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Item 1A.Risk Factors
Commvault’s Board of Directors (the "Board") provides oversight of Commvault’s enterprise risk management strategy, which includes risks from cybersecurity threats. The Audit Committee receives quarterly briefings from the CSO on the cybersecurity program, material cybersecurity threats and incidents, and related mitigation and response activities. The Audit Committee also receives updates from the Chief Trust Officer on the Enterprise Risk Management Committee ("ERMC"). The Board is kept apprised of cybersecurity matters through quarterly reporting from the Audit Committee Chair and annual, or as needed, reporting directly from the CSO. The Board is kept apprised of cybersecurity updates through quarterly reporting from the Audit Committee Chair and annual, or as needed, reporting directly to the Board from the CSO.
decision-making, and incident preparedness and response. The current CSO holds a Bachelor of Science and Master of Business Administration from the University of Maryland, holds industry certifications including CISSP, PMP, CIPP/E, CIPP/US and CISA, is affiliated with various industry working groups focused on threat intelligence and privacy, and has over twenty years of experience in cybersecurity leading technical, operational, and strategic programs to protect critical data and infrastructure. Management ensures cybersecurity risks are communicated through the ERMC and regular, or as needed, reporting to the Audit Committee and the Board. Management ensures cybersecurity risks are communicated through the establishment of the ERMC and regular, or as needed, reporting to the Audit Committee and the Board. The ERMC is responsible for the implementation, maintenance, and execution of our enterprise risk management program. The ERMC meets quarterly, or as needed, to assess, consider, and manage material risks, including cybersecurity threats across the business. Management also uses the SIRP and related escalation procedures to evaluate and respond to cybersecurity incidents and to determine whether escalation to the Audit Committee, the Board, or external disclosure processes is appropriate. An Executive Security Council is responsible for the significant operational decisions in the event of an active cybersecurity incident. The Executive Security Council meets monthly, or as needed, with the Audit Committee Chair as an optional attendee, to provide counsel and foster productive communication between Management and the Board .
You should consider each of the following factors as well as the other information in this Annual Report in evaluating our business and our prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of the following risks actually occur, our business and financial results could be harmed. In that case, the trading price of our common stock could decline. You should also refer to the other information set forth in this Annual Report, including our financial statements and the related notes.
Risks Related to Our Business and Industry
Our industry is intensely competitive, and many of our competitors have greater resources and larger, established customer bases, which could enable them to compete more effectively than we do.
The data protection and cyber resilience market is intensely competitive, highly fragmented and characterized by rapidly evolving technology and industry standards, changing customer requirements, and frequent new product introductions.The cyber resiliency market is intensely competitive, highly fragmented and characterized by rapidly changing technology and evolving standards, changing customer requirements and frequent new product introductions. Our competitors vary in size and in the scope and breadth of the products and services they offer. Competitors vary in size and in the scope and breadth of the products and services offered. Our primary competitors include Rubrik, Cohesity, and Veeam, and we also face competition from large technology companies, cloud providers, service providers, and other current or emerging market participants that offer products or services that compete with aspects of our portfolio or that customers may view as substitutes for our offerings.
Many of our competitors have significantly greater financial, technical, sales, and marketing resources than we do, as well as larger installed customer bases and greater brand recognition. These competitors may be better positioned to respond more quickly to new or evolving technologies, customer requirements, and industry standards, or to devote greater resources to the development, promotion, sale, and support of their products. Competition in our industry is influenced by a number of factors, including product functionality, performance, and integration; breadth of platform and workload coverage; ability to invest and scale; pricing and total cost of ownership; global sales infrastructure; quality of technical support; brand recognition and reputation; and the ability to address customers’ evolving cyber resilience requirements. If we are unable to compete effectively across these factors, our competitive position could weaken, and we could experience reduced revenue, margin pressure, or loss of market share, which could adversely affect our business, results of operations, and financial condition.
In addition, it is often costly and time-consuming for customers to replace existing cyber resilience systems. Most of our prospective and newly adopted customers have previously implemented competing solutions, which may provide incumbent vendors with advantages in retaining those customers due to existing familiarity with customer environments, data architectures, and operational requirements. Some customers may be reluctant to incur the cost, complexity, or operational risk associated with switching vendors, which could limit our ability to win new customers or expand within existing customer environments.
We also face competitive risks related to the ongoing transition within the industry from traditional on‑premises solutions to cloud‑based and SaaS delivery models. While we have substantially completed our transition from a perpetual licensing model to a subscription‑based model delivered through term‑based licenses or SaaS, certain competitors have operated under cloud‑native models for longer periods. Commvault has substantially completed the transition from a perpetual licensing model to a subscription-based model delivered through either term based licenses or SaaS, whereas certain of our competitors are already fully cloud-native. Differences in deployment models, customer adoption rates, infrastructure requirements, and pricing expectations may adversely affect our ability to compete in certain segments or use cases.
Competition may further intensify as we expand into new markets, as existing competitors broaden their product offerings, and as new competitors enter the market. We also expect increased competition as a result of industry consolidation, including from OEMs, systems and network management companies, and other market participants that may leverage acquisitions, bundled offerings, or established customer relationships to compete with our solutions. Increased competition could result in pricing pressure, reduced margins, loss of market share, or reduced demand for our products, any of which could adversely affect our business, results of operations, and financial condition.
In addition, the highly competitive nature of the cyber resilience industry makes it challenging to attract and retain skilled employees. Our ability to compete successfully depends, in part, on our ability to hire and retain qualified personnel, and increased competition for talent could increase our costs or adversely affect our ability to execute our business strategy.
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We rely on indirect sales channels, including resellers, systems integrators, distributors, OEMs, and marketplaces, and the failure of these channels to effectively sell our solutions could adversely affect our business.
We rely significantly on indirect sales channels for the marketing and distribution of our products and services, including value-added resellers, system integrators, corporate resellers, distributors, OEMs, and marketplace partners.We rely significantly on our value-added resellers, systems integrators and corporate resellers, which we collectively refer to as resellers, for the marketing and distribution of our products and services. Our resellers represent our most significant distribution channel. Resellers are our most significant distribution channel. Our agreements with resellers are generally non-exclusive, are typically renewed annually, do not contain minimum sales commitments, and, in many cases, may be terminated by either party without cause. However, our agreements with resellers are generally not exclusive, are generally renewable annually, typically do not contain minimum sales requirements and in many cases may be terminated by either party without cause. In addition, many of our resellers sell data protection and cyber resilience solutions that compete with our offerings. As a result, these resellers may allocate greater resources or prioritize competing products or services, or may discontinue or reduce promotion of our solutions. If a significant number of resellers or certain resellers were to discontinue or materially reduce their sales efforts on our behalf, prioritize competing products, or fail to comply with the terms of their agreements, our business, results of operations, financial condition, and reputation could be adversely affected. In addition, if we fail to effectively manage our reseller relationships, including conflicts among resellers or performance expectations, our sales and operating results could suffer.
A portion of our future growth depends on our ability to identify, attract, and retain new resellers. Our competitors also use reseller and partner-based arrangements and may be more successful in recruiting partners or entering into exclusive or more favorable arrangements, which could limit our ability to expand or maintain our reseller network. Our competitors also use reseller arrangements and may be more successful in attracting resellers and could enter into exclusive relationships with resellers that make it difficult to expand our reseller network. Failure to maintain or expand our network of resellers could impair our ability to grow revenues.
Further, we have non-exclusive distribution agreements with certain partners that manage portions of our reseller ecosystem and facilitate broader distribution of our solutions. One such partner ("Partner A") accounted for approximately 32%, 35% and 36% of our total revenues for the years ended March 31, 2026, 2025 and 2024, respectively. Separately, a second partner ("Partner B") accounted for approximately 11% of our total revenues for the year ended March 31, 2026. Total revenues for the years ended March 31, 2025 and 2024 for Partner B were less than 10%. If any of these partners were to discontinue or materially reduce their sales of our solutions, terminate their agreements with us, or experience operational or financial difficulties, and if we were unable to effectively replace them or assume management of the affected distribution activities, our business, results of operations, and financial condition could be materially adversely affected.
Our OEM partners sell and integrate our solutions as part of their offerings and represent a material source of our revenues. These partners have no obligation to sell systems incorporating our solutions, meet minimum sales targets, or recommend our solutions on an exclusive basis, and may terminate their relationships with us at any time. We do not control the timing, shipping expectations, volume, or pricing of systems sold by OEM partners, and in some cases OEM partners may choose to develop or promote competing solutions. In addition, if one OEM partner perceives our relationship with another OEM as competitive, it may decide to reduce or cease its relationship with us. Any material decline in OEM‑related sales could adversely affect our business, revenues, results of operations, and financial condition.
We also sell our solutions through cloud-based marketplace offerings operated by third-party platform providers. Marketplace providers generally act as agents in these transactions and have no obligation to promote, recommend, or continue to offer our solutions, and may change platform policies, pricing structures, or technical requirements in ways that are unfavorable to us. These transactions include sales to both new and existing customers and may include new purchases, software renewals, expansions by existing customers, and subscriptions for both on‑premise and SaaS offerings. Our inability to effectively compete or maintain visibility within marketplace channels could adversely affect our sales and operating results.
If we are unable to price our solutions competitively, manage costs associated with delivering our offerings, or maintain the scope and duration of customer subscriptions and support agreements, our business, results of operations, and financial condition could be adversely affected. If such disruptions result in cancellations of customer orders or contribute to a general decrease in economic activity or corporate spending on IT, or impair our ability to meet our customer demands, our operating results and financial condition could be materially adversely affected.
A significant portion of our revenues is derived from subscription arrangements, including term‑based software licenses, associated term‑based support for those licenses, and SaaS arrangements. These arrangements are generally priced in a competitive market and are subject to ongoing pricing pressure from competitors, customer budget constraints, and evolving customer expectations, particularly as customers transition from traditional on‑premises deployments to cloud‑based and SaaS delivery models.
At the end of an initial or renewal term, customers may elect not to renew, renew for shorter contract durations, reduce the number of workloads, users, or other subscription units, migrate to lower‑cost configurations,
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or seek concessions related to pricing or contract terms. These outcomes may be driven by competitive offerings, customer cost‑optimization initiatives, broader economic conditions, or changes in customers’ technology strategies. Any such changes could adversely affect our revenues, margins, and long‑term growth prospects.
Our ability to compete effectively on pricing and contract terms may be further affected by our cost structure, including costs associated with delivering SaaS offerings. As we continue to support hybrid, multi‑cloud, and SaaS deployment models, we incur ongoing infrastructure, hosting, security, and operational costs that may increase over time due to changes in usage patterns, cloud service pricing, or other factors beyond our control. If we are unable to manage these costs effectively or offset them through pricing, operational efficiencies, or volume growth, our margins and profitability could be adversely affected.
Our reliance on interoperability with third‑party platforms, operating systems, cloud environments, and hardware products, as well as ongoing supply chain constraints, could adversely affect our product development, customer satisfaction, and results of operations.
Our solutions are designed to interoperate with certain third-party operating systems, cloud platforms, applications, and hardware products that are developed, controlled or distributed by others. These include widely used operating systems such as Windows, UNIX, Linux and other platforms, as well as database technologies, cloud infrastructure services, and hardware products offered by numerous manufacturers. Our ability to deliver and support our solutions depends in part on the continued interoperability of our products with these third‑party technologies.
When new or updated versions of operating systems, cloud platforms, applications, or hardware products are introduced, or when existing third‑party technologies are modified, we may be required to devote significant time, engineering effort, and financial resources for continued compatibility. We may not be able to complete these development efforts in a timely or cost‑effective manner, or at all. In addition, third parties may make changes to their products, platforms, or commercial terms that degrade the functionality of our solutions, limit our ability to support certain configurations, or require us to make unplanned investments to maintain interoperability.
Our reliance on third‑party hardware products, particularly for our on-premise license solutions, also exposes us to risks associated with global supply chain disruptions, including increased hardware costs, limited product availability and extended lead times. We provide demand forecasts to our supply chain partners, and if those forecasts prove inaccurate, we could incur or experience delays in fulfilling customer orders. Industry‑wide supply constraints, inflationary pressures, logistics disruptions, or changes in supplier priorities could result in delays in hardware availability or increased costs that are passed on to customers. These conditions may impact our ability to deliver integrated solutions, support certain customer deployments, or meet customer expectations for implementation timelines, which could adversely affect customer satisfaction, demand for our solutions, or our competitive position.
In addition, uncertainties in the availability, pricing, or performance characteristics of third‑party hardware and infrastructure components may complicate customer purchasing decisions or delay customers’ adoption or expansion of cyber resilience solutions. These risks may be heightened during periods of elevated demand, geopolitical instability, trade restrictions, or other factors beyond our control that affect the global technology supply chain. If we are unable to maintain effective interoperability with third‑party platforms and hardware products, respond adequately to supply chain disruptions, or absorb or pass through increased costs associated with these dependencies, our product development efforts, sales, results of operations, and overall business could be materially adversely affected.
Volatility in the global economy, including changes in trade policy or tariffs, could adversely affect our continued growth, results of operations, financial condition, and our ability to forecast future performance.
As a global company, we are exposed to risks arising from uncertainty in domestic and international economic and geopolitical conditions, including changes in trade policy, tariffs and international trade agreements. Actions by the U.S. government or foreign governments, including the imposition of new or increased tariffs or other trade restrictions, could disrupt global supply chains, increase costs, or negatively affect economic conditions in the United States or other markets in which we operate. The scope, timing and impact of such actions remain uncertain and could adversely affect our international operations and financial performance.
Broader macroeconomic volatility, including inflationary pressures, foreign exchange fluctuations, reduced capital spending, and tightening credit conditions, may cause customers to delay, reduce, or cancel technology investments. These conditions may lengthen sales cycles, increase pricing and negotiation pressure, and make it
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more difficult for customers, partners, and us to plan and forecast business activity. Increased volatility in foreign currency markets may also adversely affect our results of operations.
Deterioration in economic conditions in regions where we operate could also result in delayed or reduced customer orders, cancellations, or slower collections on accounts receivable. Deterioration of economic conditions in the countries in which we do business could also cause slower or impaired collections on accounts receivable. Our accounts receivables are generally unsecured, and our customers and partners are typically permitted to pay within a specified period following delivery of our solutions. Adverse economic or geopolitical conditions, whether domestic or international, including economic downturns, financial market instability or geopolitical conflicts such as those in the Middle East, and Russia-Ukraine, may impair the liquidity or financial condition of our customers or partners. As a result, customers or partners may delay payments, fail to meet payment obligations, or seek to renegotiate payment terms, which could increase bad debt expense or reduce operating cash flows.
A significant portion of our revenues is derived from subscription-based and term-based arrangements under which customers may pay over extended periods. A portion of our receivables also consists of unbilled receivables related to revenue recognized in advance of invoicing. These amounts may be subject to extended collection periods and increase our exposure to credit risk, particularly during periods of economic volatility. If customers experience financial difficulty or delay payments, we may experience increased collection risk, higher write-offs, or reduced operating cash flows.
If global economic conditions worsen or recover more slowly or unevenly than expected, we may not be able to sustain historical growth rates, our business, results of operations and financial condition could be adversely affected, and we may not meet the expectations of analysts or investors, which could cause the market price of our common stock to decline. If such conditions deteriorate or if the pace of economic recovery is slower or more uneven, our results of operations could be adversely affected, we may not be able to sustain the growth rates we have experienced recently, and we could fail to meet the expectations of stock analysts and investors, which could cause the price of our common stock to decline.
We can experience long and unpredictable sales and implementation cycles, particularly with large enterprise and government customers, which could adversely affect the size, timing and predictability of our revenues.
Our sales cycles, especially for larger enterprise and public sector customers, are often lengthy and complex and require significant commitments of time, expense and management resources. These customers typically conduct extensive evaluations, require multiple levels of approval, and may involve formal procurement processes. In many cases, we must invest significant time and resources before a purchasing decision is made, and there is no assurance that these efforts will result in a sale.
Our sales cycles are subject to risks and delays largely outside of our control, including customers’ budgetary constraints and cycles, internal approval processes, customers’ willingness or ability to replace existing solutions, and the expiration timing of customers’ current contracts. As a result, sales opportunities may be delayed, reduced in scope, or not consummated, even after we have incurred significant sales and marketing expenses.
If our sales cycles lengthen unexpectedly or if we are unsuccessful in closing anticipated transactions after incurring substantial costs, the timing of our revenues may shift, our operating expenses may increase relative to revenue and our quarterly revenues and results of operations may fluctuate. These factors could adversely affect our business, results of operations, financial condition, and the predictability of our results, and may contribute to volatility in the trading price of our common stock.
We depend on growth in the data protection and cyber resiliency market, and a slowdown or contraction in this market could have a material adverse effect on our business, results of operations, and financial condition.We depend on growth in the data protection and cyber resiliency market, and lack of growth or contraction in this market could have a material adverse effect on our sales and financial condition.
Demand for data protection and cyber resilience solutions is influenced by factors such as growth in the amount of data generated and backed up, demand for data retention and management (whether as a result of regulatory requirements or otherwise) demand for and adoption of new backup devices and networking technologies, and ability to respond to and recover from cyber incidents in a secure environment.Demand for data protection and cyber resilience solutions is linked to growth in the amount of data generated and stored, demand for data retention and management (whether as a result of regulatory requirements or otherwise) demand for and adoption of new backup devices and networking technologies, and ability to respond to and recover from cyber incidents in a secure environment. Because our solutions are concentrated within the data protection and cyber resiliency market, if the demand for backup and data protection solutions declines, our business, results of operations, and financial condition could be materially adversely affected. Because our solutions are concentrated within the data protection and cyber resiliency market, if the demand for backup and data protection solutions devices declines, our sales, profitability and financial condition would be materially adversely affected.
The data protection and cyber resiliency market is dynamic and evolving, and our future financial performance depends in part on continued adoption of these solutions by organizations across industries and geographies. The market may not continue to grow at historical rates, may grow more slowly than we anticipate, or may contract due to economic conditions, technology changes, or alternative approaches to data protection and
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cyber resilience. If this market slows or fails to materialize as expected, or if customer adoption declines, our business, results of operations, financial condition, and growth prospects could be materially adversely affected.
Our SaaS offerings require substantial and ongoing infrastructure investments, and if these investments do not yield the expected return, our business, results of operations, and financial condition could be adversely affected.Our SaaS offerings require costly and continual infrastructure investments and if these investments do not yield the expected return, our business and financial performance might be adversely impacted.
To support our SaaS offerings and cloud-based delivery model, we have made, and expect to continue to make, substantial investments and incur ongoing costs related to infrastructure, hosting, security, availability, and operations. As we expand and enhance our SaaS offerings, we continue to invest in technology and platform infrastructure to support customer demand and deliver competitive products. A portion of these costs is associated with long‑term or minimum‑commitment arrangements with third‑party cloud service providers, which may limit our ability to reduce expenses in response to changes in demand.
Demand for our SaaS offerings may be affected by factors such as customer acceptance, pricing sensitivity, competition, economic conditions, data security and privacy, technological challenges, or changes in customer spending priorities. If demand for our SaaS offerings declines, grows more slowly than expected, or shifts toward lower‑cost usage models, we may not be able to fully realize the anticipated benefits of our infrastructure investments. In addition, if the costs of operating our SaaS offerings increase due to changes in usage patterns, storage requirements, network bandwidth, or third-party cloud pricing, and we are unable to offset those increases through pricing, operational efficiencies, or scale, our business, results of operations, and financial condition, including gross margins, could be adversely affected.
Our complex solutions may contain undetected errors, defects, or vulnerabilities, and incorrect or improper implementation or use of our solutions could result in customer dissatisfaction, increased data security risk, and harm to our business, financial condition, and reputation.
Our solutions operate across diverse customer environments that include multiple hardware platforms, operating systems, IT infrastructures, and third-party applications. Despite extensive testing, errors, defects, or failures may be discovered after general availability or in connection with new product releases, particularly in customer environments that include unique or non-standard configurations difficult to replicate during testing. Material errors, defects, or vulnerabilities within our solutions could result in delayed deployments, service disruptions, increased remediation or support costs, customer dissatisfaction, loss of revenue, or reduced adoption of our solutions. Defects or vulnerabilities could also expose our solutions to exploitation by malicious actors, further increasing risks . Any failure to promptly detect or remediate these issues could materially adversely affect our business, results of operations, financial condition, and reputation.
Successful use of our solutions also depends on proper configuration, implementation, training, and ongoing management. Implementations may be technically complex, and it may not be easy to maximize the value of our products without proper implementation, training, and support. Implementations of our products may be technically complicated, and it may not be easy to maximize the value of our products without proper implementation, training, and support. Some customers or partners have experienced, or may experience in the future, difficulties implementing or operating our solutions effectively. Failure to properly implement or use our solutions could reduce their effectiveness, expose customers to increased operational or data security risk, including exploitation by malicious actors, and impair customers' ability to achieve intended cyber resilience outcomes. Such failures could result in customer dissatisfaction, reduced renewal or expansion opportunities, or reputational harm, which could adversely affect our business, results of operations, and financial condition.
Our investments in research and development may not result in significant revenues, and we may not realize a return on these investments for several years, if at all.
Developing software and technology is costly, and investments in product development often involve long and uncertain payback periods.Developing software and technology is expensive, and the investment in product development may involve a long payback cycle. We incurred research and development expenses of $162.2 million, or 14%, of our total revenues in fiscal 2026, $146.3 million, or 15%, of our total revenues in fiscal 2025 and $132.3 million, or 16%, of our total revenues in fiscal 2024, and we expect to continue to dedicate significant resources to research and development to maintain our competitive position. Our research and development expenses were $146.3 million, or 15%, of our total revenues in fiscal 2025, $132.3 million, or 16%, of our total revenues in fiscal 2024 and $141.8 million, or 18%, of our total revenues in fiscal 2023. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, research and development initiatives may not result in new products, features, or enhancements that are commercially successful or generate meaningful revenues within anticipated timeframes, or at all. If we are unable to realize an adequate return on our research and development investments, our operating margins, results of operations, and financial condition could be adversely affected.
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Our ability to sell our solutions and retain customers is dependent on the quality of our customer support and professional services, and any failure to provide high quality support or services could adversely affect our business, results of operations, and financial condition.
Our services include the implementation and design of solutions to meet our customers’ data protection requirements and the efficient deployment of our solutions. Our customers depend on us to resolve issues relating to our solutions. If we or our partners do not effectively install or deploy our solutions, or fail to help our customers quickly resolve support issues, customers may not realize the expected value of our solutions. Failure to provide high‑quality customer support or professional services could result in customer dissatisfaction, reduced renewals or expansion opportunities, or reputational harm. Any such outcomes could adversely affect our business, results of operations, and financial condition.
We implemented new restructuring plans in fiscal 2026, which we cannot guarantee will achieve their intended results.We completed a restructuring plan in fiscal 2025, which we cannot guarantee will achieve its intended results.
In fiscal 2026, we initiated restructuring plans intended to optimize our cost structure, enhance organizational agility, align resources with strategic priorities, and reorganize our business technology function. We cannot guarantee the restructuring plans will achieve their intended results. Risks associated with these restructuring plans also include additional unexpected costs, adverse effects on culture, and failure to meet operating and growth targets, any of which could adversely affect our business, results of operations, and financial condition.
A portion of our revenue is generated by sales to government entities, which are subject to unique risks that could adversely affect our business.15A portion of our revenue is generated by sales to government entities, which are subject to a number of challenges and risks.
We derive a portion of our revenue from sales to federal, national, state, local, and other government entities, and we may seek to expand such sales in the future. Demand from government customers may be affected by budgetary constraints, shifts in spending priorities, regulatory requirements, and funding authorization, which may be unpredictable and subject to delay. Selling to government entities is often highly competitive, time‑consuming, costly, and may require significant upfront investment without assurance of success. Selling to government entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that we will successfully sell our solutions. Government customers may also require contract terms that differ from our standard commercial terms, including termination and audit rights, security clearance requirements, and certification or authorization obligations, such as FedRAMP requirements. Compliance with these requirements may increase costs, limit operational flexibility, or delay or restrict our ability to compete for or deliver our solutions to certain government customers.
Government demand for our solutions may be more volatile and less predictable than commercial demand. Changes in government procurement practices, funding levels, workforce priorities, or administrative initiatives could reduce, delay, or cancel purchases of our solutions, which could adversely affect our business, results of operations, and financial condition.
We have engaged, and may continue to engage, in strategic acquisitions, equity investments, and other transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. We have engaged, and may continue to engage, in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Strategic acquisitions and investments involve a number of risks, including diversion of management’s attention, the ability to finance transactions on attractive terms, failure to retain key personnel or customers, exposure to legal or regulatory liabilities, intellectual property ownership and infringement risks, and the need to record and amortize acquired or capitalized intangible assets. In addition, certain equity or strategic investments may be accounted for under complex accounting models, require ongoing valuation judgments, or result in the recognition of impairments, write‑downs, or losses if expected benefits do not materialize, any of which could adversely affect our results of operations or financial condition. Future transactions may also result in the incurrence of indebtedness or the issuance of additional equity securities. Any additional future acquisitions may also result in the incurrence of indebtedness or the issuance of additional equity securities.
We could experience financial or operational setbacks if acquisitions or strategic investments encounter unanticipated challenges, including issues related to governmental approvals, transaction execution, integration difficulties, operational underperformance, or accounting and internal control complexity relative to prior expectations. These transactions may not result in long‑term strategic or financial benefits, and we may be unable to successfully integrate, scale, or otherwise realize the anticipated value of acquired businesses or invested entities. These risks may be heightened for minority investments or early‑stage businesses where we have limited control over management decisions or strategic direction.
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Following the completion of acquisitions or certain strategic investments, we may rely on third parties or sellers to provide transitional administrative, financial reporting, internal control, or other operational support for a period of time. There can be no assurance that such support will be provided in a timely or satisfactory manner, which could disrupt operations, increase costs, or adversely affect our financial reporting, controls, or business performance. There can be no assurance that a system failure, network disruption, cybersecurity incident or data security breach will not have a material adverse effect on our financial condition and operating results.
Changes in senior management or key personnel could cause disruption in the Company adversely affect our business, results of operations, and financial condition.Changes in senior management or key personnel could cause disruption in the Company and have a material effect on our business.
We have experienced, and could continue to experience, changes in senior management, which could be disruptive to our management and operations and could adversely affect our business, results of operations, and financial condition. Turnover at the senior management level may create instability within the Company, which could impede the Company’s day-to-day operations and hinder our ability to effectively implement our business plan and growth strategy. Turnover at the senior management level may create instability within the Company, which could impede the Company’s day-to-day operations.
We rely on our key personnel to execute our business operations and identify and pursue new growth opportunities.We rely on our key personnel to execute our existing business operations and identify and pursue new growth opportunities. The loss of key employees could result in significant disruptions to our business, and efforts to recruit, integrate, and train replacement personnel may be costly, time‑consuming, and disruptive, and may not be successful. The loss of key employees could result in significant disruptions to our business, and the integration and training of replacement personnel could be costly, time consuming, cause additional disruptions to our business and be unsuccessful. Any such events could adversely affect our business, results of operations, and prospects.
Our existing and future indebtedness, including our senior convertible notes and revolving credit facility, could adversely affect our business, results of operations, and financial condition.
We have incurred, and may incur in the future, indebtedness to support our operations and strategic objectives, including borrowings under our revolving credit facility and obligations under our $900 million aggregate principal amount of 0% Convertible Senior Notes due 2030. Although we had no borrowings outstanding under our revolving credit facility as of March 31, 2026, our indebtedness could have adverse consequences, including requiring us to use a portion of our cash flows from operations to satisfy debt repayment, redemption, or settlement obligations, thereby reducing cash available for working capital, capital expenditures, strategic investments or acquisitions, share repurchases, or other corporate purposes. If we were to borrow substantially against this facility the indebtedness could have adverse consequences, including requiring us to devote a portion of our cash flow from operations to payments of indebtedness, which would reduce the availability of cash flow to fund working capital requirements, capital expenditures and other general purposes; limiting our flexibility in planning for, or reacting to, general adverse economic conditions or changes in our business and the industry in which we operate in; placing us at a competitive disadvantage compared to our competitors that have less debt; and limiting our ability to fund potential acquisitions.
The convertible senior notes are senior unsecured obligations and include features that may require us, upon conversion, redemption, or the occurrence of certain fundamental events, to settle all or a portion of the obligation in cash, shares of our common stock, or a combination thereof, at our election. Any such cash settlement or repurchase obligations could materially impact our liquidity, particularly if they coincide with other capital needs or adverse market conditions. While we entered into capped call transactions intended to reduce potential dilution upon conversion, such arrangements do not eliminate the potential cash or equity impacts associated with the notes.
Our revolving credit facility and other debt arrangements contain financial maintenance covenants and other restrictive provisions, including leverage and interest coverage ratios, as well as customary events of default. Failure to comply with these covenants or other terms could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations or limit our access to additional liquidity. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations. In addition, higher levels of debt relative to certain competitors could limit our operational and strategic flexibility, increase our exposure to interest rate or capital market volatility, and place us at a competitive disadvantage.
For additional information regarding our debt arrangements, including the terms of our senior convertible notes and revolving credit facility, see Note 17 to the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10‑K.
Risks Related to our International Operations
Our significant operations in India expose us to operational, economic, and labor‑related risks that could adversely affect our business.
Our operations in India are an important component of our business and provide access to a large pool of skilled professionals that supports product development and international growth. However, this concentration also exposes us to certain risks that we must effectively manage. As of March 31, 2026, approximately 40% of our employees were located in India. As of March 31, 2025, approximately 39% of our employees were located in India. Wage and benefit costs vary by region, and compensation levels in India have increased, and may continue to increase, at a faster rate than in many other countries, including the United States. In addition, competition in India for skilled technical professionals is intense and continues to increase. As a result,
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we may be unable to cost‑effectively retain existing employees or attract and hire qualified new talent, which could increase operating costs, disrupt execution, or reduce margins.
India has also experienced periods of elevated inflation, adverse economic conditions, shortages of foreign exchange, civil unrest, and regional conflict. The occurrence of any of these events could disrupt our India operations, including through workforce availability, infrastructure limitations, or operational inefficiencies. The occurrence of any of these circumstances could result in disruptions to our India operations, which, if continued for an extended period of time, could have a material adverse effect on our business. If such disruptions are prolonged or severe, they could have a material adverse effect on our business, results of operations, and financial condition.
In recent years, India’s government has adopted policies that are designed to promote foreign investment, including significant tax incentives, relaxation of regulatory restrictions, liberalized import and export duties and preferential rules on foreign investment and repatriations which may not continue. In recent years, India’s government has adopted policies that are designed to promote foreign investment, including significant tax incentives, relaxation of regulatory restrictions, liberalized import and export duties and preferential rules on foreign investment and repatriations. If we are unable to effectively manage any of the foregoing risks related to our India operations, our development efforts could be impaired, our growth could be slowed and our business, results of operations, and financial condition could be adversely affected. If we are unable to effectively manage any of the foregoing risks related to our India operations, our development efforts could be impaired, our growth could be slowed and our results of operations could be negatively impacted.
We may experience fluctuations in foreign currency exchange rates that could adversely affect our results of operations and financial condition.We may experience fluctuations in foreign currency exchange rates that could adversely impact our results of operations.
We derive a substantial portion of our revenues from international markets.We derive almost half of our revenues from international markets. Our international sales are generally denominated in currencies other than the U.S. dollar, and we incur expenses and maintain assets and liabilities in various foreign currencies. As a result, we are exposed to both translation risk, arising from the conversion of foreign‑currency‑denominated results into U.S. dollars for financial reporting purposes, and transaction risk, arising from foreign‑currency‑denominated receivables, payables, cash balances, and intercompany transactions.
Our primary foreign currency exposure is to fluctuations between the U.S. dollar and the Euro and, to a lesser extent, the British pound sterling, Australian dollar, Canadian dollar, Indian rupee, Korean won, Chinese yuan, and Singapore dollar. In addition, certain of our foreign subsidiaries hold assets, and may hold assets or liabilities, denominated in currencies other than their functional currencies, which could increase balance‑sheet volatility. Unfavorable movements in foreign exchange rates could adversely affect our reported revenues, operating expenses, margins, and cash flows, and could require us to adjust pricing to remain competitive in certain markets.
We may use foreign currency hedging instruments from time to time to mitigate certain exchange‑rate exposures; however, such strategies may be limited in scope, may not be available on acceptable terms, or may not be effective in offsetting adverse currency movements. As our international operations continue to grow, or if exchange‑rate volatility increases, the effect of foreign currency fluctuations on our results of operations and financial condition could become more material.
Our international sales and operations are subject to factors that could have an adverse effect on our results of operations.
We have significant sales and services operations outside the United States and derive a substantial portion of our revenues from these operations. We generated approximately 47% and 46% of our revenues from outside the United States in fiscal 2026 and fiscal 2025, respectively. Expansion of our international operations requires a significant amount of management attention and financial resources and may require us to add qualified management in these markets.
In addition to risks faced by our domestic operations, our international operations are subject to risks related to differing legal, political, social and regulatory requirements and economic conditions in the countries in which we operate, including:
•adverse economic conditions, including those related to the ongoing conflicts in Russia-Ukraine and the Middle East;
• difficulties in staffing and managing our international operations;
• foreign taxes, tariffs, trade restrictions or currency exchange controls;
• difficulties in coordinating geographically dispersed and culturally diverse operations;
• general economic conditions, including seasonal reductions in business activity in certain regions;
• changes in foreign laws or regulatory requirements, including those relating to sanctions, export controls, privacy and data protection, trade and employment and intellectual property protections;
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• longer payment cycles and difficulties in collecting accounts receivable;
• competition from local suppliers;
• risks of non-compliance with applicable laws, including anti-corruption and trade regulations;
• costs and delays associated with developing solutions in multiple languages; and
• political unrest, war or acts of terrorism.
Our success in emerging and international markets depends on our ability to operate effectively across these varying environments. We may not succeed in developing and implementing effective policies and strategies in each location where we do business. We may not continue to succeed in developing and implementing policies and strategies that will be effective in each location where we do business. The occurrence of any of these factors could have an adverse effect on our business, results of operations, and financial condition. The occurrence of any of the foregoing factors may have a material adverse effect on our business and results of operations.
Risks Related to Technology and Security
We may be subject to IT system failures, network disruptions, cybersecurity incidents and breaches in data security, which could adversely affect our business, results of operations, and financial condition.
IT system failures, network disruptions, cybersecurity incidents and breaches of data security could disrupt our operations by causing delays or cancellation of customer orders, impeding the delivery of our solutions, negatively affecting customer support or professional services, preventing the processing of transactions and reporting of financial results, and disturbing our enterprise resource planning system. Such events could also subject us to significant costs and third-party liabilities, result in improper disclosure of data and violations of applicable privacy and other laws, require us to change our business practices, cause us to incur significant remediation costs, lead to loss of customer confidence in, or decreased use of our products and services, damage our reputation, divert the attention of management from the operation of our business, result in significant compensation or contractual penalties from us to our customers and their business partners as a result of losses to or claims by them, or expose us to litigation, regulatory investigations, and significant fines and penalties. Cybersecurity breaches or incidents and other exploited security vulnerabilities could subject us to significant costs and third-party liabilities, result in improper disclosure of data and violations of applicable privacy and other laws, require us to change our business practices, cause us to incur significant remediation costs, lead to loss of customer confidence in, or decreased use of our products and services, damage our reputation, divert the attention of management from the operation of our business, result in significant compensation or contractual penalties from us to our customers and their business partners as a result of losses to or claims by them, or expose us to litigation, regulatory investigations, and significant fines and penalties.
Bad actors regularly attempt to gain unauthorized access to our IT systems, and many such attempts are growing increasingly sophisticated and difficult to detect. These attempts, which might be related to industrial, corporate or other espionage, criminal hackers or nation-state actors, include trying to covertly introduce malware or ransomware to our environments and impersonating authorized users. These attempts, which might be related to industrial, corporate or other espionage, criminal hackers or nation-state and nation-state supported actors, include trying to covertly introduce malware or ransomware to our environments, impersonating authorized users, as well as other intrusions from nation-state actors and nation-state supported actors. In particular, cyberattacks are prevalent and severe and could lead to significant interruptions, delays, or outages in our operations, disruptions in our services, loss of data, loss of income, significant extra expense to restore data or systems, reputational loss and the diversion of funds. Cybercriminals are leveraging artificial intelligence to develop more sophisticated and targeted attacks, making detection and prevention increasingly challenging. Cybercriminals are leveraging artificial intelligence (“AI”) to develop more sophisticated and targeted attacks, making detection and prevention increasingly challenging, resulting in heightened risks of security breaches and incidents.
Third-party service providers that we may rely on to back up and process our confidential information may also be subject to similar threats. Such threats could result in the misappropriation, theft, misuse, disclosure, loss or destruction of the technology, intellectual property, or the proprietary, confidential or personal information, of us or our employees, customers, licensees, suppliers or partners, as well as damage to or disruptions in our IT systems. These threats are constantly evolving, increasing the difficulty of successfully defending against them or implementing adequate preventative measures. We seek to detect and investigate all cybersecurity breaches or incidents and to prevent their recurrence, but attempts to gain unauthorized access to our IT systems or other attacks may be successful, and in some cases, we might be unaware of an incident or its magnitude and effects.
Supply chain attacks have increased in frequency and severity, and there have been high-profile incidents of third-party service providers causing widespread disruptions to their customers' infrastructure due to errors in their SaaS offerings. Similarly, supply chain attacks have increased in frequency and severity, and there have been high-profile incidents of third-party service providers causing widespread disruptions to their customers’ infrastructure due to errors in their SaaS offerings. We cannot guarantee that third parties and infrastructure in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our Commvault Cloud platform, systems and network or the systems and networks of third parties that support us and our business. Moreover, we may have limited remedies against third-party providers in the event of a service disruption.
In addition, any failure to successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies in a timely manner could adversely affect our business, internal controls, results of operations, financial condition, and reputation.
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We may not be successful in our initiatives that utilize AI, which could adversely affect our business, results of operations, financial condition, and reputation.
There are significant risks involved in utilizing AI and no assurance can be provided that such usage will enhance our business or assist our business in being more efficient or profitable. Known risks currently include accuracy, bias, toxicity, intellectual property infringement or misappropriation, data privacy, and cybersecurity, data provenance and reliance on third-party AI models, tools or providers. Known risks currently include accuracy, bias, toxicity, intellectual property infringement or misappropriation, data privacy, and cybersecurity and data provenance. In addition, AI may have errors or inadequacies that are not easily detectable. For example, certain AI may utilize historical data in its analytics. To the extent that such historical data is not indicative of the current or future conditions, or models fail to filter biases in the underlying data or collection methods, such AI usage may lead us to make determinations on behalf of our business, recommendations to our clients, or developments to our products and services, in each case, that may have an adverse effect on our business and financial results. If AI models are incorrectly designed or the data used to train them is overbroad, incomplete, inadequate or biased in some way, our use may inadvertently reduce our efficiency or cause unintentional or unexpected outputs that are incorrect, do not match our business goals, do not comply with our policies or interfere with the performance of our products and services, business and reputation.
The legal and regulatory landscape related to AI is rapidly evolving. The use of AI may increase intellectual property, cybersecurity and data protection, operational and technological risks, and our related efforts may result in new or enhanced governmental or regulatory scrutiny, litigation, ethical concerns, or other complications that could adversely affect our business, reputation, or financial results or subject us to legal liability. In particular, technologies underlying AI and their use cases are subject to a variety of laws, including intellectual property, cybersecurity and data protection, consumer protection and equal opportunity laws. If we do not have sufficient rights to use the data on which these models rely, we may incur liability through the violation of such laws, third-party privacy or other rights or contracts to which we are a party. Changes in laws, rules, directives and regulations may adversely affect the ability of our business to develop and use AI. Although we have implemented governance processes intended to support the responsible development and use of AI, such processes may not be sufficient to identify or mitigate all risks associated with our use of AI technologies. In addition, if our AI-enabled features or tools, or those provided by third parties on which we rely, produce inaccurate, misleading, biased, harmful, or otherwise unintended outputs, or are used inappropriately by us, our customers, or other third parties, our business, results of operations, financial condition, and reputation could be adversely affected.
We market our own products as containing AI features. Some of our customers, especially those in highly regulated industries, may be reluctant or unwilling to adopt such AI features which could reduce or delay customer adoption.
Any of these factors could adversely affect our business, results of operations, financial condition, and reputation, or subject us to legal liability. Any of these factors could adversely affect our business, reputation, or financial results or subject us to legal liability.
Our success depends on our technology partners. We rely on Microsoft’s products and services, including Azure, and other third parties to support certain of our products, services, customers, and business operations. Any errors, disruptions, performance problems, cybersecurity incidents, or failures in such third parties’ operational infrastructure could adversely affect our business, results of operations, financial condition, and reputation.
We rely on the technology, infrastructure, and software applications, including software-as-a-service offerings, of certain third parties, such as Microsoft Azure, in order to host or operate certain of our products, services and operational infrastructure. We do not have control over such third parties' operations. Therefore, we depend on these third parties to protect their infrastructure and operations against damage or interruption from cybersecurity incidents, natural disasters, power or telecommunications failures, criminal acts, and similar events.
If these third parties experience disruptions, cybersecurity incidents, data breaches, or update their products in ways that are incompatible with ours, or cease offering their services on commercially reasonable terms, our products and services could be impaired, our reputation could be damaged, and our revenue and margins could decline. Any such events could expose us to legal or contractual liability, increase our expenses, and adversely affect our business, results of operations, and financial condition.
Many of these third-party providers impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures. Many of these third-party providers impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures. Any renegotiation or renewal of our agreements with these third parties, or a new agreement with another provider, may be on terms that are significantly less favorable to us than our current agreements. Microsoft and other cloud platform providers may furthermore introduce functionality that competes with our products and services, as a result of an acquisition or their own development.
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If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, or to changing customer needs, requirements, or preferences, our products may become less competitive.
Our ability to attract and retain customers depends in large part on our ability to enhance, differentiate and introduce new products and capabilities. The market in which we compete is subject to rapid technological change, evolving industry standards, and changing regulations, as well as changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. If we are unable to enhance our products and keep pace with rapid technological change, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely than our products, our business, results of operations, and financial condition could be adversely affected.
Risks Related to Financial, Accounting, Regulatory, Tax, and Other Legal Matters
We have been, and may in the future become, involved in litigation that may have a material adverse effect on our business.
From time to time, we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including intellectual property, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Furthermore, because litigation is inherently uncertain, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of operations or financial condition.
We are subject to numerous and evolving privacy and data protection laws and regulations, and our actual or perceived failure to comply with such laws and regulations could adversely affect our business.We are subject to several local, state, federal and foreign laws and regulations regarding privacy and data protection, and any actual or perceived failure by us to comply with such laws and regulations could adversely affect our business.
We are subject to local, state, federal and foreign laws and regulations regarding the privacy and protection of personal data and other potentially sensitive information. In the United States, these include data breach notification, data privacy and consumer protection laws, such as the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the "CCPA"), which imposes disclosure obligations, provides consumers with rights regarding their personal data, and carries statutory penalties for noncompliance (up to $7,500 per violation). Other U.S. states have enacted or are considering similar laws, which may increase legal risk and compliance costs.
Outside the United States, an increasing number of laws and regulations govern data privacy and security. For example, the European Union's ("E.U.") General Data Protection Regulation ("E.U. GDPR") and the Digital Operational Resilience Act ("DORA"), and the United Kingdom's ("U. GDPR") and the Digital Operational Resilience Act (“DORA”), and the United Kingdom’s ("U. K.") GDPR ("U.K. GDPR"), impose strict requirements for processing the personal data of individuals. Violations of these obligations carry significant potential consequences. For example, under the E.U. GDPR, government regulators may impose temporary or definitive bans on processing, as well as fines of up to €20 million or 4% of the annual global revenue, whichever is greater. New and emerging data privacy regimes in Asia and other jurisdictions, together with increasing data localization and sovereignty requirements, continue to expand the scope of our compliance obligations and could increase our costs.
Our customers expect us to demonstrate compliance with applicable data privacy laws and further make contractual commitments and implement processes to enable them to comply with their own obligations under data privacy laws, and our actual or perceived inability to do so may adversely impact sales of our solutions, particularly to customers in highly regulated industries.In addition, as a technology provider, our customers expect us to demonstrate compliance with current data privacy laws and further make contractual commitments and implement processes to enable the customer to comply with their own obligations under data privacy laws, and our actual or perceived inability to do so may adversely impact sales of our products and services, particularly to customers in highly regulated industries.
Our actual or perceived failure to comply with applicable privacy and data protection laws, regulations, contractual commitments or industry standards could lead to costly legal action, brand and reputational damage, significant liability, and decreased demand for our solutions, which could adversely affect our business. In addition, any security breach that results in the release of, or unauthorized access to, personal information, or other confidential information of individuals, could subject us to incident response, notice and remediation costs. The scope and interpretation of these laws could change and the associated burdens and our compliance costs could increase in the future.
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Changes in tax laws, regulations, or interpretations, and the inherent difficulty in projecting our effective tax rate, could materially adversely affect our business, results of operations, financial condition, and cash flows.
The tax laws and regulations in the jurisdictions in which we operate, including the United States and various foreign jurisdictions, are complex and subject to ongoing change. Changes in tax laws, regulations, administrative guidance, or interpretations, whether through new legislation, regulatory action, court decisions, or international initiatives, could materially affect our effective tax rate, tax liabilities, cash taxes paid, financial position, and results of operations.
In the United States, recently enacted and proposed tax legislation, including the One Big Beautiful Bill Act, as well as future legislative or regulatory changes, could impact the taxation of our income, research and development expenditures, executive compensation, and international operations. In particular, expanded limitations on the deductibility of executive compensation under Section 162(m), along with related compliance requirements expected to apply beginning in fiscal years starting after 2027, may increase our tax expense and volatility in our effective tax rate. In addition, ongoing global initiatives such as the OECD's Base Erosion and Profit Shifting ("BEPS") project, including BEPS 2.0, and related foreign tax law changes could increase our worldwide tax burden and compliance costs. State and local tax regimes add further complexity, as states differ in how and when they conform to federal tax law changes, which could result in increased compliance costs and variability in our state effective tax rate and cash tax payments. Our tax position may also be affected by business decisions such as acquisitions, divestitures, and strategic or equity investments, which can increase tax complexity, require the application of significant judgment, and affect the timing and amount of tax payments, reserves, deferred tax assets and liabilities, and valuation allowances. Changes in facts, assumptions, or interpretations related to these transactions, or adverse outcomes from tax audits or inquiries, could result in adjustments to our tax positions, increased tax liabilities, penalties, or interest, any of which could adversely affect our financial results and cash flows. We continue to monitor developments in U.S. federal, state, and international tax laws; however, we cannot predict the timing, scope, or ultimate impact of future tax changes.
We are a U.S.-based multinational company subject to income taxation in multiple U.S. federal, state, and foreign jurisdictions. Our effective tax rate is difficult to project and may be adversely affected by changes in the geographic mix of our income and expenses, changes in our entity and operating structures, variations in pre-tax profitability, and the outcomes of tax examinations. The determination of our tax liabilities involves complex calculations and significant judgment, including assumptions about transfer pricing, tax credits, uncertain tax positions, and the expected outcomes of audits and examinations. We are subject to examination by tax authorities in the United States and abroad, and the resolution of examinations or related litigation could take extended periods of time and could result in outcomes that are materially different from the amounts previously recorded in our financial statements. Any adjustments arising from such examinations could increase our tax liabilities, require additional cash payments, or result in penalties or interest, which could adversely affect our business, results of operations, financial condition, and cash flows. Although no material impacts have been recorded to date, IT system failures, network disruptions, cybersecurity incidents, and data breaches could adversely impact our business, internal controls, results of operations, and financial condition.
Our tax position may also be affected by business decisions such as acquisitions, divestitures, and strategic or equity investments, which can increase tax complexity, affect the timing and measurement of tax attributes, and require the reassessment of estimates, deferred tax balances, and valuation allowances. Changes in facts, assumptions, or interpretations related to these activities could result in material adjustments to our tax expense or cash tax obligations. For additional information regarding income taxes, see Note 12 to the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change.
Goodwill represents a portion of our assets and any impairment of these assets could negatively impact our results of operations.
As of March 31, 2026, our goodwill had a carrying value of $209.3 million, which represented approximately 11% of our total assets.At March 31, 2025, our goodwill had a carrying value of approximately $185.3 million, which represented approximately 17% of our total assets. We test goodwill for impairment at least annually at the reporting unit level, or more often if
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an event occurs or circumstances change that would more likely than not reduce the fair value of its carrying amount. This assessment requires judgments regarding factors that impact fair value, including business plans, anticipated future cash flows and economic projections. Because there are inherent uncertainties involved in these factors, significant differences between these estimates and actual results could result in future impairment charges and could materially impact our future financial results. For additional information on our goodwill impairment testing, see Note 2 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. For additional information on our goodwill impairment testing, see Note 2 of the notes to the consolidated financial statements. Any future impairment of this asset could have a material adverse effect on our results of operations, which may adversely affect the market price of our common stock.
We may experience a decline in revenues or volatility in our quarterly operating results, which may adversely affect the market price of our common stock.
We cannot predict our future quarterly revenues or operating results with certainty because of many factors outside of our control. A significant revenue or profit decline, lowered forecasts or volatility in our operating results could cause the market price of our common stock to decline substantially. Factors that could affect our revenues and operating results include the following:
•the unpredictability of the timing and magnitude of orders for our solutions, particularly transactions greater than $100,000, as a majority of our quarterly revenues have been earned and recorded near the end of each quarter;
•our ability to attract new customers, expand sales to existing customers, or develop a substantial sales pipeline for our products, including by effectively marketing and pricing our products;
• customers canceling, deferring, or limiting purchases due to budget constraints or in anticipation of new solutions or updates from us or our competitors;
• the ability of our OEMs and resellers to meet their sales objectives;
• market acceptance of our new solutions and enhancements;
• our ability to control expenses;
• changes in our pricing, packaging and distribution terms or those of our competitors; and
• the demands on our management, sales force and customer services infrastructure resulting from new solutions or updates.
Our expense levels are relatively fixed and are based, in part, on our expectations of future revenues. Any significant decline in revenues for any period could have an immediate adverse impact on our results of operations for that period. Therefore, any significant decline in revenues for any period could have an immediate adverse impact on our results of operations for that period. We believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of future performance. Our results of operations could be below expectations of public market analysts and investors in future periods which would likely cause the market price of our common stock to decline.
The market price of our common stock may be volatile and could decline regardless of our operating performance.The price of our common stock may be highly volatile and may decline regardless of our operating performance.
The market price of our common stock may experience significant volatility and may decline as a result of factors beyond our control, regardless of our actual operating performance or financial condition. The trading price of our common stock could be affected by a number of factors, including:
•variations in our quarterly or annual operating results;
•changes in financial estimates, treatment of our tax assets or liabilities or investment recommendations by securities analysts following our business or our competitors;
•the public’s response to our press releases, rumors, our other public announcements and our filings with the SEC;
•changes in accounting standards, policies, guidance or interpretations or principles;
•sales of common stock by our directors, officers and significant stockholders;
•announcements of technological innovations or enhanced or new products by us or our competitors;
•our failure to achieve operating results consistent with securities analysts’ projections;
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•the operating and stock price performance of other companies that investors may deem comparable to us;
•broad market and industry factors, including economic downturns and financial instability of banking institutions; and
•other events or factors, including resulting from war, incidents of terrorism or responses to such events.
The stock prices of companies in the software and technology sectors have been, and may continue to be, particularly volatile. In recent periods, we believe market valuations for software companies have been disproportionately influenced by investor sentiment regarding artificial intelligence capabilities, adoption timelines, and long‑term market narratives, which may cause stock prices to fluctuate significantly based on perceptions or expectations rather than underlying operating performance. As a result, the market price of our common stock may experience rapid and substantial changes, even if our business fundamentals remain stable.
In addition, following periods of market volatility, companies in the technology sector have frequently been subject to securities class action litigation. Such litigation, whether or not meritorious, could result in substantial costs and could divert management’s attention and resources away from our business, which could adversely affect our business, results of operations and financial condition. In addition, any security breach that results in the release of, or unauthorized access to, personal information, or other confidential information of individuals could subject us to incident response, notice and remediation costs.
Although we believe we have adequate internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis, and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.24Although we believe we currently have adequate internal control over financial reporting, we are required to assess our internal control over financial reporting on an annual basis, and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.
Management has assessed that our internal control over financial reporting is effective and has not identified any material weaknesses.Management has assessed that our internal control over financial reporting is effective and lacks any material weaknesses. Such assessment is made through subjective judgment of our management that may be open to interpretation. The effectiveness of our internal control in the future is subject to the risk that such internal controls may become inadequate. In the future, if we fail to timely complete this assessment, or if our independent auditors are unable to express an opinion on the effectiveness of our internal controls, there may be a loss of public confidence in our financial reporting, the market price of our stock could decline and we could be subject to regulatory sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, which would require additional financial and management resources. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to timely meet our regulatory reporting obligations.
Certain provisions of our certificate of incorporation and our amended and restated bylaws or Delaware law could prevent or delay a potential acquisition of control of our Company, which could decrease the trading price of our common stock.Certain provisions of our certificate of formation and our amended and restated bylaws or Delaware law could prevent or delay a potential acquisition of control of our Company, which could decrease the trading price of our common stock.
Our certificate of incorporation, amended and restated bylaws and the laws of the State of Delaware contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the prospective acquirer and to encourage prospective acquirers to negotiate with our Board of Directors rather than to attempt a hostile takeover.Our certificate of formation, amended and restated bylaws and the laws in the State of Delaware contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the prospective acquirer and to encourage prospective acquirers to negotiate with our Board of Directors rather than to attempt a hostile takeover. Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.
We believe that these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by effectively requiring those who seek to obtain control of the Company to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition of control. We believe that these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by effectively requiring those who seek to obtain control of the Company to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition of control. However, these provisions could apply even if an acquisition of control of the Company may be considered beneficial by some shareholders and could delay or prevent an acquisition of control that our Board of Directors determines is not in the best interests of our Company and our shareholders.
Risks Related to Our Convertible Senior Notes
We may lack the cash or financing capacity to satisfy required cash payments under the Notes, including upon conversion, following a fundamental change, or at maturity.
On September 5, 2025, we issued $900 million aggregate principal amount of 0% convertible senior notes due 2030 (the "Notes") pursuant to an indenture (the "Indenture") and entered into related capped call transactions (the "Capped Calls"). If a Fundamental Change occurs (as defined in the Indenture), holders may require us to
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repurchase the Notes in cash at 100% of principal plus any special or additional interest (together capped at 0.50% per annum). If holders convert, we may elect to settle in cash, shares, or a combination. We must also repay any Notes that remain outstanding at maturity in cash, which could require refinancing. Our ability to fund required cash amounts will depend on cash on hand, cash flows, and access to capital markets and credit facilities, and may be limited by law, regulation, or agreements governing our indebtedness. We may not redeem the Notes before September 22, 2028, and any optional redemption thereafter requires our common stock to trade at or above 130% of the conversion price for a specified period, which may affect the timing and magnitude of cash outflows. Failure to make a required cash payment would constitute a default under the Indenture and could result in cross-defaults or accelerations under other indebtedness.
Conversion of the Notes may adversely affect our liquidity, dilute existing stockholders, and depress the price of our common stock, and the Capped Calls provide only partial offset.
If the conditional conversion feature of the Notes is triggered, holders may convert their Notes during specified periods. Unless we elect to satisfy our conversion obligation solely by delivering shares of our common stock (other than cash in lieu of any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect liquidity. Even if no conversions occur, applicable accounting rules could require us to reclassify all or a portion of the Notes as current liabilities, reducing our reported working capital.
The Notes are initially convertible at 4.2215 shares per $1,000 principal amount, equivalent to an initial conversion price of approximately $236.88 per share. If we elect to settle conversions in shares, existing stockholders will be diluted. The conversion rate is subject to adjustment upon certain events and may be increased for a limited period in connection with specified corporate events, which could amplify dilution. The Capped Calls offset dilution only up to an initial cap of approximately $357.56 per share, and above that level dilution will not be mitigated. In addition, the existence of the Notes may encourage short selling by market participants, because conversions can be used to satisfy short positions, and expectations of potential conversion could depress our common stock price.
The Notes and related Capped Call transactions may affect the trading price of our common stock and introduce volatility in our reported financial results.
Banks party to the Capped Calls (or their affiliates) may establish, adjust, or unwind hedges in our common stock or related derivatives, including during any conversion observation period and around redemption or unwind events, which could increase or decrease the trading price of our common stock and, during an observation period, affect the amount of conversion consideration and the value of the Notes. In addition, the Notes and Capped Calls are subject to complex accounting requirements. Although the Capped Calls are accounted for in stockholders' equity and therefore not remeasured each period, conversions and changes in our share count may affect diluted earnings per share, and application of the relevant accounting standards may introduce period-to-period volatility in our reported results.
General Risks
Our business could be materially and adversely affected by natural disasters, geopolitical instability, climate change, or other catastrophic events.
Natural disasters, extreme weather events, acts of terrorism, armed conflict, public health crises, or other catastrophic or disruptive events, whether in the United States or internationally, could adversely affect operations, customers, or third parties on which we rely. Such events may include fires, floods, hurricanes, earthquakes, power outages or shortages, environmental incidents, telecommunications failures, or disruptions to business information systems. In addition, longer-term shifts in climate patterns, such as extreme heat, rising sea levels, or prolonged drought, could disrupt operations or those of our customers or third-party service providers, through infrastructure damage or supply chain disruption. If these events impair our ability to operate, disrupt customer operations, reduce overall economic activity, or decrease corporate spending on information technology, our business, results of operations, and financial condition could be materially adversely affected. If such disruptions result in cancellations of customer orders or contribute to a general decrease in economic activity or corporate spending on IT, or impair our ability to meet our customer demands, our operating results and financial condition could be materially adversely affected.
Geopolitical instability, including conflicts in the Middle East and Russia‑Ukraine, or similar events elsewhere, could further disrupt global economic conditions, financial markets, energy supplies, or international trade. Such instability may cause customers to defer or reduce spending, disrupt our ability to deliver services, or adversely affect our ability to collect receivables. If any of these events persist or escalate, they could have a material adverse effect on our business, results of operations, and financial condition.
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| Item 1B. | Unresolved Staff Comments | ||||
None.
| Item 1C. | Cybersecurity | ||||
Risk Management and Strategy
Commvault has established a cybersecurity program designed to protect the company, our customers, partners and other stakeholders. The cybersecurity program includes policies, processes and practices that are designed to assess, identify and manage material risks from cybersecurity threats and is integrated into our enterprise risk management program. Led by the Chief Security Officer ("CSO"), Commvault’s cybersecurity program leverages the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, with the primary objective of securing systems and data from cyber threats. Led by the Chief Security Officer (“CSO”), Commvault’s cybersecurity program leverages the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, with the primary objective of securing systems and data from cyber threats. We partner with industry-leading cybersecurity experts for continuous monitoring, alerting, mitigation and responsiveness related to our cybersecurity program. We adopt industry best practices and security technologies and have established a Security Incident Response Plan ("SIRP") which outlines our processes for incident preparation, detection, analysis, containment, eradication, and post-incident analysis. In addition to the SIRP, we maintain a Crisis Management Plan to organize roles and responsibilities in the event of a crisis, a Disaster Recovery Plan to provide guidance in the recovery of systems following an outage, and a Business Continuity Plan to identify alternative means of conducting business in the event of business disruption. We partner with third party service providers to enhance our monitoring and response capabilities, facilitate readiness activities including tabletop exercises, and perform various methods of cybersecurity penetration testing. All employees are required to undergo annual security awareness training on current and potential cybersecurity threats and report suspicious activity. We assess cybersecurity risks associated with third-party service providers through diligence, evaluation of provider cybersecurity controls, contractual protections and ongoing oversight, as appropriate.
Commvault maintains a variety of third-party certifications and undergoes annual assessments for SOC 2 Type 2, ISO 27001, HIPAA, and PCI DSS. Commvault also undergoes periodic assessments and testing in support of these certifications and compliance frameworks, and our products undergo security testing as part of these processes. Annually, internal auditors also perform risk-based reviews of certain business operations and control environments, and relevant findings, observations and recommendations are shared with Management, including the CEO, CFO, Chief Accounting Officer, Chief Trust Officer, CSO, Deputy Chief Information Security Officer ("Deputy CISO"), and Chief Information Officer ("CIO"), Chief Products Officer, and with the Audit Committee, and escalated to the full Board, as appropriate.
Given the increasingly complex and sophisticated cyber threat landscape, we seek to identify, assess, and mitigate cybersecurity threats.Given the increasingly complex and sophisticated cyber threat landscape, we try to be vigilant to predict and prevent attacks. Commvault has prioritized cyber resilience measures and leverages governance processes and procedures to mitigate potential business impacts if and when an adverse event occurs. To date, we are not aware of any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Commvault, including its business strategy, results of operations or financial condition. Although no material impacts have been recorded to date, IT system failures, network disruptions, cybersecurity incidents, and data breaches could adversely impact our business, internal controls, results of operations, and financial condition.
For additional description of cybersecurity risks and potential related impacts on Commvault, refer to the risk factor captioned "Risks Related to Technology and Security – We may be subject to IT system failures, network disruptions, cybersecurity incidents and breaches in data security" in Part I, Item 1A. "Risk Factors."
Governance
Commvault’s Management, including the Chief Financial Officer, Chief Trust Officer, CSO, Deputy CISO, CIO, and Chief Products Officer , is responsible for our cybersecurity risk management strategy, operational
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