COMMVAULT SYSTEMS INC Q2 FY2025 earnings call

• Q2 was exceptional with momentum across primary KPIs. Total revenue up 16%, total ARR up 20%, Subscription ARR up 30%, SaaS ARR up 64%.
• Commvault Cloud platform innovations like Cloud Rewind, Active Directory recovery automation, and partnerships with AWS, Google, Pure Storage.
• Acquired Clumio on October 1, funded with cash from balance sheet.
• Multi-cloud strategy focused on meeting customers where they are, providing cloud-first resilience capabilities.
• Emerging workloads like ThreatWise, Active Directory, Cleanroom showing momentum.

Total revenue increased 16% to $233 million, fourth consecutive quarter of double-digit revenue growth. Total ARR accelerated 20% to $853 million. Subscription ARR rose 30% to $687 million (81% of total ARR). SaaS ARR jumped 64% to $215 million (25% of total ARR). Free cash flow grew 34% to $54 million, with 97% returned through share repurchases.

• For Q3: Subscription revenue expected $143-147 million, total revenue $243-247 million, consolidated gross margins 81%-82%, non-GAAP EBIT margins 20%-21%.
• For FY '25: Total ARR growth ~18%, Subscription ARR increase 26%-28%, Subscription revenue $552-557 million, total revenue $952-957 million, gross margins 81.5%-82.5%, non-GAAP EBIT margins 20%-21%, free cash flow over $200 million.
• Trending ahead of FY '26 targets.

Q: Aaron Rakers asked about up-sell and cross-sell in the Subscription and SaaS business.

A: Jen DiRico responded that SaaS ARR momentum is driven by 127% NRR, with one third cross-sell and two third upsell. Sanjay Mirchandani added about emerging workloads like ThreatWise, Active Directory, Cleanroom.

Q: Rudy Kessinger inquired about the guide raise and second half pipeline.

A: Jen DiRico said first half execution was strong, second half guidance is consistent with prior quarters.

Q: James Fish asked about DORA's impact and Appranix/Clumio contribution.

A: Sanjay Mirchandani said DORA is contributing to business, Jen DiRico noted most guide raise is from organic business with Clumio's impact being a few million per quarter.

Q: Jason Ader questioned operating margin outlook and scale.

A: Jen DiRico stated commitment to responsible, profitable growth, investing to accelerate growth while increasing leverage.

Q: Howard Ma asked about strength in on-premise Subscription business and market share.

A: Sanjay Mirchandani said Commvault is taking share due to platform breadth, workload flexibility, and democratized protection across on-prem and cloud.