Rubrik, Inc. Q3 FY2025 earnings

Rubrik closed the third quarter of fiscal 2025 with total revenue of $236.2 million, up 43% from $165.6 million a year earlier. Subscription revenue of $221.5 million rose 55%. Subscription ARR passed the $1 billion mark, reaching $1,002.3 million as of October 31, 2024, up 38% year over year, and Cloud ARR was $768.8 million, up 69%. Customers with $100,000 or more in Subscription ARR numbered 2,085, up 32%. The legacy parts of the business keep shrinking: maintenance revenue fell 52% and other revenue, mostly Rubrik-branded appliances and professional services, also declined. The average subscription dollar-based net retention rate stayed above 120%, down from above 130% a year earlier.

Margins moved the wrong way on a GAAP basis. Gross profit rose 36% to $180.0 million, but gross margin slipped to 76.2% from 79.6% as hosting costs for SaaS products climbed and the business kept migrating customers from legacy CDM to Rubrik Security Cloud. Operating loss widened to $124.8 million from $65.3 million, and net loss widened to $130.9 million from $86.3 million. Diluted net loss per share narrowed to $0.71 from $1.41, helped by a much larger share count after the April 2024 IPO. Stock-based compensation tied to equity awards that vested after the offering weighed heavily on the GAAP loss, and the non-GAAP figures tell a different story: non-GAAP gross margin was 79.2% against 80.1%, the non-GAAP operating loss was $31.2 million against $63.9 million, and non-GAAP net loss per share was $0.21 against $1.39.

Cash generation improved in the quarter. Operating cash flow was $23.1 million, up from $6.9 million a year earlier, and capital expenditures were $5.1 million, up from $1.5 million. Free cash flow, which subtracts equipment purchases and capitalized software from operating cash flow, was $15.6 million against $3.5 million. The nine-month picture is less encouraging. Revenue for the first nine months was $628.4 million, up 39%, but operating cash flow was negative $35.4 million against negative $17.3 million a year earlier, and free cash flow was negative $53.6 million against negative $33.2 million. The nine-month net loss was $1.04 billion against $256.7 million. Deferred revenue, current portion, stood at $686.0 million at quarter end, and remaining performance obligations were $1.56 billion.

For the fourth quarter of fiscal 2025, Rubrik guided to a non-GAAP subscription ARR contribution margin of roughly negative 3% to negative 2% and non-GAAP earnings per share of negative $0.41 to negative $0.37, on about 187 million weighted-average shares. For the full fiscal year 2025, the outlook calls for Subscription ARR of $1,057 million to $1,061 million and non-GAAP earnings per share of negative $1.86 to negative $1.82, on roughly 154 million weighted-average shares. Full-year free cash flow guidance is negative $45 million to negative $39 million, and that range includes $22.8 million of employer payroll taxes due on equity awards that vested around the IPO.

Several risks sit under the surface. Subscription ARR contribution margin improved to negative 3% from negative 14%, and to negative 1% once the payroll tax item is excluded, but the measure relies on trailing non-GAAP costs. Subscription ARR growth included 2.0 percentage points from maintenance customers moving onto subscription editions, a lift the company expects to subside in fiscal 2026. Rubrik also warns that the CDM to RSC transition will keep revenue growth lumpy through fiscal 2027, that customers exercising or forfeiting subscription credits can swing reported revenue, and that a growing mix of annual and consumption-based payments may make free cash flow volatile. The risk factors point to a limited operating history, the challenge of sustaining growth, competition from incumbents and new entrants, international expansion, and the company's ability to apply artificial intelligence in its products. Rubrik expects to keep posting operating losses for now.