Commvault CFO Defends A Modest Guidance Raise After A Bigger First-Half Beat
Gary Merrill says the outlook is built on numbers the company is "comfortable with," and management will revisit it after the third quarter.
Commvault's chief financial officer, Gary Merrill, defended the size of the company's full-year outlook raise on Tuesday's earnings call, after a KeyBanc analyst pointed out that the first-half beat was bigger than the increase. Commvault, which makes software that helps large organizations protect their data and recover after cyberattacks and outages, now guides full-year subscription ARR to $1.205 billion to $1.215 billion.
The analyst's math
The KeyBanc analyst said Commvault beat cumulatively by about $10 million or $11 million on subscription annual recurring revenue (ARR) in the first half, on a constant-currency basis. Yet the company raised the full-year figure by only about $8 million. The analyst asked why the second-half guidance did not rise more, while allowing that he might be splitting hairs.
Merrill called it a fair question. He said he and CEO Sanjay Mirchandani aim to give guidance the company is "comfortable with not only hitting but achieving."
What the second half assumes
Merrill said Commvault added a little over $90 million of net new ARR in the first half on a constant-currency basis. The raised guidance assumes a little over $100 million in the second half. He called that a foundation, with "many more" the company is working toward.
The raised guidance implies about $195 million of net new subscription ARR for the year, Merrill said. He expects SaaS ARR to exceed $500 million by year-end. Merrill said the midyear point is the best time to revisit guidance, and management will look again at the end of the fiscal third quarter.
The quarter behind the outlook
For the second quarter, Mirchandani said subscription ARR grew 20% to $1.104 billion and SaaS ARR grew 35% to $454 million. Subscription revenue rose 21% to $269 million, and free cash flow was $71 million.
Merrill said full-year free cash flow is now guided to $255 million to $265 million, with non-GAAP EBIT margins of 21.0% to 21.5%. Asked about margins beyond this year, he said the company has not yet given guidance for next year and will update in about a quarter. Commvault's SHIFT conference runs November 10 to 12 in Nashville.
Management has said it will take another look at guidance after the fiscal third quarter.
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
