Commvault Systems Inc. (NASDAQ: CVLT) reported double-digit growth across its core subscription metrics for fiscal second-quarter 2027, led by a 35% increase in SaaS annual recurring revenue. The data-protection software company also increased several full-year targets, including subscription revenue and free cash flow, while leaving its total revenue outlook unchanged.
Total revenue rose 13% year over year to $312 million. Subscription revenue increased 21% to $269 million, slightly above the company’s guidance range of $264 million to $268 million.
Subscription annual recurring revenue, which includes term-based licenses, associated support, SaaS subscriptions and consumption-based offerings, reached $1.10 billion, up 20% from a year earlier. Within that total, SaaS ARR climbed to $454 million from $336 million.
The company said SaaS remained a major contributor to subscription growth. On a constant-currency basis, subscription ARR was $1.11 billion at the end of the quarter, including $652 million of term-based software ARR and $455 million of SaaS ARR. Constant-currency net new subscription ARR totaled $51 million, compared with $41 million in the prior quarter.
Commvault ended the period with 15,750 subscription customers, up 17% year over year. Its trailing four-quarter subscription net dollar retention rate was 113%, compared with 114% in each of the previous five reported quarters. The metric reflects expansion, churn and downgrades among existing subscription customers.
Profitability and cash flow
GAAP income from operations increased to $30.4 million from $12.5 million a year earlier. Non-GAAP income from operations was $68.3 million, representing a 21.9% margin, compared with $51.4 million and a 19% margin in the prior-year quarter. Commvault’s non-GAAP measure excludes stock-based compensation, related payroll taxes, restructuring expenses, intangible-asset amortization and certain other items.
Free cash flow was $70.9 million, down 4% year over year. For the first half of fiscal 2027, free cash flow rose to $122 million from $103 million in the comparable period. The company repurchased $109 million of shares during the second quarter and $119 million during the first half.
Fiscal 2027 outlook
For the third quarter, Commvault expects subscription revenue of $293 million to $297 million, representing approximately 15% year-over-year growth at the midpoint. It forecasts total revenue of about $339 million, up approximately 8%, and a non-GAAP operating margin of 20.5% to 21.0%.
As of October 28, 2026, management projected fiscal 2027 subscription ARR of $1.21 billion to $1.22 billion, with the midpoint representing 19.2% growth. The previous range was $1.20 billion to $1.21 billion. Commvault said an $8 million organic increase to the prior midpoint was partly offset by a $3 million currency headwind.
The company now expects full-year subscription revenue of $1.13 billion to $1.13 billion, compared with its earlier range of $1.12 billion to $1.13 billion. The new midpoint implies growth of about 16%.
Commvault forecast a full-year non-GAAP operating margin of 21.0% to 21.5%, compared with its previous estimate of approximately 21%. It also increased its free cash flow range to $255 million to $265 million from $250 million to $260 million. The company continues to plan share repurchases equal to about 60% of annual free cash flow.
The full-year total revenue outlook remains $1.30 billion to $1.31 billion, representing about 10% growth at the midpoint. Commvault expects approximately 42 million diluted shares outstanding for both the third quarter and the full year.
The outlook is based on management’s current assumptions and remains subject to operational, currency and other risks. Commvault does not provide forward-looking GAAP guidance because certain reconciling items cannot be reasonably estimated, and the company noted that ARR is an annualized operating metric rather than a forecast of future revenue.
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