Commvault's (CVLT) fiscal Q2 and fiscal 2027 subscription annual recurring revenue as well as revenue guidance was ahead of expectations, with continued traction in software as a service transition, multi-product adoption and artificial intelligence, RBC Capital Markets said in a note emailed Wednesday.
The company reported fiscal Q2 non-GAAP earnings Tuesday of $1.38 per diluted share and revenue of $312.4 million, compared with FactSet estimates of $1.24 and $310.3 million, respectively.
The SaaS transition continues to perform well and is self-reinforcing, with shorter contracts leading to more frequent renewals, while multi-product adoption supports the platform thesis, with 53% of SaaS customers now using more than 2 products, according to the note.
Identity resilience is becoming a bigger growth driver, accounting for nearly 30% of net new annualized annual recurring revenue, while AI could expand the total addressable market, with Commvault well positioned as the recovery layer that makes enterprise AI deployable, the note added.
RBC said it would like to see outperformance in fiscal Q3 to ease expectations for fiscal Q4, given current expectations for a 50-50 split of NNAAR between the two quarters.
The brokerage now expects fiscal 2027 subscription revenue and ARR of $1.13 billion and $1.21 billion, respectively, up from previous estimates of $1.124 billion and $1.205 billion.
RBC kept a sector perform rating on Commvault and raised its price target to $180 from $160.
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