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Commvault Announces Second Quarter Fiscal 2026 Financial Results
Total revenues of $276 million, up 18% year over year
Annualized recurring revenue (ARR)1 surpassed $1 billion milestone, ahead of March 2026 target
Operating cash flow of $77 million, free cash flow2 of $74 million

Tinton Falls, N.J. – October 28, 2025 – Commvault (Nasdaq: CVLT) today announced its financial results for the fiscal second quarter ended September 30, 2025.

“Commvault delivered a strong quarter fueled by solid ARR and SaaS growth that accelerated a key milestone for the company – achieving $1 billion in total ARR – two quarters earlier than projected,” said Sanjay Mirchandani, President and CEO, Commvault. “As enterprises globally rely on Commvault to be resilient, our cloud-first, AI-enabled cyber resilience platform is more relevant than ever.”
Notes are contained at the end of this press release

Second Quarter Fiscal 2026 Highlights -
•Total revenues were $276 million, up 18% year over year
•Total ARR1 grew to $1,043 million, up 22% year over year, or 21% on a constant currency basis using March 31, 2025 spot rates
•Subscription revenue was $173 million, up 29% year over year, inclusive of term-based license revenue of $93 million, up 10% year over year, and SaaS revenue of $80 million, up 61% year over year
•Subscription ARR1 grew to $894 million, up 30% year over year, or 29% on a constant currency basis using March 31, 2025 spot rates
•Income from operations (EBIT) was $12 million, an operating margin of 4.5%
•Non-GAAP EBIT2 was $51 million, an operating margin of 18.6%
•Operating cash flow was $77 million, with free cash flow2 of $74 million

Recent Business Highlights -
•Commvault completed its acquisition of Satori Cyber Ltd., a data and AI security company, expanding its cyber-resiliency platform to help enterprises protect sensitive data and manage AI-driven risks across hybrid and multi-cloud environments.
•Commvault launched Clumio for Apache Iceberg on AWS, designed to deliver Iceberg-aware, air-gapped resilience for AI and analytics data lakehouses.
•Commvault introduced HyperScale Edge (for remote/edge locations) and HyperScale Flex (for high-performance, large-scale workloads) to its HyperScale portfolio, extending enterprise-grade data protection and cyber resilience and providing customers more choice for on-premise cyber resilience.
•Commvault and BeyondTrust announced a new integration between the Commvault Cloud platform and BeyondTrust Password Safe, enabling customers to further mitigate credential risk, improve security posture, and enhance data recovery efficiency.


1


Financial Outlook for Third Quarter and Full Year Fiscal 20263 -
We are providing the following guidance for the third quarter of fiscal year 2026, based on current macroeconomic conditions:
•Total revenues are expected to be between $298 million and $300 million
•Subscription revenue is expected to be between $195 million and $197 million
•Non-GAAP gross margin2 is expected to be between 80% and 81%
•Non-GAAP EBIT margin2 is expected to be between 18% and 19%

We are providing the following updated guidance for the full fiscal year 2026, based on current macroeconomic conditions:
•Total revenues are expected to be between $1,161 million and $1,165 million
•Total ARR1 is expected to grow between 18% and 19% year over year
•Subscription revenue is expected to be between $753 million and $757 million
•Subscription ARR1 is expected to grow between 24% and 25% year over year
•Non-GAAP gross margin2 is expected to be between 80.5% and 81.5%
•Non-GAAP EBIT margin2 is expected to be between 18.5% and 19.5%
•Free cash flow2 is expected to be between $225 million and $230 million
The above statements are based on the incorporation of actual second quarter results, current targets and the acquisition of Satori Cyber Ltd. which closed on August 28, 2025. These statements are forward-looking and made pursuant to the safe harbor provisions discussed in detail below. We do not undertake any obligation to update these forward-looking statements. Actual results may differ materially from anticipated results.

Conference Call Information
Commvault will host a conference call today, October 28, 2025 at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss quarterly results. The live webcast and call dial-in numbers can be accessed by registering under the "News & Events" section of Commvault's website at ir.commvault.com under the "Investor Events" heading. An archived webcast of this conference call will also be available following the call.

About Commvault
Commvault (Nasdaq: CVLT) is the gold standard in cyber resilience, helping more than 100,000 organizations keep data safe and businesses resilient and moving forward. Today, Commvault offers the only cyber resilience platform that combines the best data security and rapid recovery at enterprise scale across any workload, anywhere—at the lowest TCO.


Safe Harbor Statement
This press release may contain forward-looking statements, including statements regarding financial projections, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of software products and related services, general economic conditions, outcome of litigation and others. For a discussion of these and other risks and uncertainties affecting Commvault's business, see "Item 1A. Risk Factors" in our annual report on Form 10-K and "Item 1A. Risk Factors"
2


in our most recent quarterly report on Form 10-Q. Statements regarding Commvault’s beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from anticipated results. Commvault does not undertake to update its forward-looking statements.


Investor Relations Contact    
Michael J. Melnyk, CFA
646-522-6160
mmelnyk@commvault.com

Media Contact
Andrea Duffy
646-295-5241
andreaduffy@commvault.com

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Overview
($ in thousands)
Q2'25Q3'25Q4'25Q1'26Q2'26
RevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y Growth
Subscription:
Term-based license$84,427 22 %$97,625 21 %$107,954 33 %$109,282 36 %$92,647 10 %
SaaS49,611 75 %60,696 82 %65,274 69 %72,445 66 %80,018 61 %
Total subscription134,038 37 %158,321 39 %173,228 45 %181,727 46 %172,665 29 %
Perpetual license10,522 (27)%16,423 10 %14,962 (2)%7,335 (47)%12,073 15 %
Customer support77,688 1 %77,078 — %76,509 (1)%79,021 4 %80,229 3 %
Other services11,030 (7)%10,808 (1)%10,340 (8)%13,895 31 %11,221 2 %
Total revenues$233,278 16 %$262,630 21 %$275,039 23 %$281,978 26 %$276,188 18 %

Constant Currency - Revenue
($ in thousands)
The constant currency impact is calculated using the average foreign exchange rates from the prior year period and applying these rates to foreign-denominated revenues in the current corresponding period. Commvault analyzes revenue growth on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations. The non-GAAP financial measures presented in this press release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Q2'25 Revenue as Reported (GAAP)
Q2'26 Revenue as Reported (GAAP)
Constant Currency Impact% Change Y/Y (GAAP)% Change Y/Y Constant Currency
Subscription:
Term-based license$84,427$92,647$(1,227)10%8%
SaaS49,61180,018(1,142)61%59%
Total subscription134,038172,665(2,369)29%27%
Perpetual license10,52212,073(313)15%12%
Customer support77,68880,229(1,512)3%1%
Other services11,03011,22142%2%
Total$233,278$276,188$(4,190)18%17%

Disaggregation of Revenues
($ in thousands)
Our Americas region includes the United States, Canada, and Latin America. Our International region primarily includes Europe, Middle East, Africa, Australia, India, Southeast Asia, and China.
Q2'25Q3'25Q4'25Q1'26Q2'26
RevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y GrowthRevenueY/Y Growth
Americas$144,408 20 %$155,435 24 %$169,384 29 %$170,928 23 %$168,125 16 %
International88,870 10 %107,195 17 %105,655 15 %111,050 29 %108,063 22 %
Total revenues$233,278 16 %$262,630 21 %$275,039 23 %$281,978 26 %$276,188 18 %


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Total ARR, Subscription ARR and SaaS ARR1
($ in thousands)
Q2'25Q3'25Q4'25Q1'26Q2'26
Total ARR1
$853,265 $889,628 $930,051 $996,202 $1,043,295 
Subscription ARR1
$687,050 $734,212 $780,098 $843,873 $893,707 
SaaS ARR1
$214,832 $258,957 $281,045 $306,874 $335,669 

Constant Currency - ARR1
($ in thousands)

The constant currency impact on ARR1 is calculated using the foreign exchange spot rates from March 31, 2025 and applying these rates to foreign-denominated results in the periods presented.
Q2'25Q3'25Q4'25Q1'26Q2'26
Total ARR1 as Reported
$853,265 $889,628 $930,051 $996,202 $1,043,295 
Total ARR1 using March 31, 2025 rates
$838,074 $899,365 $930,051 $969,693 $1,016,697 
Subscription ARR1 as Reported
$687,050 $734,212 $780,098 $843,873 $893,707 
Subscription ARR1 using March 31, 2025 rates
$675,330 $741,526 $780,098 $822,695 $872,065 
SaaS ARR1 as Reported
$214,832 $258,957 $281,045 $306,874 $335,669 
SaaS ARR1 using March 31, 2025 rates
$210,585 $261,416 $281,045 $299,017 $327,781 

Additional Financial Information
•GAAP net income was $15 million, or $0.33 per diluted share for the three months ended September 30, 2025
•GAAP gross margin was 80.1% and non-GAAP gross margin2 was 80.5% for the three months ended September 30, 2025
•We repurchased approximately 737,000 shares of common stock for $131 million during the three months ended September 30, 2025
•Weighted average diluted shares outstanding were approximately 45 million for the period ended September 30, 2025
•Cash and cash equivalents totaled $1,064 million as of September 30, 2025
•SaaS net dollar retention rate (NRR)4 was 125% as of September 30, 2025
•During the three months ended September 30, 2025, we completed a $900 million convertible debt offering with a 0% coupon. A portion of the proceeds was used to purchase $100 million of capped calls, designed to mitigate the potential dilutive impact of the convertible notes upon conversion.

5


Commvault Systems, Inc.

Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Three Months Ended September 30,Six Months Ended September 30,
 2025202420252024
Revenues:
Subscription:
Term-based license$92,647 $84,427 $201,929 $164,832 
Software-as-a-service80,018 49,611 152,463 93,286 
Total subscription172,665 134,038 354,392 258,118 
Perpetual license12,073 10,522 19,408 24,258 
Customer support80,229 77,688 159,250 153,976 
Other services11,221 11,030 25,116 21,598 
Total revenues276,188 233,278 558,166 457,950 
Cost of revenues:
Subscription:
Term-based license2,414 2,371 4,656 4,149 
Software-as-a-service29,187 17,161 55,159 32,923 
Total subscription31,601 19,532 59,815 37,072 
Perpetual license194 441 439 778 
Customer support14,847 15,311 29,054 29,574 
Other services8,402 7,578 16,513 15,226 
Total cost of revenues55,044 42,862 105,821 82,650 
Gross margin221,144 190,416 452,345 375,300 
Operating expenses:
Sales and marketing122,240 101,947 244,719 197,897 
Research and development39,859 33,839 79,921 66,943 
General and administrative42,553 34,173 83,823 64,968 
Depreciation and amortization2,572 2,013 5,179 3,941 
Restructuring 1,429 566 1,666 5,245 
Change in contingent consideration— — (545)— 
Impairment charges— 2,910 — 2,910 
Total operating expenses208,653 175,448 414,763 341,904 
Income from operations12,491 14,968 37,582 33,396 
Interest income3,087 1,732 5,096 3,534 
Interest expense(637)(105)(915)(209)
Other income, net159 65 220 593 
Income before income taxes15,100 16,660 41,983 37,314 
Income tax expense370 1,095 3,757 3,222 
Net income$14,730 $15,565 $38,226 $34,092 
Net income per common share:
Basic$0.33 $0.36 $0.86 $0.78 
Diluted$0.33 $0.35 $0.84 $0.76 
Weighted average common shares outstanding:
Basic44,406 43,770 44,366 43,724 
Diluted45,195 45,114 45,264 45,095 

6


Commvault Systems, Inc.

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 September 30,March 31,
 20252025
ASSETS
Current assets:
Cash and cash equivalents$1,063,555 $302,103 
Trade accounts receivable, net234,806 251,995 
Assets held for sale— 34,770 
Other current assets54,602 46,189 
Total current assets1,352,963 635,057 
Deferred tax assets, net151,936 133,378 
Property and equipment, net9,740 8,294 
Operating lease assets28,952 10,124 
Deferred commissions cost85,156 79,309 
Intangible assets, net22,226 20,737 
Goodwill210,316 185,255 
Other assets55,639 46,112 
Total assets$1,916,928 $1,118,266 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$359 $373 
Accrued liabilities106,486 147,133 
Current portion of operating lease liabilities5,523 4,614 
Deferred revenue422,947 402,930 
Total current liabilities535,315 555,050 
Convertible notes, net878,927 — 
Deferred revenue, less current portion252,608 223,282 
Deferred tax liabilities1,504 1,384 
Long-term operating lease liabilities24,038 6,338 
Other liabilities14,076 7,090 
Total stockholders’ equity210,460 325,122 
Total liabilities and stockholders’ equity$1,916,928 $1,118,266 









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Commvault Systems, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Three Months Ended September 30,Six Months Ended September 30,
 2025202420252024
Cash flows from operating activities
Net income$14,730 $15,565 $38,226 $34,092 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,981 2,042 5,673 3,999 
Noncash stock-based compensation32,224 26,403 62,404 52,807 
Noncash operating lease expense1,774 1,369 3,410 2,948 
Noncash change in fair value of equity securities(138)(65)(199)(135)
Noncash change in fair value of contingent consideration— — (545)— 
Noncash adjustment on headquarters sale leaseback— — 495 — 
Noncash impairment charges— 2,910 — 2,910 
Deferred income taxes5,668 (3,689)9,576 (8,483)
Amortization of deferred commissions cost11,221 8,019 22,210 15,477 
Changes in operating assets and liabilities:
Trade accounts receivable, net20,258 3,432 24,006 23,113 
Operating lease liabilities(1,739)(1,671)(3,647)(3,973)
Other current assets and Other assets(8,281)(2,139)(5,903)(4,342)
Deferred commissions cost(13,712)(9,151)(28,784)(17,420)
Accounts payable232 (334)(88)(205)
Accrued liabilities2,030 11,179 (45,230)(11,832)
Deferred revenue10,513 2,392 27,953 11,830 
Other liabilities(992)(673)(1,107)(505)
Net cash provided by operating activities76,769 55,589 108,450 100,281 
Cash flows from investing activities
Purchase of property and equipment(3,187)(1,848)(5,066)(2,711)
Purchase of equity securities(482)(108)(6,626)(581)
Proceeds from sale of headquarters, net— — 34,849 — 
Business combination, net of cash acquired(26,015)— (26,015)(21,000)
Net cash used in investing activities(29,684)(1,956)(2,858)(24,292)
Cash flows from financing activities
Repurchase of common stock(131,023)(51,903)(146,073)(103,295)
Proceeds from stock-based compensation plans6,974 5,760 6,974 11,100 
Proceeds from issuance of convertible notes900,000 — 900,000 — 
Purchase of capped calls(99,630)— (99,630)— 
Payment of debt issuance costs(20,396)— (22,242)— 
Other(18)— (30)— 
Net cash provided by (used in) financing activities655,907 (46,143)638,999 (92,195)
Effects of exchange rate — changes in cash(2,671)7,710 16,861 6,523 
Net increase (decrease) in cash and cash equivalents700,321 15,200 761,452 (9,683)
Cash and cash equivalents at beginning of period363,234 287,871 302,103 312,754 
Cash and cash equivalents at end of period$1,063,555 $303,071 $1,063,555 $303,071 
Supplemental disclosures of noncash activities
Issuance of common stock for business combination$— $— $— $4,900 
Operating lease liabilities arising from obtaining right-of-use assets$1,913 $2,499 $22,165 $4,467 
Debt issuance costs accrued but not paid, included in accrued liabilities$984 $— $984 $— 
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Commvault Systems, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,Six Months Ended September 30,
2025202420252024
Non-GAAP financial measures and reconciliation:
GAAP income from operations$12,491 $14,968 $37,582 $33,396 
Noncash stock-based compensation5
31,813 26,223 61,918 48,619 
FICA and payroll tax expense related to stock-based compensation6
838 772 2,637 2,135 
Restructuring7
1,429 566 1,666 5,245 
Amortization of intangible assets8
1,140 573 2,211 1,146 
Litigation settlement9
— — — 675 
Business combination costs10
1,890 1,736 1,890 1,925 
Change in contingent consideration11
— — (545)— 
Adjustment on headquarters sale leaseback12
— — 495 — 
Noncash impairment charges13
— 2,910— 2,910
Other nonrecurring charges14
1,805 — 1,805 — 
Non-GAAP income from operations$51,406 $47,748 $109,659 $96,051 
GAAP net income$14,730 $15,565 $38,226 $34,092 
Noncash stock-based compensation5
31,813 26,223 61,918 48,619 
FICA and payroll tax expense related to stock-based compensation6
838 772 2,637 2,135 
Restructuring7
1,429 566 1,666 5,245 
Amortization of intangible assets8
1,140 573 2,211 1,146 
Litigation settlement9
— — — 675 
Business combination costs10
1,890 1,736 1,890 1,925 
Change in contingent consideration11
— — (545)— 
Adjustment on headquarters sale leaseback12
— — 495 — 
Noncash impairment charges13
— 2,910— 2,910
Other nonrecurring charges14
1,805 — 1,805 — 
Non-GAAP provision for income taxes adjustment15
(12,593)(10,770)(23,617)(20,770)
Non-GAAP net income$41,052 $37,575 $86,686 $75,977 
GAAP diluted earnings per share$0.33 $0.35 $0.84 $0.76 
Noncash stock-based compensation5
0.70 0.58 1.37 1.08 
FICA and payroll tax expense related to stock-based compensation6
0.02 0.02 0.06 0.05 
Restructuring7
0.03 0.01 0.04 0.12 
Amortization of intangible assets8
0.03 0.01 0.05 0.03 
Litigation settlement9
— — — 0.01 
Business combination costs10
0.04 0.04 0.04 0.04 
Change in contingent consideration11
— — (0.01)— 
Adjustment on headquarters sale leaseback12
— — 0.01 — 
Noncash impairment charges13
— 0.06 — 0.06 
Other nonrecurring charges14
0.04 — 0.04 — 
Non-GAAP provision for income taxes adjustment15
(0.28)(0.24)(0.52)(0.47)
Non-GAAP diluted earnings per share$0.91 $0.83 $1.92 $1.68 
GAAP diluted weighted average shares outstanding45,19545,11445,26445,095
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Three Months Ended September 30,Six Months Ended September 30,
2025202420252024
Non-GAAP gross margin reconciliation:
GAAP gross margin80.1%81.6%81.0%82.0%
Cost of revenues related to noncash stock-based compensation0.4%0.6%0.5%0.6%
Non-GAAP gross margin80.5%82.2%81.5%82.6%

Three Months Ended September 30,Six Months Ended September 30,
2025202420252024
Non-GAAP free cash flow reconciliation:
GAAP cash provided by operating activities$76,769 $55,589 $108,450 $100,281 
Purchase of property and equipment(3,187)(1,848)(5,066)(2,711)
Non-GAAP free cash flow$73,582 $53,741 $103,384 $97,570 



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Use of Non-GAAP Financial Measures
Commvault has provided in this press release the following non-GAAP financial measures: non-GAAP income from operations (EBIT), non-GAAP income from operations margin, non-GAAP gross margin, non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP free cash flow, annualized recurring revenue (ARR), subscription ARR, SaaS ARR and SaaS net dollar retention rate (NRR). This financial information has not been prepared in accordance with GAAP. Commvault uses these non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. Commvault believes that the use of these non-GAAP financial measures, when used as a supplement to GAAP financial measures, provides an additional tool for investors to use in evaluating ongoing operating results and trends, and in comparing its financial results with other companies in Commvault’s industry, many of which present similar non-GAAP financial measures to the investment community. Commvault has also provided its revenues, ARR, subscription ARR and SaaS ARR on a constant currency basis. Commvault analyzes revenue growth, ARR, subscription ARR and SaaS ARR on a constant currency basis in order to provide a comparable framework for assessing how the business performed excluding the effect of foreign currency fluctuations.

All of these non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are included in this press release.

Non-GAAP income from operations and non-GAAP income from operations margin. These non-GAAP financial measures exclude noncash stock-based compensation charges and additional Federal Insurance Contribution Act (FICA) and related payroll tax expense incurred by Commvault when employees exercise in-the-money stock options or vest in restricted stock awards. Commvault has also excluded restructuring costs, noncash amortization of intangible assets, business combination costs, the change in the estimated fair value of contingent consideration, adjustments from the sale and leaseback of headquarters and other nonrecurring charges from its non-GAAP results. These adjustments are further discussed in the reconciliation of GAAP to non-GAAP financial measures. Commvault believes that these non-GAAP financial measures are useful metrics for management and investors because they compare Commvault’s core operating results over multiple periods. When evaluating the performance of Commvault’s operating results and developing short- and long-term plans, Commvault does not consider such expenses.

Although noncash stock-based compensation and the additional FICA and related payroll tax expenses are necessary to attract and retain employees, Commvault places its primary emphasis on stockholder dilution as compared to the accounting charges related to such equity compensation plans. Commvault believes that providing non-GAAP financial measures that exclude noncash stock-based compensation expense and the additional FICA and related payroll tax expenses incurred on stock option exercises and vesting of restricted stock awards allow investors to make meaningful comparisons between Commvault’s operating results and those of other companies.

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There are a number of limitations related to the use of non-GAAP income from operations and non-GAAP income from operations margin. The most significant limitation is that these non-GAAP financial measures exclude certain operating costs, primarily related to noncash stock-based compensation, which is of a recurring nature. Noncash stock-based compensation has been, and will continue to be for the foreseeable future, a significant recurring expense in Commvault’s operating results. In addition, noncash stock-based compensation is an important part of Commvault’s employees’ compensation and can have a significant impact on their performance. The following table presents the stock-based compensation expense included in cost of revenues, sales and marketing, research and development and general and administrative ($ in thousands):

 
Three Months Ended September 30,Six Months Ended September 30,
2025202420252024
Cost of revenues$1,323 $1,374 $2,572 $2,955 
Sales and marketing12,757 11,631 25,343 21,117 
Research and development7,752 5,555 14,822 10,719 
General and administrative9,981 7,663 19,181 13,828 
Stock-based compensation expense
$31,813 $26,223 $61,918 $48,619 

The table above excludes stock-based compensation expense related to the Company's restructuring activities described below in Note 7.

The components that Commvault excludes in its non-GAAP financial measures may differ from the components that its peer companies exclude when they report their non-GAAP financial measures. Due to the limitations related to the use of non-GAAP measures, Commvault’s management assists investors by providing a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Commvault's management uses non-GAAP financial measures only in addition to, and in conjunction with, results presented in accordance with GAAP.

Non-GAAP net income and non-GAAP diluted earnings per share (EPS). In addition to the adjustments discussed in non-GAAP income from operations, non-GAAP net income and non-GAAP diluted EPS incorporates a non-GAAP effective tax rate of 24%.

Commvault anticipates that in any given period its non-GAAP tax rate may be either higher or lower than the GAAP tax rate as evidenced by historical fluctuations. The GAAP tax rates in recent fiscal years were not meaningful percentages due to the dollar amount of GAAP pre-tax income. For the same reason as the GAAP tax rates, the estimated cash tax rates in recent fiscal years are not meaningful percentages. Commvault defines its cash tax rate as the total amount of cash income taxes payable for the fiscal year divided by consolidated GAAP pre-tax income. Over time, Commvault believes its GAAP and cash tax rates will align.

Commvault considers non-GAAP net income and non-GAAP diluted EPS useful metrics for Commvault management and its investors for the same basic reasons that Commvault uses non-GAAP income from operations and non-GAAP income from operations margin. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault’s use of non-GAAP net income and non-GAAP diluted EPS.
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Non-GAAP gross margin. Commvault defines this non-GAAP financial measure as GAAP gross margin adjusted to exclude cost of revenues related to noncash stock-based compensation.

Non-GAAP free cash flow. Commvault defines this non-GAAP financial measure as net cash provided by operating activities less purchases of property and equipment. Commvault considers non-GAAP free cash flow a useful metric for Commvault management and its investors in evaluating Commvault's ability to generate cash from its business operations. In addition, the same limitations as well as management actions to compensate for such limitations described above also apply to Commvault’s use of non-GAAP free cash flow.

Forward-looking non-GAAP measures. In this press release, Commvault presents certain forward-looking non-GAAP metrics. Commvault cannot provide a reconciliation to the comparable GAAP metric without unreasonable efforts, as certain financial information, the probable significance of which may be material, is not available and cannot be reasonably estimated.
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Notes
1.Annualized recurring revenue (ARR) is defined as the annualized recurring value of all active contracts at the end of a reporting period. It includes recurring subscription offerings (including term licenses, SaaS, and utility software), maintenance related to perpetual and term licenses, extended maintenance contracts (enterprise support), and managed services. It excludes non-recurring elements such as perpetual licenses and professional services which are typically delivered at a point in time. ARR is calculated by dividing the total contract value by the number of days in the contract term and multiplying by 365. Subscription ARR includes only term licenses, SaaS, and utility arrangements, calculated using the same methodology as ARR. SaaS ARR includes only the cloud-hosted portion of subscription ARR and is calculated using the same methodology.

These metrics should be viewed independently of GAAP revenue, deferred revenue and unbilled revenue and are not intended to be combined with or to replace those items. These metrics are not a forecast of future revenues. Management believes that reviewing these metrics, in addition to GAAP results, helps investors and financial analysts understand the value of Commvault's recurring revenue streams presented on an annualized basis. See “Use of Non-GAAP Financial Measures" for additional explanation.

2.A reconciliation of GAAP to non-GAAP results has been provided in the reconciliation of GAAP to non-GAAP financial measures included in this press release. An explanation of these measures is also included under the heading “Use of Non-GAAP Financial Measures.”

3.Commvault does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See “Use of Non-GAAP Financial Measures” for additional explanation.

4.SaaS net dollar retention rate (NRR) is the percentage of SaaS ARR retained from existing customers at the start of an annual period after accounting for expansion revenue, churn, and downgrades. It is presented on a constant currency basis using exchange rates as of March 31, 2025. Acquired SaaS ARR is excluded until the acquisition is fully integrated, which we generally expect to occur twelve months from the close date. We believe our SaaS NRR offers valuable insight into the year-over-year expansion of our existing customer base, reflecting both increased utilization of current products and services as well as the adoption of additional offerings.

5.Represents noncash stock-based compensation charges associated with restricted stock units granted and our Employee Stock Purchase Plan, exclusive of stock-based compensation expense related to Commvault's restructuring activities described below in Note 7.

6.Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in-the-money stock options or vest in restricted stock awards.

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7.These restructuring charges relate primarily to severance and related costs associated with headcount reductions and stock-based compensation related to modifications of existing unvested awards granted to certain employees impacted by the restructuring plans.

8.Represents noncash amortization of intangible assets.

9.During the first quarter of fiscal 2025, we entered into a settlement agreement resulting in a payment of approximately $1.5 million which resolved certain legal matters. For the three months ended June 30, 2024, approximately $0.7 million was recorded in general and administrative expenses and the remaining $0.8 million was incurred in a prior period that is not presented in the consolidated statements of operations.

10.These charges relate to acquisition and business development activities, including legal, accounting and advisory services. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to other periods.

11.Represents the change in the estimated fair value of the contingent consideration arrangement related to the acquisition of Appranix, Inc.

12.During the first quarter of fiscal 2026, we finalized the sale of our corporate headquarters and entered into a lease for a portion of the premises. These noncash charges represent accounting adjustments for a $1.3 million loss associated with the related lease terms and an $0.8 million adjustment to reflect the final sale price of the assets resulting in a net charge of $0.5 million recorded in general and administrative expense on the consolidated statements of operations.

13.Represents noncash impairment charges related to our corporate headquarters.

14.These primarily legal and consulting expenses are related to our response in the second quarter to a one-time security matter from the first quarter. Given the non-recurring nature of the matter, these costs have been excluded from non-GAAP results to provide a clearer view of ongoing operating performance.

15.The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of 24%.
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