Commvault (Nasdaq: CVLT) reported on October 27 that its SaaS annualized recurring revenue (ARR) rose 35% from a year earlier to $454 million in the second quarter of fiscal 2027, which ended September 30. Subscription ARR, the wider measure that also counts term software licenses and their support, grew 20% to $1,104 million, down from 29.5% growth a year earlier.
The data protection company raised its full-year forecasts slightly. Its shares fell 2.4% in premarket trading on October 27 to $163.71, Investing.com reported. In a story published late on October 30, StockStory put them at $162.08, against $167.36 just before the results.
The quarter
Subscription revenue rose 21% to $268.5 million, $0.5 million above the top of the $264 million to $268 million range Commvault forecast in July. Total revenue rose 13% to $312.4 million, as revenue from perpetual licenses and their support kept shrinking.
The non-GAAP operating margin was 21.9%, against the roughly 20% the company had guided. Non-GAAP earnings per share of $1.38 compared with the $1.24 that analysts polled by S&P expected, StockStory reported. Subscription net dollar retention was 113%, from 114% in the first quarter.
Measure | Q2 FY27 | Q2 FY26 | Change |
|---|---|---|---|
Subscription revenue | $268.5M | $222.4M | +21% |
SaaS revenue | $106.2M | $80.0M | +33% |
Total revenue | $312.4M | $276.2M | +13% |
GAAP op. margin | 9.7% | 4.5% | +5.2 pts |
Non-GAAP op. margin | 21.9% | 18.6% | +3.3 pts |
GAAP EPS | $0.69 | $0.33 | +109% |
Non-GAAP EPS | $1.38 | $0.91 | +52% |
Free cash flow | $70.9M | $73.6M | -4% |
Source: Commvault's second-quarter release. Free cash flow is non-GAAP. Margin and EPS changes are SaasBuzz calculations.
SaaS growth is slowing, too
SaaS now makes up 41.2% of subscription ARR, up from 36.6% a year earlier, by SaasBuzz's calculation. The rest, term software ARR, grew 11.5% to about $650 million. SaaS has carried more of the total as both measures slowed: SaaS ARR growth has eased from 56% a year earlier, and subscription ARR growth has fallen in each of the past five quarters.
Quarter | Subscription ARR | SaaS ARR |
|---|---|---|
Q2 FY26 | +29.5% | +56.2% |
Q3 FY26 | +27.9% | +40.5% |
Q4 FY26 | +26.5% | +42.4% |
Q1 FY27 | +21.6% | +38.3% |
Q2 FY27 | +20.2% | +35.4% |
Source: SaasBuzz calculations from Commvault's results releases, using subscription ARR as recast in April to include enterprise support. Growth is from a year earlier, as reported, not in constant currency.
New business held steady rather than speeding up. Subscription ARR as reported grew by $49.6 million in the quarter, against $50.8 million in the same quarter a year earlier, and SaaS ARR by $30.1 million, against $28.8 million. In constant currency, Commvault said net new subscription ARR was $51 million, of which $30.5 million came from SaaS. Commvault no longer discloses total ARR, which also counted maintenance on perpetual licenses.
The outlook against July's
Commvault raised the midpoint of its fiscal 2027 subscription revenue forecast by $6 million and of its subscription ARR forecast by $5 million. The release breaks the ARR change into an $8 million raise in the outlook, less $3 million of currency effects.
FY27 forecast | April | July | October |
|---|---|---|---|
Subscription revenue | $1,120M | $1,124M | $1,130M |
Subscription ARR | $1,205M | $1,205M | $1,210M |
Non-GAAP margin | 20.5% | 21% | 21% to 21.5% |
Free cash flow | $255M | $255M | $260M |
Source: Commvault's fourth-quarter fiscal 2026, first-quarter and second-quarter releases. Midpoints of the ranges given; margins as guided.
The new range implies a slower second half. Subscription revenue grew 18.6% in the first six months. The third-quarter forecast of $293 million to $297 million is 14.7% above a year earlier at the midpoint, and the full-year midpoint leaves about $299.5 million for the fourth quarter, up 14.5%. Part of the second quarter's 21% came from a soft comparison: subscription revenue in the same quarter of fiscal 2026 was lower than in the quarter before it. The ARR midpoint asks for about $106 million of new subscription ARR in the second half, against $89 million added in the first half and $97 million in the second half of fiscal 2026.
A beat, then a slip
The quarter cleared Commvault's own forecasts, but narrowly on the top line, and the full-year raise was small. SaaS ARR, the measure that shows how fast customers are moving to Commvault's cloud service, kept growing quickly, yet more slowly than in any quarter of the past year, and the guidance points to slower subscription revenue growth for the rest of the year. The shares went into the report near their 52-week high of $174.25, Investing.com reported.
The report also landed in a poor week for the group. Between the October 23 and October 30 closes, 25 of the 30 software stocks in a SaasBuzz count of closing prices fell, and the median lost 5%.
Management tied the raise to SaaS. "Our raised outlook is based on momentum in SaaS and multiproduct adoption, as well as our confidence in AI-driven initiatives," Gary Merrill, Commvault's chief financial officer, said, according to StockStory. In the release, Sanjay Mirchandani, Commvault's president and CEO, said: "We believe our strong Q2 results reflect that momentum, driving durable growth and shareholder value."
The next test is the third quarter, which ends December 31: reaching the midpoint of the new range takes about $53 million of new subscription ARR a quarter for the rest of the year, against $49.6 million in the second quarter and $39.6 million in the first.
