Commvault Preliminary Q3 Results Miss Analyst Expectations Due To Weakness In Americas Software Revenue - CommVault Systems (NASDAQ:CVLT)

Commvault Systems, Inc CVLT negatively preannounced Q3 results, missing KeyBanc analyst Thomas Blakey's revenue estimate, resulting in a miss to EPS estimate, primarily due to weakening buying patterns and close rate execution in the last few weeks of December.
Weakness centered in the Americas, with software and product revenue declining 20%.
Overall, Software and Products' preliminary results for Q3 came below the analyst's estimate, with Services revenue essentially in line with Blakey's estimate driven by continued strength in Commvault's cloud-based SaaS solution Metallic.
The strength in Metallic led to higher-than-expected ARR with Subscription and Metallic ARR +45% Y/Y vs. Blakey's 40% estimate, compared to 44% in the prior quarter.
Blakey reiterated the Sector Weight rating on CVLT shares as the analyst continues to monitor the maintenance to subscription transition, Metallic's impact on gross margins, and now adding nearer-term execution on close rates.
Commvault will report Q3 results before the market opens on January 31.
RBC Capital analyst Dan Bergstrom had a Sector Perform and reduced the price target to $63 from $66 on lower estimates.
The preliminary Q3 numbers missed the analyst's expectations primarily due to a drop in Americas software business in December.
While the commentary was limited, the company cited slower-than-expected buying patterns and close rate execution as behind the order slowdown.
Despite this, the company remained confident in its strategy and noted a willingness to adjust the cost structure to changes in demand.
The analyst reduced estimates for Q3 and in the future and would look to better fine-tune forward estimates with full Q3 results, likely on January 31.
Piper Sandler analyst James Fish maintained a Neutral and lowered the price target from $70 to $60.
Wells Fargo analyst had an Overweight with a $75 price target.
The preliminary results reflected deal closure rate pressures, given incremental macro-driven customer concerns and some company-specific execution challenges.
Commvault noted that combined subscription and Metallic ARR now account for 70% of total ARR, up from 66% in Q2.
Price Action: CVLT shares traded lower by 14.66% at $55.25 on the last check Wednesday.

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