RH (NYSE: RH) Q1 2025 Earnings Call | 06/12/2025

This is a summary of Rubrik's First Quarter Fiscal Year 2026 Results Conference Call.

Q1 Fiscal Year 2026 Financial Highlights (All comparisons year-over-year)

Rubrik reported excellent first quarter results, exceeding all guided metrics for both top-line growth and profitability, and raised its guidance for the full fiscal year 2026.

• Subscription ARR: Reached approximately $1.18 billion, growing 38%.
• Net New Subscription ARR: $89 million in Q1, a standout at their scale.
• Subscription Revenue: $266 million, growing 54%.
• Total Revenue: $278 million, up 49%. (Benefited by ~7 percentage points from non-recurring material rights related to cloud transformation).
• Subscription NRR (Net Retention Rate): Remained strong, above 120%. Adoption of additional security functionality contributed over 30% to NRR.
• Customers with $100K+ Subscription ARR: Reached 2,381, growing 28%. These customers now contribute 85% of subscription ARR.
• Subscription ARR Contribution Margin: Improved by over 1,800 basis points year-over-year, becoming positive 8% in the last 12 months.
• Non-GAAP Gross Margin: 80.5% (up from 75.4%), benefiting from revenue growth and improved efficiency.
• Free Cash Flow: Positive $33 million (compared to negative $37 million in Q1 FY25), driven by higher sales and improved operating leverage.
• Cash Position: Strong, with $762 million in cash, cash equivalents, restricted cash, and marketable securities, and $323 million in debt.
• Geographic Mix: Americas revenue grew 51% to $203 million; outside Americas grew 43% to $75 million.

Strategic Vision and Innovation

Rubrik's success is attributed to a deliberate strategy focused on:

• Differentiated Product & Comprehensive Offering: For cyber resilience.
• True Platform Approach: Enabling multi-product leverage for customers.
• Unique Innovation Engine: Delivering a steady stream of new products.
• Long-Term Thinking Culture: Unlocking new markets with bold ideas.

Market Opportunity: Cyber resilience is the top cybersecurity priority as breaches are inevitable and enterprises modernize for AI. Rubrik's preemptive recovery engine (natively integrated platform scanning data and identities to pre-calculate clean recovery points) is a key differentiator against legacy and new-gen vendors.

Innovation Strategy (S-Curves): Rubrik employs a "portfolio approach to S-curves" by:

• Forward Motion: Scaling current successes (cyber-resilient data protection) across new applications, workloads, and routes to market.
• Lateral Motion: Specialized team discovering new product-market fit and launching initiatives for future S-curves (e.g., M365 protection, identity resilience).

Rubrik Platform: Combines data and metadata across enterprise, cloud, and SaaS applications, as well as identity providers. It uniquely brings data security and cyber recovery together for comprehensive cyber resilience of both data and identity.

Key Innovations and Customer Wins

• Cyber Resilient Data Protection:
  • Cloud Transformation Wins: A major US pharmacy solutions company chose Rubrik over legacy and new-gen vendors for cloud transformation due to rapid recovery, hybrid cloud scalability, and RSC platform simplicity. A large European insurer chose Rubrik RSC Enterprise Edition for critical data protection and meeting board-level cyber recovery time objectives.
  • Cloud Innovations: Introduced code-to-cloud cyber resilience, purpose-built technology for AWS RDS protection, expanded Google Cloud capabilities, and introduced Rubrik for Oracle Cloud Infrastructure (OCI).
  • Cloud & SaaS Protection Wins: A Fortune 500 financial services company expanded with Rubrik for Azure, showing significantly faster recovery times and 25% cloud cost savings over their existing solution. A global quantum computing company chose Rubrik as a unified platform for M365, Jira, and Salesforce, replacing a legacy provider with security vulnerabilities.
• Identity Resilience: Rubrik is leveraging its "lateral motion" to scale DSPM (Data Security Posture Management) and identity resilience solutions.
  • Opportunity: Active Directory and EntraID are prime targets. Compromised identity systems complicate recovery.
  • Identity Recovery Solution: Noted momentum due to unique ability to orchestrate hybrid cloud recovery across Active Directory and EntraID while avoiding malware reintroduction, reducing recovery times from weeks to under an hour.
  • Identity Recovery Wins: A major US hospital network added Rubrik Identity Recovery over a standalone competitor. A large US state county expanded with Rubrik AD Forest Recovery and RSC Enterprise Edition after a nearby county's ransomware attack.
• Rubrik Annapurna (Longer-Term Initiative): Designed to enable secure and scalable GenAI deployment by leveraging Rubrik's ability to extract, manage, and secure business data. Integrates with Google Agents Space. This is a multi-year effort to bring GenAI solutions from zero to scale.

Financial Outlook for Fiscal Year 2026

• Q2 FY26 Guidance:
  • Revenue: $281 million to $283 million (up 37%-38%).
  • Non-GAAP Subscription ARR Contribution Margin: 4.5% to 5.5%.
  • Non-GAAP EPS: Negative $0.35 to negative $0.33.
• Full Year FY26 Guidance (Raised):
  • Subscription ARR: $1.38 billion to $1.388 billion (26%-27% growth).
  • Total Revenue: $1.179 billion to $1.189 billion (33%-34% growth).
  • Non-GAAP Subscription ARR Contribution Margin: Approximately 6%.
  • Non-GAAP EPS: Negative $1.02 to negative $0.96.
  • Free Cash Flow: $65 million to $75 million.
• Seasonality: First half of FY26 expected to contribute ~46% of total net new subscription ARR, with ~54% in the second half. Subscription contribution margins are seasonally lowest in Q3 before rising in Q4.