Rubrik, Inc.(RBRK) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents Rubrik, Inc.'s unaudited condensed consolidated financial statements for the period ended April 30, 2024, including balance sheets, statements of operations, comprehensive loss, changes in equity, and cash flows, along with detailed notes explaining significant accounting policies, business operations, and recent events like the IPO and acquisitions Condensed Consolidated Balance Sheets The balance sheets present Rubrik's financial position, detailing assets, liabilities, and equity changes, significantly impacted by the IPO Condensed Consolidated Balance Sheets (in thousands) | Metric | April 30, 2024 | January 31, 2024 | | :-------------------------------------------------- | :------------- | :--------------- | | Cash and cash equivalents | $502,614 | $130,031 | | Short-term investments | $103,706 | $149,220 | | Total current assets | $852,942 | $548,713 | | Total assets | $1,166,372 | $873,610 | | Total current liabilities | $738,045 | $656,281 | | Total liabilities | $1,680,970 | $1,578,154 | | Total stockholders' deficit | $(514,598) | $(1,419,257) | - Total assets increased by $292.7 million from January 31, 2024, to April 30, 2024, primarily driven by a significant increase in cash and cash equivalents, likely due to the IPO proceeds[13] - Stockholders' deficit significantly improved from $(1,419.3) million to $(514.6) million, reflecting the impact of the initial public offering and related equity transactions[14] Condensed Consolidated Statements of Operations This statement outlines Rubrik's revenues, expenses, and net loss, highlighting the impact of increased operating costs and subscription growth Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenue | $187,315 | $135,740 | | Subscription revenue | $172,195 | $108,398 | | Maintenance revenue | $5,667 | $12,288 | | Other revenue | $9,453 | $15,054 | | Total cost of revenue | $95,979 | $35,891 | | Gross profit | $91,336 | $99,849 | | Total operating expenses | $816,173 | $184,445 | | Loss from operations | $(724,837) | $(84,596) | | Net loss | $(732,091) | $(89,273) | | Net loss per share, basic and diluted | $(11.48) | $(1.49) | | Weighted-average shares, basic and diluted | 63,794 | 59,940 | - Total revenue increased by 38% year-over-year, primarily driven by a 59% increase in subscription revenue, while maintenance and other revenue decreased[15] - Net loss significantly widened to $(732.1) million in Q1 2024 from $(89.3) million in Q1 2023, largely due to a substantial increase in operating expenses, particularly stock-based compensation recognized post-IPO[15][170] Condensed Consolidated Statements of Comprehensive Loss This statement details Rubrik's net loss and other comprehensive income/loss components, reflecting the overall change in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(732,091) | $(89,273) | | Foreign currency translation adjustment, net of tax | $(489) | $513 | | Unrealized gain (loss) on available-for-sale securities, net of tax | $(176) | $106 | | Total other comprehensive income (loss), net of tax | $(665) | $619 | | Comprehensive loss | $(732,756) | $(88,654) | - Total comprehensive loss increased significantly to $(732.8) million in Q1 2024, compared to $(88.7) million in Q1 2023, primarily reflecting the larger net loss[16] Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Deficit This statement tracks changes in preferred stock and stockholders' deficit, primarily reflecting the conversion of preferred stock and IPO-related equity transactions - As of April 30, 2024, all redeemable convertible preferred stock was converted into Class B common stock and its carrying value of $714.7 million was reclassified into stockholders' equity, following the IPO[17][86] - Additional paid-in capital increased substantially from $265.5 million as of January 31, 2024, to $1,902.9 million as of April 30, 2024, largely due to the IPO proceeds and stock-based compensation[17] - Accumulated deficit increased to $(2,414.6) million as of April 30, 2024, from $(1,682.5) million as of January 31, 2024, reflecting the net loss incurred during the period[17] Condensed Consolidated Statements of Cash Flows This statement summarizes Rubrik's cash inflows and outflows from operating, investing, and financing activities, notably influenced by the IPO proceeds Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(31,381) | $(17,457) | | Net cash provided by investing activities | $40,737 | $5,046 | | Net cash provided by financing activities | $362,182 | $559 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $371,049 | $(11,339) | | Cash, cash equivalents, and restricted cash, end of year | $508,108 | $129,267 | - Net cash used in operating activities increased to $(31.4) million in Q1 2024 from $(17.5) million in Q1 2023, primarily due to a larger net loss, partially offset by significant non-cash stock-based compensation[19][196] - Net cash provided by financing activities surged to $362.2 million in Q1 2024, mainly driven by $710.3 million in net proceeds from the IPO, partially offset by $350.4 million in taxes paid for equity award settlements[19][200] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of Rubrik's accounting policies, business operations, and significant financial events, including the IPO and acquisitions Note 1 – Description of Business This note details Rubrik's Initial Public Offering (IPO), including shares issued, net proceeds, and the conversion of preferred stock to common stock - Rubrik, Inc. completed its Initial Public Offering (IPO) in April 2024, issuing 23.5 million shares of Class A common stock at $32.00 per share, generating approximately $700.0 million in net proceeds[22] - Immediately prior to the IPO, all outstanding redeemable convertible preferred stock (74.2 million shares) and convertible founder stock (5.4 million shares) automatically converted into Class B common stock[23] - The company recognized $411.5 million in stock-based compensation expense for IPO Vesting RSUs upon IPO consummation, with 12.9 million Class A common shares withheld for tax obligations[25] Note 2 – Basis of Presentation and Summary of Significant Accounting Policies This note outlines Rubrik's financial statement preparation, fiscal year, and key accounting policies for revenue recognition and deferred revenue - Rubrik's fiscal year ends on January 31. The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP and SEC rules for interim reporting[26][27] - Revenue is primarily generated from subscription sales, typically invoiced upfront, with recognition over the subscription period for SaaS and hybrid cloud offerings, and partially upfront for term-based licenses[31][36][37] - Deferred revenue, representing advance payments from customers, increased, with $150.0 million recognized as revenue in Q1 2024 from amounts deferred at the beginning of the period[48] Revenue by Timing of Recognition (in thousands) | Revenue Type | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Subscription revenue: Products and services transferred over time | $158,020 | $81,649 | | Subscription revenue: Products and services transferred at a point in time | $14,175 | $26,749 | | Maintenance revenue: Products and services transferred over time | $5,667 | $12,288 | | Other revenue: Products and services transferred over time | $7,400 | $7,697 | | Other revenue: Products and services transferred at a point in time | $2,053 | $7,357 | | Total revenue | $187,315 | $135,740 | Note 3 – Revenue by Geography This note breaks down Rubrik's revenue by geographic region, highlighting the Americas as the largest contributor Revenue by Geographic Area (in thousands) | Geographic Area | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :---------------- | :-------------------------------- | :-------------------------------- | | Americas | $134,523 | $91,685 | | EMEA | $45,457 | $38,522 | | APAC | $7,335 | $5,533 | | Total revenue | $187,315 | $135,740 | - The Americas region accounted for the largest share of revenue, increasing from $91.7 million in Q1 2023 to $134.5 million in Q1 2024. The United States alone contributed 69% of total revenues in Q1 2024[57] Note 4 – Business Combinations This note describes Rubrik's acquisition of Laminar Technologies, Inc., including the purchase price and recognized intangible assets and goodwill - In August 2023, Rubrik acquired Laminar Technologies, Inc., a data security posture management platform, for $104.9 million, comprising $90.8 million in cash and the remainder in common stock[58] - The acquisition resulted in the recognition of $11.0 million in acquired developed technology intangible assets and $96.1 million in goodwill, primarily attributed to assembled workforce and technology integration[58] Note 5 – Financial Instruments This note details Rubrik's cash, cash equivalents, and short-term investments, and their exposure to market risks Cash and Available-for-Sale Marketable Securities (in thousands) | Metric | April 30, 2024 | January 31, 2024 | | :------------------------------------------ | :------------- | :--------------- | | Total Amortized Cost | $606,395 | $279,150 | | Total Estimated Fair Value | $606,320 | $279,251 | | Cash and Cash Equivalents | $502,614 | $130,031 | | Short-Term Investments | $103,706 | $149,220 | - The company's financial instruments, including cash, cash equivalents, and short-term investments, are primarily held in money market funds, U.S. Treasuries, commercial paper, corporate bonds, and U.S. government agencies[61][62] - As of April 30, 2024, there were no material credit or non-credit related impairments on available-for-sale debt securities with unrealized losses[63] Note 6 – Balance Sheet Components This note provides detailed breakdowns of specific balance sheet accounts, including prepaid expenses, property and equipment, and accrued liabilities Prepaid Expenses and Other Current Assets (in thousands) | Metric | April 30, 2024 | January 31, 2024 | | :------------------------------------------ | :------------- | :--------------- | | Prepaid expenses | $57,024 | $44,721 | | Total prepaid expenses and other current assets | $74,724 | $63,861 | Property and Equipment, Net (in thousands) | Metric | April 30, 2024 | January 31, 2024 | | :------------------------------------------ | :------------- | :--------------- | | Total property and equipment, gross | $108,863 | $129,336 | | Less: accumulated depreciation and amortization | $(62,880) | $(81,463) | | Total property and equipment, net | $45,983 | $47,873 | Accrued Expenses and Other Current Liabilities (in thousands) | Metric | April 30, 2024 | January 31, 2024 | | :------------------------------------------ | :------------- | :--------------- | | Accrued payroll-related expenses, taxes, and benefits | $82,611 | $20,197 | | Total accrued expenses and other current liabilities | $160,334 | $122,934 | Note 7 – Debt This note outlines Rubrik's debt arrangements, including its amended credit facility and bridge notes issued for IPO-related tax obligations - In August 2023, Rubrik amended its credit facility, increasing total borrowing capacity to $330.0 million, consisting of a $289.5 million term loan and $40.5 million in delayed draw term loans, maturing in August 2028[71] - The Amended Credit Facility allows for interest payments to be funded by delayed draw term loans, subject to a temporary 0.5% interest rate increase, and offers a 0.5% interest rate reduction if Annualized Subscription Recurring Revenue (ASRR) reaches $500.0 million[74][75] - In April 2024, the company issued $321.4 million in Bridge Notes to fund tax withholding obligations related to IPO RSU settlements, which matured and were repaid on April 29, 2024[79][81] Note 8 – Commitments and Contingencies This note describes Rubrik's warranty programs, indemnification obligations, and ongoing legal proceedings - Rubrik provides a services warranty program for data recovery and restoration following ransomware attacks, with costs to date being immaterial[84] - The company typically indemnifies customers against third-party intellectual property infringement claims, with no material liability incurred to date[85] - Management believes that any liabilities from current legal disputes will not have a material adverse effect on the company's financial statements[83] Note 9 – Redeemable Convertible Preferred Stock This note details the conversion of all redeemable convertible preferred stock into Class B common stock prior to the IPO - Immediately prior to the IPO, all 74,182,559 shares of redeemable convertible preferred stock were automatically converted into Class B common stock, and their carrying value of $714.7 million was reclassified into stockholders' equity[86] Note 10 – Stockholders' Deficit This note explains changes in stockholders' deficit, including the impact of the IPO, authorized share capital, and stock-based compensation plans - Post-IPO, Rubrik's amended certificate of incorporation authorized 20,000,000 shares of undesignated preferred stock, 1,070,000,000 shares of Class A common stock (one vote per share), and 210,000,000 shares of Class B common stock (20 votes per share)[87][88] - The 2014 Stock Option and Grant Plan was terminated post-IPO, with outstanding awards continuing under its terms, while the new 2024 Equity Incentive Plan reserved 46,073,027 shares of Class A common stock for future issuance[90][91] - The CEO Performance Award, granted upon IPO, allows the CEO to purchase up to 8,000,000 Class B common shares across 10 tranches, vesting based on service and stock value targets, with a weighted-average grant date fair value of $17.37 per share[96][97][98] Total Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Cost of revenue | $48,899 | $5 | | Research and development | $224,149 | $167 | | Sales and marketing | $239,888 | $199 | | General and administrative | $117,394 | $57 | | Total stock-based compensation expense | $630,330 | $428 | Note 11 – Net Loss Per Share This note details the calculation of Rubrik's net loss per share, including the treatment of potentially dilutive securities Net Loss Per Share Calculation (in thousands, except per share amounts) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(732,091) | $(89,273) | | Weighted-average common stock shares used in computing net loss per share, basic and diluted | 63,794 | 59,940 | | Net loss per common stock share, basic and diluted | $(11.48) | $(1.49) | - Potentially dilutive securities, including common stock options and unvested RSUs, were excluded from diluted net loss per share calculation for both periods as their inclusion would have been antidilutive[110] Note 12 – Income Taxes This note outlines Rubrik's income tax benefit/expense and the valuation allowance on its deferred tax assets - For Q1 2024, Rubrik recorded an income tax benefit of $(1.1) million, a decrease from an expense of $1.2 million in Q1 2023, primarily due to foreign subsidiaries electing U.S. branch treatment for federal income tax purposes[111][112] - The company maintains a full valuation allowance on its U.S. federal and state net deferred tax assets, indicating that realization of these assets is not more likely than not[113] Note 13 – Subsequent Events This note describes events occurring after the reporting period, specifically the underwriters' exercise of their option to purchase additional Class A common stock - In May 2024, underwriters exercised their option to purchase an additional 3,472,252 shares of Class A common stock at the IPO price of $32.00 per share, generating approximately $104.9 million in net proceeds for the company[114] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Rubrik's financial condition and operational results, highlighting the company's mission to secure data with its Zero Trust Data Security platform (RSC), its go-to-market strategy, key performance drivers, and a detailed comparison of financial results for the three months ended April 30, 2024, and 2023. It also discusses liquidity, capital resources, and critical accounting policies Overview This section introduces Rubrik's mission to secure data with its Zero Trust Data Security platform (RSC) and its transition to subscription-based offerings - Rubrik's mission is to secure the world's data through its Zero Trust Data Security platform, Rubrik Security Cloud (RSC), which provides cyber resilience across enterprise, cloud, and SaaS applications[117][118] - The company transitioned from perpetual licenses and Cloud Data Management (CDM) to subscription-based RSC offerings, with RSC representing a majority of total revenue by the end of fiscal 2024[119][120][121] - Revenue from RSC (excluding RSC-Private) is recognized ratably over the subscription term, while RSC-Private sales recognize a portion upfront and the remainder ratably[122] Our Go-to-Market Strategy This section details Rubrik's 'land and expand' strategy for customer acquisition and growth, emphasizing the value of its data security platform - Rubrik employs a 'land and expand' strategy, acquiring new customers by securing private cloud, enterprise NAS, cloud, and SaaS applications, then expanding usage through data growth, new applications, and additional security products[124] - The platform's value increases as customers manage more data with RSC and adopt additional data security products, leading to deeper insights, stronger security posture, and reduced compliance risk[124] Key Factors Affecting Our Performance This section identifies critical factors influencing Rubrik's future success, including market adoption, innovation, customer acquisition, and retention - Future success depends on market adoption of Zero Trust Data Security, continuous innovation of the platform, and effective management of growth in a competitive and rapidly changing environment[125] - New customer acquisition relies on product breadth, scaling sales and marketing, strong partnerships, and brand enhancement[126] - Customer retention and expansion are crucial, driven by platform performance, customer satisfaction, competitive offerings, and the ability to demonstrate platform benefits[127] Key Business Metrics This section presents Rubrik's key performance indicators, such as Subscription ARR, Cloud ARR, and customer growth, demonstrating business momentum Key Business Metrics (in thousands, except percentages) | Metric | April 30, 2024 | April 30, 2023 | YoY Growth | | :------------------------------------------ | :------------- | :------------- | :--------- | | Subscription ARR | $856,051 | $587,454 | 46% | | Cloud ARR | $605,574 | $296,917 | 104% | | Customers with $100,000 or more in Subscription ARR | 1,859 | 1,314 | 41% | | Average subscription dollar-based net retention rate | over 120% | over 140% | - | - Subscription ARR grew 46% year-over-year to $856.1 million, with approximately three percentage points of growth attributed to transitioning existing maintenance customers to subscription editions[129][172] - Cloud ARR more than doubled, growing 104% year-over-year to $605.6 million, indicating strong adoption of cloud-based subscription offerings[131] Non-GAAP Financial Measures This section provides reconciliations and explanations for Rubrik's non-GAAP financial measures, including free cash flow and subscription ARR contribution margin Free Cash Flow Reconciliation (in thousands) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(31,381) | $(17,457) | | Less: purchase of property and equipment | $(3,639) | $(3,373) | | Less: capitalized internal-use software | $(2,103) | $(2,416) | | Free cash flow | $(37,123) | $(23,246) | - Free cash flow was $(37.1) million in Q1 2024, a decrease from $(23.2) million in Q1 2023, including a $20.6 million cash outlay for employer payroll taxes due to equity award vesting post-IPO[139] Subscription ARR Contribution Margin (Twelve Months Ended, in thousands, except percentages) | Metric | April 30, 2024 | April 30, 2023 | | :------------------------------------------ | :------------- | :------------- | | Subscription ARR | $856,051 | $587,454 | | Non-GAAP subscription cost of revenue | $(112,094) | $(71,371) | | Non-GAAP operating expenses | $(834,504) | $(703,103) | | Subscription ARR Contribution | $(90,547) | $(187,020) | | Subscription ARR Contribution Margin | (11)% | (32)% | - Subscription ARR Contribution Margin improved from (32)% to (11)% for the twelve months ended April 30, 2024, reflecting increased operating leverage driven by strong Subscription ARR growth[143] Components of Results of Operations This section analyzes the drivers of Rubrik's revenue and cost of revenue, highlighting the shift towards subscription models and expected expense trends - Revenue is primarily from subscriptions, recognized ratably over the term, with fluctuations expected due to customer transitions to RSC and the exercise/forfeiture of material rights (Subscription Credits)[146][147] - Subscription revenue includes SaaS and term-based licenses, with SaaS recognized ratably and term-based licenses having an upfront component. Maintenance revenue is expected to decrease as customers adopt RSC[148][149][150][152] - Other revenue, mainly from Rubrik-branded Appliances and professional services, is expected to decrease as appliance sales transition to contract manufacturers[153] - Cost of revenue is expected to generally decrease as a percentage of revenue long-term due to the transition of appliance sales. Operating expenses are expected to increase in absolute terms but decrease as a percentage of revenue long-term[154][163] Comparison of the Three Months Ended April 30, 2024 and 2023 This section provides a detailed year-over-year comparison of Rubrik's financial results, focusing on revenue, cost of revenue, gross profit, and operating expenses Revenue Comparison (in thousands) | Revenue Type | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | $ Change | % Change | | :---------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Subscription | $172,195 | $108,398 | $63,797 | 59% | | Maintenance | $5,667 | $12,288 | $(6,621) | (54)% | | Other | $9,453 | $15,054 | $(5,601) | (37)% | | Total revenue | $187,315 | $135,740 | $51,575 | 38% | Cost of Revenue Comparison (in thousands) | Cost of Revenue Type | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | $ Change | % Change | | :------------------------ | :-------------------------------- | :-------------------------------- | :------- | :------- | | Subscription | $73,725 | $21,637 | $52,088 | 241% | | Maintenance | $3,609 | $2,271 | $1,338 | 59% | | Other | $18,645 | $11,983 | $6,662 | 56% | | Total cost of revenue | $95,979 | $35,891 | $60,088 | 167% | Gross Profit and Margin Comparison (in thousands, except percentages) | Metric | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | $ Change | % Change | | :---------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Total gross profit | $91,336 | $99,849 | $(8,513) | (9)% | | Total gross margin | 49% | 74% | - | - | | Subscription gross margin | 57% | 80% | - | - | | Maintenance gross margin | 36% | 82% | - | - | | Other gross margin | (97)% | 20% | - | - | Operating Expenses Comparison (in thousands) | Operating Expense Type | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | $ Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | :------- | | Research and development | $285,379 | $46,266 | $239,113 | 517% | | Sales and marketing | $379,329 | $115,362 | $263,967 | 229% | | General and administrative | $151,465 | $22,817 | $128,648 | 564% | | Total operating expenses | $816,173 | $184,445 | $631,728 | 342% | - The significant increase in operating expenses across all categories (R&D, Sales & Marketing, G&A) was primarily driven by substantial stock-based compensation expense recognized due to the IPO completion[180][181][183][170] Liquidity and Capital Resources This section discusses Rubrik's sources of funding, cash position, and ability to meet future liquidity needs, emphasizing the impact of the IPO - Rubrik's operations are financed through equity financings, term loan credit facilities, and customer payments. The IPO in April 2024 generated approximately $710.3 million in net proceeds[190] - As of April 30, 2024, the company held $606.3 million in cash, cash equivalents, and short-term investments. Management believes existing liquidity will fund operations for at least the next 12 months[190][192] - Operating cash flows may fluctuate due to seasonality, timing of billings, and customer payment preferences (multi-year upfront vs. annual/consumption payments), with a shift towards annual/consumption payments observed[195][270] Critical Accounting Policies and Estimates This section outlines Rubrik's significant accounting policies and estimates, particularly those requiring complex judgments like common stock valuation and revenue recognition - Key estimates include common stock valuations prior to IPO, volatility for CEO Performance Award fair value, identification of performance obligations in RSC, and material rights for Refresh Rights and Subscription Credits[30][204][358] - The CEO Performance Award's grant date fair value was estimated using a Monte Carlo simulation model, with expected volatility being a significant judgmental assumption[204] Recently Issued Accounting Pronouncements This section details Rubrik's assessment of new accounting standards and their potential impact on future financial disclosures - Rubrik is assessing the timing and impact of adopting ASU 2023-07 (Improvements to Reportable Segment Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures), both effective for annual periods beginning after December 15, 2024[55][56][205] JOBS Act Accounting Election This section explains Rubrik's election as an 'emerging growth company' to use an extended transition period for new accounting standards - As an 'emerging growth company' under the JOBS Act, Rubrik has elected to use the extended transition period for complying with new or revised accounting standards, which may result in financial statements not being comparable to other public companies[205] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines Rubrik's exposure to market risks, specifically interest rate risk and currency risk, and assesses their potential impact on the company's financial condition and results of operations Interest Rate Risk This section assesses Rubrik's exposure to interest rate fluctuations on its cash and investments, and its potential financial impact - Rubrik's cash, cash equivalents, and short-term investments of $606.3 million are held for working capital and are exposed to interest rate fluctuations, though a hypothetical 10% change is not expected to materially affect their fair value[207] Currency Risk This section evaluates Rubrik's exposure to foreign currency exchange rate fluctuations, primarily from operating expenses, and its current hedging strategy - While all sales contracts are in U.S. dollars, a portion of operating expenses are in foreign currencies, exposing the company to currency exchange rate fluctuations. A 10% change in the U.S. dollar's value is not expected to have a material impact on results[208] - Rubrik does not currently use hedging arrangements for foreign currency risk but may consider them in the future if risk increases[208] Item 4. Controls and Procedures This section details management's evaluation of Rubrik's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness and acknowledging inherent limitations Evaluation of Disclosure Controls and Procedures This section presents management's conclusion on the effectiveness of Rubrik's disclosure controls and procedures as of April 30, 2024 - As of April 30, 2024, Rubrik's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[209] Changes in Internal Control over Financial Reporting This section reports on any material changes in Rubrik's internal control over financial reporting during the period - There were no changes in internal control over financial reporting during the period ended April 30, 2024, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[210] Inherent Limitations on Effectiveness of Controls This section acknowledges the inherent limitations of control systems in providing absolute assurance against errors or fraud - Management acknowledges that control systems, by their inherent nature, can only provide reasonable, not absolute, assurance of achieving their objectives and may not prevent or detect all errors and fraud[211] PART II. OTHER INFORMATION Item 1. Legal Proceedings Rubrik is involved in various legal proceedings in the normal course of business but does not believe any current litigation, individually or collectively, would have a material adverse effect on its financial condition or operations - Management believes that current legal proceedings will not have a material adverse effect on the company's business, financial condition, results of operations, and cash flows[212] - Defending legal proceedings is costly and can impose a significant burden on management and employees, with uncertain outcomes that could adversely impact the company[212] Item 1A. Risk Factors This section details various risks that could significantly impact Rubrik's business, financial condition, and stock price. These include risks related to the company's rapid growth, market adoption of data security solutions, limited operating history, ability to attract and retain customers, profitability, product performance, cybersecurity threats, use of AI tools, revenue predictability, reliance on third-party cloud providers, competition, and dependence on key personnel. Additionally, risks associated with common stock ownership, such as stock price volatility and the dual-class structure, are highlighted Risks Related to Our Business This section details risks associated with Rubrik's business operations, including growth, profitability, product performance, cybersecurity, and reliance on third parties - Rubrik's rapid growth may not be indicative of future performance, and its limited operating history, especially with RSC, makes future results difficult to forecast, with revenue growth expected to fluctuate or slow due to the transition to SaaS subscriptions[214][220] - The company has a history of operating losses and may not achieve or sustain profitability due to significant investments in product development, sales and marketing, and increased public company compliance costs[224] - Failure of data security solutions to perform as intended, or real/perceived defects, errors, or vulnerabilities, could harm Rubrik's brand, reputation, and business, especially given its focus on data security[227] - Rubrik's information technology systems or data, or those of third parties it relies on, are targets for cyberattacks, which could lead to significant adverse consequences including regulatory actions, litigation, and reputational harm[233][234] - The use of generative AI tools may pose risks to proprietary software, subject the company to legal liability (e.g., IP infringement, data leakage), and could reduce customer adoption, particularly in highly regulated industries[244][245] - Reliance on third-party cloud providers for hosting data security solutions exposes Rubrik to service interruptions, which could adversely affect business, financial condition, and results of operations[248][249] - The data security market is highly competitive, with numerous established players and new entrants. Failure to compete effectively on factors like product functionality, integration, and price could harm Rubrik's business[251][252] - Rubrik relies heavily on Channel Partners for sales and distribution; any failure to maintain these relationships or if partners underperform could limit market reach and adversely affect financial results[273][274] - Sales to government entities are subject to challenges including high competition, lengthy processes, and regulatory scrutiny, including an ongoing Department of Justice investigation into potential federal law violations related to government contracts[307][310] Risks Related to Ownership of Our Common Stock This section outlines risks pertinent to owning Rubrik's common stock, such as voting control, stock price volatility, and future share sales - The dual-class common stock structure concentrates voting control with Class B holders (executive officers, directors, and affiliates), limiting Class A stockholders' influence on corporate matters and potentially affecting stock price[365][366] - Rubrik's stock price may be highly volatile due to factors like financial performance fluctuations, changes in revenue mix, competitive announcements, security incidents, and general economic conditions[368] - Future sales of Class A common stock in the public market, especially after lock-up periods expire, or the perception of such sales, could depress the market price and impair the ability to raise additional equity capital[370][371] - The company does not intend to pay dividends in the foreseeable future, meaning investor returns will depend solely on stock price appreciation[375] - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult, limit stockholder influence, and potentially reduce the market price of Class A common stock[380][381] General Risk Factors This section covers broad risks that could impact Rubrik, including litigation and catastrophic events - Future litigation, including intellectual property or employment claims, could be costly, time-consuming, and divert management resources, potentially harming the business[385] - Catastrophic events like natural disasters, cyberattacks, or pandemics could disrupt business operations, cause system interruptions, and harm reputation and financial results[386] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details Rubrik's unregistered equity security sales during Q1 2024, including stock options and restricted stock units granted to employees, and outlines the use of proceeds from its recent IPO - From February 1, 2024, to April 25, 2024, Rubrik granted 8,000,000 stock options to its CEO and 9,383,173 restricted stock units to employees, all settled in Class B common stock under the 2014 Plan[387] - The company issued 641,537 shares of Class B common stock upon option exercises for an aggregate purchase price of $3.6 million during the same period[387] - The IPO, completed on April 29, 2024, generated approximately $710.3 million in net proceeds from the sale of 23,500,000 Class A common shares, with no material change in the planned use of proceeds as described in the Final Prospectus[389][390] Item 3. Defaults Upon Senior Securities Rubrik reported no defaults upon senior securities for the period Item 4. Mine Safety Disclosures This item is not applicable to Rubrik, Inc Item 5. Other Information Rubrik reported no other information for the period Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the Amended and Restated Certificate of Incorporation, Bylaws, Equity Incentive Plan, Employee Stock Purchase Plan, and various certifications - Key exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, the 2024 Equity Incentive Plan, and the 2024 Employee Stock Purchase Plan, all filed in connection with the IPO[391] - Certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) are furnished with the report but not deemed 'filed' for Section 18 of the Exchange Act[390][391] Signatures The report is duly signed on behalf of Rubrik, Inc. by its Chief Executive Officer, Bipul Sinha, and Chief Financial Officer, Kiran Choudary, on June 13, 2024 - The report is signed by Bipul Sinha, Chief Executive Officer, and Kiran Choudary, Chief Financial Officer, on June 13, 2024[392][393]