Thank you for joining us. I am Kath, and I will be your conference operator today. I would like to welcome everyone to the Commvault Q1 FY 2025 Earnings Conference Call. I will now turn the call over to Mike Melnyk, Head of Investor Relations. Please proceed.

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 Mirchandani for his opening remarks. Sanjay?

Thanks Mike. Good morning and thank you for joining today's call. Q1 was an outstanding quarter and start to our fiscal year. We saw great momentum across all our primary KPIs this quarter. Total revenue increased 13% to $225 million. Total ARR rose 17% to $803 million. Subscription ARR accelerated 27% to $636 million. SaaS ARR jumped 66% to $188 million, and we did this profitably while investing in growth initiatives and hitting record Q1 free cash flow margins. Our Commvault Cloud platform continues to accelerate our growth as more companies turn to us for industry-leading cyber resilience. We're rapidly becoming an integral part of the security conversation. In Q1, we had more conversations with CISOs and CIOs than ever before, which contributed to our rapid results and set the stage for continued momentum through the fiscal year. The need for resilience is paramount. Whether that's recovering from a cyberattack, a natural disaster, human error, or, as we've recently seen, a massive global outage from a faulty patch. We help our customers navigate these challenges in three critical areas, risk, readiness, and recovery. Let's discuss each one. First, we help businesses reduce their risk. According to our recent Cyber Resilience readiness report, 83% of organizations have experienced a material security breach, with over 50% occurring in the past year alone. Capabilities like Commvault ThreatWise reduce risk by providing advanced threat detection. In Q1, sales of our ThreatWise offerings doubled year-over-year. Additionally, while AI enhances cyber resilience, it can also create a bigger attack surface for organizations. Our AI-enabled active insights technology is helping customers conduct real-time threat analysis to assess their cyber resilience. Second, in addition to managing their risk, businesses need to be ready. That includes being ready for the type of global outage we saw a week ago, which includes having an immutable air gap copy of your data. We provide that to over 3000 of our customers every day with our Air Gap Protect offering. That said, research shows that bad actors are going to get in. So how do businesses know that they can be ready when that happens? It comes down to regularly testing cyber recovery plans. We revolutionize how that's done. Our Cleanroom Recovery offering enables businesses to easily, frequently, and affordably test their cyber recovery plans in advance, in good times, across workloads, at scale on demand. Nobody else does this. While this offering is new to the market, global pharmaceutical, healthcare, and transportation organizations have already invested in our Cleanroom technology and are taking advantage of it. At the RSA conference, Commvault was named the winner for Trailblazing Cyber Resilience by Cyber Defense Magazine. Third, when reached, businesses need to recover their data and rebuild their cloud applications fast. Traditionally, this has taken weeks or months. Not anymore. The Appranix technology introduced at the start of the quarter is allowing customers to reduce that time to days or hours. We'll have much more to say about this groundbreaking capability in the coming months as we integrate and enhance this offering within our Commvault Cloud Platform. Our ability to help customers reduce their risk, enhance their readiness, and quickly recover is critical to enabling their resilience. However, customers also turn to us to help securely accelerate the hybrid cloud modernization journeys. I'm proud that as of today, we've enabled customers to move approximately five exabytes of data into the public cloud. That's nearly a tenfold increase over the past five years, and we do this while enabling them to do it efficiently while minimizing the total cost of ownership. For example, we recently helped Lendlease, a global real estate lender, migrate its data center footprint onto the cloud while reducing complexity and gaining significant operational efficiencies. As a result, they achieved a 50% lower total cost of ownership for data management using Commvault cloud. Additionally, Enot Group, a leading global energy provider, harnessed Commvault cloud to modernize its on-premise and cloud infrastructure to drive improved operational efficiencies, reduce overhead, and enhance business continuity across its network. It now takes them 67% less time to restore their data while achieving an 88% cost savings on system recovery and a 40% reduction in operating expenses. And being a trusted, proven partner doesn't stop there. During the quarter, we also extended our cyber resiliency leadership for government organizations. Among our top competitors, we are the only company to achieve FedRAMP High authorization. With this, Commvault Cloud for government can now securely handle controlled, unclassified information in cloud computing environments for government agencies and contractors. Additionally, Commvault Cloud is now on the AWS marketplace for the US Federal Government. Finally, during the quarter, we continued to strengthen our executive bench to drive our next wave of growth and evolution. A few weeks ago, we announced that Gary Merrill will become the company's first Chief Commercial Officer, leading our sales and partner teams. Throughout his tenure at Commvault and as our CFO, Gary has worked closely with our sales and partner teams globally. In his new role, we believe he's ideally suited to lead the charge for Commvault. With this change, we're excited to announce that Jen DiRico will join us as CFO on August 12. Jen spent close to a decade at Toast, where she was instrumental in its successful IPO. As a member of the Toast senior leadership team, she contributed to the company's significant success and expansion, including growing its ARR to over $1 billion. We believe Jen's extensive financial and operational experience will enable us to accelerate growth here at Commvault as well.

With that, I will now turn the call over to Danielle to discuss our results. Danielle? Thank you, Sanjay, and good morning everyone. As Sanjay mentioned, we had a record start to the fiscal year, delivering our third consecutive quarter of double-digit total revenue growth with accelerating momentum across all our key metrics. I'll recap our Q1 results before providing our Q2 outlook and increased guidance for the full fiscal year '25. As a reminder, all growth rates are on a year-over-year basis unless otherwise noted. For fiscal Q1, total revenue growth accelerated 13% to $225 million, driven by a 28% increase in subscription revenue, which now exceeds 55% of total revenue. Subscription revenue growth was fueled by increased contributions from our SaaS portfolio and continued double-digit growth in term software licenses, well ahead of the market growth rate. Our software revenue growth reflected a healthy balance between renewals and another strong quarter of land and expand business. Once again, we saw revenue from term software transactions over $100,000 increase by 13% as we closed an accelerated volume of larger deals. From a product perspective, our Commvault Cloud platform is resonating in the market as we have started to monetize our cyber resilience offerings. From a geographic perspective, we were also pleased as both the Americas and International regions had impressive growth with each achieving double-digit term software and total revenue growth. Q1 perpetual license revenue was $14 million. As perpetual licenses are sold in limited verticals and geographies, we believe we are approaching a steady state run rate of perpetual license sales; Q1 customer support revenue, which includes support for both our term-based and perpetual software licenses, was $76 million, down 1% sequentially and year-over-year. In Q1, we reached the key inflection point where customer support revenue derived from term software and related arrangements crossed over 50% of total customer support revenue compared to 44% in Q1 of the prior year. Now I'll discuss ARR. Q1 total ARR growth accelerated 17% to $803 million. Subscription ARR, including term-based licenses and SaaS contracts, grew 27% year-over-year to $636 million, or 79% of total ARR. This includes $188 million of SaaS ARR, which jumped 66% from a year ago. SaaS continues to be the primary driver of our new ARR growth, contributing over 60% of our total ARR growth in the quarter. SaaS now represents 23% of total ARR compared to just 17% a year ago. From a customer perspective, we added approximately 600 subscription customers during the quarter and ended the quarter with 9900 subscription customers, representing over 65% of our installed base. Existing customer expansion was strong with Q1 SaaS net dollar retention of 127% being benefited by both upsell and cross-sell activities. We saw accelerated growth in SaaS ARR from hybrid cloud workloads and our newer workloads such as Active Directory and Cleanroom. Now I'll discuss expenses and profitability. Fiscal Q1 gross margins was 83%, roughly flat year-over-year, benefiting from continued SaaS gross margin improvement and the growth in term software licenses. Fiscal Q1 operating expenses increased 15% to $137 million, including costs associated with our appearance at the RSA conference, a live in-person sales kickoff event, and higher commissions and bonuses on record revenue. We ended the quarter with approximately 3000 employees, an increase of 4% sequentially, including strategic resource investments and onboarding the employees brought over through the Appranix acquisition. Non-GAAP EBIT for Q1 was $48 million and non-GAAP EBIT margins were 21.5%, demonstrating our commitment to a responsible growth philosophy. Moving to some key balance sheet and cash flow metrics, we ended the quarter with no debt and $288 million in cash. Our Q1 free cash flow grew 16% year-over-year to $44 million, reflecting continued growth in SaaS deferred revenue and the strength of our software subscription business, which typically includes upfront payment on multi-year contracts. In Q1, we repurchased $51 million of stock, representing 117% of free cash flow. We now have $205 million remaining on our existing share repurchase authorization. Now I'll discuss our outlook for fiscal Q2 and our improved guidance for fiscal year '25. For fiscal Q2, we expect subscription revenue, which includes both the software portion of term based licenses and SaaS, to be $120 to $124 million. This represents 25% year-over-year growth at the midpoint. As a result, we expect total revenue to be $218 to $222 million, with a growth of 9% at the midpoint. At these revenue levels, we expect Q2 consolidated gross margin to be in the range of 81% to 82%. We expect Q2 non-GAAP EBIT margin to be in the range of 19% to 20%. Our projected diluted share count for fiscal Q2 is approximately 45 million shares. As you saw in this morning's press release, we have raised our outlook for the full fiscal year '25. We now expect fiscal year '25 total ARR growth of 15% year-over-year. We expect subscription ARR to increase in the range of 23% to 25% year-over-year. From a full year fiscal '25 revenue perspective, we now expect subscription revenue to be in the range of $522 million to $527 million, growing 22% year-over-year at the midpoint, with strong contributions from both term software licenses and SaaS. We now expect total revenue growth to accelerate and be in the range of $915 million to $925 million, an increase of approximately 9.5% at the midpoint. Moving to our updated full year fiscal '25 margin, EBIT and cash flow outlook, we continue to expect gross margins to be in the range of 81.5% to 82.5%, inclusive of the accelerating contribution of our SaaS business. We also continue to expect non-GAAP EBIT margins to be in the range of 20% to 21%, inclusive of certain focused investments to continue our revenue momentum. From a free cash flow perspective, we continue to expect full year free cash flow of at least $200 million. And lastly, we expect to continue with our existing practice of repurchasing at least 75% of our annual free cash flow. As a reminder, for fiscal year '25, we lowered our non-GAAP tax rate from 27% down to 24%. We believe that a 24% rate more closely aligns with our effective tax rate expectations over the next few years. Given our initial momentum to start fiscal year '25, our updated fiscal year '25 outlook, the current cyber market tailwinds, and our execution momentum in the field, we remain confident that we can deliver on our fiscal '26 ARR aspirations of total ARR of $1 billion, with subscription ARR representing 90% of total ARR, including an accelerating SaaS contribution ranging from $310 million to $330 million. For additional details and trends on all of our key metrics, please take time to review our earnings presentation contained in the investor relations section of our website. Operator, you can now open the line for questions.

Thank you. We will now begin the question-and-answer session. Your first question comes from the line of Aaron Rakers from Wells Fargo. Your line is open.

Yes, thanks for taking the question. Congrats on the solid results here in the quarter. Maybe I'll just start by asking about the current macro environment, maybe the deal activity flow pipeline discussion and then kind of tied to that, Sanjay, I'd be interested in what you're hearing from customers following the CrowdStrike outage. Obviously, the cyber resiliency strategy for Commvault is resonating, I'm curious about what your customer engagements have been like? I know it may be early, but since that outage about a week ago.

Good. Aaron, thanks for the question. Good morning. It's been a good quarter because fundamentally, we're solving a hard problem for our customers with resilience in general, but cyber resilience in particular. And what we're seeing is the macroeconomic situation is showing a straight line from the previous quarters, and our pipeline looks good. We're having a lot of conversations with CISOs and CIOs at the same time around resilience. And what the CrowdStrike incident really brought to the fore wasn't so much of a direct line to us and what we do outside of our secure cloud capabilities. Air Gap Protect would have been invaluable in this case, as customers would have had an offsite secure copy. It's bringing up the conversation repeatedly around resilience. And this was not a malicious situation; it was a trusted environment that went wrong. You need to be resilient to recover from that, just as you would with a cyber incident. Had it been a cyber situation, we would still be scrambling to figure out what happened, what our environment looks like, and what we need to do to fix it. So, the conversation around resilience is categorically resonating and making a difference.

Yeah, very good. And then just as a quick follow-up, you mentioned the 127% net dollar retention number and mentioned strong upsell and cross-sell opportunities. I'm curious about any added commentary or quantification you could give us in terms of the cross-sell opportunity perspective as that business continues to grow rapidly?

Let me give you a little bit of color and then Danielle will fill in some numbers for you. What we're seeing is our new workloads and hybrid workloads are growing quite substantially. Outside of the Office 365 type workloads, we're seeing secure storage, Air Gap Protect, Active Directory, and our Kubernetes container cloud-based workloads growing handsomely. That bodes well for us because that shows mission-critical cloud-native applications being backed up and secured in the cloud. We've got over 3,000 customers using Air Gap Protect, which is substantial. We talked about ThreatWise, our threat deception capability, doubling year-on-year. Active Directory got off to a great start. We see that a third of our customers tend to have more than one product out of the door. So, there's good traction. I'll let Danielle add some more color there if you want.

Yeah. Thanks, Aaron. Thanks for the question. Good morning. So when we launched our Commvault Cloud platform, our objective was really to create one unified platform that allowed our customers to easily navigate between their software and their SaaS offerings. This allowed us a natural opportunity to monetize that navigation. We've really seen traction in that. In particular, about a year ago, we saw about 25% of our cross-sell opportunities coming from our expand revenue. That number is closer to a third today. We are really seeing the way that customers are buying change, as Sanjay spoke about in his opening remarks.

Yep. Very good. Thank you, guys.

Your next question comes from the line of Howard Ma from Guggenheim Securities. Your line is open.

Great. Thank you. Sanjay, hats off to you and the team for the strong performance. It looks like a clean print all around. I want to ask you about investments in two areas that may be underpenetrated for Commvault, and those are the government vertical and the Asia Pacific region. So Commvault cloud recently achieved a FedRAMP High authorization, as you just mentioned in your prepared remarks. You also expanded your partnership with Carahsoft, targeting the US intelligence community. And in Asia Pac, you recently hired a field CTO focused on security in that region. My question to you is, how impactful are those investments, and should we expect them to bear fruit this year?

Hey, Howard, good to hear from you and thank you for your support. So, government, federal government, governments around the world are a definite area of focus. We went through the long journey of getting our technology FedRAMP High certified, and we're in a very rarefied space with that certification. Most of our competitors don't even come close on the level of certification that we have. In addition, we're making our technology far easier to obtain and access by being on marketplaces like the AWS Federal marketplace and Government marketplace that we just announced. Agencies are looking for security and compliance, and we have it. We're investing in specialized field resources, as you've observed with our field CTO community, that are deeply rooted in security issues and can take some of our capabilities from a compliance and standards point of view to governments globally. It's an active area of investment for us, mostly on the product side for the moment, and a little bit on the go-to-market side. As for APAC, we are doing modest growth there. Our focus has historically been on Australia, New Zealand, Singapore, Southeast Asia, and a little bit in mainland China. We're continuing to go deeper, as there's a lot of opportunity coming up, and we're investing there. So that’s where we are with it.

Got it. Well, thank you for that added color. And I'd like to ask Danielle as well. I was trying to figure out the strength in the subscription and SaaS and specifically new term license, at least the way we attempt to back into it. The question for you is whether your gross renewal rate has been ticking up and also if you're benefiting more from one-year subscription renewals this year. Thanks.

Yeah, thanks, Howard. Thanks for the question. Good morning. So the first thing I want to say is this quarter, Q1, we saw very balanced contribution from all the items on our subscription line. That's our software renewals, our software land expand opportunities, and SaaS. When I think significantly about term in particular, I mentioned in my prepared remarks that we actually saw a 13% growth rate on our large deals—those over $100,000. Much of that was actually driven by volume, so you mentioned our GRR rate. We are seeing our GRR rate strengthen. We are seeing good signs. But I want to highlight that the success of the quarter really came from that balanced contribution of all those pieces in the subscription line.

Great. Thanks so much, Danielle.

Your next question comes from the line of James Fish with Piper Sandler. Your line is open.

Hey, guys. Nice quarter there. Actually, wanting to go back to last quarter a little bit where you had another good quarter. That Dell announcement kind of went fairly unnoticed. Just any update on how that relationship has kind of gone out of the gate and sort of the ability to hit milestones from here?

Hey, Jim, it's Sanjay. How are you? So, you know, as we said when we announced it sort of around this time last quarter, we indicated that it was a long-term initiative for us to go after the installed base, particularly the Veritas and Dell data domain install bases. This is a situation where we're competing until the customer decides they want both of us. We're engaged in situations where customers want us to come in, want us to provide proof of concept, and want our help in moving them. We're in the midst of it. I never expected to achieve quick wins in a 60-90 day period. This is a ramp that involves replacing an entrenched install base and is moving exactly as we expect and want. So, nothing significant yet, but we will share more data down the road.

Yeah, makes sense. And Danielle, thanks for all the color and for jumping on the call with us. As we think about this fiscal Q2 guidance, can you explain why there is a sequential drop on subscription? Understanding that the duration on term deals is getting closer to two years, but when we look back three years ago when deals were often signed for three years, this drop feels somewhat unexpected, particularly as metallic spend is accelerating. So is this just being prudently conservative or are you seeing any macro caution?

Hi, Jim. Yeah, thanks for the question. I wouldn’t say we're being prudently conservative. I mean, we raised our guidance going into Q2, and a lot of what you see is actually the momentum that we're seeing in SaaS. There are a couple of pieces that play into that subscription line I mentioned. The subscription renewals, which we're gearing up for a slightly smaller renewal pool in Q2, are a factor. But really, it goes back into the momentum and capitalization of our SaaS in that line. Obviously, SaaS is recognized ratably, so we don't see that benefit in the following quarter, but rather over time, and you can really see that in the growth rates we're seeing in our SaaS ARR.

Makes sense. Thanks again.

Your next question comes from the line of Rudy Kessinger with D.A. Davidson. Your line is open.

Hey, guys, thanks for taking my questions. And I'd like to congratulate you. The net-new ARR figures especially look very, very impressive. I know it sounds like you're saying that strengthening the quarter was broadly based. I want to narrow in on two issues. Firstly, cyber resilience. I believe I heard you say you're starting to monetize that. Could you just expand on that? How materially did that contribute in the quarter? And is there any color you can share on the type of ASP uplift you're seeing in deals that include some of your cyber resilience products?

Yeah. Thanks, Rudy, for the question. Good morning. Maybe I’ll start by talking about the quarter, and then I'll hand it over to Sanjay to discuss the broader market. We had a material contribution from our cyber resiliency offerings this quarter, in particular, our cyber recovery and autonomous recovery bundles. That traction we saw this quarter is part of what gave us the confidence to raise our guidance for the rest of the year. Sanjay, do you want to discuss?

Yeah. So, really, the way to think about our cyber resilience is that it's not just one skews; it's an overall platform within Commvault Cloud that delivers integrated services. In other words, a customer using our software, say our cyber resilience SKU, can access services delivered through the cloud and our SaaS-based capabilities, such as Air Gap Protect or ThreatWise. It’s an integrated approach. We’re seeing uplift as customers view the platform holistically for that solution. Since we released the autonomous offering and cyber resilience SKUs, which integrate these services, we've observed a marked uplift in our pipeline and in the contributions during Q1.

Okay. Got it. And I know James just asked about Dell, and it sounds like you're confident on it.

Work in progress. It's work in progress. We are competitors. We are also collaborators. It's a relationship that we're building out, and we're excited about it. I think the potential is massive, and the work is ongoing.

The teams are working well. I guess the broader question is about the pace of legacy displacement between Dell and others. Have you seen any increase in the pace of legacy displacements over the last couple of quarters, or has it been more steady state?

No, no. We have seen a marked focus by boards, audit committees, and leadership teams inside companies stating that they need to be resilient. Are we employing the best technology and capabilities to protect ourselves? Some legacy providers fall short, and a significant portion of our pipeline is focused on refreshing outdated installations.

That's helpful. Great. Thanks.

That concludes our Q&A session. I will now turn the conference back over to Mike Melnyk for closing remarks.

Thanks for everyone for joining us today. As a reminder, we have a presentation on the investor relations website. If you have any questions, feel free to reach out to me, and we look forward to seeing you at some upcoming conferences. Thanks very much.

Ladies and gentlemen, that concludes today’s call. Thank you all for joining, you may now disconnect.