Rubrik grows revenues with monster loss; spends big to grow even more

Rubrik grew revenues almost 40 percent in its first post-IPO quarter but made a $0.7 billion loss as it increased Opex spending 4.6x compared to a year ago, on R&D, sales and marketing, general and admin expenses.

Revenues for the cyber securing, protecting and recovery company in its first quarter of fiscal 2025, ended 30 April, were $187.3 million, up 38 percent annually, but with a loss of $723.1 million, contrasting markedly with the year-ago loss of $89.3 million. Subscription revenue rose 59 percent to $172.2 million and subscription annual recurring revenue was up 46 percent to $856.1 million. There were 1,859 customers with $100,000 or more in subscription ARR, up 41 percent year over year.

Bipul Sinha.

Rubrik co-founder and CEO Bipul Sinha said in the earnings call: “We got off to a very strong start to the year. It was an exceptional quarter.” And: “We benefited from some large transactions … We had two times more ARR from million dollar-plus transactions this quarter versus Q1 of fiscal 2024.”

His prepared statement on the results said: “Rubrik is a leader in one of the fastest growing new segments in the cybersecurity market, data security, with a total addressable market of about $53 billion by 2027…. While we are excited and proud of all the team has done to date, we are in the very early innings of data security and look forward to continuing to build an enduring company.” 

Sinha said: “Our core assumption is that enterprises will get breached, we cannot stop this.” He reviewed the demand picture, saying: “As you look at the broader landscape, there has been a lot of investment in cyber prevention solutions around network endpoints, perimeters and cloud, but cyber recovery is little bit of an afterthought. Now folks are realising that recovery has been under invested and to ensure continuing operation they need to have solid cyber recovery because attacks are inevitable. So we are seeing significant strength in terms of the demand.”

In other words it is operating in “a strong market with high demand. … We’re still very early in a large market [with] 6,000-plus customers in a market size of 60,000 plus.”

Financial summary

  • Gross margin: 75%
  • Operating cash flow: -$31.4 million vs -$17.5 million a year ago
  • Cash, cash equivalents & short-term investments: $606.3 million
  • Debt: $297 million

The growth numbers are positive but the huge loss is surprising. A look at the numbers show that spending on three operating expense items rocketed compared to a year ago; research and development (R&D), sales and marketing, and general and administrative (G&A) expenses. Spending on the three items together totaled $816 million versus $184.5 million a year ago. That accounts for most of the loss.

B&F chart using Rubrik’s numbers.

Sinha commented on this as he answered a question in the earnings call: “When you look at the operating expense line items, starting with R&D; we are hiring …. And as we scale we are getting more leverage with the balance of great talent as well. And in sales and marketing …  increasing … investments internationally and federal as well. We will see increasing leverage on the sales and marketing line. And lastly, we did step up G&A costs as a public company, but you will see benefits of scale as well.”

He’s growing the company’s capabilities because: “The explosion of data especially with AI is creating a massive market opportunity for Rubrik.”

We believe that Rubrik is focussing R&D work on AI, specifically on enabling Gen AI large language models to interrogate the masses of information in stored backups and also to help customers understand and improve their cyber-security arrangements.

Sinha talked about Rubrik’s Ruby chatbot: “the Gen AI agent for Ruby security cloud is focused on productivity for IT and security operations teams.” In contrast Cohesity’s Gaia chatbot is focussed on natural language, RAG-enhanced, access to information content in Cohesity’s stored backup data.

He said: “We are adding a lot of skill sets to the AI to ensure that that all the activities in this Rubrik security cloud can be done in natural language with ease of use, to be able to complete the task. It is as if we are shipping a person along with our product to handhold our customers to a tremendous outcome. It’s a long term project for us.”

We believe that Rubrik is also looking at RAG-enhanced, chatbot access to information in its data stores for customers.

Sinha also took a sideswipe at the Cohesity-Veritas acquisition: “I wish both parties on the merger luck, but the history is … there has not been a lot of success by merging a growth company with a legacy platform to create a new company.”

The outlook for Rubrik’s next quarter is $196 million in revenues, +/- $1 million, which will be a 29 percent increase year-on-year. The full fy2025 revenue outlook is $817 million +/- $7 million, a 30.1 percent increase annually at the mid-point.