In its second earnings report since going public in April, Rubrik (RBRK, Financial) delivered strong results, exceeding Q2 (Jul) earnings and sales estimates, projecting Q3 (Oct) figures ahead of consensus, and raising its FY25 (Jan) outlook. Despite these positive numbers, the stock is sliding today.
As an unprofitable cybersecurity firm with a high forward sales multiple, Rubrik's quarterly reports face intense scrutiny. The market expected another beat-and-raise following its successful IPO and strong Q1 report in June. Although Rubrik raised its FY25 outlook, the increase was modest. Additionally, the Q2 earnings beat was smaller than in Q1, and revenue growth was lighter compared to its first quarterly report.
Following the CrowdStrike (CRWD, Financial) outage in July, the importance of cybersecurity has intensified, prompting organizations to invest more in IT security. Operating in the cyber resilience market, Rubrik focuses on ensuring businesses recover quickly after an attack. Although management noted increased discussions about resilience, this has not yet translated into a rapid uptick in cybersecurity demand.
Overall, today's sell-the-news reaction overshadowed an otherwise decent report.
- Despite a challenging macroeconomic environment, Rubrik narrowed its net losses, posting earnings of $(0.40) per share. Revenue grew by 35.2% year-over-year to $204.95 million, compared to a 38.0% increase last quarter.
- Rubrik continued its momentum in large deals, with customers having subscription annualized recurring revenue (ARR) of $100K or more up 35% year-over-year to 1,969. These larger customers contributed 81% of its total subscription ARR, which climbed by 40% to $919.1 million, up 3 points from last year. Other security firms like SentinelOne (S, Financial) and Okta (OKTA, Financial) have also noted the resilience of enterprises compared to small and medium-sized businesses (SMBs).
- Looking ahead, Rubrik aims to balance growth with improving profitability. The company expects Q3 adjusted EPS of $(0.41)-$(0.39) and revenues of $216.5-218.5 million, both modestly ahead of consensus. For FY25, Rubrik projects adjusted EPS of $(2.12)-$(2.06), revenues of $830-838 million, and subscription ARR of $1.026-1.032 billion, improved from its previous outlook of $(2.35)-$(2.25), $810-824 million, and $983-997 million, respectively.
Rubrik maintained impressive growth in Q2, supporting its raised guidance. However, high expectations were already priced in. Despite this, Rubrik remains a solid cybersecurity firm worth monitoring, especially given the significant impact of software issues on the global economy, as seen with CrowdStrike.
