Shares of Commvault Systems (NASDAQ: CVLT) collapsed more than 30% on Tuesday, hitting two-year lows as investors looked past a third-quarter earnings beat to focus on a sharp deceleration in guidance and a shortfall in net new annual recurring revenue (ARR).
As of 1:15 PM ET, the stock was trading at $89.92, down $39.44 from Monday’s close of $129.36. The sell-off wiped out nearly $1.5 billion in market capitalization, leaving the company valued at approximately $3.96 billion.
Latest Quarterly Results
Despite the market reaction, Commvault reported record total revenue that exceeded analyst estimates for the third fiscal quarter of 2026. Growth was primarily driven by the company’s shift toward cloud-native and AI-enabled data security.
- Total Revenue: $314 million, an increase of 19% year-over-year.
- Subscription Revenue: $206 million, up 30% compared to the prior year.
- GAAP Operating Income: $20 million, an increase of 43%.
- Total ARR: $1.085 billion, reflecting 22% growth.
Financial Trends
Business & Operations Update
The quarter included the first full contribution from the acquisition of Clumio, which added incremental ARR to the platform. The company also officially launched the Commvault Cloud Unity Platform, integrating AI-driven “Cleanroom Recovery” and “Cloud Rewind” features designed to combat ransomware and accelerate cyber-recovery.
Equity Analyst Commentary
Prior to the results, the median price target for CVLT stood at $180. Following the earnings release and guidance update, analysts and industry experts downgraded the stock to a Rank #4, citing unfavorable estimate revisions.
Guidance & Outlook
Management projected fourth-quarter revenue between $305 million and $308 million, implying a sequential deceleration in growth rate. For the full fiscal year 2026, Commvault raised its revenue guidance to a range of $1.177 billion to $1.180 billion. Investors will be monitoring the company’s ability to maintain its Rule of 40 performance amidst slowing growth.
Performance Summary
- Stock Move: -30% to $89.92.
- Revenue Growth: +19% YoY to $314 million in Q3.
- Segment Signal: Subscription revenue grew 30%, outpaced by concerns over future deceleration.
- Guidance: Q4 revenue forecast indicates slower growth; full-year guide raised.
