Table of Contents
Quick note on the evolving business model:
As a reminder, Rubrik shifted most of its business to cloud-based deployments over the last couple of years. The rise in cloud as a portion of ARR is now largely done. As the transition was occurring, Rubrik recorded accelerated revenue recognition for each customer migrating to the cloud. That’s because it was able to record allocated licensing reserves as revenue faster than it would have been able to. This is called material rights revenue. The important thing to know here is that it propped up revenue growth for a while and is now slowing down revenue growth, as RBRK is enjoying fewer material rights than the Y/Y period we’re comping against. Subscription ARR growth is the metric that eliminates this noise.
a. Demand
Beat revenue estimate by 7.7% & beat guidance by 8%.
Material rights came in a little higher than expected. Without this help, revenue was 7.4% ahead of estimates.
Revenue excluding material rights rose by 43% Y/Y.
Beat ARR estimate by 1.2%.
There was no impact on the business from memory inflation.
Beat net new ARR estimate by $21M or 28%.
Beat $100K+ ARR customer estimate by 7.
$1M+ ARR customers rose by 57% Y/Y.
Beat 119% net revenue retention (NRR) estimate with a “119%+” NRR.
“We are very proud of the high customer retention and expansion dynamics of our business. All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful runway we have to more deeply penetrate our customer base.” – CFO Kiran Choudary
b. Profits
Missed 81.7% GPM estimate by 70 basis points (bps; 1 basis point = 0.01%).
GPM was pressured by lower material rights (very high margin revenue).
Beat 11.5% subscription ARR contribution margin estimates by 250 bps. Subscription ARR contribution margin was 14% vs. 9.4% Y/Y.
Beat -$7M EBIT estimate by $40M.
The sharp improvement in EBIT margin was via scale, “improving efficiencies and cost management.”
Beat $0.04 EPS estimate by $0.16 & beat guidance by $0.16.
Beat FCF estimate by 65%.
c. Balance Sheet
$1.7B cash & equivalents.
$1.1B notes.
5.6% Y/Y dilution.
d. Guidance & Valuation
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