Release Date: December 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rubrik Inc (RBRK, Financial) surpassed $1 billion in subscription ARR, growing 38% year over year.
- Subscription revenue grew 55% year over year to over $221 million.
- The company achieved a strong subscription net retention rate above 120%.
- Rubrik Inc (RBRK) reported over $15 million in free cash flow for the quarter.
- The company continues to innovate with new offerings like Rubrik Anona API service, enhancing its position in the market.
Negative Points
- Despite strong growth, Rubrik Inc (RBRK) reported a non-GAAP EPS of negative $0.41 to negative $0.37 for Q4.
- The company anticipates total gross margin to stay at the lower end of its long-term target of 75% to 80%.
- Free cash flow is expected to be negative $45 million to negative $39 million for the full year fiscal 2025.
- There are concerns about the impact of shorter contract terms and invoicing cycles on free cash flow.
- The transition from maintenance to subscription is expected to provide no growth benefit in fiscal 2026.
Q & A Highlights
Q: Can you talk about what you hear from customers about their desire to use third-party data protection tools like Rubrik for cloud workloads versus relying on a backup solution from their cloud provider?
A: (Bibel Sinha, CEO) Rubrik has a huge opportunity in the cloud because cyber resilience is needed wherever your application and data reside. Customers are looking for a single policy engine and security control to deliver cyber recovery across all their data estates. This is why we are winning in the cloud, as we provide a comprehensive solution for native cloud providers, data centers, and SaaS applications.
Q: How do you think about the pace of investments going into next year, and how long of a lag do you expect between contribution margin improvements and reported operating income?
A: (Karen Cry, CFO) We are pleased with the margin progression, driven by top-line scale and efficiency improvements. Our goal is to achieve break-even or better subscription contribution margin next fiscal year. Operating margin typically follows subscription margin within a few quarters, but due to our cloud transformation, the lag may be longer.
Q: How much is DS PM contributing to the pipeline and potentially shortening deal cycles?
A: (Bibel Sinha, CEO) DS PM is seeing strong traction, with customer numbers doubling quarter over quarter. It provides data risk and threat visibility, and when combined with cyber recovery, offers complete cyber resilience. However, DS PM is still a smaller part of our business and not significantly influencing overall sales cycles.
Q: Can you provide an update on the adoption rate of the Enterprise edition over the last six months?
A: (Bibel Sinha, CEO) Enterprise edition continues to be our flagship platform for cyber recovery. About half of our new customers adopt Enterprise edition initially, and nearly a third of our net retention rate comes from the adoption of data security products, including Enterprise edition.
Q: Can you talk about your efforts with go-to-market partnerships and their contribution going forward?
A: (Bibel Sinha, CEO) Rubrik's go-to-market strategy includes working with VARs, GSIs, and technology alliance partners. We are 100% indirect, leveraging partners to attach services and take our products to their trusted customers. This multi-faceted strategy helps deliver comprehensive cyber resilience solutions globally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
