Rubrik (RBRK) Q4 2025 Earnings Call March 14, 2025 01:35 AM ET Company Participants Melissa Franchi - VP & Head of IRBipul Sinha - Co-Founder, CEO & ChairmanKiran Choudary - Chief Financial OfficerSaket Kalia - Managing DirectorKash Rangan - Managing DirectorFatima Boolani - Managing Director, Co-Head US Software Equity ResearchJohn DiFucci - Senior Managing DirectorBrad Zelnick - Managing DirectorJoel Fishbein - Managing DirectorParam Singh - Executive Director Conference Call Participants Andrew Nowinski ...

Rubrik, Inc. (NYSE:RBRK) Q4 2025 Earnings Conference Call March 13, 2025 5:00 PM ET Company Participants Melissa Franchi ??? Vice President, Head-Investor Relations Bipul Sinha ??? Co-Founder, Chairman and Chief Executive Officer Kiran Choudary ??? Chief Financial Officer Conference Call Participants Saket Kalia ??? Barclays Kash Rangan ??? Goldman Sachs Fatima Boolani ??? Citigroup John DiFucci ??? Guggenheim Securities Andrew Nowinski ??? Wells Fargo Brad Zelnick ??? Deutsche Bank Eric Heath ??? KeyBanc C ...

Investor Presentation Fourth Quarter Fiscal 2025 Copyright © Rubrik 2025 11 Copyright © Rubrik 2025 Securing the World's Data Copyright © Rubrik 2025 Important Notice and Disclaimers Forward-Looking Statements This presentation includes express and implied forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on Rubrik, Inc.'s ("Rubrik" or the "Company") management's beliefs and assumptions and on information currently available to management. ...

Group 1 - Michael Wiggins De Oliveira is an inflection investor, focusing on buying undervalued companies at pivotal moments when their profitability is expected to increase significantly over the next year [1] - The investment strategy emphasizes technology and the Great Energy Transition, including uranium, with a concentrated portfolio of approximately 15 to 20 stocks and an average holding period of 18 months [1] Group 2 - Michael has over 10 years of experience analyzing companies in the tech and energy sectors, and has built a following of over 40,000 on Seeking Alpha [2] - He leads the investing group Deep Value Returns, which offers insights through a concentrated portfolio of value stocks, timely updates, weekly webinars for live advice, and support for both new and experienced investors [2] - The Deep Value Returns community is described as active, vibrant, and supportive, with easy access via chat [2]

Stock Performance - Rubrik's shares have rallied 90% since its IPO on April 25, outperforming the Zacks Computer & Technology sector (27.8%) and the Zacks Internet - Software industry (31.1%) [1] - Rubrik's shares have outperformed industry peers like Fortinet, which gained 52.2% over the same period [1] Growth Drivers - Strong demand for Rubrik's cyber recovery and resilience solutions, a rapidly growing customer base, and an expanding network of strategic partnerships have driven the momentum in its shares [2] - Rubrik's innovative platform, including its Security Cloud and Data Security Posture Management (DSPM), is expected to boost its clientele [3][4][5] - The company secured a significant win with Simpler, a healthcare tech company serving 5,000 U.S. hospitals, by offering stronger cyber resilience and security [6] Platform and Technology - Rubrik's Security Cloud is a unified platform that automates data management and security across enterprise, cloud, and SaaS environments, delivering robust, end-to-end protection [3][4] - The platform uses AI to help organizations detect and respond to cyber threats, offering unique cyber recovery with AI-powered zero-trust architecture for fast data and system restoration [3] - Rubrik's DSPM provides continuous visibility into data access across on-premises and cloud environments, combining fast cyber recovery with DSPM for a complete cyber resilience solution [5] Strategic Partnerships - Rubrik's rich-partner base, including Pure Storage and Okta, is a key catalyst for maintaining momentum [7] - The collaboration with Pure Storage integrates Rubrik Security Cloud with Pure Storage's platform, offering a modern architecture for data storage and protection [7] - In 2024, Rubrik announced an integration with Okta's Identity Threat Protection to enhance protection against identity-based attacks [8] - Rubrik was named to CRN's 2025 Cloud 100 List, recognizing its leadership in cloud innovation and data security [8] Financial Outlook - For 2025, Rubrik anticipates revenues of $860-$862 million, implying 37% year-over-year growth, with the Zacks Consensus Estimate pegged at $861.20 million [9] - The company expects its non-GAAP loss for 2025 to range from $1.86 to $1.82 per share, with the consensus mark at $1.83 per share [9] - Rubrik's earnings have beaten the Zacks Consensus Estimate in all the trailing three quarters, with an average surprise of 26.51% [10][11] Competitive Position - Rubrik's expanding clientele, driven by strong cyber recovery and resilience solutions, and a rich partner base, improves its competitive position in the cybersecurity market [12]

Core Insights - SentinelOne reported a fiscal third quarter 2025 EPS of breakeven, missing consensus estimates by a penny, while revenues grew 28.3% year-over-year to $210.6 million, surpassing consensus estimates of $209.73 million [15] - The company experienced a 29% year-over-year increase in annualized recurring revenue (ARR) to $859.7 million, and GAAP gross margin expanded by 140 basis points to 74.7% [15] - Despite positive free cash flow for the first time on a trailing twelve-month basis, the stock saw a sell-off of 13.2% following the earnings report, closing at $24.89 [16][17] SentinelOne Financial Performance - SentinelOne's revenue guidance for fiscal full-year 2025 is expected to be around $818 million, exceeding consensus estimates of $815.65 million [17] - The company ended the quarter with $1.1 billion in cash and investments, indicating a strong liquidity position [3] - Operating losses grew 9.4% year-over-year to $89.1 million, and R&D expenses increased by 34.7% year-over-year to $70.4 million [15] Market Reaction and Analyst Ratings - Analysts have given SentinelOne a "Moderate Buy" rating, with a 12-month stock price forecast averaging $29.44, indicating a potential upside of 31.25% [4][16] - The stock was not included in the list of top recommendations by analysts, suggesting a cautious outlook among some market participants [22] Competitive Landscape - SentinelOne was expected to benefit from the CrowdStrike incident in July 2024, which caused significant disruptions, but this did not materialize in Q3 as anticipated [14] - The cybersecurity industry remains competitive, with various firms targeting different aspects of online protection, highlighting the need for continuous innovation and customer acquisition [12]

Core Viewpoint - Rubrik (RBRK) is experiencing significant growth driven by strong subscription ARR, strategic partnerships, and innovative cyber resilience solutions, despite facing intense competition in the data protection market [4][15]. Financial Performance - For the fourth quarter of fiscal 2025, Rubrik expects revenues between $231.5 million and $233.5 million, with non-GAAP earnings projected to range from a loss of 41 cents to 37 cents per share [3][17]. - For the full year 2025, Rubrik anticipates revenues of $860-$862 million, indicating a year-over-year growth of 37% [7]. - The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is pegged at $232.88 million, with a consensus mark for loss narrowing to 39 cents per share [17]. Customer Growth - The number of customers with a Subscription ARR of $100,000 or more grew by 32% year-over-year, reaching 2,085 customers, indicating successful attraction of larger clients [5]. Strategic Partnerships - Rubrik has formed partnerships with Mandiant, Pure Storage, CrowdStrike, and Kyndryl to enhance data security and provide comprehensive cyber resilience solutions [6][10][12]. - The collaboration with Mandiant aims to integrate threat intelligence into Rubrik Security Cloud, expediting threat detection and cyber recovery [6]. Market Performance - Rubrik shares have surged 100.7% in the past three months, significantly outperforming the Zacks Computer & Technology sector's return of 6.3% [14]. - The company's stock performance is attributed to expanding partnerships that enhance data security capabilities [15]. Innovation and Product Development - Rubrik introduced Data Security Posture Management (DSPM) for Microsoft 365 Copilot, enhancing visibility and control over sensitive data [2]. - The integration with Okta's Identity Threat Protection positions Rubrik as a leader in data security by enabling better identification of user risks [16].

Subscription and Revenue Growth - Subscription ARR as of October 31, 2024, reached $1,002,252, representing a 38% growth compared to $724,811 in 2023[174] - Cloud ARR as of October 31, 2024, was $768,838, showing a 69% growth from $454,866 in 2023[176] - The average subscription dollar-based net retention rate was over 120% as of October 2024, down from over 130% in 2023[180] - The number of customers with $100,000 or more in Subscription ARR increased to 2,085, a 32% growth from 1,581 in 2023[182] - Subscription revenue for the three months ended October 31, 2024, was $221,511 thousand, a 55% increase from $143,363 thousand for the same period in 2023[224] - Total revenue for the nine months ended October 31, 2024, reached $628,444 thousand, up 39% from $452,879 thousand in the prior year[225] - Subscription ARR increased from $724.8 million as of October 31, 2023, to $1,002.3 million as of October 31, 2024, representing a 38% growth[228] - The company had 2,085 customers with $100,000 or more in Subscription ARR as of October 31, 2024, up from 1,581 customers a year earlier[228] - Maintenance revenue represented 2% of total revenue for the three months ended October 31, 2024, down from 5% in the same period of 2023[229] Financial Performance and Cash Flow - Free cash flow for the nine months ended October 31, 2024 was $(53.6) million, compared to $(33.2) million for the same period in 2023, reflecting a modest improvement adjusted for employer payroll taxes[186] - Net cash used in operating activities was $(35.4) million for the nine months ended October 31, 2024, compared to $(17.3) million in 2023, highlighting increased operational expenses[189] - Net cash provided by financing activities was $396.1 million for the nine months ended October 31, 2024, compared to $96.4 million in 2023, indicating a strong financing position[189] - The company reported net cash used in investing activities of $387.6 million for the nine months ended October 31, 2024, primarily due to $641.3 million in purchases of investments[263] - The company generated net cash provided by financing activities of $396.1 million for the nine months ended October 31, 2024, mainly from $815.2 million in proceeds from its IPO[265] - As of October 31, 2024, the company had cash, cash equivalents, and short-term investments totaling $632.0 million[255] - The company expects to continue incurring operating losses, with an accumulated deficit of $(2,722.4) million as of October 31, 2024[255] Expenses and Cost Management - Total operating expenses for the three months ended October 31, 2024, were $304,819 thousand, compared to $197,175 thousand in the same period of 2023[224] - Research and development expenses are expected to increase as the company continues to innovate its platform and product functionality[215] - Sales and marketing expenses are projected to rise as the company expands its sales force and marketing efforts in new markets[217] - General and administrative expenses are expected to increase due to the costs associated with operating as a public company, although they are anticipated to decrease as a percentage of revenue over the long term[218] - Research and development expenses for the three months ended October 31, 2024, increased to $80,050,000, a 56% increase from $51,372,000 in the same period of 2023[238] - Sales and marketing expenses for the three months ended October 31, 2024, were $158,907,000, a 31% increase from $120,847,000 in the same period of 2023[240] - General and administrative expenses for the three months ended October 31, 2024, increased to $65,862,000, a 164% increase from $24,956,000 in the same period of 2023[241] Strategic Initiatives and Market Position - Rubrik transitioned customers from legacy CDM capabilities to RSC, which now represents a majority of total revenue as of the end of fiscal 2024[160] - RSC is primarily adopted as a cloud-native, fully managed SaaS solution, with a specialized version for U.S. public sector organizations called RSC-Government[159] - The company utilizes a land and expand strategy, focusing on acquiring new customers and expanding within existing ones[165] - The transition to subscription pricing models has been a significant part of the company's business evolution since fiscal 2020[158] - The company expects contributions to growth from transitioning existing maintenance customers to subscription editions to subside in fiscal 2026[174] - The company expects the transition of existing maintenance customers to subscription offerings to be largely completed by the end of fiscal 2026[229] - The company anticipates that maintenance revenue will decrease as adoption of RSC increases, affecting overall revenue composition[202] Legal and Compliance Matters - The company is involved in various legal proceedings but does not believe any current litigation will have a material adverse effect on its business[284] - The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective at the reasonable assurance level[280] - There were no changes in internal control over financial reporting that materially affected the company's reporting during the period covered[281] - The management believes that the company's controls provide reasonable assurance but acknowledges inherent limitations in detecting all errors and fraud[282] Currency and Tax Considerations - The company’s effective tax rate may fluctuate significantly based on earnings in different countries, which could impact overall financial performance[247] - The reporting currency for the company is the U.S. dollar, while foreign subsidiaries operate in their respective local currencies, exposing the company to foreign currency exchange rate fluctuations[278] - The company has not entered into any hedging arrangements for foreign currency risk, but may consider doing so in the future[278] - A 10% increase or decrease in the relative value of the U.S. dollar is not expected to have a material impact on the company's results of operations[278]

Financial Data and Key Metrics Changes - Rubrik surpassed $1 billion in subscription ARR, growing 38% year-over-year [7][43] - Subscription revenue was over $221 million, growing 55% year-over-year [9][46] - Free cash flow was reported at over $15 million for the quarter [10][54] - Subscription ARR contribution margin improved by 1,100 basis points year-over-year, reaching negative 3% [10][52] Business Line Data and Key Metrics Changes - Net new subscription ARR added was $83 million, indicating strong performance in the cyber resilience market [9][43] - Customers with $100,000 or more in subscription ARR reached 2,085, growing 32% year-over-year [10][46] - Cloud ARR reached $769 million, growing 69% [43] Market Data and Key Metrics Changes - Revenue from the Americas grew 46% to $169 million, while revenue from outside the Americas grew 35% to $67 million [47] - Subscription net retention rate remained above 120% [45] Company Strategy and Development Direction - Rubrik focuses on cyber resilience as a key market driver, emphasizing the need for comprehensive solutions across various data environments [11][14] - The company is expanding its product offerings, including the recent addition of Postgres SQL and Red Hat OpenShift virtualization [20] - Rubrik aims to leverage partnerships to enhance its go-to-market strategy, integrating with various technology partners [34][138] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the cyber resilience market and the demand for Rubrik's offerings [55] - The company raised its guidance for the full fiscal year 2025, expecting subscription ARR growth of approximately 35% [58] - Management noted that the transition from maintenance to subscription ARR is moderating, with no expected benefit in fiscal 2026 [60] Other Important Information - Rubrik announced the Rubrik Annapurna API service, aimed at accelerating the development of trusted generative AI applications [31][122] - The company is focused on innovation and long-term growth, with a commitment to building a secure data infrastructure for AI applications [32][124] Q&A Session Summary Question: Insights on cloud backup and third-party data protection tools - Management highlighted the need for a unified policy engine for cyber recovery across diverse data environments, which is why customers prefer Rubrik over native cloud solutions [72][73] Question: Contribution margin improvement and investment pace - Management confirmed that the subscription ARR contribution margin is expected to reach breakeven next fiscal year, with continued focus on efficiency and growth [76][78] Question: DSPM deals and their impact on sales cycles - Management noted that DSPM deals have doubled in volume, providing data risk visibility and enhancing cyber resilience, although they currently represent a smaller part of the business [84][86] Question: Total Addressable Market (TAM) in cybersecurity - Management explained that Rubrik's transformation of the backup and recovery market into a cyber resilience platform has expanded the TAM significantly [99][101] Question: Operating efficiency sustainability - Management expressed optimism about sustaining operating efficiency improvements, driven by higher productivity and a focus on renewals [103][104] Question: Adoption rate of enterprise edition - Management reported that about half of new customers are adopting the enterprise edition, contributing significantly to net retention rate [115] Question: Vision and evolution of Rubrik Annapurna - Management described Annapurna as a long-term strategy to build a centralized data platform for secure AI applications, with plans for market experimentation [122][125] Question: Go-to-market partnerships - Management confirmed increased engagement with VARs and GSIs, enhancing Rubrik's go-to-market strategy [136][140]

Investor Presentation Third Quarter Fiscal 2025 Copyright © Rubrik 2024 Copyright © Rubrik 2024 11 Important Notice and Disclaimers Forward-Looking Statements This presentation includes express and implied forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on Rubrik, Inc.'s ("Rubrik" or the "Company") management's beliefs and assumptions and on information currently available to management. All statements other than statements of historical ...