury our customers do not have. CommVault Cloud Rewind enables customers to rapidly rebuild their applications and the infrastructure and configurations that power them so they can get back. And as more organizations embrace AI, they need to be able to recover AI data at a moment's notice.

Mike Nally: A second example of how we're enabling continuous business as cloud rewind.

Mike Nally: After cyber in fact, one of the most complex costly and time consuming steps in the recovery process is rebuilding cloud native applications that power and run the data. This can take weeks our luxury our customers do not have.

Mike Nally: Commvault operating blind enables customers to rapidly rebuild their applications and the infrastructure and configurations that power them.

Mike Nally: So they can get back to business.

Mike Nally: And as more organizations embrace AI, they need to be able to recover at a moment's notice. This brings me to my third example of how we're enabling continuous business. Many company store massive AI data repositories on Amazon necessary.

Sanjay Mirchandani: This brings me to a third example of how we're enabling continuous business. Many companies store massive AI data repositories on Amazon. If that data has corrupted the law... Our CommVault Plumio offerings, like BATRAC, can help customers rapidly recover these massive data sets with billions of objects fast. In fact, according to our research, Clumio's serverless orchestration engine can scale to hundreds of petabytes and restore data at 10 times the speed of other solutions. The need for this technology has never been greater. For example, Atlassian, the software company, chose Clumio to help protect dozens of petabytes of Amazon S3 data and billions of objects across numerous geographies.

Mike Nally: If that data is corrupted or lost.

Mike Nally: Commvault gloomy offerings like backtrack can help customers rapidly recover these massive datasets the billions of objects.

Mike Nally: Yeah.

Mike Nally: In fact, according to our research Gloomier serve several as orchestration engine can scale to hundreds of Petabytes and restore data at 10 times the speed of other solutions the need for this technology has never been greater.

Mike Nally: For example, Atlassian the software company chose <unk> to help protect dozens of Petabytes of Amazon <unk> III data in billions of objects across numerous geographies Cumulus massively scalable solutions significantly reduce backup and restore times and help cut costs by more than 50%. This showcases.

Sanjay Mirchandani: CUMMIU's massively scalable solutions significantly reduce backup and restore times and help cut costs by more than 50%. This showcases CUMMIU's enterprise-grade data protection at cloud scale, where traditional solutions simply can't be.

Mike Nally: <unk> enterprise grade data protection AD cloud scale with traditional solutions simply can't compete.

Sanjay Mirchandani: The three offerings I just discussed, Active Directory, Cloud Rewind, and Clumio Backtrack, are pivotal to enabling continuous business. And when it comes to addressing key customer pain points, they're even better together.

Mike Nally: The three offerings I just discussed active directory cadre mine, that's let me backtrack, a pivotal to enabling continuous business and when it comes to addressing key customer pain points. They are even better together.

Sanjay Mirchandani: This brings us to our third major growth driver for fiscal year 2020. executing internally and with our partner. We drove record levels of inflow, improved growth rates, and increased reproductivity while growing our sales. Building on that momentum, in Q4, we saw record contributions of partners to a land I'll show you just a few examples. Partnering with Hitachi and Pure, we displaced two incumbent providers to help a Fortune 500 global finance firm standardize its platform and enhance the cyber resilience with strict time to recovery. Our ability to secure the entire data estate at scale was key to this win.

Mike Nally: This brings us to our third major growth driver for fiscal year, 2006, executing internally and with our partner ecosystem.

Mike Nally: We probe record levels of inflow improved close rates and increased rep productivity, while growing our sales force building on that momentum in Q4, we saw a record contribution from partners to our land business.

Mike Nally: Just a few examples.

Mike Nally: Partnering with Hitachi and pure we displaced to incumbent providers to help a fortune 500 global finance firm standardized its platform and enhanced cyber resilience with strict time to recovery estimates.

Mike Nally: Our ability to secure the entire data state at scale.

Mike Nally: Key to this way.

Sanjay Mirchandani: Next, with HPE, we enabled a large European bank to enhance its cyber resilience posture and support its DORA compliance set. and partnering with Kedro, we displaced the incumbent to help a large UK bank modernize its cloud footprint and support its door. Our ability to protect the most applications with a single solution, address and test security concerns with CommVault Cleanroom, and provide the fastest time to recovery were key competitors differentiate. We also doubled down on our relationships with leading hyperscalers, supporting our customers as they accelerate the move to the cloud. This fuels additional growth as our marketplace transactions grew nearly 50% quarter-on-quarter and over 250% year-on-year.

Mike Nally: Next with HPE, we enabled a large European bank to enhance cyber resilience posture and supported the Dora compliance deadlines.

Mike Nally: And partnering with control we displaced the incumbent to help a large UK bank modernize its cloud footprint and supported store compliance our ability to protect the most applications with a single solution.

Mike Nally: Dressing test security concerns with combo cleaning driven and provide the fastest time to recovery what key competitive differentiators.

Mike Nally: We also doubled down in our relationships with leading Hyperscale are supporting our customers as they accelerate the move to the cloud.

Mike Nally: This fueled additional growth as a marketplace transactions grew nearly 50% quarter over quarter and over 250% year on year.

Sanjay Mirchandani: Building on the momentum in fiscal year 25, we plan to continue investing in cloud and data security integrations across our partner economies.

Mike Nally: Building on our momentum in fiscal year 'twenty five we plan to continue investing in cloud and data security integrations across our partner ecosystem.

Sanjay Mirchandani: In closing, as we head into Fiscal Year 26, We believe the opportunity before us is compelling. And as we grow and expand our portfolio with the higher growth adjacent markets like data security and cloud security, we're attracting new buyers and significantly increasing our total addressable market. We now estimate this opportunity to be approximately $24 billion. While we continue to monitor the macro environment, our business remains strong, our team is executing, and we're winning new customers.

Mike Nally: In closing as we head into fiscal year 2006, we believe the opportunity before us is compelling.

Mike Nally: And as we grow and expand our portfolio with a higher growth adjacent markets like data security and cloud security, we are attracting new buyers and significantly increasing our total addressable market.

Mike Nally: We now estimate this opportunity to be approximately $24 billion.

Mike Nally: While we continue to monitor the macro environment, our business remains strong our team is executing and we are winning new customers. We are confident in our outlook and excited about the future as the most innovative cyber resilience platform in the industry.

Sanjay Mirchandani: We're confident in our outlook and excited about the future as the most innovative cyber resilience platform in the industry.

Sanjay Mirchandani: I want to thank our entire team for their dedication and hard work. Our people are the driving force behind everything we do. And if the energy and enthusiasm I witnessed Phil's kickoff a few weeks ago is any indication, we are ready to deliver for our customers and partners again in fiscal year 26.

Mike Nally: I want to thank our entire team for their dedication and hard work. Our people are the driving force behind everything we do.

Mike Nally: And it would be an energy and enthusiasm I witnessed sales kickoff a few weeks ago is any indication we.

Mike Nally: We're ready to deliver for our customers and partners again in fiscal year 2006.

Jen DiRico: Now, I'll turn it over to our Chief Financial Officer, Jen DiRico, to discuss our results. Jen? Thanks Sanjay. As Sanjay noted, Q4 was another excellent quarter driven by strong performance across geographic regions, increased contributions from our new offerings, elevated new customer growth, and healthy renewal and expansion activity within our installed I'm proud to say that our platform and our message are resonating with customers and our team is executing against a growing market opportunity.

Speaker Change: Now I'll turn it over to our Chief Financial Officer, gender Rico to discuss our results.

Mike Nally: <unk>.

Speaker Change: Thanks Sanjay.

Speaker Change: Sanjay noted Q4 was another excellent quarter driven by strong performance across geographic regions increased contributions from our new offerings elevated new customer growth and healthy renewal and expansion activity within our installed base.

Speaker Change: I'm proud to say that our platform and our message are resonating with customers and our team is executing against the growing market opportunity.

Jen DiRico: I want to thank all the vaulters that contributed to the best fiscal year that CommVault has ever seen. Now I'll discuss our Q4 results and operating. followed by a discussion of guidance for Q1 and Fiscal 2016. Please note that all growth rates are compared on a year-over-year basis unless otherwise specified. Total ARR increased by 21% to $930 million on a reported For a like-for-like comparison of FX Adjusted ARR to prior quarters, please refer to page 27 of the Q4 earnings presentation. Subscription ARR grew 31% to $780 million, including a substantial 68% increase in SAS ARR, totaling $281 million.

Want to thank all the <unk> that contributed to the best fiscal year that Commvault has ever seen.

Speaker Change: Now I'll discuss our Q4 results and operating metrics followed by a discussion of guidance for Q1 and fiscal 'twenty. Six. Please note that all growth rates are compared on a year over year basis, unless otherwise specified.

Speaker Change: Total <unk> increased by 21% to $930 million on a reported basis.

Speaker Change: For like for like comparison of FX adjusted <unk> to prior quarter. Please refer to page 27 of the Q4 earnings presentation.

Speaker Change: Subscription <unk> grew 31% to $780 million, including a substantial 68% increase in SaaS AAR totaling $281 million.

Jen DiRico: Subscription ARR now constitutes 84% of total ARR compared to 77% one year ago. We consider subscription ARR to be the best indicator of the company's growth profile, as it adjusts for the lower growth of our perpetual license and customer support business. Now I'll discuss Q4 revenue. Total revenue increased 23% to $275 million. driven by a robust 45% increase in subscription revenue. The growth in subscription revenue was driven by momentum across our fast platform, healthy growth in our software land business, and expansion with existing. Revenue from term software transactions over $100,000 increased by 38%. benefiting equally from an improvement in volume and average transactions.

Speaker Change: Subscription IRR now constitutes 84% of total IRR compared to 77% one year ago.

Speaker Change: We consider subscription IRR can be the best indicator of the company's growth profile as it adjusts for the lower growth of our perpetual license and customer support businesses.

Speaker Change: Now I will discuss Q4 revenue trends.

Speaker Change: <unk> revenue increased 23% to $275 million driven.

Speaker Change: Driven by a robust 45% increase in subscription revenue.

Speaker Change: The growth in subscription revenue was driven by momentum across our SaaS platform healthy growth in our software land business and expansion with existing customers.

Speaker Change: Revenue from term software transactions over $100000 increased by 38% benefiting equally from an improvement in volume and average transaction size.

Jen DiRico: This included more than a dozen transactions over $1 million. Many of these transactions carried multi-year terms as customers view CommVault as the strategic partner of choice to help them address their evolving cyber resilience needs. This presents an exciting opportunity for us to grow and expand with them as their needs evolve. For example, we recently landed one of the world's largest consumer product companies that was using a costly patchwork of competitive offers. CommVault centralized its numerous heterogeneous workloads, enhanced its data security, and lowered its costs across multiple clouds, factories, and data centers. Our growth this quarter wasn't limited to large deals.

This included more than a dozen transactions over $1 million.

Speaker Change: Many of these transactions carried multiyear terms as customer of you commvault as a strategic partner of choice to help them address their evolving cyber resilience needs. This presents an exciting opportunity for us to grow and expand with them as their needs evolve.

Speaker Change: For example, we recently landed one of the worlds largest consumer product companies that was using a costly patchwork of competitive offerings.

Speaker Change: <unk> central lines into numerous heterogeneous workloads enhanced data security and lowered its cost across multiple clouds factories and data centers.

Speaker Change: Our growth this quarter wasn't limited to large deals Q4 was also the best volume quarter of the year for term software transactions under $100000 and we added 700, new subscription customers, surpassing 12000 worldwide.

Jen DiRico: Q4 was also the best volume quarter of the year for term software transactions under $100,000. And we added 700 new subscription customers, surpassing 12,000 worldwide. Existing customer expansion remained healthy, with Q4 SaaS net dollar retention rate steady at 127%. driven by both upsell and cross-sell. SAS ARR saw notable growth from new products, particularly Active Directory, Cleanroom, and Threads. For example, we secured a seven-figure multi-year renewal with an existing CommVault customer that recognized the value and innovation that we deliver. This Fortune 500 clean energy production company expanded existing workloads, including AirGap Protect, VMs, M365, and Active Directory.

Speaker Change: Existing customer expansion remains healthy with Q4, SaaS net dollar retention rate steady at 127% driven by both upsell and cross sell SaaS IRR. Some notable growth from new products, particularly active directory clean room and threat scan.

Speaker Change: For example, we secured a seven figure multi year renewal with an existing commvault customer that recognize the value and innovation that we deliver this fortune 500 clean energy production company expanded existing workloads, including <unk> protect Vms and $3 65, and active directory and.

Jen DiRico: In addition, to help mitigate the impact of cyber incidents and support continuous business operations, the company added numerous cyber offerings, including risk analysis, threat scan, and cleanroom.

Speaker Change: In addition to help mitigate the impact of cyber incidents and support continuous business operations. The company added numerous cyber offerings, including risk analysis threat scan and cleaner on.

Jen DiRico: This customer is an example of why we are winning in the market and how we plan to build on this momentum in FY26. One of our strategic priorities for FY26 is to drive increased multi-product adoption of our SaaS offering. Today, approximately 30% of SAS customers utilize multiple offerings. As we have shared in the past, there is significant potential to drive this percentage higher over time by monetizing our cyber offerings like Active Directory, ThreatScan, and Cleanroom, as well as our enhanced AWS offerings like Clumio Backtrack. Today, approximately 30% of SAS customers utilize multiple As we have shared in the past, there is significant potential to drive this percentage higher over time by monetizing our cyber offerings like Active Directory, ThreatScan, and Cleanroom, as well as our enhanced AWS offerings like Clumio Backtrack.

Speaker Change: This customer is an example of why we are winning in the market and how we plan to build on this momentum FY 'twenty six one of our strategic priorities for FY 'twenty six is to drive increased multi product adoption of our SaaS offerings today, approximately 30% of SaaS customers utilize multiple offerings as we have shared in the.

Speaker Change: The past there is significant potential to drive this percentage higher over time by monetizing our cyber offerings like active directory threat scan and clean room as well as our enhanced AWS offerings like Colombia backtrack.

Speaker Change: Today, approximately 30% of SaaS customers utilize multiple offerings as we have shared in the past there are significant potential to drive this percentage higher over time by monetizing our cyber offerings like active directory threat skin and clean room as well as our enhanced AWS offerings.

Speaker Change: Michael Neal Backtrack.

Jen DiRico: Now I'll discuss our consistent profitability and free cash flow, which demonstrates our commitment to a responsible growth philosophy. Fiscal Q4 growth margins were 83.1 percent, reflecting a strong mix of term software sales combined with a continued focus on driving optimization in our staff. Going forward, we continue to expect total growth margins to be in the low 80% range over time as SAS becomes a larger mix of the overall business. Operating expenses of $168 million represented 61% of total revenue, compared to 62% in the prior year. Q4 operating expenses included previously disclosed growth driving investments and higher commission and bonuses on record sales results.

Speaker Change: Now I will discuss our consistent profitability and free cash flow, which demonstrates our commitment to a responsible growth philosophy.

Speaker Change: Fiscal Q4 gross margins were 83, 1%, reflecting a strong mix of term software sales combined with a continued focus on driving optimization in our SaaS margins.

Speaker Change: Going forward, we continue to expect total gross margins to be in the low 80% range overtime SaaS becomes a larger mix of the overall business.

Speaker Change: Operating expenses of $168 million represented 61% of total revenue compared to 62% in the prior year.

Speaker Change: Q4 operating expenses included the previously disclosed growth driving investments and higher commission and bonuses on a record sales results.

Jen DiRico: Non-GAAP EBIT grew 31% to $59 million, with margins up 130 basis points year-over-year to 21.5%. non-GAAP EBIT benefited from strong flow-through of revenue outperformance, which was driven by the continued hyper-growth of our SaaS platform and a record quarter for term software transactions. Now, moving to some key balance sheet and cash flow methods. We ended the quarter with no debt and $302 million in cash. Q4 free cash flow of $76 million and full year free cash flow of $204 million came in at the high end of our guidance. The biggest drivers of free cash flow are deferred revenue from fast contracts and the strength of our term software business, which typically includes upfront payments on multi-year contracts.

Speaker Change: non-GAAP EBIT grew 31% to $59 million.

Speaker Change: With margins up 130 basis points year over year to 21, 5% non-GAAP EBIT benefited from strong flow through of revenue outperformance, which was driven by the continued hyper growth of our SaaS platform and a record quarter for term software transactions.

Speaker Change: Now moving to some key balance sheet and cash flow metrics, we ended the quarter with no debt and $302 million in cash.

Speaker Change: Q4 free cash flow of $76 million in full year free cash flow of $204 million.

Speaker Change: Came in at the high end of our guidance.

Speaker Change: The biggest drivers of free cash flow, our deferred revenue from SaaS contracts and the strength of our term software business, which typically includes upfront payments on multiyear contracts.

Jen DiRico: For the fiscal year ending March 31, 2025, we repurchased $165 million of stock, representing 81% of free cash flow, again, exceeding our guidance to return at least $75.

Speaker Change: For the fiscal year, ending March 31, 2025, we repurchased $165 million of stock representing 81% of free cash flow again exceeding our guidance to return at least 75%.

Jen DiRico: Now I'll discuss our outlook for Q1 and fiscal year 2020. I'm extremely proud of what we accomplished in fiscal year 2020. The rate of innovation at CommVault is impressive, and the breadth and depth of our platform is unmatched. As Sanjay said earlier, our innovations allow us to address new use cases, new buying personas, and significantly expand our total addressable market, which we now estimate to be over $24 billion. We're excited about this larger, higher growth market opportunity and confident in our team's ability to At the same time, we're closely monitoring the macro environment and potential changes in demand.

Speaker Change: Now I'll discuss our outlook for Q1 fiscal year 2006.

Speaker Change: Extremely proud of what we accomplished in fiscal year 2025, the rate of innovation that Commvault is impressive and the breadth and depth of our platform is unmatched.

Speaker Change: Sanjay said earlier, our innovations allow us to address new use cases.

Speaker Change: <unk> <unk> and significantly expand our total addressable market, which we now estimate to be over 24 billion.

Speaker Change: We're excited about this larger higher growth market opportunity and confident in our team's ability to execute at the same time, we're closely monitoring the macro environment and potential changes in demand trends.

Jen DiRico: For Fiscal Q1-26, we expect subscription revenue, which includes both the software portion of term-based licenses and SAS, to be in the range of $166 to $170 million. This represents 35% year-over-year growth at the We expect total revenue to be in the range of $266 to $270 million, with growth of 19% at the moment. At these revenue levels, we expect Q1 consolidated growth margins to be in the range of 81 to 82%. We expect Q1 non-GAAP EBIT margins of approximately 21%. Our projected diluted share count for fiscal Q1 is approximately 45 million shares. Now, I'm happy to share our initial FY26 outlook.

Speaker Change: For fiscal Q1, 'twenty six we expect subscription revenue, which includes both the software portion of term based licenses and SaaS to be in the range of $166 million to $170 million.

Speaker Change: This represents 35% year over year growth at the midpoint.

Speaker Change: We expect total revenue to be in the range of $266 million to $270 million with growth of 19% at the midpoint.

Speaker Change: At these revenue levels, we expect Q1 consolidated gross margins to be in the range of 81% to 82%.

Speaker Change: We expect Q1, non-GAAP EBIT margins of approximately 21%.

Speaker Change: Our projected diluted share count for fiscal Q1 is approximately 45 million shares.

Speaker Change: Now I'm happy to share our initial FY 'twenty six outlook.

Jen DiRico: We expect fiscal year 26 total ARR growth of 16 to 17% year over year. This will be driven by subscription error, which we expect to increase in the range of 22 to 23% year-over-year. Beginning in FY26, we will report ARR on both a reported and FX-adjusted basis using rates as of March 31, 2026. For a historical comparison, please refer to page 27 of our Q4 earnings presentation, which includes FY25 ARR rebased using these same From a full-year fiscal 26 revenue perspective, we expect subscription revenue to be in the range of $727 to $732 million, growing 24% at the midpoint with strong contribution from both term software licenses and SAS.

Speaker Change: We expect fiscal year 'twenty, six total ore growth of 16% to 17% year over year.

Speaker Change: This will be driven by subscription error, which we expect to increase in the range of 22% to 23% year over year.

Speaker Change: Beginning in FY 'twenty six we will report <unk>.

Speaker Change: On both a reported and FX adjusted basis using rates as of March 31, 2025.

Speaker Change: For a historical comparison, please refer to page 27 of our Q4 earnings presentation, which includes FY 'twenty five <unk> rebased using these same rates.

Speaker Change: From a full year fiscal 'twenty six revenue perspective, we expect subscription revenue to be in the range of $727 million to $732 million growing 24% at the midpoint with strong contribution from both term software licenses and SaaS.

Jen DiRico: We expect total revenue of $1.13 to $1.14 billion, an increase of 14% at the midterm. Moving to our full-year fiscal 26 margin EBIT and cash flow outlook. We expect growth margins to be 81 to 82%. This range reflects continued growth in our SaaS platform, which carries a different growth margin profile than SaaS. We expect non-GAP EBIT margins to be approximately 21%. Non-Gap Event Margins include our continued investments around additional growth driving initiatives. We are projecting full-year free cash flow of $210 to $215 million. This guidance reflects our transition to a cash taxpayer following the full utilization of our tax carry-forward credits in fiscal 2020.

We expect total revenue of 113 to 114 billion.

Speaker Change: An increase of 14% at the midpoint.

Speaker Change: Moving to our full year fiscal 'twenty, six margin EBIT and cash flow outlook.

Speaker Change: We expect gross margins to be 81% to 82%. This range reflects continued growth in our SaaS platform, which carries a different gross margin profile than software.

Speaker Change: We expect non-GAAP EBIT margins to be approximately 21%.

Speaker Change: non-GAAP EBIT margins include our continued investments around additional growth driving initiatives.

Speaker Change: We are projecting full year free cash flow of $210 million to $215 million.

Speaker Change: This guidance reflects our transition to a cash taxpayer following the full utilization of our tax carryforwards credits in fiscal 2025.

Jen DiRico: From a capital allocation standpoint, our three core priorities remain unchanged. Strategic M&A, share repurchases, and reinvestment in the business. As we shared last quarter, the mix across these pillars may shift based on the opportunities we see in the market.

Speaker Change: From a capital allocation standpoint, our three core priorities remain unchanged strategic.

Speaker Change: Strategic M&A share repurchases and reinvestment in the business.

Speaker Change: As we shared last quarter the mix across these pillars may shift based on the opportunities we see in the market.

Jen DiRico: In closing, the investments we made in FY25 have positioned us well to capture a significantly larger market opportunity in FY26 and beyond. While we remain mindful of the broader macro environment, we're confident in our trajectory. Our initial FY26 guidance shows we are on pace to exceed our 1 billion total ARR and 330 million SAS ARR targets ahead of schedule. To build on this momentum, we plan to continue to invest with focus and pace as we scale our leadership and cyber resilience.

Speaker Change: In closing the investments we made in FY 'twenty five have positioned us well to capture a significantly larger market opportunity in FY 'twenty six and beyond.

Speaker Change: While we remain mindful of the broader macro environment, we're confident in our trajectory.

Our initial FY 'twenty six guidance shows we are on pace to exceed our $1 billion total IRR and 330 million SaaS IRR targets ahead of schedule to build on this momentum we plan to continue to invest with focus and pace as we scale our leadership in cyber resilience now.

Unknown Executive: Now I will turn it back to the operator to open the line for questions. Thank you.

Speaker Change: Now I will turn it back to the operator to open the line for questions.

Unknown Executive: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, simply press star 1 again.

Speaker Change: Thank you we will now begin the question and answer session.

Speaker Change: You would like to ask a question. Please press star one on your telephone keypad, Derbyshire head and join the queue to withdraw your question simply press Star. One again, if you were called upon to ask your questions and listening via loud speakers on your device. Please pick up your handset and ensure that your phone is not on mute and ask your question.

Unknown Executive: If you were called upon to ask your question and a listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue.

Chris: Chris firewall to join the queue.

Eric Heath: And your first question comes from the line of Eric Heath with KeyBank Capital Markets. Your line is open. Hey, good morning, Sanjay, Jen. I just wanted to ask about the macro. Can you just talk about what you're hearing talking to customers? How they're thinking about the macro at this point in the month of April? How they're thinking about cyber resiliency? There's any changes to sales cycles at this point or close rates in the last few weeks.

Speaker Change: And your first question comes from the line of Eric <unk> with Keybanc capital markets. Your line is open.

Eric: Hey, good morning, Sanjay Jen.

I just wanted to ask about the.

Speaker Change: The macro.

Can you just talk about what youre hearing and talking to customers.

Speaker Change: They're thinking about the macro at this point in the month of April how theyre thinking about cyber resilience.

Is there any changes to sales cycles at this point or close rates.

Speaker Change: In the last few weeks.

Eric Heath: And then lastly, Jen, just how you're thinking about these factors when you're thinking about building the guidance for fiscal 2021. Sure, Eric. So, you know, obviously, you know, we've been spending a lot of time looking and hearing and checking on what we should be assuming as part of our fiscal year 26 plan. At this point, you know, the best indicators are conversations with customers and partners. And everything we're hearing so far is that cyber resilience continues to be a priority. And, you know, we don't see anything dramatically different from our assumptions going into Q1. Now again, you know, it's what we know and what we're close to.

Speaker Change: And then lastly, John just how youre thinking about these factors when you're thinking about building the guidance for fiscal 'twenty six.

Speaker Change: Sure Eric.

Speaker Change: So obviously.

Speaker Change: We've been spending a lot of time looking in hearing and checking on what we should be assuming as part of our fiscal year 'twenty six plan at this point.

Speaker Change: The best indicators of conversations with customers and partners.

Everything we're hearing so far is the type of resilience continues to be a priority and.

Speaker Change: We don't see anything dramatically different from our assumptions going into Q1.

Speaker Change: No again, it's what we know.

Jen DiRico: Having said that, you know, we do have some very clear outcomes from the COVID period when we had supply chain issues and so, you know, we've done things like not, we don't sell hardware, so we don't have any direct dependency, you know, on hardware, but customers obviously do sometimes if they're installing our software or we give them optionality with SAS.

Speaker Change: Those two having said that we do we do have some.

Speaker Change: Outcomes from.

Speaker Change: The coldest periods than we have supply chain issues and so we've done things like.

Speaker Change: Not we don't sell hardware. So we don't have any direct dependency.

Speaker Change: On hardware, but customers, obviously do some times what they are installing our software or we give them optionality with SaaS. So there are.

Jen DiRico: So, there are, you know, so to net it out, I'd say it's a wait and watch, but at this point. No significant change between Q4 and Q1.

Speaker Change: I'd say, it's a wait and watch but at this point.

Speaker Change: No significant change between Q4 and Q1, John do you want to add anything yes, sure and so in terms of how we thought about guidance. The first thing I would just say to you is our philosophy is consistent with historical.

Jen DiRico: Jen, do you want to add anything? Yeah, sure. And so in terms of how we've thought about guidance, the first thing I would just say to you is our philosophy is consistent with historical. And I think overall, what you're hearing in our guidance is a balance between being prudent, but also understanding there's a true need for our cyber resilience products and our own internal execution. And so, as Sanjay said, we have constant conversations with partners and suppliers. And at this point, I think it's a balance and we're feeling confident about the guidance that we've set out.

Speaker Change: Thank overall, what you're hearing in our guidance is that balance between being prudent but also understanding that you need for our cyber related products and our own internal execution.

Speaker Change: Third we have constant conversations with partners and suppliers and at this point I think it's a balance and we're feeling confident about the guidance that we set out.

Unknown Executive: That's great.

Speaker Change: Okay, that's great and John if I could just ask on the operating margin guidance.

Unknown Executive: And Jen, if I could just ask on the operating margin guidance, about flat year over year, again, for the second year, understand the momentum in the business and the reason to invest, but just a little bit more clarity on how you're thinking about the growth versus margin trade off where the investments are. And just maybe some of the I would have thought we'd see some expansion kind of rolling off the Clumio acquisition last year that had some headwinds. Thanks. So, first of all, I would say we're really pleased with our FY25 performance. Rule of 41 for the year, rule of 45 for the quarter.

Speaker Change: That year over year again for the second year understand the momentum in the business and the reason to invest but just a little bit more clarity.

Speaker Change: Are you thinking about the growth versus margin trade off where the investments are in.

Speaker Change: Just maybe some of the I would have thought we'd see some expansion kind of rolling off the <unk> acquisition last year that some headwinds. Thanks.

Speaker Change: So first of all I would say, we're really pleased with our FY 'twenty five performance.

Speaker Change: 41 for the year, we will have 45 for the quarter.

Jen DiRico: As we think about next year, right, all of the same things we've seen around the secular tailwinds, our own internal execution, the amount of buying decisions that continue in the market lead us to want to continue to invest behind that opportunity. And so we're balancing those two things. And so ultimately, what I would say to you is we're continuing to invest behind the opportunity while also being thoughtful around our overall practice. And you know, SAS has a business is growing that has a different margin profile. So when you when all things considered, you know, we can we think it's a pretty good plan.

Speaker Change: As we think about next year right. All of the same things you are seeing around the secular tailwind our own internal execution amount of buying decisions that continue in the market lead us to want to continue to invest behind that opportunity and so we're balancing those two things and so ultimately what I would say to you is we're continuing to invest behind the opportunity while also being sought.

Speaker Change: <unk> around our overall profitability.

Speaker Change: And thanks to SaaS.

Speaker Change: The business is growing that has a different margin profile so when.

Speaker Change: All things considered.

Speaker Change: We think thats a pretty good plan.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Stifel.

Speaker Change: Michael.

Unknown Executive: Well, Demi, we'll take the next question, please.

Speaker Change: Jimmy we'll take the next question please.

Aaron Rakers: Your next question comes from the line of Aaron Rakers with Wells Fargo. Jeremy Zhuk Yeah, thanks. Thanks for taking the question and congrats on the solid fiscal year and the results. A couple questions if I can real quick. In terms of Clumio, you know, I think last quarter, you had alluded to that being roughly about a $24 million contribution in this last quarter. I'm curious if you could, you know, maybe help us appreciate how much Clumio's provided, you know, this last quarter and kind of the momentum you're seeing there as you integrate that acquisition and really drive that business.

Speaker Change: Your next question comes from the line of Aaron Rakers with Wells Fargo.

Speaker Change: Line is open.

Speaker Change: Yes. Thanks, Thanks for taking the question and congrats on the solid fiscal year and the results are.

Speaker Change: Couple of questions if I can real quick.

Speaker Change: In terms of <unk> I think last quarter, you had alluded to that being roughly about a $24 million tranche.

Speaker Change: Contribution in this last quarter I'm curious if you could maybe help us appreciate how much <unk>.

Speaker Change: <unk> this last quarter and kind of the momentum you're seeing there as you integrate that acquisition and really drive that business.

Jen DiRico: So first, I'll tell you this, we're really excited, we continue to be very excited about Clumio in terms of what it does in terms of expanding to additional customers and market segments. Going forward, we shared with you the Clumio business last quarter to give you a complexion.

Speaker Change: So first I'll tell you is we're really excited we continue to be very excited about <unk> in terms of what it does in terms of expanding to additional customers and market segments.

Speaker Change: Going forward, we shared with you the Columbia business last quarter to give you a complexion going forward because we've integrated fully into the platform I wont be sharing specific guidance. What I can tell you is as we think about next year's guidance, there's about 100 bps in the number.

Sanjay Mirchandani: Going forward, because we've integrated it fully into the platform, I won't be sharing specific guidance. What I can tell you is as we think about next year's guidance, there's about 100 VIPs in the number. and On Total Revenue.

Speaker Change: And until those on total revenue.

Sanjay Mirchandani: And and Aaron, Sanjay here. Just on, you know, on the product, Plumio brings us some very unique capabilities with our ability to handle extremely large data sets on S3 and AWS, our ability to literally, you know, backtrack to previous version in a fraction of the time, and even capability that nobody has in the business. This bodes very well for large data sets and AI type applications, data lakes. So we're really excited about it. We've put a considerable amount of focus on it for the new fiscal year. And it's, you know, we're, we think it's going to be a big differential.

Speaker Change: And.

Speaker Change: Erin Sanjay here.

Speaker Change: Just on <unk>.

Speaker Change: The product Livia brings us some very unique capabilities with our ability to handle extremely large datasets on S. III.

Speaker Change: U S.

Speaker Change: Our ability to literally.

Speaker Change: Backtrack, the previous version and a fraction of the time and even capability.

Speaker Change: Nobody has in the business this bodes very well for large datasets and AI type applications data lakes.

Speaker Change: Really excited about it.

Speaker Change: A considerable amount of focus on it.

Speaker Change: For the new fiscal year.

Speaker Change: And.

Speaker Change: We think it's going to be a big differentiator now of course, we're not calling out numbers, specifically radical meet those as part of our go to market and part of our overall.

Aaron Rakers: Now, of course, we're not calling out numbers specifically around domain because it's part of our go to market and part of our overall loss. Yeah, fair enough.

Jen DiRico: And then as a real quick follow-up, you know, Jen, you talked about, obviously, the cross-sell, up-sell opportunity. I think the 30 percent number is consistent with what we saw, I think, last quarter, maybe the last couple quarters. I'm curious if you could help us appreciate the context of how much your SaaS portfolio has expanded, and maybe in that definition of, like, how do you define success? Like, 30 percent goes to 50, or how are you about that cross-sell opportunity within that SaaS customer base as you look out through the course of this next year? Yeah, it's a great question, and I would say, first of all, we're really continue to be proud of the fact that our SaaS net dollar retention remains at 127 percent.

Speaker Change: Yes, Okay fair enough and then as a real quick follow up John you talked about obviously the cross sell up sell opportunity I think the 30% number is consistent with what we saw I think last quarter, maybe the last couple of quarters I'm curious if you could help us appreciate the context of how much your SaaS portfolio has expanded and maybe in that definition.

Speaker Change: How do you define success like 30% close to 50 or how are you thinking about that that that cross sell opportunity within that SaaS customer base as you look out through the course of this next year.

Speaker Change: Yes, it's a great question and I would say first of all we're really continue to be proud of the fact that our SaaS nets, our attention remains at 127% as I shared and consistent with prior quarters that mix is largely two thirds upsell one third cross sell.

Jen DiRico: As I've shared and consistent with prior quarters, that mix is largely two-thirds up-sell, one-third cross-sell. We continue to see the continued adoption of newer offerings as well as our cyber offerings, things like AirGround Protect, Active Directory, CleanRoom, ThreatScan. They made up 25 percent of our net new ARR this past quarter. And so while the mix is similar to prior quarters, I would say the number, the absolute number of multi-product customers is materially up. And you heard my prepared remarks, a couple of great examples of customers that are taking on more than one product. And so, ultimately, I think we're really pleased you heard this be a strategic priority without giving any sort of guidance.

Speaker Change: We continue to see that continue the blocks adoption newer offerings as well as our fiber offerings things like aircraft protect active directory clean room threat scan they made up 25% of our net new <unk> this past quarter.

Speaker Change: So while the mix is similar to prior quarters posted a number the absolute number of multi product customers is materially up.

Speaker Change: And you heard my prepared remarks, a couple of Great example of customers are taking on more than one product and so often I think we're really pleased you heard the SBA strategic prior top priority without giving any sort of guidance I think if you look at other peers in the industry, where we show over time Q3, four products and Thats what were looking to see overtime.

Unknown Executive: I think if you look at other peers in the industry where we show over time two, three, four products, I mean, that's what we're looking to see over time.

Unknown Executive: Thank you. Thanks. Thank you.

Speaker Change: Yes. Thank you.

Speaker Change: Thanks, Thank you.

Param Singh: Your next question comes from the line of Param Singh with Oppenheimer. Your line is open. Yeah, hi. And thank you for taking my question.

Speaker Change: Your next question comes from the line of beryllium sheet with Oppenheimer. Your line is open.

Speaker Change: Yes, hi, and thank you for taking my question.

Param Singh: I really wanted to get a sense of, you know, what do you think in the competitive landscape, how that's changed after, you know, the close of the acquisition of Veritas by Cohesity. And, you know, you also mentioned that some of the other vendors, such as Rubrik, tend to be more stronger in cybersecurity. How are you addressing that? I would love to understand that. Thank you. Sure. So, you know, our strategy has been about resilience. We've been on the journey of helping our customers be more resilient, which, if you double click, is giving them a strong ability to recover in the face of either a cyber attack or any other type of situation.

Speaker Change: Really wanted to get a sense of what are you seeing in the competitive landscape how has that changed.

Speaker Change: After the close of the acquisition of Brio toss by cohesively.

Speaker Change: And you also mentioned that some of the other vendors such as rubric tend to be more stronger in cyber security, how you're addressing that and would love to understand thank you.

Speaker Change: Sure.

Speaker Change: So.

Speaker Change: Our strategy has been bought Brazilians.

Speaker Change: And on the journey of helping our customers be more resilient.

Speaker Change: Which if youre doubleclick is giving them.

Speaker Change: <unk> ability to recover in the in the face of either a cyber attack or any other type of situations. We're very focused on that and we choose we choose our battles carefully. We wanted to we wanted we are we believe with the best technology with Commvault cloud.

Sanjay Mirchandani: We're very focused on that. And, you know, we choose our battles carefully. We want to go, we are, we believe we're the best. Our technology with CommVault Cloud in a hybrid world is the broadest capability there is. So, customers work with us and we shared a lot of new customers, large customers that have adopted the platform to make them more resilient. Now, the overall on-premise market that some of the competitors you mentioned play in is flat to very low single digit. If you look at our growth, be it on revenue or ARR, it's healthy double digit.

Speaker Change: In a hybrid in a hybrid world is.

Speaker Change: The broadest capability there so customers work with us and we shared a lot of new customers large customers that have adopted the platform to.

Speaker Change: To make them more resilient now the overall on premise market that some of the competitors. You mentioned plan is flat to very low single digits. If you look at our growth.

Speaker Change: On revenue or IRR, it's healthy double digit and that means we're taking share.

Sanjay Mirchandani: And that means we're taking shares.

Speaker Change: Alright.

Sanjay Mirchandani: Sanjay, if I may follow up on that, you know, one of the earlier questions was about the investments you're making organically, right? So I wanted to understand what type of workloads or capabilities do you want to focus on in the next year to three years that you feel are largely untapped at this point? Yeah, so if you look at if you you know, if you look at where where we think that, you know, the way we've been sharing our platform, one is about anything to help customers with, it's not so much workload, but capabilities to help customers recover.

Speaker Change: Okay.

Speaker Change: Sanjay if I may follow up on that.

Speaker Change: One of the earlier questions was about the investments youre, making organically right. So I wanted to understand what type of workloads or capabilities do you want to focus on in the next year to two years that you'll see.

Speaker Change: Actually on top at this point.

Speaker Change: Yes.

Speaker Change: Pardon me if you look at it.

Speaker Change: If you look at sort of where.

Speaker Change: Where we think that the way we've been sharing a platform. One is about anything to help customers with it's not so much workload, but capabilities to help customers recover so things like bike cleaner.

Sanjay Mirchandani: So things like Cleanroom, our ability to help them recover with Active Directory forest level, which is fairly, which is really good technology, right? Like not very needed. If you look at what we're doing with Clumio, and the Clumio capabilities, it's about scale, and the ability to scale out, you know, hundreds of petabytes of data in minutes and hours versus what would take, you know, unpredictable amounts of time, if customers need to roll back. If you look at our Rewind technology that we acquired through Opranix, which allows you to sort of rebuild at the click of a button, and literally, I mean, click of a button, entire cloud-native applications, configurations, the infrastructure that's needed to support it, and the data, of course, we're changing the game.

Speaker Change: Our ability to help them recover.

Speaker Change: With active directory forest level, which is which is fairly low.

Speaker Change: Really good technology I'm very needed.

Speaker Change: If you look at what we're doing with <unk>.

Speaker Change: And to me our capabilities, it's about scale and the ability to scale out.

Speaker Change: Hundreds of Petabytes of data in minutes.

Speaker Change: Hours versus what would take unpredictable.

Speaker Change: Unpredictable amounts are tiny if customers need to roll back some payments if you look at.

Speaker Change: Our <unk> technology that we acquired through our products, which allows you to sort of rebuild at the click of a button and literally I mean click of a button and higher cloud native applications configurations, the infrastructure thats needed to support it.

Speaker Change: And the data of course.

Speaker Change: We're changing the game, we're changing what what protection means and what Brazilians means now with that we're obviously enhancing emerging workloads be their stuff Thats of course, AI media things like factor databases, whether it's more cloud capabilities. So we continue to enhance.

Sanjay Mirchandani: We're changing what protection means and what resilience means. Now, with that, we're obviously enhancing emerging workloads, be there, you know, stuff that supports AI, be it things like vector databases, whether it's more cloud capabilities. So we continue to enhance the workloads, but really what we're really enhancing is our ability to make customers more resilient. in the face of something that brings them.

Speaker Change: The workloads, but really what we're really enhancing our ability to make customers more resilient.

Speaker Change: Sure.

Speaker Change: In the face of something that brings in business there.

Sanjay Mirchandani: And if one last one, if I could squeeze that in, Sanjay, I want to really get your view on on this whole idea that, you know, backup vendors could be the source of truth into LLMs and feed into it. Some of your competitors have talked about it. I want to get your sense. Do you think that's realistic or is that something that CommVault might want to get into over the next year or so? You know, we, we tend to we only tend to mention something when we have capability to support it. That's the truth. Directionally, I would say that that we, we as in CommVault, have been a very good source of the truth.

Speaker Change: Great and just one last one if I could squeeze that Ed.

Speaker Change: You haven't really gives you a view on on this whole idea that.

Speaker Change: Taco vendors could be the source of truth into our labs and feed into it some of your competitors have talked about it I wanted to get your sense do you think that's realistic or is that something that commvault might want to get into over the next year or so.

Speaker Change: We tend to we tend to.

Speaker Change: You mentioned something when we have capabilities to support.

Sure.

Speaker Change: That's the truth.

Speaker Change: Directionally I would say that.

Speaker Change: We are in Commvault has been.

Speaker Change: A very good source of the truth and to do that you have to be application aware.

Sanjay Mirchandani: And to do that, you have to be application aware. Okay, so even in historical, you know, applications, on-premise applications, which are tightly coupled and engineered, bringing back state, bringing back what, you know, bringing back the application to the way it was when there was an error or a failure has always been where we shine. Now, with AI apps, the provenance of the applications and the componentry of that becomes, it's very important. In fact, I would go as far as saying it's more important because of the way these apps are built and used. So I'm not getting ahead of myself, but to say that we could have a very good role to play in something like that is fair.

Speaker Change: Okay. So even in historical applications on premise applications, which are tightly coupled and engineered bring.

Speaker Change: Bringing back states, bringing back bringing.

Speaker Change: Bringing back the application to the way it was when there was an error or failure has always been where we shine with AI apps, the provenance of the applications and the componentry of that becomes very important.

Speaker Change: I would go as far as that is more important.

Speaker Change: Because of the way these apps are built in use.

Speaker Change: No.

Speaker Change: I am not getting ahead of myself, but to say that we could we could have a very good role to play in something like that is fair.

Unknown Executive: Thank you for sharing your insights on it. Appreciate it.

Speaker Change: Okay, I guess for Shanghai insights on that appreciate it. Thank you.

Rudy Kessinger: Thank you. Your next question comes from the line of Rudy Kessinger with DA Davidson. Your line is open. Hey, great. Thanks for taking my questions, guys.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Rudy <unk> with D. A Davidson your line is open.

Speaker Change: Hey, great. Thanks for taking my questions guys.

Rudy Kessinger: On the ARR guide, could you just give us some parameters, I guess, around expected net new ARR, you know, in Q1 or just seasonality we should be in mind of for the year in Q3, Q2, Q3 were your strongest years last year, just how should that, you know, low 150-ish million of net new ARR fall throughout the Yeah, I think what you can expect to see is typical seasonality of what we saw in FY25. I think the baseline of $30 to $35 million on a quarterly basis is still the right way to think about the business, especially given the strength that we saw in particular in Q3 this past quarter.

Speaker Change: On the <unk> guide could you just give us some parameters I guess around expected net new <unk>.

Speaker Change: In Q1 or just.

Speaker Change: Seasonality, we should be in mind that for the year in Q3, Q Q2, Q3, where your strongest years last year, just how should that low $150 million of net new and at our fall throughout the year.

Speaker Change: Yes, I think what you can expect to see is typical seasonality of what we saw in FY 'twenty five I think the baseline of $30 million to $35 million on a quarterly basis is still the right way to think about the business.

Speaker Change: Especially given the strength that we saw in particular in Q3 this past quarter.

Speaker Change: Okay.

Unknown Executive: Got it.

Jen DiRico: And then I just want to drill down maybe I know it was already asked about the guide and what what it implies from a macro standpoint, just maybe to be clear, you know, you talked about record sales productivity and improvements year over year in Q4, etc. What does the guide imply from a sales productivity, closed rate, etc. standpoint? Does it imply things are flat with last year or further improvements building on last year? Yeah, Rudy, I would just say I'd go back to my comments around we're being prudent about the background about the macro, but also understanding we have a great opportunity in front of us.

Speaker Change: Got it and then I just wanted to drill down maybe I know it was already asked about the guide and what what it implies from a macro standpoint, just maybe to be clear.

Speaker Change: You talked about record sales productivity and improvements year over year in Q4 et cetera, what does the guide imply from a sales productivity close rate et cetera standpoint that does imply a things are flat with last year further improvements building on last year.

Speaker Change: Yes, Rudy I would just add go back to my comments around we're being prudent about the background about the macro but also understanding we have.

Speaker Change: Great opportunity in front of us and so what I would say is we're not assuming massive gains in productivity, but we're quite confident in the durability of our model over the long term.

Unknown Executive: And so what I would say is we're not assuming massive gains in productivity, but we're quite confident in the durability of our model over the long term. Got it. Great. Thank you. And congrats again on the quarter. Thanks again, Rudy.

Speaker Change: Got it great. Thank you.

Speaker Change: Congrats again on the quarter. Thanks.

Speaker Change: Thanks again.

James Fish: Your next question comes from the line of James Fish with Piper Sandler. Your line is open. Hey guys, appreciate the questions here.

Your next question comes from the line of James Fish with Piper Sandler Your line is open.

Speaker Change: Hey, guys I appreciate the questions here can you just walk us through the growth in the international Arena. This year between EMEA and APAC and more specifically, how youre thinking about durability of growth and really answering why wont.

James Fish: Can you just walk us through the growth on the international arena this year between EMEA and AIPAC, and more specifically, how you're thinking about durability of growth and really answering why won't some of the door or tailwinds that you guys even talked about in your prepared remarks start to subsidize throughout the year, just given that implementation date back in January? Yeah, thanks. I would say to you that overall, from a guidance perspective, we're expecting balanced growth where we already saw it. This past quarter, we saw balanced growth across our regions, right? And overall, Amiya actually had a really strong quarter without giving you too much detail on that.

Speaker Change: Some of the door of tailwind that you guys had been talked about in your prepared remarks start to subsidize throughout the year, just given that implementation date back in January.

Speaker Change: Yes, Thanks, I would say to you that our overall from a guidance perspective, we're expecting balance growth, where we're already thought this past quarter, we saw balanced growth across our regions right.

Speaker Change: And overall EMEA actually had a wonder a really strong quarter without giving you too much detail on that ultimately I would say to you as we think about next year. Overall, we are incorporating what we know about the macro and also feeling quite confident on our pipelines after we talk to customers and partners.

Sanjay Mirchandani: Ultimately, I would say to you, as we think about next year, overall, we're incorporating what we know about the macro, and also feeling quite confident in our pipelines after we talked to customers and partners.

Sanjay Mirchandani: Hey, Jim, and also on the regulatory stuff, it's not a one and done, you know, these things are constantly evolving, depending on the size of the institution, depending on the branches, depending on, you know, it's just, it's not, it's not one and done. So it's a process that goes over. And Sanjay, you had kind of talked about this, and actually you as well, Jen.

Speaker Change: Hey, Jim on also on the regulatory stuff, it's not a one and done.

Speaker Change: These things are constantly evolving depending on the size of the institution I think on the branches spending on.

Speaker Change: It's not it's not one end up so it's a process that goes over time.

Speaker Change: Got it.

Speaker Change: Sanjay.

Speaker Change: You had kind of talked about this and actually the U S. While Jen.

Sanjay Mirchandani: Driving greater stickiness, so how are we supposed to think about the packaging or perhaps bundling that you could see particularly on the cloud or SaaS side versus having customers purchase individual SKUs moving forward? Yeah, that's a great question. So they'll always let me take a second half of the question first, there'll always be specific workloads that customers need to protect. So that will never go away. So you know, I'm, I'm, I'm an Oracle shop tomorrow, I buy a company that has SAP, I need to incorporate SAP into the same single payment class, same policy, you know, so that will That will continue.

Speaker Change: Driving greater stickiness. So how are we supposed to take about the packaging or perhaps bundling that you could see particularly on the cloud or SaaS side.

Speaker Change: Versus having customers purchase individual skus moving forward.

Speaker Change: Yes, that's a great question. So let me take the second half of the question first there'll always be specific workloads that customers need to protect so that will never go away. So.

Speaker Change: I'm, an oracle shop tomorrow.

It's something that I need to incorporate S&P. It's the same single pane of glass and policy. So therefore.

Speaker Change: That will continue.

Sanjay Mirchandani: Where we have spent a lot of our time, effort, and in turn, the way we create IP, is around resilience. Now, resilience isn't a simple thing. Resilience is, you know, it means different things to different companies. And we're working with this concept of a minimum viable company, where what does it take to come back to life in a minimum capacity? Let's say your data center gets messed up, or you get cyber attacked, or whatever the cause is. You know, what is your predictable way? What is your predictable resilience to come back to life in a minimum way?

Speaker Change: Where we have spent a lot of our time effort and in turn the way we create IP is around Brazilians are resilient.

Speaker Change: Resilience is it means different things to different company than we were working with this concept of a minimum viable company, where what does it take to come back to life in a minimum capacity, let's say you have data center gets messed up or are you guys cyber attacks or whatever the causes what is your predictable way what is your predictable Brazil.

Speaker Change: To come back to life.

Sanjay Mirchandani: Now, some of that is process, some of that is skills, some of that is technology. And we're working with partners to help customers think through this and build this out. So then when you look at products like AirGap Protect, and Cleanroom, and AD force level recovery, and other workloads that we back up, all of this falls into the construct of resilience. And customers tend to then think about, and will continue hopefully to think about, resilience as the outcome, and what do we need to do to make that happen? And then you'll see that the stacking of what we're bringing to market makes a lot of sense, and the packaging around that makes a lot of sense.

Speaker Change: Minimum wage some of that is processed some of the skills. Some of that is technology and we're working with partners to help customers think through this and build this up. So then when you look at products like <unk> got protect and clean room and <unk>.

Speaker Change: Forest levels recovery and other workloads that we back up all of this falls into the construct of Brazilians and customers tend to then think about and we will continue hopefully to think about.

Speaker Change: The resilience.

Speaker Change: Outcome and what do we need to do to make that happen and then you'll see that the.

Speaker Change: The stacking of what we are what we're bringing to market.

Speaker Change: Makes a lot of sense in the packaging around that makes a lot of sense.

Unknown Executive: Hence, Jen's comments about being able to cross-sell other abilities, and we don't distinguish between SaaS and software, so you could be a software customer and still avail of our SaaS capabilities. depending on what Hopefully that added. Got it. Thanks. Again, if you would like to ask a question, press star 1 on your telephone keypad.

Speaker Change: Yes.

Speaker Change: Jim's comments about being able to cross sell other abilities and we don't we don't distinguish between SaaS.

Speaker Change: And and software so you could be a software customer is still available by SaaS capabilities.

Speaker Change: Depending on what it is.

Speaker Change: Hopefully that added some color.

Speaker Change: Got it thanks.

Speaker Change: Thanks.

Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad.

Speaker Change: Okay.

Howard Ma: Your next question comes from the line of Howard Ma with Guggenheim Security. Your line is open. Great. Thanks for taking the question. Jen, you mentioned earlier the on fast NRR that the mix between upsell and cross-sell. Do we expect the mix to shift more to cross-sell in FY26, given your pace of product innovation? And what I'm getting at is when I Correct me if I'm wrong, but when I think about your product set, like in terms of like a layered cake approach, you have what I call backing up cloud-native workloads, you know, M365, Salesforce, VM, then you have more security-specific modules, you know, ThreatWise and the like.

Speaker Change: Your next question comes from the line of <unk> with Guggenheim Securities. Your line is open.

Speaker Change: Yeah.

Great. Thanks for taking the question.

Speaker Change: Ken you mentioned earlier, the SaaS and RR that the mix between upsell and cross sell chips do we expect the mix to shift more of the cross sell and FY 'twenty six given your pace of product innovation.

Speaker Change: What I'm getting at is when I.

Speaker Change: Correct me, if I'm wrong, but when I think about your.

Speaker Change: Your product set in terms of like a layer cake approach that you have you have what I call backing up.

Speaker Change: Cloud native workloads and <unk> hundred 65 sales force and then you have more security specific module threat wise and alike.

Howard Ma: I don't know if AirGap Protect, Cleanum Recovery fit in that bucket or the cloud-native bucket, but perhaps both. And then Sanjay also mentioned that the newer modules, you know, Active Directory, which you guys have emphasized a lot, the Cloud Rewind, Clumio.

Speaker Change: I don't know Eric protects cleanup recovery in that bucket or the cloud native bucket, perhaps both and then Sanjay also mentioned that the newer modules.

Speaker Change: Active directory, which would you guys have emphasized a lot the cloud rewind.

Howard Ma: Can you kind of give us a sense of where are you on, I don't know if those are the right three buckets, but in terms of like a layered cake approach, should that drive more of a shift to cross-sell then instead of up-sell this year? Thank you.

Speaker Change: <unk>.

Speaker Change: Can you kind of give us a sense of where you like where where are you on those.

Speaker Change: Right three buckets.

Speaker Change: In terms of a layer cake approach.

Speaker Change: Should that drive more of a shift to two cross sell then instead of upsell. This year. Thank you, yes. It's a great question, while I won't guide to any specific mix, we do expect expansion in our multi product adoption over time, because it is a strategic focus for us.

Jen DiRico: Yes, it's a great question. While I won't guide to any specific mix, we do expect expansion in our multiproduct adoption over time because it is a strategic focus for us. And you're absolutely right as you think about the cyber products, Cleanum, AirGap Protect, ThreatScan, Cloud Rewind, Clumio, all Active Directory, all important products as we think about the expansion and the overall cross-sell motion. Okay, got it. Thanks.

Speaker Change: You're absolutely right as you think about the fiber products.

Speaker Change: Clean room Air got protect threat scan cloud rewind colonial all active directory all important products as we think about.

Speaker Change: The expansion.

Speaker Change: And the overall cross sell motion.

Speaker Change: Okay got it thanks.

Jen DiRico: As a follow up, and I'll keep this one a little shorter. So similar question on the on the term subscription side, how much of that strength is driven by improvement or perhaps stability and gross retention and renewal timing as compared to new term subscription licenses? And how much is the hybrid approach, the CommVault hybrid approach driving cross sell of hyperscale X? Like, is it really the hyper, the hybrid rather approach? Or, or is it just existing customers, you know, buying, buying more, expanding more, but not necessarily hybrid? Yeah, so first, I will start with you.

Speaker Change: As a follow up.

Speaker Change: I'll keep this on a little shorter.

Speaker Change: Question on the on the term subscription side.

Speaker Change: Much of that strength is driven by improvement or perhaps stability in our gross retention and renewal timing as compared to the new new term subscription licenses.

Speaker Change: Ed.

Speaker Change: How much is the hybrid approach to Commvault cloud hybrid plus driving cross sell of Hyperscale acts like is it really the hyperscale the hybrid rather approach or or is it just existing customers.

Speaker Change: Buying buying more expanding more but not necessarily hybrid.

Speaker Change: Yes, So first I will start with the software term license portion this quarter was particularly strong not only in land, but also in the renewal and expansion and so to your point, we absolutely see that customers under commvault, because we can not only protect their on premise workloads quite well, we can grow with it and they can grow with us as they add more.

Sanjay Mirchandani: The software term license portion this quarter was particularly strong, not only in land, but also in the renewal and expansion. And so to your point, we absolutely see that customers come to CommVault because we can not only protect their on-premise workloads quite well, we can grow with it, they can grow with us as they add more platforms in the cloud, etc. And so I don't know, Sanjay, if you want to add anything to that. The hybrid, you know, we What we bring to customers with our true hybrid multi-cloud approach is what separates us from the pack.

Speaker Change: Platforms in the cloud et cetera, as I don't know Sanjay you want to add anything to that.

Speaker Change: The hybrid.

Speaker Change: What we bring to customers with our with our true hybrid multi cloud approach.

Speaker Change: It's what separates us from the pack, we are singular cloud platform.

Sanjay Mirchandani: Our singular cloud platform, CommVault Cloud, you don't need to worry about having an air-gassed coffee if you're an on-premise hyperscale X customer. It just happens for you. You can choose the cloud you want, and we'll make the rest of it happen. Active Directory, it's completely transparent as the service runs. So we have been able to bridge that experience for our customers, regardless whether they dock with us with a hyperscale X starting point, or they come in from the cloud and then realize that, hey, it's easy enough for me to have a single pane of glass for my on-premise.

Speaker Change: You don't need to worry about.

Speaker Change: Having an aircraft copy if you are an on premise hyperscale customer. It just happens for you can just you can choose the cloud you want and we will make the rest of it happen.

Speaker Change: Active directory its completely transparent as the service runs.

Speaker Change: We have been able to bridge that that experience for our customers, regardless, whether they adopt with us with a hyperscale.

Speaker Change: Starting point or they come in from the cloud and then realize that hey, it's easy enough for me to have a single pane of glass for my on premise workloads. So we.

Sanjay Mirchandani: So we have cases of both. And as our product capabilities that we've shared a little bit about today already, evolve and have evolved, customers see this as the value function.

Speaker Change: We have cases of both and as.

Speaker Change: As our product capabilities that we've shed a little bit about today already.

Speaker Change: If all that have evolved.

Speaker Change: Customers see this as the value proposition.

Unknown Executive: Okay, and artificial, I've said this for years, artificial separation between a cloud or a SaaS-based capability and an on-premise capability is giving customers choices that they don't need to make. or giving them things to do that they don't need to. abstract that away and give you a unified approach. We're very Great, thanks so much. Thanks for the question.

Speaker Change: And artificial level I've said this for years artificial separation between a cloud or SaaS based capability in an on premise capability is giving customers choices that they don't need to make.

Speaker Change: Or given them things to do that they don't meet so we try and abstract.

Speaker Change: Abstract that away.

Speaker Change: And give you a unified unified approach, we're very unique in that.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you thanks for the question.

Mike Melnyk: Seeing no further questions at this time, that thus concludes our question and answer session. I will turn the call back over to Mike Melnyk for closing remarks. Thanks for thanks for joining the call this morning.

Speaker Change: Seeing no further questions at this time that does conclude our question and answer session I will turn the call back over to Mike Melnyk for closing remarks.

Speaker Change: Thanks for thanks for joining the call. This morning for those of you who are in San Francisco, We encourage you to stop by the nor call RSA and visit our experience.

Mike Melnyk: For those of you who are in San Francisco, we encourage you to stop by the North Hall at RSA and visit our experience booth 5678. We made some exciting announcements around this event and reach out with any questions after that. Thanks so much.

Speaker Change: 5678.

Speaker Change: <unk> made some exciting announcements around this event and reach out with any questions. After that thanks, so much.

Unknown Executive: This concludes today's conference call.

Speaker Change: Yeah.

Speaker Change: This concludes today's conference call you may now disconnect.

Unknown Executive: You may now disconnect.

Okay.

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Speaker Change: Yes.

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