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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, everyone, and thanks for joining us today for Commvault's fiscal third quarter earnings review and futureready investor event. My name is Michael Melnyk, Head of Investor Relations, and we look forward to spending the next couple of hours with you today.
Our leadership team is excited to discuss our view of the dynamic data protection and management market. We'll highlight how our vision and strategy has been brought to life through our transformed software and SaaS portfolio, our optimized go-to-market motion and our focus on execution excellence, all of which are fueling our intended return to sustainable and profitable growth. Given the increased visibility associated with our growing recurring revenue base we'll provide near and long-term targets, and we'll discuss a more comprehensive capital allocation framework.
After our prepared remarks, we'll be hosting a moderated Q&A session. [Operator Instructions]. Before I turn it over to our President and CEO, Sanjay Mirchandani, I'll quickly summarize our safe harbor statement. Today, we'll be making forward-looking statements under the safe harbor provisions of the United States securities laws. These statements are based on our current expectations, assumptions and remain subject to risks and uncertainties. Our actual results may differ materially. Factors that could cause our results to differ from these statements can be found in our SEC filings. We're also referencing non-GAAP financial measures and targets. The reconciliation of non-GAAP financial measures to comparable GAAP measures can be found on our Investor Relations website. We hope you enjoy today's program. Sanjay will be joining us after the short video introduction.
Wow, it's a great time to be in this industry. I'm thrilled to be with you today to share our vision and what we see as the opportunity ahead. Thank you for being with us. When I joined Commvault, we focused on 3 priorities: one, simplifying our business to make it easier for partners and customers to work with us; two, radically innovating to meet the market in massive transition; and three, executing by focusing on what matters to deliver results, which is why we've exceeded expectations in 5 of the last 6 quarters, with the only exception at the start of the pandemic. I'm proud to say we've made tremendous progress, ushering in a new era for Commvault.
Our high-performing engineering team is innovating faster than ever. Our field is delivering results. And we have a winning team and culture already helping customers with their digital transformations. Before I get into our view of future, let me take a minute to talk about our Q3 results. Simply put, Q3 was our best quarter ever. We delivered all-time highs for total revenue as well as software and product revenue. All of our geographies had a solid quarter. Annual recurring revenues, the primary metric we use to indicate the health of our business also crossed a critical milestone, over $0.5 billion. Finally, we delivered record earnings per share, which demonstrates our balanced approach to revenue growth and profitability. These results reflect and are the result of our transformation over the past 2 years.
With that, let me share a little bit about our vision and expectations moving forward. We're here today because 3 things are coming together right now. First, as organizations digitally transform and embrace the cloud, multigenerational data sprawl threatens the fundamental integrity of their business, more on that in a moment. Second, we believe our portfolio delivered through intelligent data services as software and SaaS is best aligned to help customers with their hard problems. And third, we've been working really hard over the past 2 years to get ready for this opportunity, and we think we are.
That translates to our near-term outlook. We are positioned to deliver between 6% and 7% total annual revenue growth, 9% to 10% software and products growth and 10% ARR growth. We're on a path to deliver over 25% EBITDA through FY '23, and we will be close to the Rule of 40 by fiscal year '25.
Now let's go into a little more detail about what's at stake. As you know, Commvault has a rich heritage of delivering world-class solutions. More than 100,000 organizations around the world are leveraging Commvault's technology. Over 25 years, we have evolved as conditions have changed. And we developed a powerful ability to help customers reinvent themselves for the future and thrive.
We believe this is what gives us a unique vantage point to help customers accelerate their digital transformations. It's not just about modernizing backup environments or moving to the cloud or even transitioning to Saas. These miss the heart of today's mission-critical data challenge. You see, digital transformation changes everything when it comes to data and when your very existence depends on data, how do you ensure the fundamental integrity of your business without increasing your exposure, slowing down your transformation or leaving yourself inequipped to handle what's next.
This is the question being asked more and more by Board members, by CIOs, by CSOs, by governments and by customers. It's not surprising that organizations are in a state of change. Infrastructure is moving to the cloud and sometimes back again. Businesses need that flexibility. Tightly integrated and monolithic software is being replaced by SaaS applications. Once modern, agile software delivery processes are now being replaced by DevOps and sometimes NoOps methodologies to immediately bring capabilities to market. Containers are being used increasingly in production environments. The use of mobile is an imperative. And the lines of ownership between IT and the business are fast blurring.
So what does all this mean? Data is in constant motion, almost kinetic, if you will, from here to there, from this application to that application, never has data been further away from the tools that created it than it is now. And this causes multigenerational data sprawl throughout an organization. And it's only getting worse as data grows exponentially. Frankly, it's out of control. This introduces massive data fragmentation, inefficiencies and potential points of failure. For starters, you can't control what you don't know exists, like dark data or some SaaS app spun up somewhere unknown to IT. This is compounded by the rise of ransomware attacks and increased data governance scrutiny. Can the organization recover quickly and evolve to beat these governance demands, all of which depends on integrated data protection. And management policies driven by deep degrees of automation. Otherwise, you just cannot reach the promise of the cloud. This is what I mean by an existential risk.
The heart of the challenge is, what we at Commvault call, the business integrity gap. Simply put, it is the growing exposure between the current budgets and capabilities and the organizations need to digitally transform. The gap won't go away on its own. Just think about these trends. Implementing new SaaS applications to compete more effectively, actually increases the data footprint that you manage. 9 out of 10 organizations have a multi-cloud strategy. Containerized applications are increasing. Ransomware events are rising fast, up 40% this past fall and continue to get more sophisticated. And it's frankly hard to find people with the necessary skills to span this gap.
If this this wasn't challenging enough. We're also in the midst of a pandemic, which has catapulted us into unnatural time lines, furthering the gap. In fact, IDC predicts that by the end of 2021, 80% of organizations will accelerate their move to cloud-centric infrastructure and applications. That is twice as fast. The new imperatives are to modernize and use technology to drive competitive advantage, but organizations need to take control of their data now.
So how do organizations close the business integrity gap? Unfortunately, some organizations have employed inferior strategies, hoping and praying or adding a new set of tools, which will only come up short while adding complexity. There is a better way, which brings us to the second reason why we will seize our opportunity. We believe that we are the best positioned to solve this existential problem with multigenerational intelligent data services delivered through software and Saas.
Folks, our entire existence is around data and innovation. We've been doing this for 25-years and have the patents and the accolades to prove it. Customers rely on us and are looking to us to help them close the gap, which is why we've invested over $1 billion in R&D to continually enhance our no boundaries architecture. The digital transformation journey, our customers are on requires that they manage the data life cycle with an integrated set of services versus discrete disparate products and can be consumed on-premise through the cloud and through Saas. Our portfolio enables this today. Let's have a look.
First, we start with the broadest workload coverage in the business. The broader the coverage, the more relevant you are on the journey. On-premise, cloud, multi-cloud and hybrid cloud and SaaS applications. Because business continuity is such a strategic imperative, we believe a rich set of intelligent data services to apply to your workload data, often starting with data protection, and disaster recovery. Then we layer in modern storage through Hedvig, HyperScale X and cloud storage via Metallic. And we build on that with data insights that optimize storage and provide governance and compliance.
The piece in the middle, Metallic Saas, is where the future lies. Built on our core technology, metallic provides a world-class modern SaaS experience to make it quick and easy to start and get to scale. You see enterprises have a bit of everything in their environment and need the flexibility to mix and match intelligent data services using software or Saas, whichever works best for their business. Our platform provides the automation and APIs to integrate into customer workflows, and it can all be managed from a single user interface. We shouldn't make the customer choose how to use the technology. We should give them the flexibility by supporting the broadest workloads, layers of capabilities, rich insights and a better overall experience across our services.
In just a little bit, Don Foster and team will discuss our maturity model for customers, working through this journey. But don't only take our word for it. We are firmly positioned in the upper right of the Forrester wave and the Gartner Magic Quadrant. And in Gartner's latest critical capabilities report. We ran the table, earning number one positions for the physical, virtual and public cloud environments. Folks, this is the first, no other company has done this. Not only are we thought leaders, but we have an early mover advantage. And this recognition is a testament to a wide workload coverage and deep data readiness capabilities.
So we have the intelligent data services to close the gap but what does this mean for you as investors? We now operate in markets that will grow to $42 billion by 2024. According to industry estimates, the new data management space, which will be worth a $37 billion in 2024, is growing at about 7% per year. The majority of which will come from data protection as a service, growing at 17% to more than $15 billion by 2024. This is where we have a real advantage with our fast-growing Metallic offering which today sells in 24 countries. In fact, we already have hundreds of customers protecting petabytes of data. And we've added nearly $5 billion in TAM from software-defined storage when we acquired Hedvig, which we quickly integrated into our new HyperScale X appliance saving on operational costs and giving us unique cloud extension capabilities for hybrid workloads and a world-class cloud-native Kubernetes storage platform.
This brings us to the third part of our journey. Since I joined Commvault, we've transformed our business top to bottom. So let's discuss how we've transformed it breakneck speed and the growth drivers we're focused on to capitalize on the massive opportunity ahead. We've been working hard on the things that are going to help us secure new customers, cover more workloads and capture added value. We have a broader portfolio to enable our land and expand model. Our SaaS offerings are attracting new customers and adding value to existing accounts. Our customer success team is driving repeatable business through adoption and renewal initiatives. We've significantly strengthened our sales productivity, which Gary will discuss later. And we've built stronger technology and go-to-market partnerships across all regions to bring in new customers. I recently caught up with Gavriella Schuster at Microsoft to discuss the power of partnerships further.
Thanks for joining us today, Gavriella?
Yes, thanks for having me.
2020 was a lot of things for the world. But one of the things we saw in the business was a lot of our customers accelerating the digital transformations. As we go into 2021, what are you thinking about this? What are you seeing with your customers?
Well, what I'm seeing is that customers are moving very, very quickly. They're trying to provide great virtualization, collaboration spaces for their people, they're trying to secure their environment, and they're trying to accelerate their move to the cloud. And so what this means is that it puts a lot of pressure on the partner ecosystem to move very quickly and on all of us. And I think we've made a lot of progress as an ecosystem in responding to what customers need. Helping our customers recover. And I think what's in the road ahead as we move into 2021, is to help customers then reimagine what does the world look like post-COVID? And how do they really set up their organizations to be more resilient in the future and to really keep the lessons learned from 2020 as we move forward because I think while it's been painful -- the state of the world has been painful. It has enabled everyone to learn new ways of doing business. So I guess I would throw it back to you. You speak to a lot of customers, are you having similar conversations?
We are. And what -- and we look at it from the point of view of data, that's our life. And what we're seeing is data is front and center. Every business is being transformed into a data-centric business. And customers want to be able to manage it, really prioritize it, be able to get value out of it, protect it because the bad guys are at work. And all of this is causing sort of adoption of the cloud, but also causing customers to rethink how they do things. And that's what we see. So Gavriella, I'm going to put you in the spot. Commvault, Metallic, our partnership, very strategic for us, what brought it all together for Microsoft?
Well, I mean, so there's a number of factors. First of all, it's a great representation of Commvault's commitment to its customers when it comes to security, backup and recovery and services. And so we are very happy to continue the strong partnership that we've had for many years and supporting this new delivery. We're working and learning from home has made security and recovery a top concern for our customers. And so it's very timely to market. The service itself within Metallic is easy to configure. It's scalable, it's robust, it safeguards the exchange SharePoint and OneDrive, and also really safeguards the back-end and protects the VMs and the file server. So it's really a great end-to-end solution. So having a partner that has a long history in the market and is incredibly valuable from a customer perspective and also from a Microsoft perspective, is where this partnership really comes to life and where we want to put our efforts. So I'm happy to say that our engineering teams have really worked very closely together to build these solutions and help customers solve the challenges that they're facing today in real-time and glad we were collectively able to get Metallic into the market.
So like -- tell me a little bit how is Metallic doing from your perspective?
Well, thank you for sharing your perspective on Metallic. We're really excited about it. This is a product we built ground up for the enterprise. And partnered with Microsoft very closely as we did it. The product is now available across Europe. It's available in Asia, obviously, the United States and Canada. We've added a heap of services into the product over the past quarter or so, and we're getting great traction. As customers are seeing how easy is this to adopt, how easy it is to add additional services around it and how easy it is to grow as their businesses grow with Metallic. So we're really excited about it.
Awesome. I couldn't agree more. I mean I think that Commvault and Microsoft have a proven track record together of over 20 years. And especially now when our customers need us so much, the companies need new innovations from trusted leaders. And while there's still a lot more work that we can do together. I'm very excited about the work that we've done in bringing Metallic to the market and having it built on Azure. So I think that we're in for a great ride as we move into 2021.
Absolutely. We've just begun the products and the partnership and the ecosystem of our partners have incredible potential and most of all, great value for our customers. Gavriella, thank you so much for joining us. We really appreciate it.
You're welcome, and thank you for your leadership and continued partnership with Microsoft.
I want to thank Gavriella for being part of our event. It's partnerships like this that make us excited about what's ahead. In addition, we need to run efficiently as an organization. To use a metaphor: "we have been changing the engines of an airplane while in flight". We have driven massive cost savings by streamlining our organization, driving process efficiencies, increasing our presence in low-cost locations and remaining focused on spending. Next, we have continued to invest. As the market evolves, we need to continue to innovate to stay ahead. I believe we are staying ahead, especially with Metallic, and our Hyperscale X solution. And finally, we've made significant progress in attracting top talent, committing ourselves to transparency and creating a winning culture.
I would like to call out another reason for my confidence. We have the right leadership in place. As you know, it's all about the people. During my tenure, we've built a tremendous leadership team, comprised of Commvault veterans and industry leaders who have brought fresh perspective and energy to the company. I'm proud to work alongside them. You'll be hearing from some of them during this meeting. In a few moments, Don, Manoj, Ranga and Geeta, will go a bit deeper into our technological vision and advantages. Then Chris; Riccardo; Sandy; and Gary will discuss our go-to-market strategy. After that, Brian will take you through the detailed financials. And then our independent directors, Martha Bejar behar and YY Lee will shine a light on our important environmental, social and governance initiatives. And before we wrap, we will have 40-minutes to take your questions. With that, thank you for joining us today. And now I'd like to hand it over to Don Foster, an 18-year of Commvault veteran, who makes a huge difference with our customers, to discuss how we're driving innovation. Don?
Thanks, Sanjay, and thank you all for your time. Over the last 24-months, new technology trends have driven new customer needs. And in solving for these new trends, we've uncovered a new strategic problem that organizations face. And as Sanjay described earlier, this is the business integrity gap. Over the last 24-months, we've also released a number of innovations in our product portfolio, focused on closing that gap and allowing customers to control their always-in-motion data environment. Over the next 20-minutes, we'll discuss 3 key trends that highlight and showcase how our product portfolio and strategy are supporting our ability for aggressive market growth.
Those three trends are: number one, that IT is actively transforming into a hybrid and multi-cloud landscape; number two, that, that same hybrid multi-cloud landscape is catalyzing the next phase of application modernization with microservices and containers; and number three, there's an increased demand for SaaS driven outcomes for all workloads. Both in the cloud and on-premises. We believe that we are uniquely positioned to handle these data-related challenges that have emerged from these new trends, and more importantly, help customers meet the demands that they have today and tomorrow.
Now these five steps that Sanjay covered earlier, really helped to highlight the acceleration that's occurring in the digital business transformation. In fact, it's this acceleration that is widening the business integrity gap for organizations everywhere. Business and IT leaders alike must start thinking differently about their data, ask different questions and find answers through and with technology to implement and enact a new strategy energy that can support the movement to the hybrid multi-cloud world.
Working with over 100,000 organizations worldwide, we are confident that we know how to close this business and take a gap. Customers of all types fall somewhere in the spectrum of this data-readiness journey, all trying to ascertain that industrialized state which guarantees they have data readiness and that they can respond to whatever might be coming in their direction and that they can protect their business in action. Let's quickly walk through with the different states of the data readiness journey.
In the splintered state, we often find organizations struggling with multiple data management tools. Delivering inconsistent results, inconsistent coverage and more importantly, lacking a single source of truth for operations across their organization. Now the first step in solving this is an easy one. Consolidation of these data management point solutions into a unified set of intelligent data management services is the key to ushering in the seamless state. Once there, data management operations are unified. Protection, coverage, governance, reporting, all are drastically improved. And it also introduces new automation techniques to allow customers to manage at scale.
Once this management-at-scale is achieved, then it's all about data awareness. Data awareness completely across the data state, and that brings a customer into the optimized state. We're understanding your data state and having data awareness and combining that with workflow automation that is built off of artificial intelligence and machine learning with the awareness of how the data state is actually a living organism or a living state that helps provide a solid ransomware response pattern in case you get struck by a ransomware attack.
And finally, once that entire data environment is optimized, only through policy automation in delivering the automated and continuous autonomous optimization of the entire data landscape with cloud as a foundational component of your strategy have you achieved that true industrial state. Here, leveraging cloud, leveraging the automation components and the API integration, a customer can truly be and achieve an industrial state of data readiness. So that they can be ready for whatever the business is throwing at them today and be agile and future-proof into what's coming in the future.
Commvault with our portfolio of intelligent data services can provide and help customers achieve that true industrialized state of data readiness. Data management in a complete form, starting with our data protection products and our disaster recovery solution provides customers a solid and an all-encompassing solution that will allow customers to build off of our no limits architecture at scale and provide freedom to consume our solutions, whether it be on-premises, whether it be through a converged appliance with our HyperScale X solution or even through SaaS with our Metallic based offerings. Moreover, we can add to this solution by helping customers then achieve that complete data awareness across their data state, eliminating dark data and also providing an understanding of what the risk profile of that data landscape looks like. All while meeting the needs of governance, compliance and the e-discovery needs from that single integrated portfolio.
Customers and analysts alike all agree that only Commvault can achieve and help closing that business readiness gap. In fact, just last week, I had a chance to sit down with one of our customers, Russell Peters at Coca Cola, a Senior Cloud Architect. And we discussed exactly how Commvault helped them transform. So I'm here with Russell Peters, Senior Cloud Architect at Coca Cola. And Russell, thanks for joining. The last year has been a really interesting year. We've seen lots of changes to IT priorities and of course, along with that, some changes in the data management priorities that companies have. How is that affecting your business?
Well the pandemic has affected us significantly. We're having to reduce our brand count that we have, we had over 500 brands starting in 2020. And basically having quality near time -- near real-time data that's clear, it can easily flow at a high pace. Given to the right teams, it's of paradigm importance to figure out how to reduce our brand count that we have, we're trying to leverage AI, cognitive services to unlock the potential of the data to more effectively discover our consumer trends and of course, protecting our data assets is very vital.
So it sounds like Coca-Cola has truly become a data driven business. Now I know we've been working with your organization for a number of years now. Why did Coca-Cola choose Commvault over any of the other number of vendors that are in the market space to help manage these data management priorities?
Well, it started out, Microsoft, basically, they said they use Commvault for their SAP HANA footprint, and we need to did the same sort of thing. So we first engaged Commvault as a candidate to orchestrate and catalog, our HANA database backups and other databases, but also we needed to protect data in our field offices and certain plants around the globe. So we needed a solution that was strong in the cloud as well as in hybrid cloud, VMware and our physical environments. So Commvault differentiated itself by checking all of the boxes.
Well, that's fantastic. So everything from on-prem, virtual, physical, cloud, cloud-native, Commvault was a data management solution that helped you solve all of those challenges?
You bet. Yes.
That's a fantastic. Russell, thank you so much for your time today.
Thanks, Don.
What an incredible customer testimonial of our innovation in action in helping Coca-Cola achieve that hybrid and multi-cloud world. Speaking of hybrid and multi-cloud. I'd like to invite our Head of Products, Ranga Rajagopalan, to come and double-click into this topic and really help highlight how we're helping our customers accelerate in their hybrid and multi-cloud world. Ranga, the floor is all yours.
Thank you, Don. As you rightly pointed out, businesses are in different stages of IT transformation, and they are adopting different approaches to the hybrid multi-cloud. Some customers prefer to use cloud as a secure offsite storage while some other customers prefer to use cloud as an on-demand disaster recovery location for their business-critical workloads. Also, as part of the hybrid cloud journey, customers are accelerating the use of Saas, PaaS and cloud needed workloads, all of which require to be protected with the same business SLAs. In short, we can say that no 2 customers are going to have the same approach to the hybrid multi cloud.
Through our leadership and innovation in multi-cloud data management we ensure that our customers can achieve that industrialized state of data management regardless of their approach. Let me explain how. traditional on-prem applications continue to be in the dominant application architecture for most businesses, and they need a simple future-proof way for protecting all those applications. Last year, we introduced Commvault HyperScale X as our flagship product, next-generation secondary storage solution powered by our very own Hedvig distributed file system technology,
HyperScale X has delivered as an integrated hyper-converged scale-out solution, which can start small and grow as the customers' data needs grow. And with HyperScale X, customers can protect all their hybrid cloud applications. Our entire differentiated data management software is prepackaged into HyperScale X. So our customers can easily turn on any of our intelligent data services that Don was mentioning before, be it backup and recovery or e-discovery, disaster recovery or data governance, any of these services, customers can turn on with HyperScale X through our granular licensing.
With our huge and growing set of workloads, we enable our customers to protect all their workloads with HyperScale X as a single, reliable data protection solution. Additionally, HyperScale X can also serve as the edge appliance for our Metallic SaaS. This means that our customers can get the dual benefits of SaaS simplicity for even the most traditional enterprise on-prem workloads, while at the same time, getting rapid local recovery, thanks to HyperScale X all managed with the confidence of a single brain and with the simplicity of command center as a single pane of glass across all the workloads.
Remember, we were talking about using cloud as a storage target Hyperscale X enables this use case by natively and seamlessly integrating into leading public clouds like Azure, AWS, GCP and so on. To directly write the backup copies to the customer's cloud of choice. Additionally, in October of last year, we went another step further in simplifying our customers' cloud journey. We introduced Metallic Cloud Storage Service, or MCSS, as a seamless cloud extension of HyperScale X. MCSS is built for global scale with layered security, and it is all managed by Metallic. When MCSS is combined with HyperScale X, HyperScale X turns into a reliable, secure cloud gateway providing ransomware protection and recovery. It stores hard copies of data on-prem and securely moves the secondary copies to MCSS.
Cloud is also becoming a very attractive location for disaster recovery of business-critical workloads. With HyperScale X, customers can simply turn on Commvault DR and start using clouds as their disaster recovery locations. Commvault Disaster Recovery provides flexible and scalable replication, reliable recovery automation and verifiable recovery readiness. And all of this come together to empower our customers to do automated fail over and fail back of business-critical workloads to AWS, Azure VMware Cloud or even another data center.
Through the breadth of workloads across cloud, on-prem, SaaS and PaaS that we bring to the table. We ensure that HyperScale X is a single data protection solution for our customers without getting into any point product complexity. By bringing together all the differentiated aspects of our connected portfolio, HyperScale X literally serves as a single stop shop to enable all the paths to the hybrid multi-cloud that we discussed earlier. With that, I'm going to transition back to Don to discuss some of the other transformational data management trends that we are seeing with our customers. Thank you.
Thanks, Ranga. The execution on our product portfolio is proof that we have had a multi-hybrid cloud focus within our technologies and how we deliver solutions for our customers. But it's not just about our product portfolio. It's also about how we work with our partners. Have a quick listen to the testimonial provided by Sabina Joseph, General Manager of Americas Partner Technology at AWS. She provides some really interesting insight about some of the things Commvault and AWS have done together.
My name is Sabina Joseph, and I am responsible for managing our technology partnerships in the Americas at AWS. I want to thank Commvault for your partnership in working with AWS since 2014 to deliver data protection solutions for our mutual customers. Just this past year alone, Commvault has expanded support across many of our AWS services, including supporting our hybrid services. This level of integration gives our mutual customers the flexibility they need regardless of whether or not they're running on-premises, on AWS or in a hybrid architecture. Last month, Commvault presented with one of our large enterprise customers at re:Invent. The presentation showcased how Commvault and AWS protect over 1,200 EC2 instances, 150,000 snapshots and 1.2 petabytes of data. And yet the customer only needed one individual to manage this very large environment. Thanks to Commvault, for your partnership and providing an important solution for customers as they increasingly move to the cloud. Thank you so much for your time.
Thanks Sabina for the fantastic testimonial. Proof, again, that hybrid multi-cloud focus on data management truly leaves that there is no workload left behind. And with the hybrid multi-cloud world, it's also catalyzing the next phase of application modernization from microservices and containers. And with that topic at hand, I'd like to introduce our expert, our resident expert in containers and microservices and seemed product manager, Geeta Vaghela, and she's going to talk us through how we're keeping customers ready for that next transformation of application modernization. Geeta, the floor is all yours.
Thanks, Don. As discussed, businesses are at various points in their IT transformation. And this is actually even more pronounced when we think about next-gen technologies like microservice and containers. In fact, Gartner predicts that 85% of global enterprise will use containers by 2025. This comes with a speed -- with the promise of speed of innovation and digital agility. Which depends on what to use not only to keep pace and respond to adversities and change but to outpace their competitors. The promise of containers and microservices is really the foundation to provide performance, agility and application mobility, but this doesn't come for free. So when we think about the value that was brought to the market by containers and microservices, we also need to think about the new challenges that this introduces.
Microservice by design are lightweight and performant. This is great, and it really allows the application efficiency, faster design, reuse and being able to get applications to market faster. But by virtue it no longer contains stateful information. That responsibility now lies with I&O, where state required by an application needs to be managed in a performant way so the applications can still deliver on the lightweight value of it with performt while supporting stateful applications. Similarly, I mentioned reduced development time. So by repurposing the lego blocks with microservices, you can create applications faster. But this means that the glue, the communication between the applications need to be bulletproof. And so there's a real focus in terms of making sure that there is programmability in every component so that you can really get that intra-application communication.
And finally, with all of the variations in how you can deploy today with IaaS, PaaS, microservices, on-prem, off-prem, public cloud, hybrid cloud, portability becomes hugely important. And when we think about porting applications, it's no longer a single entity. It contains state. It contains secret keys, it contains data. And so when we're thinking about porting these applications from one place to another, we may need to think about comprehensive portability to be able to really enable the CI/CD.
From a Commvault perspective, we really look at this with 2 inflection points. The first is around technology inflection, and this is what allows businesses to adopt new technologies. So we think about that as lowering the barrier to entry. How do we integrate into existing workflows. That could be automation orchestration tools for your I&O or it could be things like Kubernetes for your DevOps engineers. And so that integration and that being seamless so that it's part of a known environment, it's hugely important.
Similarly, we think about being application driven. And this is really providing granular opportunity for each application to pick and choose the I&O capabilities or attributes that it needs to be successful. If we go back and we think about the maturity inflection point here, it was really shown to us by virtualization, now consider the ubiquitous enterprise platform of choice.
So think about how virtualization grew. It started by virtualizing compute. They came networking and storage. And then came the real enterprise-grade resilience. So this is unified management, the economies of scale and a simplified way of being able to deploy virtualization without creating a sider. As we think about allowing businesses to adopt these next-gen technologies, these are the 2 points we want to solve for, the technology and the maturity inflection point. And that allows businesses to take advantage of these next-gen technologies and deployment production. From cohort, similar to how we think about microservices, we consider our attributes and our products within the portfolio and network blocks and so we're able to store with heavy distributed storage protect with Commvault Complete and protect with -- and migrate with Metallic, whether it's on-prem, off-prem, being able to migrate using a SaaS model is really what we're seeing our customers ask for.
So in conclusion, the intention here is to drive seemless on-ramp, comprehensive data management, and a solution that's future-proof for our customers, really allowing our customers to embrace next-gen technology capabilities and deployment production. With that, back to you Don.
Thank you, Geeta. Well, definitely, you mentioned Saas, and we've definitely seen the way that customers want to consume these new data management solutions to be across a spectrum of different areas, be it packaged software on-premises, maybe be through converged appliances like our HyperScale X and of course, through SaaS offerings like what our Metallic offering offers to customers today. We're incredibly focused on the whole SaaS delivery for customers and ensuring that we can combine this into a single solution for how they manage their data. And with SaaS being a major trend in the marketplace, and we're seeing that increased demand for SaaS-based outcomes regardless of where the workloads live in the cloud or on-premises, we're acutely focused on helping to deliver those types of capabilities. And with that, I'm going to invite Manoj Nair, our General Manager for our Metallic business unit to come and help address exactly what we're doing for the SaaS-based offerings for customers, both today and into the future. Manoj, the floor is all yours.
Thank you, Don. Let's double-click on what Don just said. And why is SaaS really becoming the fastest-growing initiative for customers of all sizes. Today, if you have a workload that you're managing yourself, you're probably already moved it to a SaaS model or you're looking to move to a SaaS model. It doesn't matter what size of customer you are. It's because of the simplicity of the SaaS experience that transense from technology, try before you buy, grow and small, expand as your needs grow. That entire experience is what's making SaaS the fastest growing initiative. And our industry is no different. Data protection as a service is growing faster than traditional data protection. It's into this environment that Metallic was born in October of 2019.
And we have been on an innovation tear since then. No one could have predicted the pandemic. But we were ready with our remote workforce support options, and we expanded cloud coverage to include all the major clouds, AWS, Azure, VMware on-premise, in the cloud. We also built out our 3 go-to-market pillars with an expanded partnership with Microsoft between Metallic and Azure that allows us to go directly to use the Microsoft channel and the Microsoft indirect channel. We.
Also expanded our coverage in the Commvault channel, both our direct sales force and the large Commvault partner network. Last but not least, very important for a SaaS initiative is growth marketing. And we build out our growth marketing engines to bring in net new customers into the Commvault family. And we're also adding a lot more in terms of our data management capabilities to help with that expansion, including GDPR and compliance.
GDPR manage data companies all over the world. If you're a multinational, it doesn't have to be a European country, but that has also helped us with our global expansion. Just yesterday, we announced that we're live in 10 more countries in EMEA, 9 in Europe, and now we're on the map in Africa with our capabilities launched in South Africa. Very important difference that we have versus all the other data protection as a service companies is our hybrid support with what we call SaaS+. That SaaS+ plus distributed architecture is very important for customers and it's very unique.
We can protect the workload from the cloud, from our SaaS service whether that workload lives on-prem, and we can make a copy and protect that workload -- on-prem workload on-prem. We can protect the workload that's in AWS with a copy on AWS and all of that data can now have an additional copy on, let's say, some other cloud, Azure. That flexibility is very important because data has gravity. And that data gravity, some of the things that are preventing customers from adopting cloud even faster. That data gravity is also seen in edge workloads, which is why, as Ranga said, we launched our Metallic edge capabilities with the HyperScale X flagship portfolio now having a Metallic mode where Metallic is able to use that as an edge extension, where it does not make sense to bring that data back to the cloud.
All of this innovation is what's driving our results. And the results are showing. With hundreds of customers in production. We just last quarter added as many customers as the prior 3 quarters. We're protecting petabytes of data, bringing in lots of new customers to the Commvault family. 1/3 of our customers are using Metallic to protect their enterprise mission critical workloads. Our land and expand strategy is really working. We're seeing customers acquire multiple metallic services. My best story there is a customer who started with a few hundred users in O365 for a few thousand dollars booking early last year, by end of the year it was $1 million-plus booking across almost an entire set of workloads at all the users. That's the power of Metallic.
And we're seeing partners also are gravitating towards that with our partners-originated booking, also growing significantly. All this is what makes us feel like Metallic is setting the standard for the -- Gold Standard for data management as a service. Our breadth of coverage, our ability to protect data, whether it's terabytes or petabytes. Customers of any size are able to come in, start with a few workloads and expand. And the workload coverage today covers all major SaaS, hybrid cloud and endpoint workflows. Just yesterday, we launched our support for salesforce.com and Oracle.
Today, Metallic is giving customers the ability to use a simple SaaS model to be ready to combat ransomware, to be ready for any critical issues that they might face with their crown jewels, and really bridge that business integrated gap that Don talked about earlier, with a simple SaaS experience. Thank you, and back to you, Don.
Thanks, Manoj. This is really exciting stuff. All the innovation that we're driving towards our SaaS-based offering completely complements exactly what we're delivering for customers across our entire portfolio. In fact, through the conversation today, we've shown how we're mapping our solutions, our innovation, our strategy to help customers achieve the movement to a hybrid multi-cloud world. Be prepared for that movement towards containerization and microservices and that next evolution of the application modernization journey. And more importantly, to your point, Manoj, showcasing how we can deliver these technologies and these solutions. To help customers achieve that industrialized state of data readiness and to help close that business integrity gap, whether it be through on-premises software, whether it be in the cloud through SaaS or even at the edge.
We truly have the best product portfolio to help customers meet these needs across all of these different environments. But products by themselves are not just enough. It's great to have the innovation, a solid product portfolio. How you go-to-market and bring those to your customers and partners is just as important. And so with that, I'm going to pass the baton to my friend and colleague, Chris Powell, to help us deep dive directly into what our go-to-market strategy is and how we're going to bring these solutions to our customers?
Thanks, Don, and thank you all for being here with us today. I'm Chris Powell. I head up our marketing efforts here at Commvault. And I'm pleased to be talking about the ways that we're driving our go-to-market forward. If you think about all of the innovations that you just heard Don and the product folks cover off, they were the ways that we're driving forward and really innovating in some ways that have been accelerated over the past couple of years. That spirit of innovation has really been brought into the ways that we're going to market.
And there's three key things that we're going to talk about. First, Riccardo Di Blasio, our Chief Revenue Officer, is going to talk about how he's driving growth in his organization. Second, we'll have Sandy Hamilton, our Head of Customer Success -- Vice President of Customer success, talk about the ways that she's driving the adoption, the renewals, the expansion with our customers in building out a world-class customer success function. And then finally, Gary Merrill, our Vice President of Operations, is going to talk about how we're driving all of this with greater efficiency. So with no further ado, let's get started. Welcome, Riccardo.
Thank you, Chris, and nice meeting, everyone. My name is Riccardo Di Blasio.
So Riccardo, I know when we talk about the ways that we're looking to grow the organization, you have a great way to frame this out in terms of our growth drivers. Can you sort of take everyone through your 3 growth drivers?
So the number one driver we have is our main focus in our traditional business, which is the data protection business. We can do so much more here in order to have our fair share. So the first big part of our growth strategy will be to double-down in our data protection market and keep growing, convincing a lot of organization around the world to switch for a better technology like Commvault. The second one is what we call new business, which is where we are all benefit from all the product portfolio that you saw before that allow us to give us our unique upsell and cross-selling opportunities and really going fishing into addition and additional addressable market. And last but not least, what we call leverages. Which are -- you will see later on the slide, our people, the operating model and a robust partner ecosystem.
Riccardo, this next piece, the first piece you really talk about here, this traditional business, I know that there's so many different key indicators of success that we're seeing? What are some of the ways that you see success in our traditional business today?
Yes. As you know we are operating in a market which is fundamentally going flat. And in spite of that, we've been able to grow double digit, 14% more precisely this year, which is the living proof that we are gaining share at speed. As a consequence of that, we added more than 1,000 logos over the course of the year of new clients that switch into Commvault technology, generating more than one hexabyte of workloads that migrated into the public cloud, leveraging of technology like ours.
So I know that when the market looks at this, some of the best ways that we can explain what's happening is through customer success stories. And we have one of the biggest customer success stories in our history. I know that's occurred just in the last couple of quarters. Talk about that a little bit.
Indeed. And we're very fortunate that this particular case is a very large American retail corporation, part of the Fortune 500, but we have so many cases like this. We've been able to make them switch fundamentally within 3 conversation. Number one is the product. When you're dealing with large, complex legacy environment Commvault is a second to known technology. Capable to provide the best customer experience and the best performance in order to build your data protection platform.
The second is the economics we've been able to generate, thanks to that, delivering one of the best total cost of ownership in the industry and a very fast ROI. And last but not least, we've been able to do that thanks to our partners. And in this specific case, thanks to Microsoft, which we've been blessed in having a strong partnership with Microsoft and all the team of Microsoft, that in this case, with joint forces to win a new account.
And that's great speaking of Microsoft. I know we've recently asked Casey McGee from Microsoft to give us some of his thoughts on the partnership with Commvault and how we're going to market.
Over the last year, the pandemic has had a dramatic impact on how businesses serve their customers. The speed and amount of transportation has been dramatic. We've seen a rapid shift to remote work leveraging Office 365 and Teams to replace typical in-person work. Companies are also serving their customers in new and different ways, remote meetings, digital commerce and innovations in supply chain have all transformed. With this, cloud data has grown exponentially. Cybersecurity and data protection have become even more critical to manage for IT decision-makers. One of the most important aspects of the Microsoft-Commvault partnership is our focus on ensuring customers' data is protected through the resiliency, reliability and security of our platform. We believe this starts with Microsoft Azure and is completed through the partnership with Commvault.
So our partnership is seeing early progress with accounts of all sizes. We have invested in building a joint sales strategy engaging with our partner network and bringing unique new innovations to market with joint technologies like MCSS. Commvault Microsoft have a rich 20-plus year partnership, and it really shows through how well our field teams partner on our co-selling engagements. We spent a lot of time together on joint account planning in order to more deeply understand our customers, and to help our customers drive their digital transformation and adopt hybrid cloud. Through our work together, Microsoft and Commvault have identified a number of customer scenarios. Where we believe our innovation can help accelerate growth. Microsoft and Commvault have a robust partner channel ecosystem that provides proximity to and engagement with companies of all sizes. This partner ecosystem will play an important role in helping bring Metallic, one of our most important innovations to market. Metallic leverages Commvault's proven technology to bring SaaS delivered innovations to market and to do so in a way that is much faster than a typical bespoke solution.
Customers know they can rely on the innovation from Commvault and the trusted cloud platform from Azure. Thank you, Riccardo, for the opportunity to speak with here today, and we deeply appreciate the partnership.
So, Riccardo, the next piece that I know that we are focused on is, as you captured it, really it's driving new business. So when you look at new business, a lot of discussion happened around the products group talking about the expansion of our product portfolio and what that does to our total addressable market can you talk about what the total addressable market expansion means from a field perspective?
Totally. Well, the short answer, we've been able to create a much larger addressable market, $42 billion by year 2024, precisely. And here, the rule of the game is to go above and beyond our data protection market with the upselling and cross-selling of the new product portfolio that the company built over the last couple of years.
And this is a very powerful revenue stream for us because not only will allow us to secure better our data protection business, but will give us the opportunity to have one more conversations with our clients on a lot of other things.
So I know the big way that, that's being driven is that broader portfolio that we spoke about earlier, when you're talking with customers, what do they think about this broader portfolio?
They love it because they see this as a data stack. Right? So where at the center, you have our core data protection business, but then you can spend between the value of the data, the data insight and the storage of the data and you can take that stack and deliver it in a ratable model as a service through our Metallic engine. So that hybrid way of delivering technologies and that breadth of technology is a very powerful conversation to have.
So in those conversations with customers and the adoption of the broader portfolio, again, no better way to look at this than with a customer example. So how about this one here in the health care industry?
Yes. We're very luck that this is one of the many examples that you will see while us delivering the data protection business, we've been able to drive more conversation with the client. And convince them to also adopt our new technology HyperScale X as well as having that delivered true Metallic as a service. So we've been able to take a traditional transaction only for data protection and make it larger to a much bigger transaction and have more conversation within the same account. And we do this with existing account, but we also do this with new prospect accounts.
Excellent. So Riccardo, that brings us to your third growth driver, which is around go-to-market leverage. Can you talk a little bit about what that means for you?
Yes, Chris. So the leverage we've been able to generate with our new go-to-market strategy, first of all, is the people. We've been very lucky that we've been able to develop internally, but at the same time, attract from outside people with deep domain expertise that are capable to hit the ground and run out of the gate. Having a material impact in that field productivity. The second is the business model. We've been activating inside sales organization around the world, creating an ecosystem with our account managers and sales engineering. But we've been also able to adopt new technologies AI machine learn driven that are giving us more insight of our field organization, of our segmentation so that we can be more focus in the different segment of the industry that we target. And you heard me before, we're also very lucky that we can benefit and leverage our robust partner ecosystem. And our goal is to double down on this. And not only to meet our current partner but [indiscernible] attract new ones.
So speaking of the partner ecosystem, I know this is a big part of your overall go-to-market efforts and even some recent executive hires that you might want to mention. So how do you see the partner ecosystem within your go-to-market?
Absolutely. It is a fantastic opportunity for us. And yes, I mean, you call it out. We recently hired John Tavares, to lead our new global sales partner organization around the world. And what you see in this slide is just an example, the slide is not exhaustive, but our partnerships span from global system integrators, to cloud providers, to managed service provider, to tech alliances with other vendors like our or with the value-add reseller that are in the territories and the distributors. So unique opportunity, we're not going to be able to be where we want to be without our partners.
So, Riccardo, thanks for all these insights. Let's summarize again for the group. What are these three ways that you're looking to grow the organization, and then we'll bring in to Sandy.
Absolutely. So number one, focus on data protection, our traditional business, gain our fair share by leveraging all the new operating model, our people and our partners doing the same with our newly created addressable market, the new business, the upselling and cross-selling and leveraging the 3 elements of the plan in order to maniacally execute all the above. And this is also an opportunity for me to call it out, the importance of customer success in our organization, and this is a great segue to introduce my partner in crime, Sandy Hamilton, who leads customer success worldwide. Sandy, over to you.
Thank you, Riccardo, and it's great to be here with you all today. When I joined Commvault about 18-months ago, my priority was to build a world-class customer success team. Now that can mean a lot of different things to different people. But here at Commvault, we have aligned all post-sale activities, including enablement and customer education under customer success. Essentially pulling the thread from new customer onboarding through expansion and onto renewal. And that's just what we've been doing over the past 6 quarters.
We've built an organization focused on delivering an exceptional experience for our customers that also delivers business value and outcomes for Commvault. A great customer experience in our business is similar to what you or I would want, a partner who is easy to do business with, who makes you feel important and who delivers value for your investment. We have dedicated customer success professionals around the world and increasingly in our center of excellence, which not only provides round-the-clock coverage but financial leverage as well.
There are three key business outcomes we are focused on. First is the adoption of Commvault's leading solutions to make sure customers are using what they bought, second, expanding across our portfolio of products and third, ultimately, renewing our subscription installed base. So let's dive a bit deeper into each one of these, starting with adoption.
When we work closely with our customers, we set them up for success. They adopt our solutions faster, and then they have the opportunity to expand. Over the past 3 years, there has been a dramatic decrease in time to second purchase. On average, 10-months faster. So what's changed? We have dedicated customer success managers. A programmatic set of onboarding activities and a maniacal focus on education. Things like giving customers best practice set of guides and offering data-driven health reviews. And as you heard Ranga mentioned, we now have an expanded portfolio, which we believe creates more opportunities for us to work with customers and for customers to work with us.
So now let's talk about how we actually are expanding customers into these new products. We intend to expand our accounts and grow subscription revenues with targeted campaigns for new products to promote cross-sell opportunities. To monitor capacity and workload consumption to promote upsell opportunities and roll out incentive programs for the teams to ensure alignment against our goals. This year alone, we have seen our subscription customers expand at twice the rate of perpetual. And during the past 4 years, the number of new subscription customers who own multiple products, has increased by more than 30% as a result of expanding. And 1 in 3 of our subscription customers have expanded this year alone.
So let me give you two examples. First, a large financial services company, and then a mid-market information management organization. As you can see from these examples, expansion is occurring across market segments, and what is driving the expansion is not only additional capacity, but also new products and services, including our data intelligence solutions and our SaaS offering Metallic. I recently had the opportunity to talk with one of our long-term customers, Justin, at the University of Canberra in Australia. It is now ranked 1 of the top-20 young universities in the World.
Good afternoon, Justin. I really appreciate you being here to talk with us this afternoon. I was wondering if you might share with us a couple of different aspects. You guys have been a long-time customer of Commvault about 15-years now. And not only have you stayed with Commvault during that period of time, but you've also continued to really stay with us as we've innovated and put out new technologies and new products, you guys have really been there every step of the way with us. So maybe you can share a bit about your journey with us, and we'd love to hear that.
Yes, yes, no worries, happy to. Thanks for having me. Yes. So as you said, we've had a long-term partnership with Commvault. And for me, that really comes down to just some key aspects, I guess, what the product does for us, value for money and the excellent support we get from Commvault. As part of my job, I'm required to make sure that we are using the best products from a technology point of view for the university. So every so often, I have to go out into the market. And I mean -- and I enjoy doing that as well as part of my job to see what technologies are out there to make sure we're still using what's best for us. And over the years looking at products like HYCU and Veeam and Rubrik, which are great products in their own right.
We still circle back to Commvault time and time again for a number of reasons, which I've touched on being that they're often the leader in technology and then feature sets in the product, value for money and probably first and foremost is just the excellent support we get from Commvault, both locally from our reps here and from a professional services and support point of view, and as we've continued to evolve over the year, the universities a lot of rapid change with technology, Commvault has been one of those vendors that keep up with those technology changes to protect the various technologies, the new ones we adopt and put in, and that's been evidenced over the last few years. And even recently, late last year, we put in the HyperScale platform from Commvault. And for us, that kind of was a no-brainer because we already were heavy users of the Nutanix hyperconverged platform. So we kind of knew the great feature set you kind of get out of a hyperconverged platform and how easy it is to support and how much redundancy is built in. So that's been a great journey for us as well and has freed up a lot of our technical resources to focus on other areas.
Super. well, listen, Justin, I apologize that our time today was so short, but I know you have to run. And so I just want to say again, thank you for taking the time. We love to hear stories from our great long time customers like this and I'm sure we'll talk again soon. So thank you.
No worries, thanks for having me.
One of the best things about my role is that I get to speak with so many great customers like Justin, and hear their stories about how Commvault continues to help them achieve their business goals. But now back to our business goals. Let's turn to renewals. Renewals are a strategic imperative for Commvault. We are focused on continuous engagement to understand the customer health, leveraging predictive analytics to identify opportunities and risks, and providing flexibility on licensing models to help customers who want to move from modern -- move to modern-based subscription pricing. And while it's early days with this fiscal year being the first with a meaningful renewal population. Our net retention rate has been firmly above 100% in each quarter of this year. We've increased our customer net promoter score by 19 points to be among best-in-class. And we have almost 1,000 individuals who advocate on our behalf. This all speaks to the fact that customers are staying with us and are happy.
So here's what I want you to remember. 3 key takeaways. number 10, the average decrease in the number of months to second purchase. One in three, the number of customers who have subscriptions that are expanding. And 100% plus is the quarterly net retention rate so far this year. So I want to thank you for your time, and now I'm going to turn it over to Gary Merrill, our Head of Operations.
Thanks, Sandy, and hello, everyone. I'm Gary Merrill, VP of Operations. I am excited to study few minutes with you on our third topic, which is outlining the operating leverage we are targeting as we optimize our sales and marketing spend. As you will see with this first visual, since FY '18, we have dramatically reduced our annual sales and marketing expense by about $75 million, while still strategically investing in key growth initiatives.
This includes Metallic go-to-market as covered earlier by Manoj, and the build-out of our customer success team as you just heard from Sandy both of which are included in sales and marketing expense. So this is a 1,200 basis point improvement. Through our estimated FY '21 results. For our current year FY '21, we expect that sales and marketing expense will be approximately 41% of revenue, which is a 400 basis point improvement over just FY '20. We expect to drive additional sales and marketing expense leverage. As we approach our FY '23 goal of 38% as a percentage of revenue.
To achieve this, I am working with the go-to-market leadership team as we are focused on continued operating discipline tied to our customer segmentation approach. First, we are focusing our account executives on expanding the footprint in our existing installed base and in enterprise prospect accounts. This should then complement our new segmented sales motion, which is intended to cost efficiently secure our subscription renewal opportunity. In FY '22 alone, we estimate that our subscription renewal opportunity is approximately $80 million. 60% larger than the approximate $50 million opportunity just this current fiscal year.
As we enter FY '22 and beyond, we anticipate additional leverage from our recently build out inside sales organization as well as our customer success function as the adoption of our product portfolio accelerates. These strategic changes have created a land, expand and renew motion that we expect will continue to drive operating margin leverage. Brian will discuss this further in the financial overview section.
We expect that another key driver to our operating leverage will be sales rep productivity. Which is the sum of our software and SaaS bookings on a frontline per rep sales basis. We are targeting double-digit CAGR increases in sales rep productivity over the next few years. Don't forget that talent and tenure are both key to sales rep productivity. We have been transforming our sales force with a material percentage of our sales reps having been onboard less than 2 years. These recent hires are ramping nicely, and we are seeing increased sales rep productivity across all geographic regions under the direction of our new go-to-market leadership. We believe our continued top line success will lead to a more tenured sales force, which in turn should be more productive on average.
In addition, we expect that the accelerated adoption of our product portfolio that Sandy discussed will also facilitate additional sales rep productivity as it is aligned directly to our subscription-led land, expand and renew motion, leveraging our low touch inside sales reps and customer success resources during the customer journey should allow our direct sales force to land opportunities in a large and underpenetrated market.
And our sales reps will continue to benefit from increased marketing leverage as we continue to shift focus towards more efficient digital channels. The team and I are aligning our Commvault resources to take advantage of a stronger and more modern partner ecosystem, spanning from technology alliances to GSIs to service providers. We fully expect that this will provide a tailwind to improve both our reach and our execution.
Lastly, our growing subscription renewal base provides a repeatable revenue stream to support our sales rep productivity objective. So in summary, we have built a land, expand and renew sales motion that we believe will provide operating leverage for years to come, balancing our earnings expectations with our top line objectives. And with that, I'll turn it back over to Chris.
Thanks, Gary, and thanks Riccardo and Sandy. That was a great summary of the ways that we're looking to win in the market. First, driving growth with Riccardo and talking about the growth drivers in his field organization working with our ecosystem. Second, Sandy talked about the ways we're driving adoption, expansion and renewals with our customers base as she builds out a world-class customer success function, and you just heard from Gary talking about the ways that we we'll drive greater efficiency. Next, I'll hand it over to Brian Carolan, our Chief Financial Officer.
Thanks, Chris, and hello, everyone. Thanks for joining us today. For those of you who don't know me, I'm Brian Carolan Commvault's Chief Financial Officer. These are exciting times for Commvault. And I hope you're joining today's event. Hopefully, you had a chance to review our fiscal third quarter results that we released this morning.
I'm pleased to say that this was the largest revenue quarter in the company's history. We set numerous records this past quarter, and here are some of the highlights. Total revenues were $188 million, up 7% year-over-year, a quarterly record. Software and products revenue was $89 million, up 16% year-over-year, also a quarterly record. Large deal revenue, which our deals greater than $100,000 of software grew 19% year-over-year, with the average deal size up 15% year-over-year to approximately $322,000 and that's an important stat for us because our results weren't driven by 1 or 2 mega deals. In fact, the number of 7-figure deals was meaningfully above our recent run rate with solid contributions from all 3 geographic regions.
Subscription revenue increased over 50% year-over-year and represented 55% of software products revenue up from 41%, a year ago. Annual recurring revenue increased 11% year-over-year and is now over $500 million. On a constant currency basis, ARR grew 8%. Recurring revenue was approximately $140 million and represented 74% of total revenue compared to 70%, a year ago. Non-GAAP EBITDA grew 26% year-over-year to almost $40 million. Non-GAAP margins were approximately 21%, up 300 basis points year-over-year. We had $33 million of share repurchases during the quarter, and EPS was a record $0.57 per share.
To summarize, this was a record quarter for Commvault, and we are pleased with our progress. As you've seen throughout the day, our organization has rallied together over the past 2-years to reposition the company with a focus on sustainable and responsible growth. What's also gratifying is the fact that we're building consistency and credibility.
So what's the key takeaway? We're focused on creating long-term shareholder value and there are 3-key levers that go into that: increasing our recurring revenue; driving margin expansion; and a committed and attractive capital allocation policy. On our earnings calls, Sanjay frequently speaks to customers being on a journey, always moving from something to something. Well, we've been on our own journey to transition our business from a perpetual model to a recurring revenue model. So let's take a look at where we've been, where we are today and what we expect in the years ahead.
Some of you may recall that prior to FY '18, we almost exclusively sold perpetual software licenses. At that time, subscription and utility contracts accounted for less than 10% of our software and products revenue. Recurring revenue, which includes subscription software and maintenance, represented about 50% of total revenue. Beginning in FY '18, we introduced more flexible subscription-based pricing. We've made significant progress since then. Fast forward to today, and now subscription revenue accounts for about 58% of our software revenue and recurring revenue represents about 77% of total revenue.
FY '21 marked the first year of a significant multiyear subscription renewal cycle that we expect to serve as a revenue tailwind in the years ahead. I'm happy to report that our net dollar retention rate for our subscription revenue business comfortably exceeds 100%. In fact, fiscal Q3 was our strongest subscription retention quarter of the year. Earlier this year, in fiscal Q1, we introduced annual recurring revenue or ARR as a metric. We believe ARR represents a good measure of all of our recurring revenue streams. As shown earlier, recurring revenue currently represents about 77% of total revenue as we sell more subscription products and SaaS solution we believe the recurring revenue mix can approach 80% to 85% over the near term.
Historically, the largest component of ARR has been perpetual maintenance. It's important to understand that subscription offerings contribute about 2x the amount of ARR when compared to perpetual contracts on a like-for-like basis. Over the last several years, particularly in FY '21 as we successfully cycled through our first renewal year, subscription offerings have grown to represent an increasingly meaningful portion of ARR. Over the next couple of years, we expect subscription offerings to cross over perpetual maintenance and become the largest contributor to ARR. Long term, we expect our subscription offerings to represent the majority of ARR. And with that, we see potential for 10% or more annual ARR growth.
And let me give you a few reasons why we believe this. The factors driving this projected acceleration are: One, a large and growing total addressable market; a portfolio that is aligned to the addressable market, both from a solution and pricing perspective; an optimized go-to-market motion that addresses all segments of the market from enterprise down to SME; and a growing subscription renewal opportunity with opportunities for expansion.
So let me start first with the total addressable market, or TAM. The data management market is large and growing. Innovation, both internal and external, has been the primary driver of our TAM expansion. In addition to our core data protection offerings, we believe that our internal and external innovation has expanded our TAM opportunity to over $40 billion by 2024. This is based on data from IDC and sell-side projections. More importantly, we've expanded into higher growth adjacencies, including the integrated appliance market, the software-defined storage market and most recently data protection as a service market which IDC projects to grow at high teens CAGR through 2024.
Our new unbundled product portfolio and simple subscription-based pricing makes it easier for potential customers to try and buy our products. Our comprehensive portfolio has solutions for customers' unique data needs, whether it's data protection, data storage or data intelligence. And these solutions can be consumed in any form factor, including downloadable software, an integrated appliance or as a service. Our new portfolio offerings can also scale up to large enterprises and scale down to mid-market, SME and SMB. Not only is our portfolio aligned to a large addressable market. We've also enhanced our go-to-market motion in an effort to increase our share across all segments of the market.
So let's discuss these land and expand opportunities in our addressable market. Historically, we competed in the data replication and protection market. This is a large market, estimated at approximately $9 billion dominated by a handful of legacy players. Over the past several years, the legacy market share leaders have become shared donors to the market innovators such as Commvault. Based on IDC data, we estimate that our share increased by about 200 basis points over that same time frame. In fact, since FY '18, our new subscription logos have grown at approximately 50% CAGR, that's 50%. Looking forward, we believe our enhanced portfolio and go-to-market motion will drive additional new logo growth and further market share gains in this large and fragmented addressable market.
In addition to landing these new customers, we expect to expand with our existing base. Simply put, we believe that incumbency is an asset, the majority of our customers are large, well-capitalized enterprises with whom we have long-standing relationships approximately 9 years. Historically, customer dollar expansion was primarily capacity driven, but in recent quarters, we're starting to see some green shoots from our cross-sell motion, especially as digital transformation initiatives reshape IT spending priorities toward cloud and SaaS. For example, as Sandy mentioned earlier, expansion with subscription customers is happening at a faster pace and earlier in the customer life cycle. In Q3, over 50% of our Metallic customers are also using another Commvault's solution. And reps that are successfully selling Metallic are also selling more software. There is a direct positive correlation. This cross-sell effort is a new and emerging motion for us. But we expect to continue progress on this front.
We also have a growing subscription renewal opportunity. The software value in FY '21 is approximately $50 million. With nearly 25% of this remaining in fiscal Q4. More exciting than our initial success in FY '21 is our subscription renewal opportunity increases to approximately $80 million in FY '22. Keep in mind that FY '21 was the launch year of our customer success team. We've learned a lot from this inaugural effort and want to capitalize on these larger renewal opportunities in the years ahead. Sustainable revenue growth is only one element to creating long-term shareholder value.
Now let's pivot to margins. And I'll begin with gross margins. Prior to introducing our first-gen HyperScale appliance late in fiscal year FY '18 and our gross margins were consistently in the 86% to 87% range. Following the launch, third-party IP costs and the cost of pass-through hardware associated with that appliance impacted gross margins which bottomed out at just below 83% in FY '20. We've recently taken some strategic actions to improve our gross margins, including the successful integration of Hedvig, the decision to return to a software-only model and optimizing our field operations and global delivery capabilities. These have all contributed to our year-to-date improvement in gross margins.
Over the near term, we believe we can approach historical peak levels. However, something that could have a dampening impact to overall gross margins is how fast the expected growth from Metallic comes due to the incremental cloud storage costs, especially as we expand into new geographies.
Now on to operating expenses. Since FY '18, we have aggressively worked to drive overall operating expenses lower, even while investing in growth driving initiatives, like our Metallic platform, the Hedvig integration, restructuring of our sales force and our renewed customer success effort. In aggregate, non-GAAP total operating expenses declined 12% from FY '18 through FY '20. We achieved G&A savings through real estate optimization and a shift toward lower cost geographies, but the largest driver has been optimization of our go-to-market motions. In FY '18, total non-GAAP operating expenses represented almost 74% of revenue, with sales and marketing expense making up 53% of that base. As you heard from our go-to-market leaders, over the past 3 years, we've taken actions to aggressively reduce sales and marketing expense while increasing productivity. Our progress to-date has been significant we expect to end FY '21 with sales and marketing expense, representing approximately 41% of revenue. This is an improvement of over 1,200 basis points since FY '18. Our return to sustainable revenue growth, combined with our relentless discipline around costs, should allow us to deliver FY '21 non-GAAP EBIT margins of over 18%, an increase of nearly 500 basis points year-over-year.
Now let's talk about another important value driver, our capital allocation priorities. Our primary use of free cash flow is share repurchases. Historically, we have been opportunistic with our approach. However, our shift to our recurring revenue model and our relentless focus on execution affords us better visibility and predictability of our revenue, margins and free cash flow. The improved visibility, our debt-free balance sheet and our meaningful free cash flow generation gives us confidence to adopt a more committed approach to capital deployment in the years ahead. In fiscal Q3, we repurchased approximately $33 million of our stock. Today, we are committing to repurchase an additional $200 million of our stock by the end of FY '22. We intend to act on that beginning in Q4 '21.
But wait, there's more. In addition to that fixed dollar commitment, we also intend to return at least 75% of free cash flow annually beginning in FY '22. We expect these planned repurchases to more than offset dilution from share compensation. I know we've given you a lot today, a lot of exciting topics and metrics to absorb. So let's take a moment to recap. Sanjay discussed the growing business integrity gap and how Commvault's intelligent data services help customers. The products team explain how our portfolio innovation has positioned us as the leader in the industry. The go-to-market team talked about a refined subscription-led land and expand motion, positioning us to increase market share through new customer acquisition and dollar expansion across our large and diverse installed base. And I've discussed how our pursuit of executional excellence across all functions should continue to drive our return to sustainable and profitable growth.
So you've heard about our transformation journey. You've seen the recent consistency of our financial results and when you put it all together, that now gives us confidence to lay out near-term and longer-term targets. So let's discuss our Q4 '21 outlook and near term targets. Looking to Q4 '21, we expect software and products revenue growth of approximately 26% to be about $84 million. Total revenue would be approximately $182 million, which is growth of 11% year-over-year. Keep in mind, we are still transitioning away from older generation solutions that carry third-party royalties, and there will be some remaining sales of lower-margin hardware this quarter. And just a reminder on OpEx, our fiscal Q4 is calendar Q1. So there's a seasonal FICA reset of approximately $3 million. Despite this, we expect total expenses to be roughly flat sequentially, resulting in non-GAAP EBIT margins approaching 17%.
Now I'll discuss the near term targets, which we expect to be achieved by the end of FY '23. We believe our software revenue CAGR will be in the range of 9% to 10%. Subscription revenue as a percentage of software and products revenue will likely approach 70% to 75%, up from approximately 55% in FY '21. And we can see total annual revenue growth of approximately 6% to 7%. Please keep in mind that our subscription transition will have a potential dampening effect on services revenue. Also, we're strategically converting many of our customers that are on legacy perpetual pricing models to subscription and SaaS models. The recurring revenue mix should be in the range of 80% to 85% over the near term, up from approximately 75% in FY '21. And we are striving for ARR growth of 10% or more. We have set an objective of achieving non-GAAP EBITDA margins of 25% and by the end of fiscal 2023. That represents a nearly 600 basis point improvement off the projected 19% base in FY '21. This would translate into non-GAAP EBIT margins of approximately 23.5%. Finally, we expect non-GAAP EPS to increase at a double-digit CAGR off a projected FY '21 base of approximately $2 per share.
To help you tie this all out, I'll share some expense line item guidance to highlight the drivers of margin improvement. As I noted earlier, we expect gross margins to approach peak levels of approximately 87% over the near term. We expect sales and marketing expenses as a percentage of revenue to decline to approximately 38% or better over the near term. Both R&D and G&A expenses as a percentage of revenue should approximate their current levels.
And longer term, which we define as FY '25 and beyond, we are focused on the algorithm of balanced revenue growth and EBITDA margin and have aspirations to achieve the Rule of 40. Keep in mind that as a tech company, things can change rapidly. We envision the market continuing to shift towards cloud and recurring SaaS-based solutions. We believe that we will be well positioned for this we intend to accomplish this responsibly with the majority of the leverage come from sales, marketing and G&A.
In summary, we believe the new Commvault presents a compelling investment opportunity. The plan we discuss today highlights a recurring revenue model characterized by sustainable growth, improved profitability, strong free cash flow and an attractive capital return policy. We believe that we have the ingredients to create material shareholder value in the years to come. Before I hand it back to Sanjay, you heard him speak earlier about our commitment to ESG. We've actually asked 2 of our Board members, Martha Bejar and YY Lee to share their thoughts and what this means to Commvault.
ESG is incredibly important because we are fundamentally a global company in a connected world and an increasingly interconnected world. And this is what powers our business.
ESG is not a destination. ESC is not a check mark for us, but it's very much embedded into our strategy. And so that creates the value that we want to create for all of our shareholders.
2020 has really shown us what a direct role we have to play in supporting the integrity and the continuity and the resilience of our customers, employees and the communities around us. And it has really brought us together from the leadership and the Board, for sure, with the employees and across the many people involved in our business and in our community system.
Our priorities as independent directors. They are the governance of ESG, whether you're thinking about business codeofconduct, data privacy, cybersecurity, human rights, anti-corruption laws, that governance is a part for us. When you think about value creation, we think our value creation for all of our stakeholders, whether we're thinking of employee value creation, innovation, creating solutions and creating services that are second to none is a priority for our Board.
Commvault has really prioritized more inclusive leadership as the focal starting points who help our business through hiring, through career development, proactive mentoring at all stages, plus an increasingly diverse board.
ESG is part of our strategy, and we will continue to evolve and we'll continue to raise the bar. We've made a lot of progress on the diversity inclusion and belonging. It is an amazing organization that is creating value and is executing to our strategy.
We need to make sure that our customers can rely on us, not only with leading-edge technology, really powerful solutions. But so that our customers know the integrity with which we run our business, the integrity with which we behave in the marketplace is something that they can build into the core of their operations and their businesses and to have that assurance that they can rely on us to be a world-class partner in every aspect.
As you can see, Commvault is more than just its innovation and fundamentals. It is also on how we continually strive to be a better company for our employees, customers, shareholders and the communities where we live and work. After all, people want to work for and do business with socially responsible companies. That is core to who we are. And our social responsibility will remain a priority for us this year and in the years to come. And with that, I'll bring back our CEO, Sanjay Mirchandani. Sanjay, welcome back.
Thanks, Brian. As you can see, we are excited about the opportunity ahead and believe we have the people, portfolio, strategy and fundamentals to continue our path to sustainable and responsible growth. We look forward to continuing these conversations with you in the future. During these unusual times, the health of employees, partners and customers is of utmost important to us at Commvault. As an organization, we carefully follow CDC and state COVID guidelines. Everyone that is here in the office today has been tested for COVID and received a negative test result. With that, Brian and I will begin the question-and-answer session, so we can hear from you.
The first question is, your software growth numbers were well above your guided range. Can you give us some more color on the Q3 results and what drove the upside? Well, nobody better than Brian, for that.
Thank you, Sanjay, and hello, everyone. Great to be here. Sure. This was a gratifying quarter for us, a record quarter in many respects, record software, record total revenue, record EPS, as you heard. And what was great is that it was really the quality of the earnings and the quality of the revenues that came in was really important to us. Our large deal revenue, which are our 6-figure software deals and greater was up 19% year-over-year, and the average deal size approximated our four quarter average. So that really means that it was driven by many, many large deals, not just 1 or 2, what we call megadeals. So that was really gratifying to see.
Also, our deal is less than $100,000 was also up meaningfully. It's up 10%. So really good contributions from that. Our recurring revenue is still making strides, 74% of our revenue is recurring in nature. Our ARR balance now sits squarely at over $0.5 billion, up 11% year-over-year, 8% constant currency. And also, we saw strong contributions from all of our geographies. The sales and marketing changes that we made 12 to 18 months ago are starting to pay off, and we're starting to see green shoots of that. And then lastly, we did this responsibly. We had our margins improved by 300 basis points year-over-year, resulting in record EPS for us.
So with that, I'll turn to the second question. Can you give some more color on the capital allocation plan? I want to make sure I understand the total commitment?
Sure, I'd be happy to do that. What we laid out today, we think, is a very responsible and attractive capital allocation plan. We have committed a sizable chunk of our existing cash and future cash flows to share repurchases. Let me break down the numbers. We've actually committed $200 million of our cash over the next 14-months through the end of FY '22 to share repurchases. In addition, starting on April 1, 2021, we will dedicate 75% of our future free cash flows to share repurchases. You add all that up, and that is a sizable commitment from our perspective. And we think it's a great use of our capital, great use of our cash, and we're excited to roll that out today.
So let's move on to the next question. I think it's going to be for Sanjay. Sanjay, I'll read this. You outlined a very large TAM, much bigger than what we discussed post Hedvig acquisition. Can you give some more color on the market opportunity? So Sanjay?
Thanks, Brian. So we outlined a $42 billion TAM opportunity based on some logical grouping of layers, if you would, on the opportunity. It starts with core data protection, data protection as a service, insights, analytics, GDPR, GRC type things around the data and then software defined storage. These tend to be fragmented as markets and tend to be difficult for customers to embark upon and get the full life cycle. We think, as customers go through digital transformation, we have a great opportunity here to help them through it. When I speak to CIOs, they are concerned about where their data is. They're concerned about ransomware. They're concerned about the cloud. They're concerned about digital transformation. And we think our portfolio aligns to the opportunity is number one in being able to help our customers in that journey.
The next question is -- and I think I'll take this. You announced new pricing and packaging last summer, how is that being accepted? So far, so good. The feedback we're getting, we're pleased with. I think more importantly, the folks that actually have to deal with the pricing with customers and partners appreciate what we've done. We simplified our packaging and licensing in the summer based on feedback. It makes it easier for customers to buy what they need aligned to the workload. So as they add more workloads, they can, in a granular way, acquire licenses and capabilities to work with us. And also to note, our newer technologies and products are subscription-first in alignment with the strategy that Brian and I shared. So we see a growing trend, hopefully, with our subscription revenue.
In that light, how should we think about subscription renewal as an opportunity? Brian, why don't you take that one?
Sure. Thanks, Sanjay. We get this question quite a bit, and it's a great question to ask. I think it's important to understand that renewals is just part of the story. We started this journey several years ago. For those of you that may not be as familiar with Commvault. Prior to FY '18, less than 10% of our software revenue was recurring in nature. Beginning in FY '18, we started a concerted effort to move to more recurring based revenue. Now we're happy to report that well north of 50% of our software revenue is considered recurring. Part of this is that when we started selling these contracts, multiyear contracts back in FY '18, they are generally 3 years in length.
So fast forward to today, in FY '21, that's actually the first meaningful renewal cycle that we've had for our subscription business. And I would say things are progressing well to date. In fact, our Q3 net retention rate for our entire subscription business is firmly above 100%. The opportunity that we had in FY '21 is a $50 million software opportunity. We see that actually growing to $80 million in FY '22 and then growing again in FY '23. So again, this will be a tailwind for the near-term ahead. It will normalize probably after that point in time as we approach that 70% to 75% range of subscription revenue as a percentage of software. And I think, again, it's more than just about the renewal. It's part of the whole motion that Sandy Hamilton laid out. It's the land, adopt, expand and renew altogether and that's where we're looking at that subscription business with net retention rate above 100%. We're seeing green shoots pop up with respect to our product portfolio and our customer success motion really contributing tangible results.
Next question, I think I'll take this one, Sanjay. Can you talk to us about the drivers of ARR? And can you break it down in components of subscription, perpetual contracts, Metallic, other? Sure, I'd be happy to do this. Well, as you heard on our call today and presentation, ARR is an important metric for us, and it's going to be an important metric for us for years ahead. And it really is a measurement of the journey that we have been on and will continue to be on for the foreseeable future. As I said, it stands at over $0.5 billion, but we're not done. We expect this to grow north of 10% and over the near term.
And what gives us confidence is that we're continuing to go with subscription-led and SaaS-led offerings, as you heard from our go-to-market team. Also things like Metallic, our SaaS offering, while it's still growing, it's growing rapidly. It's in the 7-figure range, and that's going to contribute to our ARR growth over time. In fact, over the near term, we actually foresee our subscription revenue overtaking the perpetual maintenance revenue that also rolls into ARR. Right now, perpetual maintenance is the largest component. But over the next couple of years, we see that subscription becomes the majority. We're encouraged by this. We think it's a great metric. And again, we firmly believe that we're going to be at least 10% or better ARR growth in the near term.
Switching gears. I think Sanjay, I'll ask this one of you. Have you come up. A lot of questions on Metallic. We're getting -- sorry, there's another one that popped in, sorry about that. Your guidance suggests 17% software growth this year in FY '21. You also have a $30 million renewal tailwind in FY '22. Why are you guiding to only 9% or 10%?
Correct. So our guidance would suggest that our software growth for FY '21 is in the 17% range. Keep in mind that, that's building off a base in FY '20, which we would consider a transformational year for us also, we were hit like many companies with the onset of COVID in the March 2020 quarter. And so therefore, our growth rate of 17% may not be the best metric to use going forward. And also that creates a more difficult comp for FY '22 off the FY '21 guidance that we laid out. We think that near term -- that our guidance that we laid out today of a 9% to 10% software growth CAGR still represents a very compelling growth opportunity for us. And why is that? So first of all, we're growing and taking market share. We have a large market that we operate in. We're entering into higher growth adjacency markets, as you heard, you add all that up, our TAM should expand over $40 billion, 7% CAGR over that time period. Also, we had that portfolio that is well aligned to that growing market opportunity. And in addition to that, we are creating a much stickier recurring revenue stream, as you heard. We're leading with SaaS. We're leading with subscription led offerings. We're seeing green shoots of success there. And again, I think that the ARR growth is going to be the true measurement, which is north of 10% growth compared to our software growth of approximately 9% to 10%.
Now I'll jump to the Metallic question. That did pop in. We're getting a lot of good feedback on this. Can you talk to us about the progress to date on your road map ahead? And how are you different from competitors that are out there?
I could take the rest of the allocated time to answer that question. We're really excited. The Metallic is doing really well. We've gone from 2 countries at launch to 23 as of yesterday. Our portfolio has gone from 3 core services to 7, supporting major SaaS workloads. We have Office 365 enhancement, salesforce.com. Major cloud providers like Azure, AWS, VMware, all supported, endpoints, supported, hybrid across cloud, supported, on-premise and edge, supported, hundreds of paying customers, ARR has tripled over the past 3 quarters. 1/3 of our customers are enterprise customers with healthy expansion.
In fact, 50% of our customers in Metallic have more -- are also using some other Commvault products. It's also bringing in new customers. 40% of our Metallic customers are new to Commvault really enabling our land, expand, adopt motion.
How are we doing with the competition? I like to compete on the merits of what we build. On our technology. And I think Metallic has, by far, the best technology in the SaaS data protection as a service capability. We are rolling out services very fast. And we can do that because our core, our heritage is data protection. Metallic is also managed through single interface, whether the workload was originated on-premise, on the edge or on the cloud. While some of the competition may be focused on a particular segment or a particular workload, we have the broadest, our heritage is enterprise. So we build for scale. We're going to win on the merits of all that.
The next question is, how have your win rates track over the last couple of years, especially relative to some of the private players, how do you beat the competition? Okay. Another question near and dear to my heart. So we think of the competition very simply put in 3 buckets. There's the legacy competition that we've been competing with and winning against and taking share from every day. We've got the appliance players over the past few years who had an advantage with -- an early mover advantage on a form factor. And I think that's been leveled. Our HyperScale X and our Metallic technologies sort of blow that away. And the third is SaaS, and I just shared with you how we're doing with Metallic. The difference is we have a superior set of products, no workload left behind. From traditional to new, we out innovate. We have over 900 patents and more. The second is really around partnerships, making sure that we have no great businesses built by itself, Riccardo and I talk about it all the time, strong partnerships like the ones we highlighted today matter and they matter across the world. And we -- that also gives access to customers for the solutions they need. The third piece, simplicity, making it easy to adopt, making it easy to change your mind as you transform and giving you a single way to think about all of this. So superior product, great partnerships and simplification day in and day out, allow us to win.
You recently announced John Tavares to lead the channel. How critical is the channel to Commvault? I'll take that. Yes, we did announce John Tavares. We're really happy to have him leading our global partner organization, brings a lot of great experience. How important is the channel to Commvault? Very important. Since I've been at Commvault, I have stated it over and over again. And I mean it, that we are a channel friendly company. We cannot build this business, we cannot put those -- that long-term guidance out there without our channel and our partners. 90% of our business, even today, is transacted with the channel. Many of our marquee wins come with partnerships. In addition to go-to-market channel partnerships, and we also have deep integration, technical integration on our platforms and our technology with our key alliance partners. And that includes over 20 cloud providers that we work with. So it's a combination of really engaging with the channel in a committed manner worldwide and also making sure our technology works better out of the door with our partners.
The next question is regarding sales and marketing expense. Can you do more on sales and marketing expense? Will you give any details in fiscal year '22? Brian, this is right to you.
Thank you, Sanjay. Well, as you heard from Gary Merrill, he laid out in really good detail. We've done a lot with sales and marketing expense. In fact, we've reduced our spend by roughly $70 million from FY '18 to FY '21, took the overall cost as a percentage of sales from 53% down to our projection of 41% for this fiscal year. So we've accomplished a lot, but we're not done, we're not stopping there. Now we want to make this more repeatable. We want to make it more sustainable. We're focused on rep productivity, rep maturity, partner leverage, adding some complementary customer success functions and resources, also inside sales reps. So I think this is going to also feed into the land, adopt, expand and the renew strategy because as we get more muscle memory here and more recurring revenue, our cost of sales associated with that revenue, we believe, is going to go down.
With respect to any details, I would say, just kind of look at the glide path that we're on, Gary laid out that where we're at, 41% in FY '21 is our expectation. We expect to get to 38% by FY '23. I think that journey will accelerate as we go along over the next couple of years, and we're confident in those targets that we laid out. But in summary, we've done a lot, but there's still a lot more to do.
Next one is we put out targets a few years ago. How is this different? How confident are you in your near term outlook? I would say, without any doubt, we have many, many reasons to be confident and much more confident, I think, than we were a few years ago. First of all, we have the right markets. We've expanded our market opportunity drastically. We've realigned our product portfolio. We have a rebuilt go-to-market and distribution platform and structure, we actually built out a customer success function. We've got a renewals opportunity and a tailwind for years to come. And also the recent momentum gives us further confidence in our guidance that we laid out today.
So let me just unpack that a little bit. The market, in particular, I mean 7% TAM growth, we're projecting that our software growth is going to be in excess of that. The overall growth will be around the 6% to 7% range. The go-to-market infrastructure, as you heard from Riccardo Di Blasio, Sandy Hamilton, this is really starting to hit its stride. We brought in a lot of talent over the last 12 to 18 months. Talent brings additional talent, and we're really confident that we're starting to see that.
And then also, just the recurring revenue gives us further confidence, $0.5 billion of recurring revenue with a tailwind of subscription renewals that should contribute to that growth profile. So in summary, we're confident in our strategy and confident in our targets that we laid out.
And then the question is, do you really think it's feasible to approach a Rule of 40 in the long term? Yes, great question. So first and foremost, we're squarely focused on hitting our near-term targets through FY '23. And then I think beyond that, you're going to start seeing a flywheel effect that kicks in after that. So again, we will be much more entrenched into larger, high-growth markets. Our product portfolio has a huge competitive advantage, and it's only going to get bigger. We will have more recurring revenue at that point in time, we'll have a more mature SaaS business at that point in time. And also, our sales reps will be much more productive and gaining much more leverage. And as you heard from Sanjay, just our partner leverage should add to this equation. So again, we're very focused on this algorithm of revenue growth and EBITDA growth and the combination that we see getting to the rule of 40 once we kind of break through the near-term targets that we laid out today through FY '23.
Question for you, Sanjay, what is driving the strength in Europe and Asia? Have you done something material in terms of sales in those geographies? Sanjay, I'll let you take over.
Thanks, Brian. Folks, I know we're at the top of the hour, but we've got a few more questions coming in, so we'll take them. Europe and -- thank you for noticing that Europe and Asia are doing well, but our Americas business is also doing well. We've really put simply, we've got -- our strategy is resonating. The problems we're solving for customers matter. Our technology portfolio is more granular and easier to consume, and our teams, which includes our partner channel are doing a great job getting in front of customers. So notwithstanding the pandemic, we've been able to really drive and make a difference with our customers' digital transformation journey.
So it's working and it's working around the planet. You cited -- and I'm going to take two more questions. You cited software-defined storage in your TAM slide. What is the future of Hedvig, just HyperScale X? Or is there a standalone opportunity? Well, when we acquired Hedvig in October, 1.5 years ago, it was driven by three key goals. One was the technology, and it continues to be absolutely state of the art for what it was built. Two, improved margins because incorporating Hedvig into our architecture, we didn't have to pay third-party royalties that were pricy. The third, it gave us an adjacency to roughly a $5 billion software-defined storage market. The outcomes are really quite straightforward. We've been able to integrate Hedvig right into our HyperScale X and we've got a world-class product there that we talked about. We're seeing the margin improvement every day as customers embrace our HyperScale X technology. And there is growing interest every day on stand-alone software defined storage, which we continue to bring to market and innovate around. So the three premises upon which we acquired Hedvig hold and are louder than ever.
And folks, the last question, I know you're having fun, but this is the last question. Regarding HyperScale X, help us understand where this fits in your portfolio, how much does it contribute to your current business? I did call it our flagship product. And I mean it because HyperScale X essentially incorporates everything we do, encapsulates everything we build. It is the cornerstone of our strategy. It's central to how we solve hard problems that customers have. It's a simple form factor. You can have it as an appliance. You can have it as a software. The choice is yours as a customer. It ties to the cloud, it ties to the edge. You get ransomware protection built in with an easy button, so to speak. And it gives you that expansion you need over time into the hybrid cloud. We're very excited about this. This -- I keep saying this, this encapsulates everything we do. And as much as you'd like me to call out, the numbers, we don't hear out the numbers for HyperScale X, in particular.
So with that, folks, I think we're out of time. Let's bring this to case. I hope you enjoyed the session, we did. Once again, thank you for all your participation and interest in Commvault. Have a great day.