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Commvault reported Q2 FY2027 revenue of $312.4 million, above the $310.8 million consensus. Adjusted earnings per share were $1.38, compared with the consensus of $1.25.
Revenue rose 13.1% from $276.2 million a year earlier. The filing attributed the increase primarily to subscription offerings, including term licenses, support and software as a service (SaaS). Subscription revenue reached $269.0 million; the filing said SaaS growth and term-based revenue increases were partly offset by declines in perpetual licenses and support as customers shifted toward subscriptions.
Commvault reported gross margin of 81.2%, up from 80.1% a year earlier. The filing attributed higher SaaS gross margin to infrastructure and product optimization, increased scale and improved cloud-partner economics. Operating margin rose to 9.72% from 4.52%, while diluted earnings per share increased to $0.69 from $0.33. Free cash flow was $70.9 million, compared with $73.6 million a year earlier.
| Q2 FY2027 | Q2 FY2026 | Change | |
|---|---|---|---|
| Revenue | $312.4 million | $276.2 million | 13.1% |
| Diluted EPS | $0.69 | $0.33 | 108.9% |
| Gross margin | 81.2% | 80.1% | 1.1 percentage points |
| Operating margin | 9.72% | 4.52% | 5.2 percentage points |
| Free cash flow | $70.9 million | $73.6 million | −3.69% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.38 | $1.25 | Beat by 10.4% |
| Revenue | $312.4 million | $310.8 million | Beat by 0.51% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Sanjay Mirchandani said enterprises were prioritizing cyber resilience and recovery, with customers seeking to keep operating through disruptions. He said Commvault added over 500 subscription customers during the quarter and described a subscription deal in which an insurance carrier chose its platform over a legacy vendor.
CFO Gary Merrill said subscription annual recurring revenue (ARR) rose 20.0%, while SaaS ARR grew 35.0%. He attributed new subscription ARR to SaaS demand and improved term-software performance. Asked about term software, Merrill said new customers and sales of more advanced resilience bundles contributed to the improvement.
Merrill said 53.0% of managed SaaS customers used more than one Commvault product. In response to a question about multiproduct adoption, he said identity, data security and cloud-centric offerings were contributing to cross-selling. He also said larger renewal pools in the second half could accelerate identity-related cross-selling.
On margins, Merrill attributed higher SaaS gross margin to product optimization and agreements with cloud partners. He said Commvault continued to invest in sales capacity and product initiatives, including its AI recovery roadmap. Asked about go-to-market spending, he attributed the quarter’s results above company expectations to sales execution and higher close rates, and said cloud and cloud-native products would remain an investment area.
Mirchandani said customers building AI applications needed to think about recovery while building their AI stack. He added that Commvault was investing in identity resilience and integrating the discovery of identity vulnerabilities with their effects on data and applications.
Asked about timing in SaaS, Merrill said customers’ hybrid workloads and project schedules could make ARR vary from quarter to quarter. On the outlook, he said SaaS momentum and visibility supported the guidance increase, while expected cross-selling and renewals informed the second-half outlook.
Guidance
Commvault raised its FY2027 outlook for subscription ARR, subscription revenue and total revenue. CFO Gary Merrill said the company now expects a non-GAAP EBIT margin of 21.0% to 21.5% and free cash flow of $255.0 million to $265.0 million for the year. He said SaaS offerings were expected to lead subscription ARR growth.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Free cash flow | FY2027 | $255.0 million–$265.0 million | — | New |
| Operating margin, non-GAAP | FY2027 | 21.0%–21.5% | — | New |
| Revenue, Subscription Arr | FY2027 | $1.2 billion–$1.2 billion | — | New |
| Revenue, Subscription | FY2027 | $1.1 billion–$1.1 billion | — | New |
| Operating margin, non-GAAP | Q3 FY2027 | 20.5%–21.0% | — | New |
| Revenue, Subscription | Q3 FY2027 | $293.0 million–$297.0 million | — | New |
| Revenue | FY2027 | $1.3 billion–$1.3 billion | — | New |
| Revenue | Q3 FY2027 | $339.0 million | — | New |