Core Insights - Three cybersecurity stocks have seen significant upgrades in the last 30 days, indicating a positive shift in market sentiment [1][10] Group 1: Okta (NASDAQ: OKTA) - Okta has received seven analyst upgrades in the past month, with a current price of $98.53 and a 12-month price forecast of $121.59, suggesting a potential upside of 23.4% [1][2] - The stock has outperformed the S&P 500, with a 25% increase in 2025 compared to the index's 3% return [2][3] - Following a 16% drop after its fiscal Q1 2026 earnings report, analysts believe the decline was unwarranted, with the lowest price target being $110, indicating moderate upside potential [3] Group 2: Rubrik (NYSE: RBRK) - Rubrik has garnered nine upgrades in the last 30 days, with a current price of $90.14 and a 12-month price forecast of $100.38, implying an 11.35% upside [4][5] - The average price target from recent updates is nearly $114, suggesting a potential upside of approximately 27% [5] - The company reported a 49% revenue increase last quarter and improved its adjusted operating margin from -50% to -7% year-over-year [6][7] Group 3: Zscaler (NASDAQ: ZS) - Zscaler has received 28 upgrades recently, making it the most upgraded stock, with a current price of $308.46 and a 12-month price forecast of $294.03, indicating a downside of 4.68% [8][9] - Despite the forecast suggesting a decline, the average updated price target is $329, implying a potential upside of around 6% [9] - The company achieved a 23% revenue growth last quarter, with billings rising by 25%, indicating potential for future revenue acceleration [9]

Company Overview - Rubrik, a cybersecurity software company backed by Microsoft, is acquiring Predibase, a startup focused on AI model deployment [1][3] - The acquisition is part of Rubrik's strategy to enter the rapidly growing AI market [3][4] - Rubrik has achieved over $1 billion in annualized revenue by providing data backup solutions for clients [4][7] Acquisition Details - The financial terms of the deal are not publicly disclosed, but estimates suggest Rubrik will pay between $100 million and $500 million for Predibase [2] - Predibase will operate as a separate unit post-acquisition, continuing to support customers in connecting data from various third-party systems [6] Market Context - The AI market is experiencing significant growth, with cloud infrastructure providers generating billions from services related to AI model training [3] - Companies like Anthropic and OpenAI are rapidly expanding by offering subscription-based chatbot services, indicating a strong demand for AI tools [3] Predibase Background - Founded in 2021, Predibase has received over $28 million in investments from venture firms and has notable clients including Checkr, Marsh McLennan, and Qualcomm [5] - The startup employs 25 people and was co-founded by individuals with prior experience in AI tools at Uber [5]

Core Viewpoint - Rubrik, Inc. (NYSE: RBRK) is positioned favorably in the market, with strong customer adoption indicating that its products resonate well with users [1] Company Analysis - The company is experiencing a significant pace of customer adoption, suggesting a positive reception of its offerings [1] - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing the importance of buying quality companies at a discount to their intrinsic value [1]

Group 1 - The stock market is currently influenced by macroeconomic fears, particularly regarding the impact of tariffs on the U.S. economy and the effects of rising geopolitical tensions on global growth [1] - Gary Alexander has extensive experience in covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1] Group 2 - Alexander has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications, indicating his influence and reach within the investment community [1]

Financial Performance - The company reported a significant increase in revenue, with a year-over-year growth of 25% in Q1 2026, reaching $150 million[8] - The company anticipates continued growth, projecting revenue to reach between $600 million and $650 million for the fiscal year 2026, representing a growth rate of approximately 20%[8] - The company reported a net loss of $5 million for the quarter, but expects to achieve profitability by Q4 2026[8] User Growth - User data showed a 30% increase in active users, totaling 1.2 million users on the platform[8] Product Development - New product launches are expected to contribute an additional $50 million in revenue by the end of Q2 2026[8] - The company is investing $20 million in research and development to enhance its data security solutions and introduce innovative features[8] Market Strategy - Market expansion efforts are underway, targeting an increase in market share by 15% in the next 12 months[8] - The company is exploring potential acquisitions to bolster its technology stack and expand its service offerings[8] Operating Expenses - Operating expenses increased by 10% due to higher marketing costs associated with new product launches[8] Risk Factors - Risk factors include potential challenges in customer retention and competition in the data security market, which could impact future growth[8] - The company has experienced rapid growth, but this may not be indicative of future performance, making it difficult to evaluate future prospects[17] - The market for data security solutions must grow for the company to sustain its business growth and operational results[17] - The company has a limited operating history with its Rubrik Security Cloud offering, complicating future operational forecasts[17] - A history of operating losses raises concerns about the company's ability to achieve or maintain profitability[17] - Customer subscription renewals and expansions are critical; failure to secure these could harm operational results[17] - The company faces risks related to the performance and perception of its data security solutions, which could damage its brand and reputation[17] - Reliance on third-party cloud providers poses risks; disruptions could adversely affect business and financial conditions[17] - The competitive nature of the markets requires effective competition; failure to do so could harm financial results[17] - Estimates of market opportunity and growth may prove inaccurate, potentially leading to slower business growth than anticipated[17] - The dual class structure of common stock concentrates voting control, limiting influence on corporate matters and potentially affecting stock price[17]

Core Insights - Rubrik, Inc. reported better-than-expected first-quarter results, with losses of 15 cents per share, surpassing the analyst consensus estimate of 32 cents losses. Quarterly revenue reached $278.48 million, exceeding the Street estimate of $260.35 million [1][3]. Financial Performance - The company raised its fiscal 2026 adjusted EPS guidance to a range of losses between $1.02 and $0.96, compared to the previous estimate of losses of $1.15. Additionally, Rubrik increased its fiscal revenue outlook to between $1.18 billion and $1.19 billion, up from the $1.16 billion estimate [3]. Market Reaction - Following the earnings announcement, Rubrik shares gained 2.6%, trading at $100.93 [3]. Analyst Ratings - Rosenblatt analyst Blair Abernethy maintained a Buy rating on Rubrik and raised the price target from $82 to $110. Keybanc analyst Eric Heath also maintained an Overweight rating, increasing the price target from $98 to $113 [8]. CEO Commentary - CEO Bipul Sinha emphasized the strong first-quarter results, highlighting the company's focused innovation and execution in the cyber resilience market, suggesting that the opportunity for growth is larger than ever [2].

Financial Performance - For the quarter ended April 2025, Rubrik, Inc. reported revenue of $278.48 million, which is an increase of 48.7% year-over-year [1] - The earnings per share (EPS) for the quarter was -$0.15, a significant improvement from -$1.58 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $260.22 million, resulting in a surprise of +7.02% [1] - The company delivered an EPS surprise of +54.55%, with the consensus EPS estimate being -$0.33 [1] Key Metrics - Subscription Annual Recurring Revenue (ARR) was reported at $1,181.27 million, surpassing the three-analyst average estimate of $1,155.96 million [4] - The number of customers with $100K or more in Subscription ARR reached 2,381, compared to the estimated 2,362 [4] - Subscription revenue was $265.66 million, exceeding the average estimate of $247.37 million [4] - Other revenue was $10.49 million, above the average estimate of $8.48 million [4] - Maintenance revenue was $2.33 million, slightly below the average estimate of $2.38 million [4] - Gross profit from Subscription was $213.75 million, compared to the average estimate of $202.30 million [4] Stock Performance - Shares of Rubrik, Inc. have returned +30% over the past month, significantly outperforming the Zacks S&P 500 composite's +5.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - Rubrik, Inc. reported a quarterly loss of $0.15 per share, which was better than the Zacks Consensus Estimate of a loss of $0.33, and a significant improvement from a loss of $1.58 per share a year ago, representing an earnings surprise of 54.55% [1] - The company posted revenues of $278.48 million for the quarter ended April 2025, exceeding the Zacks Consensus Estimate by 7.02%, and up from $187.32 million in the same quarter last year [2] Stock Performance - Rubrik, Inc. shares have increased approximately 50.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.35 on revenues of $270.67 million, and for the current fiscal year, it is -$1.14 on revenues of $1.15 billion [7] - The estimate revisions trend for Rubrik, Inc. is mixed, resulting in a Zacks Rank 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Rubrik belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - Subscription ARR reached approximately $1,200 million, growing 38% year over year [6][30] - Subscription revenue was $266 million, growing 54% year over year [6][32] - Free cash flow was over $33 million, a significant improvement from negative $37 million in the same quarter last year [7][36] - Non-GAAP gross margin was 80.5%, up from 75.4% year over year [33] Business Line Data and Key Metrics Changes - Net new subscription ARR reached $89 million in the first quarter [6][30] - Subscription NRR remained strong above 120% [6][32] - Customers with $100k or more in subscription ARR reached 2,381, growing 28% year over year [6][32] Market Data and Key Metrics Changes - Revenue from the Americas grew 51% to $203 million, while revenue from outside the Americas grew 43% to $75 million [33] - Cloud ARR reached $972 million, up 60% [30] Company Strategy and Development Direction - The company focuses on cyber resilience as a top cybersecurity priority, with a unique platform that combines data and identity security [9][10] - Rubrik aims to innovate continuously across data security and AI, leveraging a portfolio approach to manage innovations [11][14] - The company is expanding its offerings in identity resilience, which is seen as a significant growth opportunity [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the cyber resilience market and the demand for their differentiated offerings [37][76] - The company raised its guidance for the year, anticipating strong subscription ARR growth [39][40] Other Important Information - The company has a strong cash position with $762 million in cash and equivalents and $323 million in debt [36] - The company is investing in R&D to drive innovation in data security and AI [37] Q&A Session Summary Question: How long is the runway for the shift from legacy to next-gen solutions? - Management indicated that the shift is expanding the total addressable market (TAM) due to the rise in identity-based attacks and the need for comprehensive cyber resilience [46][48] Question: What is happening to sales cycles and awareness of Rubrik's capabilities? - Management noted that the current market environment is pushing enterprises to modernize their infrastructure, which is benefiting Rubrik's offerings [54][56] Question: How is the demand environment characterized? - Management stated that cyber resilience is a top priority for CIOs and CSOs, and they are not seeing any change in demand [75][76] Question: What is the size of the identity resilience opportunity? - Management emphasized that identity security is a critical component of their strategy, and they are seeing great momentum in this area [63][65] Question: What are the technical advantages Rubrik brings to identity security? - Management highlighted the unique ability to combine identity and data security, enabling faster recovery times and preventing malware reintroduction [114][115]

Financial Data and Key Metrics Changes - Subscription ARR reached approximately $1,200 million, growing 38% year over year [7][33] - Subscription revenue was $266 million, growing 54% year over year [7][35] - Subscription NRR remained strong above 120% [7][34] - Free cash flow was over $33 million, a significant improvement from negative $37 million in the same quarter last year [8][38] - Non-GAAP gross margin improved to 80.5% from 75.4% year over year [36] Business Line Data and Key Metrics Changes - Cloud ARR reached $972 million, up 60% [34] - Customers with subscription ARR of $100,000 or more increased to 2,381, growing 28% year over year [7][35] - Subscription ARR contribution margin improved by over 1,800 basis points year over year [8][37] Market Data and Key Metrics Changes - Revenue from the Americas grew 51% to $203 million, while revenue from outside the Americas grew 43% to $75 million [36] - The company operates in a $50 billion market for cyber resilience, with significant growth opportunities in identity resilience [78] Company Strategy and Development Direction - The company focuses on cyber resilience as a top priority, leveraging a unique platform that combines data and identity security [10][76] - The strategy includes a two-platform approach, transforming legacy backup into a comprehensive data security platform [51][102] - Investments in R&D and go-to-market strategies will continue to drive innovation and market penetration [39][91] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the cyber resilience market and the demand for differentiated offerings [39][78] - The company anticipates strong subscription ARR growth and has raised its guidance for the fiscal year [41][42] - Management noted that the current market environment is favorable for the adoption of generative AI and modernization of infrastructure [58][60] Other Important Information - The company has successfully integrated its DSPM Laminar product, resulting in a 300% year-over-year increase in DSPM ARR [66] - The company is focused on combining identity security with data security to create a comprehensive solution for customers [66][118] Q&A Session Summary Question: How long is the runway for the shift from legacy to next-gen solutions? - Management indicated that the shift is expanding the total addressable market (TAM) due to rising identity-based attacks and the need for comprehensive cyber resilience [50][52] Question: What is happening to sales cycles and awareness of Rubrik's capabilities? - Management believes they are at the front end of a significant trend in data security and AI, with increasing awareness leading to faster sales cycles [56][60] Question: How does Rubrik differentiate in identity resilience? - The company combines identity and data security on a single platform, allowing for faster recovery times and preventing malware reintroduction [117][118] Question: What is the demand environment for cybersecurity? - Management stated that cyber resilience is a top priority for CIOs and CSOs, with no change in demand environment observed [77][78] Question: What are the top priorities for Rubrik in the next 12-18 months? - The focus will be on creating a unified platform for data and identity security, ensuring comprehensive risk management and recovery capabilities [102][103]