Commvault reported third quarter revenue of $314 million, up 19% year-over-year, driven by subscription revenue of $206 million which rose 30% compared with the prior-year period. Annualized recurring revenue (ARR) reached $1.085 billion, a 22% increase year-over-year (17% on a constant currency basis). GAAP operating income was $20 million, representing a 6.3% margin, while non-GAAP operating income was $61 million, or a 19.6% margin. Operating cash flow totaled $4 million, with free cash flow of $2 million, reflecting timing impacts in working capital.

Following the earnings release, shares plunged 31% in a single trading session after investors noted the stock had been trading at approximately 73 times forward EBITDA, leaving little buffer for guidance that only matched expectations. In after-hours trading, the stock recovered marginally after management emphasized continued strength in product adoption and the launch of its AI-enabled Cloud Unity Platform.

Over the past year, the consensus analyst price target has declined from $191.35 to $175.29, reflecting recalibrated growth expectations in an increasingly competitive data protection market. RBC Capital analyst Dan Bergstrom has set a $63 target based on an in-depth review of institutional ownership trends, profitability metrics and relative valuation versus peers.

For the fourth quarter of fiscal 2026, Commvault expects revenue of $305 million to $308 million and subscription revenue of $203 million to $207 million, with non-GAAP gross margin of approximately 81% and non-GAAP operating margin near 19%. Full-year guidance calls for total revenue of $1.177 billion to $1.180 billion, ARR growth of about 18%, subscription ARR growth of 24%, non-GAAP gross margins between 81% and 81.5%, non-GAAP operating margins of 19% to 20%, and free cash flow of $215 million to $220 million.