Commvault CEO: 'The Days Of Saying I Have A Backup Are Long Gone'
Management pitched recovery over backup for the AI-agent era and raised its full-year subscription ARR outlook.
Commvault CEO Sanjay Mirchandani said on the company's earnings call Tuesday that merely having a backup no longer counts as resilience, as he pitched protection for AI agents and other non-human accounts. Commvault, which makes software that helps large organizations protect their data and identity systems and recover after cyberattacks and outages, also raised its full-year outlook after subscription ARR grew 20% to $1.104 billion in the second quarter.
Recovery over backup
"The days of saying I have a backup are long gone," Mirchandani said. "What you really need to say is I know how to recover my business." He said the company will unveil AI-focused product announcements at its SHIFT conference in Nashville, November 10 to 12.
He said over 80% of the time, an identity compromise is what causes a downstream breach, and that the agentic capabilities of non-human identities "can cause a lot to happen inside an organization." Asked about Commvault's edge, he pointed to the ability to roll back to the last known good state with a click, and later to a "bulletproof rollback."
An analyst at Oppenheimer asked about the cross-sell opportunity in identity. CFO Gary Merrill said protection for Active Directory, Microsoft's identity directory, was up nearly 100% year over year in the first half, and that he expects cross-sell to accelerate in the second half, when larger renewals come due. Mirchandani said identity ARR nearly doubled year over year, citing the largest Active Directory deal to date, at one of the nation's largest integrated healthcare systems.
The quarter and the raised outlook
Merrill said identity resilience and data security made up about 30% of net new subscription ARR. Subscription net dollar retention was 113%, which he said is within the normal operating range for the year; he has described a baseline of 114%, plus or minus 200 basis points (two percentage points).
SaaS ARR grew 35% to $454 million, and subscription revenue rose 21% to $269 million. Total revenue grew 13% to $312 million, free cash flow was $71 million, and the company repurchased about 808,000 shares for $109 million.
For the full year, Commvault now expects subscription ARR of $1.205 billion to $1.215 billion, subscription revenue of $1.127 billion to $1.133 billion, and free cash flow of $255 million to $265 million. Non-GAAP (adjusted) EBIT margin is projected at 21.0% to 21.5%.
What analysts pressed on
A KeyBanc analyst asked why the raise was not larger given the first-half beat. Merrill said the company sets guidance it is comfortable achieving, and that the new outlook assumes a little over $100 million of net new ARR in the second half, after a little over $90 million in the first half.
Merrill also said about 40% of SaaS customers in the quarter were new to Commvault, up from about 30% a year ago, and 53% of managed SaaS customers use two or more products, up from about 45%.
Commvault will stream SHIFT virtually on November 18 for those who cannot attend in person.
Sources
- Commvault 2Q Profit, Revenue Rise as AI Drives Demand for Data Recovery, Identity Protection — MarketWatch
- Commvault: Fiscal Q2 Earnings Snapshot – WTOP News — wtop.com
- CommVault Systems Non-GAAP EPS of $1.38 beats by $0.14, revenue of $312.39M beats by $2.11M (CVLT:NASDAQ) | Seeking Alpha — seekingalpha.com
- Commvault Announces Second Quarter Fiscal 2027 Financial Results — prnewswire.com
