Company: CVLT
Filing Date: 2025-10-29
Form Type: 10-Q
Source: 0001169561-25-000089
Chunk: 38

Company: COMMVAULT SYSTEMS INC
Filing Date: 2025-10-29
Form: 10-Q
Item: Part II, Item 1A
Chunk 38
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ure and could result in cross-defaults or accelerations under other indebtedness.

The conditional conversion feature of the Notes, if triggered, may adversely affect our liquidity, financial condition, and results of operations.

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.

Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock, and the Capped Calls may provide only partial offset.

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 

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conversions can be used to satisfy short positions, and expectations of potential conversion could depress our common stock price.

Hedging activity by Capped Call counterparties may affect the trading price of our stock and the value of the Notes.

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.

Accounting for the Notes and Capped Calls may increase volatility in our reported financial results.

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