Rubrik, Inc.(RBRK) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Rubrik's revenue grew 37% to $392.3 million, but net loss significantly widened to $(909.0) million due to $735.3 million in post-IPO stock-based compensation Condensed Consolidated Balance Sheets Total assets increased to $1.22 billion post-IPO, while total liabilities grew to $1.72 billion, and stockholders' deficit narrowed to $(499.3) million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | July 31, 2024 | January 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $888,990 | $548,713 | | Cash and cash equivalents | $142,349 | $130,031 | | Short-term investments | $458,992 | $149,220 | | Total Assets | $1,218,204 | $873,610 | | Total Current Liabilities | $776,715 | $656,281 | | Deferred revenue (Current) | $626,131 | $526,480 | | Total Liabilities | $1,717,498 | $1,578,154 | | Total Stockholders' Deficit | $(499,294) | $(1,419,257) | Condensed Consolidated Statements of Operations Revenue grew 37% to $392.3 million, but net loss expanded to $(909.0) million due to massive operating expense increases, especially post-IPO stock-based compensation Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2023 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $204,951 | $151,535 | $392,266 | $287,275 | | Subscription Revenue | $191,315 | $127,456 | $363,510 | $235,854 | | Gross Profit | $149,783 | $116,145 | $241,119 | $215,994 | | Loss from Operations | $(168,293) | $(73,520) | $(893,130) | $(158,116) | | Net Loss | $(176,930) | $(81,121) | $(909,021) | $(170,394) | | Net Loss Per Share | $(0.98) | $(1.35) | $(7.42) | $(2.83) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $(58.5) million, with $384.4 million provided by financing activities, primarily from $815.2 million IPO proceeds Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(58,464) | $(24,205) | | Net cash used in investing activities | $(315,461) | $(22,218) | | Net cash provided by financing activities | $384,374 | $726 | - The significant cash inflow from financing activities was due to IPO proceeds of $815.2 million, which was partially offset by $430.3 million used for taxes related to the net share settlement of equity awards[21][204] Notes to Condensed Consolidated Financial Statements Notes detail the April 2024 IPO, $1.51 billion in remaining performance obligations, and a dramatic $735.3 million increase in stock-based compensation - In April 2024, the company completed its IPO, issuing 23.5 million shares of Class A common stock and receiving net proceeds of approximately $700.0 million[23] - As of July 31, 2024, total remaining non-cancellable performance obligations were approximately $1.51 billion, with 48% expected to be recognized as revenue over the next 12 months[50] - Total stock-based compensation expense for the six months ended July 31, 2024, was $735.3 million, a dramatic increase from $1.6 million in the same period of 2023, primarily due to the IPO[107] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the subscription model transition, with Subscription ARR at $919.1 million and Cloud ARR at $677.9 million, and $601.3 million in liquidity post-IPO Overview Rubrik's mission is to secure data via its Zero Trust Data Security platform, Rubrik Security Cloud (RSC), transitioning from perpetual licenses to a subscription model - The company's core offering is the Rubrik Security Cloud (RSC), a Zero Trust Data Security platform designed to secure data across enterprise, cloud, and SaaS applications[117] - Rubrik has evolved its business model from perpetual licenses to a subscription model, with RSC, launched in fiscal 2023, now representing a majority of total revenue[118][119][120] Key Business Metrics Subscription ARR grew 40% to $919.1 million, Cloud ARR grew 80% to $677.9 million, and dollar-based net retention remained over 120% Key Business Metrics as of July 31 | Metric | 2024 | 2023 | YoY Growth | | :--- | :--- | :--- | :--- | | Subscription ARR | $919.1M | $655.0M | 40% | | Cloud ARR | $677.9M | $376.8M | 80% | | Customers with >$100k Subscription ARR | 1,969 | 1,463 | 35% | - The average subscription dollar-based net retention rate was over 120% as of July 31, 2024, indicating strong expansion within the existing customer base[133] Results of Operations Total revenue increased 35% to $205.0 million, but operating expenses surged 68% due to $103.8 million in post-IPO stock-based compensation, leading to a doubled operating loss - Subscription revenue for Q2 FY25 grew 50% YoY to $191.3 million, driven by a 40% increase in Subscription ARR[172][173] - Total cost of revenue increased 56% YoY for the quarter, and total operating expenses increased 68% YoY. The primary driver for these increases was stock-based compensation expense recognized after the IPO[176][182] Stock-Based Compensation Expense (in thousands) | Period | Q2 FY25 | Q2 FY24 | YTD FY25 | YTD FY24 | | :--- | :--- | :--- | :--- | :--- | | Total SBC Expense | $105,018 | $1,204 | $735,348 | $1,632 | Liquidity and Capital Resources Post-IPO, the company has $601.3 million in cash and investments, with $815.2 million net proceeds from the offering, deemed sufficient for future operations - The company completed its IPO in April 2024 and exercised an over-allotment option in May 2024, resulting in total net proceeds of approximately $815.2 million[193][204] - As of July 31, 2024, the company had cash, cash equivalents, and short-term investments totaling $601.3 million[194] - The company has an Amended Credit Facility from August 2023 with a total borrowing capacity of $330.0 million, maturing in August 2028[192] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate and currency risks, but a 10% change in interest rates is not expected to be material, and currency exposure is unhedged - The company's investments are exposed to interest rate risk, but management believes a hypothetical 10% change in rates would not materially affect the portfolio's fair value[212] - All sales contracts are denominated in U.S. dollars, but a portion of operating expenses are in foreign currencies, creating currency risk. The company does not currently hedge this exposure[213] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of July 31, 2024, with no material changes to internal control over financial reporting - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective at the reasonable assurance level[214] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[215] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any litigation expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not presently a party to any litigation that is expected to have a material adverse effect on its business or financials[217] Item 1A. Risk Factors Key risks include a history of operating losses, intense competition, reliance on third-party cloud providers, and an ongoing DOJ investigation related to government contracts - The company has a history of operating losses, with an accumulated deficit of $(2.6) billion as of July 31, 2024, and may not achieve or sustain profitability in the future[229] - In October 2023, the company received a grand jury subpoena from the DOJ regarding potential violations of federal law in connection with government contracts involving a former employee. The investigation is ongoing[316] - The dual-class stock structure concentrates approximately 97% of voting power with holders of Class B common stock, limiting the influence of Class A stockholders on corporate matters[373] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales occurred; $815.2 million in net IPO proceeds were received, with planned use unchanged from the prospectus - The company completed its IPO on April 29, 2024, and the underwriters exercised their purchase option in May 2024, resulting in total net proceeds of approximately $815.2 million[398] Item 5. Other Information Several directors and officers adopted Rule 10b5-1 trading plans during the quarter for selling Class A common stock - During the quarter ended July 31, 2024, Chief Revenue Officer Brian McCarthy, board member Yvonne Wassenaar, and Chief Financial Officer Kiran Choudary each adopted Rule 10b5-1 trading plans[400][401][402]