Commvault Systems, Inc.

Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Commvault Second Quarter Fiscal Year 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question again, press the star 1. I would now like to turn the conference over to Michael Melnick, Head of Investor Relations. You may begin.

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. During this call, 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. Now I'll turn it over to our CEO, Sanjay Merchandani, for his opening remarks. Sanjay?

Good morning, and thank you for joining today's call. Commvault had another strong quarter and an excellent start to the first half of the fiscal year. Highlights include, in constant currency, we added a record 47 million net new ARR. Subscription ARR rose 30% to 894 million. Total revenue grew 18% to $276 million. Additionally, we hit a major milestone earlier than expected. Total ARR grew 22%, and with that, we achieved a billion dollars in total ARR two quarters earlier than our original March 2026 target. In Q2, SaaS ARR grew 56%, hitting $330 million. This was also two quarters earlier than projected. And for the fiscal first half, we achieved 42 on a rule of 40 basis. We couldn't have done it without the support of our customers and partners and the unwavering commitment to innovation and excellence from the Commvault team. Looking ahead, there are three key business drivers that continue to fuel our growth. One, strong demand for our Commvault cloud cyber resilience platform from our hybrid cloud customers. Two, As I mentioned in prior quarters, the continued move to the cloud, which our platform is tailor-made to support. And three, customers rely on our innovation engine to meet their complex and evolving readiness and resilience requirements. I'll discuss each in more detail. First, hybrid cloud customers are embracing our cyber resilience platform. New attack vectors are constantly emerging. And with AI, data is more distributed and is being used in new ways, which introduces more threat vectors for organizations to grapple with. The need for best-in-class detection, protection, and recovery is paramount. Traditional data protection approaches don't cut it. Customers need a platform that makes them ready to withstand the worst to keep their business continuous. We do this better than anyone else. This quarter, we saw strong momentum across our identity and data security-focused offerings, which grew double digits sequentially and represented nearly 40% of net new ARR.