Commvault posts record cash flow as SaaS revenue jumps

Commvault reported fourth-quarter fiscal 2026 revenue of USD $312 million and record quarterly free cash flow of USD $132 million.

Subscription revenue rose 20% year on year to USD $208 million. Within that total, term-based licence revenue increased 6% to USD $114 million, while SaaS revenue climbed 43% to USD $93 million.

Income from operations was USD $17 million, for an operating margin of 5.3%. Non-GAAP EBIT reached USD $66 million, or 21.3% of revenue.

For the full fiscal year, revenue rose 19% to USD $1.184 billion. Total annual recurring revenue reached USD $1.122 billion, up 21% year on year, or 18% on a constant-currency basis using March 31, 2025, spot rates.

Annual subscription revenue increased 30% to USD $768 million, including term-based licence revenue of USD $435 million, up 18%, and SaaS revenue of USD $333 million, up 52%.

Subscription ARR grew 27% to USD $989 million, or 24% on a constant-currency basis. Annual operating income was USD $74 million, representing a 6.3% operating margin, while non-GAAP EBIT was USD $238 million, or 20.1%.

Cash generation remained strong throughout the year, with operating cash flow of USD $245 million and free cash flow of USD $237 million.

President and Chief Executive Officer Sanjay Mirchandani linked the results to product development and growth in cloud-delivered services.

"Our results reinforce that we are delivering durable growth fuelled through industry-leading innovation and our rapidly expanding SaaS business," Mirchandani said. "In fiscal 2027, the rise of AI will create more data and more risk - which in turn increases demand for our platform's trusted protection, governance, and recovery capabilities. We believe we are well positioned to deliver profitable growth through new and expanding customer relationships."

Business moves

Alongside the results, Commvault highlighted a series of recent partnerships and product integrations aimed at expanding its position in cyber recovery, identity resilience, and data security.

These included an integration with Microsoft Security to connect threat detection with recovery processes, and an expanded relationship with CrowdStrike to provide bi-directional visibility with CrowdStrike Falcon Next-Gen SIEM.

Commvault also announced a strategic alliance with NetApp focused on data protection and cyber resilience. In identity resilience, it extended support to Okta and began working with CloudSEK to address exposed credentials on the dark web.

It also expanded its offering to cover structured data and AI data through the acquisition of data and AI security company Satori. A partnership with STACKIT is intended to support European customers with sovereign cloud requirements.

Outlook

For the first quarter of fiscal 2027, Commvault expects subscription revenue of between USD $263 million and USD $265 million, with a non-GAAP EBIT margin of about 19%.

For the full year, it expects subscription revenue of between USD $1.115 billion and USD $1.125 billion, subscription ARR of between USD $1.200 billion and USD $1.210 billion, and total revenue of between USD $1.300 billion and USD $1.310 billion. It also forecast a non-GAAP EBIT margin of about 20.5% and free cash flow of between USD $250 million and USD $260 million.

The guidance assumes current exchange rates and current macroeconomic conditions. Its subscription revenue and subscription ARR outlook reflect revised definitions set out alongside the earnings release.

The results show a business continuing to shift toward recurring subscription and SaaS revenue, with cloud-delivered software growing faster than the rest of the group. SaaS revenue accounted for just under a third of subscription revenue in the quarter and more than 43% of the full-year subscription total.

That mix has become increasingly important for software investors because recurring income can provide greater visibility into future sales and cash generation. Commvault's annual recurring revenue figures, particularly the faster growth in subscription ARR, suggest the transition remains central to its strategy.

Commvault reported USD $44 million in constant-currency net new ARR during the year and said it achieved all guided metrics for the fourth quarter and fiscal 2026.