Commvault Q4 2026 Earnings Call - SaaS Momentum and Identity Resilience Drive Record Cash Flow

Eric Heath, Analyst, KeyBanc2: Hello, welcome to the Commvault Q4 for year 2026 earnings conference call. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, just press star followed by 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. Now I would like to turn the call over to Michael Melnyk, Vice President of Investor Relations. Please go ahead, Mike.

Eric Heath, Analyst, KeyBanc0: Good morning, and welcome to our earnings conference call. Before we begin, I’d like to remind you that statements made on today’s call will include forward-looking statements about Commvault’s future expectations, plans, and prospects. All such forward-looking statements are subject to risks, uncertainties, and assumptions. Please refer to the cautionary language in today’s earnings release and Commvault’s most recent periodic reports filed with the SEC for a discussion of the risks and uncertainties that could cause the company’s actual results to be materially different from those contemplated in these forward-looking statements. Commvault does not assume any obligation to update these statements. All Commvault’s financial results are presented on a non-GAAP basis. A reconciliation between the non-GAAP and GAAP measures can be found on our website. Thank you again for joining us. I’ll turn it over to our CEO, Sanjay Mirchandani, for his opening remarks. Sanjay.

Eric Heath, Analyst, KeyBanc5: Good morning, and thank you for joining us. We had a strong finish to the fiscal year, delivering results at or above our guided metrics while continuing to build momentum across the business. In the fourth quarter, subscription ARR increased 27% to $989 million. This was led by another quarter of strong growth from our SaaS business, which grew 42% to reach $400 million in ARR, a milestone for Commvault. Subscription revenue grew 20% to $208 million, and we generated a record free cash flow of $132 million in Q4, resulting in $237 million for the fiscal year. We’re growing at scale while also generating strong profits and cash flow. We believe this combination reflects the health of the industry, the strength of our platform, and the durability of our model.

Now, let me take a step back and talk about what’s driving this momentum. In 1 word, it’s data. Data is the lifeblood of every organization. When it’s down due to an outage, cyberattack, or human error, business comes to a halt. Organizations today are facing a variety of challenges with their data. First, data is scattered across environments, on-premise, at the edge, and in the cloud, expanding the attack surface for bad actors. Second, cyberattacks continue to grow in volume and sophistication. Adversaries are getting smarter and stronger. Compromise is almost certain. Third, identity has become 1 of the hottest new threat vectors. This is compounded by AI as non-human identities outnumber human identities by 50 to 1. Commvault helps organizations address today’s challenges by protecting, identifying, securing, and when needed, rapidly recovering their data. These challenges aren’t static.

With the rise of AI, we’re in the most important technology shift in modern history. AI creates more data, more access, and more risk, directly increasing demand for protection, governance, and trusted recovery. We see AI as a powerful tailwind for Commvault because it amplifies the importance of what we do. In an AI-driven world, if your data is compromised, your AI is compromised. Commvault provides the picks and shovels that empower customers to adopt AI securely and responsibly. We do this in a variety of ways. We protect the datasets used for AI and a broad spectrum of AI workloads. We help customers leverage AI to detect threats faster, recover at greater scale, and automate resilience operations. We help customers activate AI data securely for use with models and agents, and we bring governance to AI data.

For example, with our Satori acquisition now fully integrated into Commvault Cloud, customers can monitor and enforce agents’ access to data. Additionally, as customers embrace and deploy AI, they’re also focused on simplifying their technology stack. Enterprises don’t want a patchwork of fragmented tools and products. They want the best unified platform to bring it all together, Commvault Cloud. Commvault Cloud unifies data protection, data security, identity resilience, and recovery all on one scalable control plane. Increasingly, more customers are standardizing on our platform as evidenced by growth we see across the business. Let me shine a light on some of the major growth drivers for Commvault, which will extend into fiscal year 2027 and beyond. First, we continue to add new subscription customers to our platform. Second, we’re expanding and driving multi-product adoption across our SaaS base.

Third, we’re seeing strong momentum with emerging revenue streams, including identity resilience. Now I’ll discuss each of these in more detail. First, we added over 2,500 subscription customers in fiscal year 2026. The growth-oriented investments we made over the past two years paid off. In the on-prem market, we’re winning against other vendors while seeing customers return to Commvault after upstarts fail to live up to the hype. For example, in Q4, one of the world’s top 50 law firms returned to Commvault because an upstart overpromised and underdelivered on products that were quote on the roadmap and did not work. This customer is now leveraging our software and SaaS solutions, including a complete suite of data security, identity resilience, and recovery offerings. Second, we’re making steady progress in driving multi-product adoption, a core pillar of our growth strategy.

This is especially true in our SaaS business. The percentage of Commvault managed SaaS customers using more than one offering increased to 48%, a 500 basis point improvement from Q4 of last year. For example, in Q4, we added a large virtual charter school that could not securely or efficiently manage its multi-cloud architecture with native hyperscaler tools. They chose Commvault to help manage their multi-cloud estate with the addition of Air Gap, Threat Scan, and Cleanroom Recovery to meet their resiliency requirements. In fiscal year 2027, we’re doubling down and incentivizing our sales force to build on this multi-product momentum. In terms of monetizing new offerings, we’re seeing healthy momentum as identity becomes a primary target for attackers. Our Active Directory, Entra ID, and Office solutions are landing new customers and expanding existing.

In Q4, Active Directory was once again one of our fastest-growing SaaS offerings, with ARR more than doubling year-over-year. Collectively, our identity resilience and data security offerings represented 33% of net new ARR in Q4. For example, after a competitor suffered a crippling ransomware attack, a Fortune 500 retailer determined its resilience posture was too complex and costly. In Q4, they purchased Commvault’s Active Directory Protection because it provided lower TCO and reduced recovery time from 2 days to under 90 minutes. As identity threats continue to evolve, this will continue to be an area of focus and innovation for us in fiscal year 2027. In closing, Commvault provides customers with a single unified platform that’s essential for today’s diverse data environments and tomorrow’s AI-driven applications. Let me leave you with a few key takeaways.

First, the market is getting bigger by the minute. AI is driving more data, more complexity, and more risk, increasing the need for resilience. As data grows, so does Commvault. Second, Commvault Cloud is the differentiator. Customers are consolidating fragmented tools and standardizing on a single platform for data protection, data security, identity resilience, and recovery. Third, we’re delivering durable high-quality growth. We’re scaling SaaS, expanding within our customer base, and doing so with improved margins and strong cash flow. That is why we believe we’re well-positioned to win in the AI era. Now I’ll turn it over to Gary Merrill, who’s back as our CFO, to discuss our results and outlook. We welcome him and Geoff Haydon as our new President of Customer and Field Operations. Gary.

Gary Merrill, Chief Financial Officer, Commvault: Good morning, and thank you for joining us. For those who I’ve not yet met, I served as Commvault’s CFO from 2022 through 2024 before moving into the Chief Commercial Officer role. I’m excited to return as CFO, especially as we close fiscal year 2026 with strong momentum. I look forward to working with you as we continue to drive disciplined execution to capitalize on the growth opportunities ahead. Our Q4 results demonstrated accelerating SaaS growth, improved profitability, and record free cash flows. I will discuss our Q4 and fiscal year 2026 financial metrics using our existing reporting definitions. Additionally, please note that we will transition to the new financial reporting effective fiscal 2027 that I’ll discuss later in my prepared remarks. Turning to our fiscal Q4 results.

I’ll start by discussing ARR and free cash flow, which we believe are the North Star metrics. We encourage you to evaluate these metrics on an annual basis, which is aligned to how we plan and manage our business. In Q4, subscription ARR increased 27% to $989 million. On a constant currency basis, using FX rates for March 31, 2025, we added $53 million of net new subscription ARR, our strongest performance of the fiscal year. Within subscription, our SaaS ARR hit a major milestone, growing 42% to $400 million, reflecting both new customer growth and healthy expansion from existing customers. We continue to make meaningful progress in multi-product adoption, a core pillar of our growth strategy. As Sanjay noted, 48% of Commvault managed SaaS customers are using more than one product.

This adoption is supported by a strong uptake of our identity resilience and data security solutions, which represented 33% of net new ARR. Our SaaS net dollar retention improved to 122%, highlighting our ability to expand within existing accounts. Total ARR, which includes subscription ARR and the maintenance associated with perpetual licenses, increased 21% to $1.12 billion. On a constant currency basis, using FX rates as of March 31, 2025, we added $44 million of net new total ARR during fiscal Q4. Moving to free cash flows. Q4 rebounded to a record $132 million, reflecting strong collections aligned with focused working capital management. Full year fiscal 2026 free cash flows were $237 million, growing 16% year-over-year.

In Q4, we accelerated our stock repurchases to 3 million shares for total consideration of $259 million, reflecting our confidence and focus on delivering long-term shareholder value. This brings total FY 2026 repurchases to $446 million, representing over 4 million shares. I’ll discuss our income statement performance. Q4 total revenue increased 13% to $312 million. Subscription revenue grew 20% to $208 million, led by a robust 43% growth in SaaS revenue to $93 million. Term software license revenue grew 6% against a challenging comparison driven by strong renewals and existing customer business. We continue to see strength in large enterprise accounts with revenue from transactions over $100,000 increasing 9%, driven by higher deal volumes. Turning next to profitability.

Q4 consolidated gross margin expanded 30 basis points sequentially to 81.8%. This reflects continued improvement in SaaS hosting margins driven by scale efficiencies and ongoing product optimization. Q4 operating expenses increased 11% to $187 million, representing 60% of revenue, an improvement of 100 basis points year-over-year. This reflects benefits of our pulse optimization program aimed to expand margins and allow for reinvestment in strategic growth initiatives. Non-GAAP EBIT in Q4 was $66 million, representing a non-GAAP EBIT margin of 21.3%. Looking ahead, we are entering fiscal year 2027 with strong momentum. With our subscription transformation largely complete, our financial priorities are to scale subscription ARR, expand margins, and increase free cash flow.

Before reviewing our outlook for fiscal year 2027, I will briefly discuss 3 updates to our financial reporting that will be effective in fiscal Q1. These changes are outlined in our earnings press release and on slides 25 to 27 in our earnings presentation. First, we have recast certain revenue and ARR classifications. The primary adjustment moves all term software-related support revenue into subscription revenue alongside term software licenses and SaaS revenue. Perpetual support revenue is now presented on its own line in our P&L, which directly correlates to our non-subscription-based revenue and ARR offerings. These recast changes are being made to, 1, provide a consistent view of our offerings across subscription revenue and subscription ARR. Secondly, align financial reporting with our subscription-based business model. Finally, they reflect how we manage the business internally.

There are no changes to total revenue or total ARR for any periods presented. Under the recast presentation for fiscal year 2026, subscription revenue was 82% of total revenue and subscription ARR was 90% of total ARR. To assist with year-over-year comparability of our new financial reporting effective in fiscal year 2027, we have provided a two-year quarterly look-back in our earnings press release and earnings presentation, all recast amounts. For modeling purposes, an Excel download is also available on the investor relations website. The second change in our financial reporting is to streamline our KPI framework with emphasis on four key guided metrics: subscription ARR, free cash flow, subscription revenue, and non-GAAP EBIT. We will also provide supplemental total revenue and diluted share count guidance to assist with P&L modeling.

Going forward, we will no longer disclose total ARR as the remaining perpetual maintenance stream will be less than 10% of our business. In addition, our subscription ARR guidance will no longer peg to the beginning of the fiscal year FX rate. The final change to our fiscal year 2027 reporting will be a transition to subscription net dollar retention measured on an annualized basis. This includes both our term software and SaaS offerings and will align net dollar retention metrics with our subscription ARR and revenue disclosures. For context, fiscal year 2026 subscription net dollar retention measured on an annualized basis was 114%. I’d like to reiterate that we will guide subscription ARR and free cash flow annually, which matches our business planning and management approach.

Term software accounts for most of our ARR and upfront revenue. Quarterly results may fluctuate due to factors such as the mix between software and SaaS transactions, renewal timing, and shift in contract duration in any discrete quarter. Typically, these fluctuations even out over the fiscal year. Moving to our fiscal 2027 outlook using our new financial reporting. For fiscal Q1, we expect subscription revenue of $263 million-$265 million, representing approximately 15% year-over-year growth at the midpoint. This would result in approximately $310 million of total revenues. We also expect EBIT margins of approximately 19% and a diluted share count of approximately 42 million shares.

For the full fiscal year 2027, we expect subscription ARR growth of 18%-19% year-over-year, representing a range of $1.20 billion-$1.21 billion. Our subscription ARR growth percentage will continue to be led by our SaaS offerings, which we expect to exceed a half a billion dollars of ARR by the end of fiscal 2027. We expect subscription revenue in the range of $1.115 billion-$1.125 billion, representing approximately 15% year-over-year growth at the midpoint. As I mentioned earlier, we will also guide total revenue to assist with financial models. We expect total revenue of $1.30 billion-$1.31 billion.

In addition, for fiscal 2027, we expect non-GAAP EBIT margin of 20.5%, free cash flows of $250 million-$260 million weighted towards the second half of the fiscal year, and diluted share count of approximately 42 million shares. Finally, our board refreshed our share repurchase authorization for $250 million. We currently expect to allocate approximately 60% of annual free cash flow to share repurchases, subject to market conditions. In closing, I am excited to return to the CFO role and look forward to working with you as we continue to execute with discipline and capitalize on our growth opportunities ahead. We operate in a large and growing addressable market. There is meaningful potential to acquire new customers and expand with our installed base through increased multi-product adoption.

I’m focused on executing those opportunities with a clear path to continued margin expansion and strong free cash flow generation while driving shareholder value. With that, I’ll open the call for questions. Operator?

Eric Heath, Analyst, KeyBanc2: We will now begin the question-and-answer session. If you would like to ask a question at this time, simply press star followed by the number 1 on your telephone keypad. We will pause for a brief moment to compile the Q&A roster. Our first question comes from the line of Todd Weller with Stephens. Todd, please go ahead.

Eric Heath, Analyst, KeyBanc8: Thanks. Good morning, and thanks for the question. You mentioned kind of the success with multi-product sales and changes in compensation. Could you walk us through, at a high level, your FY 2027 kinda sales comp structure and kinda what behaviors you’re trying to drive differently versus FY 2026? Thanks.

Gary Merrill, Chief Financial Officer, Commvault: Hi, Todd. It’s Gary. Nice to meet you. I will take this. I’ll hit the multi-product question that you were asking. Before I do that, I’ll hit sales compensation first. We don’t disclose the discrete components of our compensation plan, but what I can tell you is that our compensation plan for the field is geared towards two items specifically. The first is new customer acquisition, and the second is cross-sell, so platform expansion in our hybrid environment. They’re the two key pillars of our compensation plan for FY 2027. As we look back to FY 2026, we’re seeing great progress that we want to build off on multi-product expansion, especially with our customers that are now licensing at least two of our SaaS products.

That’s now approaching 50% of our SaaS customers and our ability to cross-sell and the opportunity to drive growth from cross-sell is a key pillar of our FY 2027 strategy.

Eric Heath, Analyst, KeyBanc8: Thank you.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Aaron Rakers with Wells Fargo. Aaron, please go ahead.

Aaron Rakers, Analyst, Wells Fargo: Yeah, thanks for taking the questions. I have two real quick. I guess, you know, maybe going back to late last year, I’m curious, you know, with your Cloud Unity platform, what you’ve been seeing in terms of customer engagements, customer interest, any kind of metrics you can share on those platforms, obviously the Satori acquisition integration? Just curious, as we think about these multi-product platforms, you know, what you’ve seen in terms of, you know, the products introduced late last year?

Gary Merrill, Chief Financial Officer, Commvault: Aaron, good to hear from you and good to talk to you again. When we think about what we announced at Unity, objective number 1 is to drive customer engagement. To give the ability for our customers to leverage our platform now truly across any workload, whether it’s on-premise or the cloud. Our primary measurement of that is really driving new subscription customer growth. Okay? We’ve added about 2,500 new subscription customers in the past 12 months. This quarter alone, it was roughly 600. How we start to monitor and measure that going forward will be across metrics of multi-product adoption as well as our ability to cross-sell. Not just up-sell, ’cause now we’re starting to see the acceleration on the cross-sell motion as well.

Eric Heath, Analyst, KeyBanc5: Aaron, Sanjay here. Let me just add a little bit more to that. The platform, if you remember, the Unity in the platform was about making sure we could give customers a singular capability to take data security, identity resilience, and data recovery as one unified offer, whether they deploy it in SaaS or they deploy it on-premise. You know, identity resilience and security, as an example, represented 33% of our net new ARR last quarter. We also added hundreds of Active Directory customers. Our ARR on Active Directory doubled year-on-year, and it’s one of our fastest-growing offers in the history of the company. Without getting into absolute specifics, it gives you a sense that the design of Unity is exactly where customers are leaning in on.

Aaron Rakers, Analyst, Wells Fargo: Yeah. Then maybe as a quick follow-up, you know, Gary, now that you’re back in the CFO seat, I’m curious, you know, I know you gave guidance for the full year at 20.5% operating margin. How do you think about the leverage that you see in this model? You know, is there any kind of thoughts of, you know, driving incremental operating margins? You know, could we see maybe mid-20, you know, +% operating margin in the Commvault story as we look forward? Thank you.

Gary Merrill, Chief Financial Officer, Commvault: Aaron, thanks for the second follow-up question. First, guidance for FY 2027, 20.5%. Our belief when thinking about guidance is setting our guidance at the level that we believe and that we’re confident that we can tame. As we think about long-term, especially as we scale our SaaS platform, there is leverage in this business model. AI, from both an internal perspective and a customer perspective, will give us great operating leverage opportunity. AI is driving data growth, it’s driving efficiencies in our product, and it’s driving efficiencies in how we talk to customers every single day. The short answer is yes. We’re not at the point where I’m ready to give multi-year guidance, but a baseline of 20.5 is a good starting point, and we look to expand on that from there.

Aaron Rakers, Analyst, Wells Fargo: Yeah. Thank you.

Gary Merrill, Chief Financial Officer, Commvault: Thanks, Aaron.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Michael Romanelli with Mizuho Securities. Michael, please go ahead.

Eric Heath, Analyst, KeyBanc1: Hey, guys. Thanks for taking the questions. Just maybe on, you know, the 27 guide. Can you walk through, you know, some of the top line puts and takes for us? You know, as part of that, you’ve announced some, you know, recent leadership changes, obviously. You know, how did that factor into the thought process and logic around setting guidance? Can I have a follow-up?

Gary Merrill, Chief Financial Officer, Commvault: This is Gary. I’ll take the first part. If I zoom up to maybe go very at the macro level, as we thought about our plan for FY 2027, our objective is to build durable growth. Okay? The plan is built along the foundation of durable growth. There’s three pieces that will help us drive those growth vectors. First is AI data growth. AI is driving massive amounts of data growth. That becomes a tailwind to our business. When you combine that with the complexity of hybrid environments, it makes what we do from a resiliency perspective even more important. When you add the third vector of AI cyber-led attacks, which brings in the resiliency and security aspects, you have three growth vectors that build the foundation of the plan.

As we think about how we measure that success, you heard in my prepared remarks about our North Star metric of subscription ARR. That is the key way we will measure it. We’re a hybrid business and we’re expecting continued momentum in that business. As we serve our customers, whether they’re on-premise or in the cloud, we expect acceleration to continue to come, especially from our SaaS business.

Eric Heath, Analyst, KeyBanc5: Yeah. I’ll add a little bit on the leadership transition. Gary, you know, as Gary was our Chief Commercial Officer, helped build the plan, was intricately involved with all aspects of both the guidance as well as where the revenue numbers we were forecasting. Geoff was a board member, and on the inside was, you know, had full visibility as to what we were, how, what our assumptions were and how we were thinking all through the process. We were able to synchronize the leadership transition at the start of our fiscal year at the, you know, and had both of them at our sales kickoff, which is very important from a handover point of view and consistency point of view.

For all the important things like comp plans, territory planning, forecasting methodology, it was two in the box getting it done. You know, I feel pretty good about. I feel very good actually about the timing and the leadership that we brought into the company to take us, you know, to 27 and beyond.

Eric Heath, Analyst, KeyBanc1: Got it. Thanks. Super clear and helpful. Sanjay, you’ve laid out what is a pretty clear AI resilience vision and, you know, more recently unveiled Data Activate, AI Protect, and AI Studio. How are you just thinking about, you know, the commercial opportunity there? Is, you know, AI a significant growth driver for you guys in FY 2027 or is the real monetization, you know, perhaps beyond that? Just, you know, would love to hear your thoughts on that. Thanks.

Eric Heath, Analyst, KeyBanc5: We’re not pinpointing the exact number that, you know, we’re attributing to AI because it’s still early days, but it’s definitely a tailwind. It’s at, you know, to oversimplify it, we believe, and obviously a biased belief, that data is at the heart of AI and is driving AI models, is driving how customers use AI in the enterprise. What we’re trying to do is make sure that we’re giving them not only the products and the capabilities you mentioned, which are the latest, but doing what we’ve done for the better part of 30 years, which is protecting the components that build up the systems they use.

Whether it’s the vector databases, whether it’s their deep S3 buckets that they’re storing data in, you know, whatever it may be, we’re every day we’re supporting more and more of the componentry that builds up, you know, the AI apps that they’re building. We’ll continue to do that to give them all the availability. Plus, with the capabilities that we’ve just announced, we give them agentic access to our workflows. We give them agentic access to single policy engines. We’re giving them, you know, everything they need to really protect their environments with the right guardrails and be able to recover as they roll out these fairly complex AI capabilities inside their enterprises.

Early days for us in quantifying it externally, but we, you know, we feel today pretty good about the fact that it’ll, you know, as long as the data keeps growing, which we think it does because of AI, what we do by way of resilience becomes front and center.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Eric Heath with KeyBanc. Eric, please go ahead.

Eric Heath, Analyst, KeyBanc: Great. Congrats on the results, gentlemen, strong net new ARR acceleration. Gary, welcome back to the seat. Can you just talk about what you saw from a macro perspective, both in the quarter, given just some macro headwinds out there? Also memory is also an issue, so anything you could speak to about memory impact in the quarter. Gary, just coming back to some of the guidance philosophy and the assumptions there, just any change in the philosophy we should be thinking about? I know you addressed some of it already, just given the leadership changes, any additional prudence there? Similarly along your other question, any assumptions on macro or memory pricing that you’re assuming in the guidance? Thank you.

Gary Merrill, Chief Financial Officer, Commvault: Yeah. Eric, thanks. Thanks, and good to hear from you. I’m going to start with the last on the macro and the memory pricing. We kind of look at them as a combined. We’re managing that in our pipeline. From an outlook perspective, the current trends are baked into our guidance. Now, we’ve been successful in being able to navigate that with our platform. We have 3 primary ways how we navigate supply chain or macro related to memory. First is we have a broad technical partnership with all of the major storage providers. We’re able to leverage those partnerships, whether it’s on supply or technical alignment as well. The depth and breadth of our platform integrations is a key competitive differentiator.

Secondly, we work with our customers to, I’ll use the term sweat the asset. Even if it’s a, if it’s a competitive takeout and it’s a fresh install, working with our customers, we’re able to leverage their existing infrastructure. Okay. The third, which we think is one of our best competitive abilities, is our SaaS platform. We have the ability from a workload perspective to migrate customers to our SaaS platform, and which is kind of where we see our ability to then manage these workloads regardless of what’s happening in the broader economy. On your second question, which I believe is guidance philosophy, fundamentally, I’ve been a part of the leadership team now for many years. As we think about how we run the business day-to-day, nothing’s changed, I would say, right?

The collaboration between myself with Sanjay and now Geoff and the broader team is consistent regardless of what role that I was in. The way we think about guidance is taking a look at the market opportunity and then providing a number externally that we feel confident in.

Eric Heath, Analyst, KeyBanc5: I’ll just say this, now that Gary’s signed and everything, having a CFO who’s been a CRO is one heck of an asset because you get a very pragmatic point of view on how to look at things. We’re very happy with that.

Eric Heath, Analyst, KeyBanc: Thank you, gentlemen.

Eric Heath, Analyst, KeyBanc2: Now our next question comes from the line of Jason Ader with William Blair. Jason, please go ahead.

Jason Ader, Analyst, William Blair: Yeah. Thank you. Good morning. First I want to just applaud you guys for the shift of the term support to the subscription line. It’s something that I, you know, Mike, I’ve mentioned to you many times. I think that just cleans things up and I think we all appreciate that. For Sanjay, you talked a little bit about or I guess, Gary, you talked about the hardware pricing. I’m just wondering, has it actually impacted deals where some of your competitors are more tied to hardware, specific hardware, and therefore, it sort of shifted deals like that were late in process towards you because of the supply availability and your sort of hardware agnosticism?

Eric Heath, Analyst, KeyBanc5: Yeah, I’ll take the first shot at it. You know, I will say this, we are probably at the place in our company’s history where we have the strongest relationships with our technology partners. We work with them very closely on the pipeline. We work with them very closely on the customer requirements. You know, as much as availability and pricing does cause a little bit of, you know, revisits as part of the process, we’ve been so far been able to manage the forecast pretty tightly in conjunction with our partners.

You know, one of the things, almost more importantly, that we can do that Gary mentioned that holds us in good stead is allowing customers because of the way our platform is architected, to sweat the asset a little longer till they can get the right setup that they need and the timing that they want and the project kickoff the way they require. If they need the resilience we provide, in many cases, we’ve been able to go in and just sweat out the asset, and without getting super technical, we can also let them run the control plane in any way they want so that they could, you know, they’re not beholden to a particular piece of hardware. We’ve got that flexibility in the architecture, and it’s being used every single day as a hybrid company.

Whether they’re using the SaaS piece of it or they, you know, they’re running it in the cloud, we’re letting them work through this present sort of situation till it clears up.

Gary Merrill, Chief Financial Officer, Commvault: Jason, to go back to your first comment about the recap, I appreciate the call-out. One of the key priorities with that is aligning our P&L to AR. Now you can specifically see how the AR momentum is translating into acceleration on the top line within the subscription. Then it’s also important to give the clarity to our shareholders about the actual size now of the professional business now that it’s become nominal to the overall business.

Jason Ader, Analyst, William Blair: That’s fair.

Great. Great. One follow-up, on the comment, 33% of net new ARR coming from identity and data security. Can you just give us a quick report card, Sanjay, on some of the data security products, like what’s going well? Where do you still feel like you’ve got some work? I know you have a handful of different products there, some acquisitions. Just it’d be great to get a quick report card.

Eric Heath, Analyst, KeyBanc5: Yeah. You know, I think with Unity, we really upped the ante, if you would, on how our policy engine operates across the product. When you look at Satori and what it does with data security being integrated, those, you know, those capabilities, the DSPM type capabilities are in the product, right in the product. If you look at Threat Scan, which has been something that has done really well for us, now it’s been completely revamped. We’ve taken input from a variety of sources, including our own IP and third-party IP, to really give customers deep scanning capabilities to look at what happened.

You tie that back to Cleanroom, which we brought to market two years ago, and this generation of Cleanroom has tight integration with AGP and all the risk analysis that we can do to tell customers what happened, who touched it. Now, when you fast-forward this to agentic capabilities, a lot of companies are fixated on, you know, rolling back an agent, which is fine. That is one threat vector in the overall scheme of things that needs to be looked at in sort of cohesion to bring back to really have resilience. That’s where we’re going.

The numbers we shared sort of bode well for where customers’ minds are and where, you know, how they’re thinking about resilience because you have to look at it in an integrated way, data security, identity resilience, and true single-click recovery on large platforms.

Jason Ader, Analyst, William Blair: Thank you.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of James Fish with Piper Sandler. James, please go ahead.

James Fish, Analyst, Piper Sandler: Hey, guys. Topic that’s coming up, of course, is hardware and cloud. Maybe just to go back to that, are you seeing customers initially actually start with the on-prem for either a net new or new deal completely, but then, you know, evaluate or turn to you guys to see what kind of cloud equivalent pricing would be just given the rising hardware costs? How are customers handling that sort of messaging? How are they handling that overall exposure to you? Is there a way to understand that penetration of cloud within subscription entirely at this point?

Gary Merrill, Chief Financial Officer, Commvault: James, Gary, I’ll start on this. As it relates to thinking about navigation. What customers want is they want resilience at the end of the day. If you start with the macro theme of what we provide is resilience. When you get into, I’ll say tier two, tier three apps, maybe not like the mission-critical tier one, the flexibility is there to think about the ability to be agnostic between whether they use on-premise infrastructure or they use cloud infrastructure, their own storage or even our own cloud storage. That’s kind of where we see it.

When you combine that with the flexibility with the hardware partners that we have, as well as helping them sweat the assets, it becomes about the options that they have to make sure that we can keep their projects on track. To quantify, would I say that shift has been material to our SaaS business? Not yet. Okay, not yet. What it does is it keeps our project top of mind, and it allows us to continue to execute with a close plan.

Eric Heath, Analyst, KeyBanc5: Yeah, we’re very unique in what we can deliver in that true hybrid capability, letting customers truly mix and match how they wish to deploy. Of course, it’s a regulated industry. They have their own policy. There’s a lot of things that come into play. We give them that, we give them the very unique flexibility that nobody else has, can to do what they need to do. Over time, they can mix and match. Some do.

James Fish, Analyst, Piper Sandler: Okay. Yeah. Just to follow back up, I know I asked a long question there, but what’s the customer penetration of cloud within subscription entirely? Can you just remind us what optimizations on the product side are occurring and where cloud gross margins are now today? Thanks, guys.

Eric Heath, Analyst, KeyBanc5: Take the first part. I’ll take the second.

Gary Merrill, Chief Financial Officer, Commvault: Okay. Penetration of cloud. Cloud-native workload. If you’re thinking about workloads that are now running the cloud, whether there’s databases, VMs, file and objects, even our Clumio, and we think about contributions to our growth, that bucket of our cloud digital native, cloud native offerings from Q3 to Q4 was our fastest growing segment that contributed to ARR. Which shows what the ability is to move and protect cloud applications with our cloud product. Major contributor, Jim, to our success sequentially. From a margin perspective, continued optimization. I don’t have the margins in front of me, but we can get them back to you. I would say sequential improvement on the margins. North Star is driving well north of 70%.

We’re on pace for that over the next couple years. That’s where we’re focused on, is the product optimization and building that durable business of in the cloud.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Param Singh with Oppenheimer. Param, please go ahead.

Eric Heath, Analyst, KeyBanc3: Yeah. Hi, thank you so much for taking my question. Maybe, Sanjay, I wanted to understand the buying persona for identity resilience, is that more focused towards the CISO? Are you investing more in your security-focused sales teams, not just for identity resilience, but for some of the other workload opportunities, particularly around ransomware? Lastly, in that vein, are you also investing in R&D to fill some of the gap, technical gaps on the ransomware side, or do you feel you have a robust portfolio today? Thank you.

Eric Heath, Analyst, KeyBanc5: Hey, Param. I’ll take the last part first. I think we’ve got a world-class platform when it comes to not just ransomware as a threat vector, but broader. Making sure that, and I don’t mean to say this in any way but serious, which is regardless of the threat vector or what causes the damage to the data, our focus is to be able to bring customers back to life, recover them. It’s broader than ransomware, but it definitely does ransomware, if that makes sense, okay? It does it very well. Every day, we’re helping customers with it.

On the first part of your question, on the buying persona for identity is quickly becoming because of AI, is quickly becoming sort of a joint decision between the CISO organization and the classic CIO organization. Because in some cases, identity is managed by the IT organization, and now with AI applications being developed by teams or new teams sometimes, it’s sort of going up in visibility. We’re seeing both. We’re seeing both. I’m not adding more security specialists, if you would. Over the past couple of years, a lot of the folks that have come into the company have come in from a security background.

In fact, Geoff Haydon, our President, also has a deep security background because today, you know, like I keep saying, data security, identity, and recovery are implicitly tied. We’re cross-training our people. There’s a lot of enablement we’re doing to make sure that they can talk to the different personas, identify the right kind of conversations to have, and feel pretty good about the progress we’ve made. I mean, you know, we don’t it’s rare that we’d lose a deal because we didn’t have a security capability.

Eric Heath, Analyst, KeyBanc3: Understood. Great. Thank you so much for that, Sanjay. As a follow-up, if I could, not to get into the memory side, I know you’re managing the supply chain well, but a different question, right? The higher memory and component pricing does constrain budget dollars a little bit. Have you heard concern from customers where, you know, they’re picking and choosing what workloads are mission-critical and more important to secure now and potentially pushing off certain workloads to the next year? Do you feel that the entire data state is crucial enough today where dollars would primarily be spent on cyber resilience first and then something else? Any clarity there would be really appreciated. Thank you.

Eric Heath, Analyst, KeyBanc5: Yeah. Param, I’ll take the first shot at it. You know, anecdotally, customers are focused on resilience because you’re only as good as the breadth of your coverage, okay. You know, your resilience capability increases with pretty much you have to protect everything that runs your business as mission-critical. For that, if customers are doing refreshes, they prioritize that in whatever architecture their industry allows them or their policies allow them to do. In some cases, it’s not about pushing it off to next year.

It’s saying, "I think we can run this through a SaaS capability, you know, that so we look at your SaaS, or we could have it hosted, and we’ll write the data on-premise." Again, it comes back to the architecture, which we think gives customers the choices they need to be able to prioritize both the cost increases and the availability of memory and servers, et cetera. It comes back to that. There’s no single answer. Yes, you know, obviously, if things are in spare supply or are more expensive, people do prioritize, and we’re right there with them to help them through that.

Eric Heath, Analyst, KeyBanc3: Perfect. Thank you so much for that. Appreciate it, Sanjay.

Eric Heath, Analyst, KeyBanc5: Thanks, Param.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Yun Kim with Loop Capital Markets. Yun, please go ahead.

Eric Heath, Analyst, KeyBanc9: All right, great. Thank you. Congrats on a strong finish to the year. If you can update us on the overall partner ecosystem that you’re expanding, especially around cloud service providers. I think you had some announcements on that recently, with Google and whatnot. How important is that, securing that close relationship with the three major hyperscalers in your go-to-market, especially around cyber resilience, and then especially with much of the agentic AI framework running on those hyperscaler platforms?

Eric Heath, Analyst, KeyBanc5: Hi, Yun, it’s Sanjay. I’ll try and address that. Our relationships with the hyperscalers are pivotal. It’s very important as customers truly embark upon not just hypercloud but multi-cloud deployments, our ability to protect customers with a single platform across multiple clouds and on-premise capabilities is unique. Our hyperscaler relationships are something that we invest deeply in, okay? Both from an engineering point of view and a go-to-market point of view. Access. If a customer wants to purchase off of a marketplace, we have deep integrations into all the marketplaces. We continue to evolve the platform as customers make choices around agentic, to your point, whether it’s the, you know, whether it’s the vector databases, whether it’s the agentic frameworks that they have, identity systems that they use.

We’re continuing to build out our resilience capabilities on that so that, you know, when the customer makes that choice, we’re right there with them, okay? We’ve done that for years, and that’s always held us in good stead, so we continue to do that. What was the other part of your question? Cyber resilience. Yeah, and what we do, for example, that makes us, again, very unique from a resilience point of view is customers can write their data into our air-gapped immutable capabilities on any of the four major hyperscalers today. They can mix and match as they need to.

For whatever, for economic reasons, commercial reasons, resilience reasons, redundancy reasons, we allow them, through the same control plane, very seamlessly to be able to protect their data and their capabilities on any of the hyperscalers. You know, the abstraction is what we bring, TCO is what we bring. As you mentioned Google, our Commvault Cloud platform, you know, supports Google, but our Clumio capability, our Clumio platform, which is designed for cloud natives, which has thus far been an Amazon AWS sort of protection, has now expanded into Google. Google Cloud is also supported by Clumio, which is quite the favorite with the cloud natives.

Eric Heath, Analyst, KeyBanc9: Okay, great. Thanks for that, Sanjay. Gary, in regard to, probably a question that you probably wanted to avoid so far, but in regard to seasonality of your SaaS business for in your outlook, is there any big regional quarter when, where you’re expecting a certain SaaS, upsell or even a conversion of, term license to SaaS?

Gary Merrill, Chief Financial Officer, Commvault: Yeah. Thanks, Yoon. I’ll hit it. The average contract length of our SaaS deals is 1 to 2 years, so we’re in that midpoint of 1 to 2 years. What that means is, as you see our SaaS AR accelerate and grow every quarter, that means that our renewal base is growing every single quarter as well. What happens is, and what you’ll see is some of the acceleration in the second half of fiscal year 2026, is that as our renewal population grows, it’s a natural opportunity for that cross-sell opportunity that you see and that’s coming through in some of our prepared remarks. We expect that trend to continue with our typical seasonality.

As we build out and think about renewals in the second half of fiscal year 2027, the opportunity will even be that much bigger on incremental cross-sell as well.

Eric Heath, Analyst, KeyBanc9: Okay, great. Thanks for that answer. Thank you.

Eric Heath, Analyst, KeyBanc0: Marco, can you next question?

Eric Heath, Analyst, KeyBanc2: Absolutely. Our next question comes from the line of Howard Ma with Guggenheim Securities. Howard, please go ahead.

Howard Ma, Analyst, Guggenheim Securities: Hey, thanks. I’ll keep it short. Gary, welcome back to the seat. My question is, are there any trends to call out in terms of new and renewal procurement decisions? What I’m really getting at is how comfortable are you in the initial subscription revenue and margin guide? Did you appropriately bake in? I kinda think there’s three things. There’s higher memory prices, there’s cloud modernizations that are happening broadly, there’s the potential impact of Commvault Cloud Unity on shorter contract duration. Did you appropriately bake in potential contract duration compression? Thank you.

Gary Merrill, Chief Financial Officer, Commvault: Howard, good to talk to you again. I’m glad to be back working with you. Couple different pieces there. If you look at the renewal pool, I would say on the software side in FY 2027 relative to FY 2026, it’s roughly the same or slightly bigger, but not significant. We have factored in our expectations on renewal term, like term length. What we saw in from fiscal Q3 to 4 is roughly no change to term length, but we’ve modeled that out now into FY 2027. If I think about the way we’ve built the guidance around subscription ARR, we expect the vast majority of subscription ARR driven from our SaaS business, okay. Similar to the trend that you saw for FY 2026. Therefore, we’ll continue to see acceleration in the SaaS business.

Our software business and our hybrid environment is a roughly plus or minus similar renewal pool. Then the difference will be what we expect to take from the new local acquisition on-premise.

Eric Heath, Analyst, KeyBanc0: Okay. Thank you, Gary.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of.

Eric Heath, Analyst, KeyBanc0: Mark-

Our next question comes from the line of Rudy Kessinger with D.A. Davidson. Rudy, please go ahead.

Eric Heath, Analyst, KeyBanc4: Great. Thanks for taking my question. Gary, certainly looking forward to working closer with you again going forward. Gary, you said in response to a question on memory earlier, you know, one of the three reasons you’re able to navigate this is the ability to maybe cover some of those workloads from the cloud. I just wanna clarify that with respect to how much of a driver of your SaaS net new ARR in fiscal Q4 was from customers, you know, protecting on-premise workloads via your SaaS offering, as opposed to, you know, purchasing new hardware. Is that a material driver, and do you expect that to be a material driver of SaaS net new ARR going forward this year, just given the memory price increases?

Gary Merrill, Chief Financial Officer, Commvault: Hey, Rudy, nice to talk to you again as well. Not significant in Q4. What it does, it gives us the ability to make sure that our project with the customer to help meet the resilience need stays on track. To give them that option if they need to go that way in the future, that they’ve scoped out the technical considerations. Not a significant to predict Q4 acceleration. That is not factored into my guide for FY 2027 either. My guidance related to FY 2027, exceeding $500 million of SaaS ARR, would exclude any significant impact from that.

Eric Heath, Analyst, KeyBanc4: Okay, super helpful. That’s it for me. Thanks again.

Eric Heath, Analyst, KeyBanc5: Thank you.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Joseph Gallo with Jefferies. Joseph, please go ahead.

Joseph Gallo, Analyst, Jefferies: Hey, guys. Thanks for the question. Your subscription NRR was really impressive at 114%. Given the broadening portfolio, how should we think about how that trends in FY 2027 versus your sub-ARR guide of 18.5%?

Gary Merrill, Chief Financial Officer, Commvault: It’s Gary. Hey, Joseph. Nice to meet you, and thanks for asking the question. One of the recast items that I made thinking about going into FY 2027 is focusing on that subscription NRR as a key metric because as you’re right, it aligns to both our revenue on subscription and the ARR. We’re not modeling significant upside in that number in the guidance. The guidance generally reflects that steady state. That keeps our SaaS NRR very healthy and gives us opportunity to improve also on the software piece as well.

Joseph Gallo, Analyst, Jefferies: Awesome. Thanks. Just as a quick follow-up, I mean, it was great to hear the potential competitive differentiation with higher memory prices versus other vendors. I’m just curious, broadly, have you seen any changes in the pricing environment competitively?

Gary Merrill, Chief Financial Officer, Commvault: No significant. If I look at discounting trends that we had during the quarter, they were consistent with the last couple quarters. It is a competitive market, obviously, as you guys do your research, but we’re not seeing any incremental pricing pressure. It’s more, I think as Sanjay outlined, and you even emphasized, it’s navigating those cost challenges relative to the resilience budget and making sure that resilience budget is maintained as a priority versus traded off as just storage costs.

Joseph Gallo, Analyst, Jefferies: Awesome. Thank you.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Shrenik Kothari with Baird. Shrenik, please go ahead.

Eric Heath, Analyst, KeyBanc6: Thanks a lot. Again, welcome back, Gary. Sanjay, just in relation to overall outlook and guide, I know in prior calls you’ve talked about AI as a big growth driver, but it was mostly as proofs of concept within your customers. It seems now you’re pushing harder. AI is driving more data, more risk. You mentioned the market is getting bigger by the minute. Just which of the use cases that you are most excited about and you’re seeing real enterprise budget pull today compared to what you talked earlier? If you can sort of elaborate more across protecting AI data sets versus model flows as the recovery of agent-run workloads, also governing data access and cloud-native recovery. Just any thoughts there, and I had a quick follow-up.

Eric Heath, Analyst, KeyBanc5: Sure, sure. Shrenik, you know where I’d say in the enterprise-grade applications, we’re in the early days. There’s a lot of trials, there’s a lot of models being used. What we’re doing is getting back to, like I said in an earlier response, is making sure that we can broadly protect the componentry that customers are using or will use to build these apps. The databases, the, you know, the vector databases where the data is stored, exposing that data so they can use it in pipelines, so the newer products we have. Giving them agentic capabilities to quickly get resilience built day zero into the apps as opposed to an afterthought.

What we believe is critical in this new sort of new types of apps, AI-enabled apps that are being built, is that protection and resilience needs to be active, not passive. It needs to be on the front end of as you build the app, as opposed to in the back end of when you’ve got the app. You know, you mentioned many things. You know, it’s like, is it risk? Is it data? Is it recovery policy? You know, cloud native? All of it. All of it. We’re helping them through the process. Again, our focus is data and recovering the data regardless of what the, you know, what may have touched it. Agentic, non-agentic, human, non-human, you know, all of that.

It’s early days, it’s a journey, but our goal is to be able to give customers, through Commvault Cloud, a single-click recovery of the entire AI stack. That’s where we’re driving to.

Eric Heath, Analyst, KeyBanc6: Great. Very helpful. Thanks a lot, Sanjay. Just very, very quickly, again, Gary, in relation to guide, I know you did mention there’s field comps are geared for the next year towards both new logos as well as cross-sell platform. Just it sounds great, right? Especially given the stronger identity and multi-product momentum. Just how different is this in practice from fiscal 2026 in terms of how we are sort of fine-tuned our incentives, any success metrics around AI, identity? Just anything that you can provide there in granularity.

Gary Merrill, Chief Financial Officer, Commvault: Yes. I can summarize this for you. The comp plan design for our field teams for FY 2027 is roughly consistent with 2026. What we do is tweak the cross-sell incentives on the products that we believe have the greatest opportunity for growth and that obviously our customers need to stay resilient. It’s a tweak in the where we point them as it relates to the specific product, but new logo acquisition has always been a fundamental pillar of our comp plan.

Eric Heath, Analyst, KeyBanc6: All right. Well, thanks a lot.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Junaid Siddiqui with Truist. Junaid, please go ahead.

Junaid Siddiqui, Analyst, Truist: Great. Thank you, and morning. Sanjay, as frontier AI models become increasingly embedded across cybersecurity workflows and as these model providers themselves potentially push further into security, how do you see Commvault’s role evolving to remain core to cyber resilience? How are you partnering with these platforms to protect customers in a more agentic world?

Eric Heath, Analyst, KeyBanc5: Hi, Junaid. you know, it’s these models used right will firstly make for better software, okay. More secure software. Our focus has always been a combination, making sure that the platform we provide, the Commvault capabilities we provide are equal parts data security, identity resilience, and recovery. I’d probably take that back. I’d say more recovery. we specialize on the recovery capabilities, but it’s with the same policy engine that gives you the provenance of what happened to the data to allow customers to truly recover.

Whether the agent caused something to happen or a cyber attack caused something to happen or human error caused something to happen or a corruption caused something to happen, our focus always is data out, making sure we can get the data recovered for the business. The models will make for more secure software, I believe, but what we need to do is stay focused on, and what we’re focusing on is just getting customers back from anything that may have happened to their systems, at, you know, especially when you’re looking at the pace at which AI changes things. I’m kinda giving you a 10,000 foot response on it, but we’re obviously looking at it’s a multi-pronged capability, whether it’s agentic or cyber or or just system provenance. You know, the

We’re looking at all of that and making sure that our, you know, our capabilities can bring all of it back with single policy.

Junaid Siddiqui, Analyst, Truist: Great.

Eric Heath, Analyst, KeyBanc0: Mark, we’ll take the next question, please.

Eric Heath, Analyst, KeyBanc2: Our next question comes from the line of Joe Vandrick with Deutsche Bank. Joe, please go ahead.

Joe Vandrick, Analyst, Deutsche Bank: Thanks for taking my question. Sanjay, you called out multi-product adoption as a driver of growth and also touched on the momentum in your identity protection products. Can you talk about the typical deal size for identity and maybe the ACV uplift when a customer adds on that identity protection? Also, is there a way to think about what percentage of the base has adopted identity protection today? Should that adoption rate eventually get to 100%?

Gary Merrill, Chief Financial Officer, Commvault: It’s Gary. I’ll jump in and answer this for you. We don’t disclose the actual ASP of our identity solutions. However, what I can provide to help is that it’s a good land or a good expand motion to drive the stickiness in the platform. How we think about it internally is that it’s less about the individual ASP of the offering, it’s more how we’re driving the adoption of the platform. When you get multi-product adoption, as you would expect in any business, our ARPA goes up significantly. We’ll start to give color on that in the out quarters as we get going and get more penetration. To the positive side on opportunity, we’ve had great success on our identity year-over-year.

The business grew about 100% year over year, and it’s still a very small proportion of our install base that have adopted it. We still have a long runway of opportunity to drive that as we continue to enhance the platform with even more identity solutions. It’s just not about the traditional Active Directory. When we get into other offerings like Okta and other.

Eric Heath, Analyst, KeyBanc5: Enter ID.

Gary Merrill, Chief Financial Officer, Commvault: Entra ID, it’s the whole platform approach across multi-identity solutions, which will drive multi-product adoption and then drive our ARPA, which we’ll continue to talk about as we build those metrics out.

Eric Heath, Analyst, KeyBanc5: Right. Joe, just to close, I mean, just to give you a typical scenario, use case scenario, outcome-based scenario that a customer would look at. They would start with identity. They would look at Cleanroom to be able to test that identity, and they would look at AGP, our Air Gap Protect capabilities, to be able to restore data from that secure location, whether it’s for test purposes or production purposes. Without identity resilience, you are, it’s an incomplete solution. That’s how we think about it. In and of itself, it’s a starting point. It’s a good land spot. It’s a good expand spot if a customer already using our technology. It really shines when you look at it, at the life cycle of how a customer would use it.

Eric Heath, Analyst, KeyBanc0: Mark, we’ll take our last question, please.

Eric Heath, Analyst, KeyBanc2: Our last question comes from the line of Thomas Blakey with Cantor Fitzgerald. Tom, please go ahead.

Eric Heath, Analyst, KeyBanc7: Thanks for squeezing me in here, Michael. Hello, Sanjay and Gary. Great to be working with you again. I guess my first question is on this net new ARR and constant currency metric that we, you know, heard from the company in the past. It seems like with, you know, AI increasing data, very successful push here in terms of, you know, organic growth from a new product perspective as well as M&A. It seems like if I’m looking at the moving pieces here, the new target of $1.205 billion in subscription ARR, just maybe kind of talk about what we’re kind of expecting here and embedding in the guide for net new ARR on a constant currency basis into fiscal 2027. It’s my first question.

Gary Merrill, Chief Financial Officer, Commvault: Hey, Tom. It’s Gary. I’ll jump in. How we’ll be guiding net new ARR going forward, it’s really tied to subscription ARR, the overall subscription ARR. That will be an annual guide. We set up the annual guide for FY 2027 at the midpoint. That’s 18 and 18.5%. Okay? If you quantify that means that the amount of subscription net new ARR for the full fiscal year 2027 will be roughly $190 million. Okay? That’s kind of the key benchmark. Now, what I won’t be doing is giving a discrete guide on any individual quarter. Okay?

As you’ve seen in our business in the past, there’s gonna be puts and takes from quarter to quarter, but we’ll continue to provide, and I’ll continue to provide the updated view of the annual number, how we’re trending against that annual number, and also NT relative mix between the software and SaaS pieces of the business. For FY 2027, we continue to expect majority of that $190 million of net new ARR for the full year to continue to be led by acceleration in our SaaS platform, which should exceed about $500 million by the end of FY 2027.

Eric Heath, Analyst, KeyBanc7: Well, super helpful and good to see the uptick there on the net new, you know, ARR basis that we can just maybe imply for fiscal 2027. Just maybe a look back at as it relates to look forward. Could you maybe expand on the market share gains that you experienced at the expense of some of the legacy players in fiscal 2026 and what you’re embedding in the fiscal 2027 guide? That’d be helpful just given the dynamics there. Thank you very much. Thanks for taking the questions.

Gary Merrill, Chief Financial Officer, Commvault: Overall, FY 2026 was a strong, net new customer, right? There was some fluctuation quarter to quarter. Q3 was an extremely strong piece of the business on net new. Q4 was more tied to our existing install expansion business. Overall, when you look out at the full fiscal year, we saw strong growth. It’s, it’s beyond, I would say now, the legacy players that only have on-premise because our value prop is the hybrid. It’s the hybrid and managing those workloads on-premise or across multiple clouds. What you see in our subscription ARR, whether it shows up in software or in SaaS, it’s our hybrid approach that’s giving us the competitive advantage. We may swap out a legacy install on-premise, and that new deal will end up likely being hybrid across both on-premise and cloud.

Eric Heath, Analyst, KeyBanc5: Mm-hmm.

Gary Merrill, Chief Financial Officer, Commvault: That’s why the combined subscription ARR becomes the north star metric because it will show the penetration and success of that hybrid new logo acquisition.

Eric Heath, Analyst, KeyBanc5: That’s key. The hybrid is key. We believe that as AI gets rolled out broadly in the enterprise, it will continue to be hybrid.

Eric Heath, Analyst, KeyBanc0: Mark, we’re.

Eric Heath, Analyst, KeyBanc2: There’s no further questions. Okay. There’s no further questions at this time. That concludes today’s conference call. You may now disconnect.