10-Q: Rubrik Q2 2026 Revenue Surges 51% Amid Strong Subscription Growth

Rubrik, Inc. reported a significant increase in total revenue for the second quarter of fiscal 2026, driven by robust subscription growth and the successful transition to its Rubrik Security Cloud platform.

Summary

• Total revenue for the three months ended July 31, 2025, increased by 51% to $309.9 million from $205.0 million in the prior year.
• Subscription revenue grew 55% to $297.0 million for the three months ended July 31, 2025, from $191.3 million in the prior year.
• Subscription Annual Recurring Revenue (ARR) increased 36% year-over-year to $1,252.4 million as of July 31, 2025.
• Cloud ARR grew 57% year-over-year to $1,064.1 million as of July 31, 2025.
• Net loss for the three months ended July 31, 2025, was $(95.9) million, an improvement from $(176.9) million in the prior year.
• Gross profit for the three months ended July 31, 2025, increased 64% to $246.3 million, with total gross margin improving to 79% from 73%.
• Acquired Predibase, Inc. in July 2025 for $109.1 million ($14.5 million cash, $94.6 million stock) to accelerate agentic AI adoption.
• Repaid $327.9 million outstanding balance under the Amended Credit Facility in June 2025 and terminated the agreement.
• Issued $1.15 billion aggregate principal amount of 0.00% convertible senior notes due June 2030, with net proceeds of approximately $1.13 billion.
• Free cash flow for the six months ended July 31, 2025, was $90.9 million, a significant improvement from $(69.1) million in the prior year.
• Customers with $100,000 or more in Subscription ARR increased by 27% to 2,505 as of July 31, 2025.

Sentiment

Score: 8

Explanation: The company demonstrated strong revenue and subscription ARR growth, significantly reduced net losses, and achieved positive free cash flow, indicating improving operational efficiency and market traction for its core offerings. The strategic acquisition and debt refinancing further strengthen its position. However, it remains loss-making, operates in a highly competitive and evolving market, and faces various operational and regulatory risks.

Positives

• Total revenue increased by 51% for the three months ended July 31, 2025, and 50% for the six months ended July 31, 2025, demonstrating strong top-line growth.
• Subscription revenue surged 55% for both the three and six months ended July 31, 2025, highlighting successful transition to subscription models.
• Subscription Annual Recurring Revenue (ARR) grew 36% year-over-year to $1,252.4 million, indicating robust recurring revenue expansion.
• Cloud Annual Recurring Revenue (ARR) increased 57% year-over-year to $1,064.1 million, reflecting strong adoption of cloud-based offerings.
• Net loss significantly reduced to $(95.9) million for the quarter (from $(176.9) million) and to $(198.0) million for the six months (from $(909.0) million), showing improved financial performance.
• Gross margin improved substantially to 79% for the quarter (from 73%) and for the six months (from 61%), driven by higher RSU expense in prior periods and increased SaaS adoption.
• Achieved positive Free Cash Flow of $90.9 million for the six months ended July 31, 2025, a significant improvement from negative $69.1 million in the prior year.
• The number of customers with $100,000 or more in Subscription ARR increased by 27% to 2,505, indicating successful penetration into larger enterprise accounts.
• Successfully refinanced debt by repaying the Amended Credit Facility and issuing $1.15 billion in convertible senior notes, strengthening the capital structure.
• Acquired Predibase, Inc. in July 2025, a strategic move to accelerate agentic AI adoption and enhance platform capabilities.

Negatives

• Despite improvements, the company continues to report net losses, with $(95.9) million for the quarter and $(198.0) million for the six months.
• Maintenance revenue decreased significantly by 61% for the quarter and 60% for the six months, reflecting the ongoing transition away from perpetual licenses.
• Incurred a $6.7 million loss on debt extinguishment due to the early repayment of the Amended Credit Facility.
• Other income (expense), net, was negative $(5.5) million for the six months ended July 31, 2025, worsening from $(2.1) million in the prior year.
• Operating expenses increased in absolute terms for the three months ended July 31, 2025, with sales and marketing up 8%.

Risks

• Recent rapid growth may not be indicative of future growth, making future prospects difficult to evaluate.
• The market for data security solutions is at an early stage and rapidly evolving; failure to grow this market would adversely affect the business.
• Limited operating history, particularly with Rubrik Security Cloud (RSC), makes forecasting future results difficult.
• Inability to attract new customers or retain and expand existing customer subscriptions could harm results.
• History of operating losses and no guarantee of future profitability.
• Data security solutions may fail, not perform as intended, or be perceived to have defects, harming brand and reputation.
• Information technology systems or data, or those of third parties, have been and may in the future be compromised, leading to significant adverse consequences, especially as a data security company.
• Use of generative and other artificial intelligence tools may pose risks, including to proprietary software, and could lead to legal liability.
• Revenue mix and business factors are expected to impact period-to-period revenue recognition, making comparisons difficult and revenue hard to predict.
• Reliance on third-party cloud providers (GCP, Azure, AWS) for hosting, with any disruption adversely affecting the business.
• Inability to successfully manage growth efficiently could harm the business.
• Competitive markets, with many competitors having greater resources, could harm the business if not competed effectively.
• Estimates of market opportunity and growth forecasts may be inaccurate.
• Reliance on a limited number of contract manufacturers and OEMs for compatible commodity servers; failure to forecast demand or manage relationships could negatively impact sales.
• Customer dissatisfaction if Subscription Credits are not utilized before expiration.
• Reliance on highly skilled personnel; inability to retain or motivate key personnel or hire qualified personnel could harm the business.
• Substantial dependence on the data security platform; failure to satisfy customer demands or achieve market acceptance would harm the business.
• Fluctuations in financial results, making projections difficult, and failure to meet expectations could cause stock price decline.
• Ability to introduce new products depends on adequate R&D and successful acquisitions; failure could harm competitiveness.
• Dependence on third-party SaaS technologies; interruptions or performance problems could adversely affect business.
• Reliance on Channel Partners and technology alliance partners; failure to maintain relationships or partner underperformance could limit sales.
• Failure to effectively expand and train the sales force could harm customer acquisition and sales.
• Failure to enhance brand cost-effectively could impair customer base expansion.
• Limited history with pricing models; adjustments could adversely affect revenue.
• Need for additional capital to support growth, which might not be available on acceptable terms.
• Servicing debt (Convertible Notes) requires significant cash flow, which may not be sufficient.
• May not have enough cash to pay upon conversion or repurchase of Convertible Notes.
• Exposure to fluctuations in currency exchange rates.
• Unfavorable conditions in industry or global economy, or reductions in technology spending, could limit growth.
• Failure to meet service-level commitments could lead to customer terminations and reputational damage.
• Sales to enterprise customers involve longer, more unpredictable cycles and higher risks.
• Intellectual property rights may not adequately protect the business, and disputes can be costly.
• Subject to claims alleging violations of employees' contractual obligations to prior employers.
• Inability to maintain company values as the company grows could harm the business.
• Risks inherent in international operations (political, economic, regulatory, currency, etc.).
• Changes in tax laws or regulations could harm financial condition.
• Subject to additional sales or indirect taxes.
• Ability to use net operating losses may be limited.
• Estimates or judgments relating to critical accounting policies may prove incorrect.
• Leverage could adversely affect financial condition.
• Dual class stock structure concentrates voting control with Class B holders.
• Stock price may be volatile.
• Future sales of Class A common stock could cause price decline.
• Capped call transactions may affect market price of Notes and Class A common stock.
• Subject to counterparty risk with capped call transactions.
• Issuance of additional capital stock will dilute other stockholders.
• No intention to pay dividends.
• Emerging growth company status (will cease Jan 31, 2026) means reduced reporting requirements are temporary.
• Significant costs of operating as a public company.
• Anti-takeover provisions.
• Exclusive forum provisions restrict stockholder choice of judicial forum.
• Lack of research or unfavorable research from analysts could cause stock price decline.
• Future litigation could be costly.
• Business could be disrupted by catastrophic events.

Future Outlook

The company expects to continuously innovate its platform and product functionality to capture market opportunity in data security. New and existing customers are anticipated to continue adopting the Rubrik Security Cloud (RSC) platform, with active migration of existing customers from legacy CDM capabilities to RSC. The ratable portion of subscription revenue is expected to increase as customers adopt or transition to RSC. Benefits from customers exercising or forfeiting Subscription Credits are expected to continue through fiscal 2026 but significantly decline after fiscal 2026. Maintenance revenue is projected to decrease, with the transition of existing maintenance customers to RSC largely completed by the end of fiscal 2026. Other revenue is expected to be primarily driven by professional services and decrease as a percentage of total revenue over time. Operating expenses are anticipated to increase in absolute terms but decrease as a percentage of revenue (exclusive of stock-based compensation) over the long term. The company expects to maintain a full valuation allowance on U.S. federal and state net deferred tax assets for the foreseeable future and does not expect the One Big Beautiful Bill Act (OBBBA) to have a material impact on consolidated financial statements in fiscal 2026. Existing cash and cash equivalents are believed to be sufficient to fund operating and capital needs for at least the next 12 months. The company will cease to qualify as an emerging growth company as of January 31, 2026.

Management Comments

• "We are on a mission to secure the worlds data. Cyberattacks are inevitable. Realizing that cyberattacks ultimately target data, we created Zero Trust Data Security to deliver cyber resilience so that organizations can secure their data across the cloud and recover from cyberattacks."
• "We believe that the future of cybersecurity is data security—if your data is secure, your business is resilient."
• "We built Rubrik Security Cloud ('RSC') with Zero Trust design principles to secure data across enterprise, cloud, SaaS, unstructured data, and identity providers."
• "We expect new and existing customers to continue to adopt RSC."
• "We are actively migrating our existing customers from our legacy CDM capabilities to RSC."
• "We expect our maintenance revenue to decrease as we drive adoption of RSC for existing maintenance customers and the transition to be largely completed by the end of fiscal 2026."
• "We expect our other revenue as a percentage of total revenue to continue to decrease."
• "We primarily measure our business on the basis of Subscription ARR, as we believe it best reflects our actual growth and our growth prospects."
• "We expect our operating expenses will continue to increase as our business grows. We also expect our operating expenses, exclusive of stock-based compensation, as a percentage of revenue to generally decrease over the long term."
• "We believe that our existing cash and cash equivalents will be sufficient to fund our operating and capital needs for at least the next 12 months."

Industry Context

The company operates in the rapidly evolving data security market, which is at an early stage. The industry has traditionally focused on preventing cyberattacks, but Rubrik's approach emphasizes Zero Trust Data Security for cyber resilience and recovery, addressing the growing demand for data protection against increasing ransomware activity. The market is highly competitive, with a mix of traditional data management/protection vendors (e.g., Dell-EMC, IBM, Commvault, Veeam, Cohesity), cloud/SaaS data management vendors, and specialized cybersecurity firms. Many competitors are also investing in AI technology to enhance their data security products. The ability to converge data security and data management in a cloud architecture is a significant competitive factor. The regulatory landscape for AI tools is rapidly evolving globally, with new laws and proposals (e.g., EU's AI Act, various US state laws) creating a complex compliance environment for companies utilizing AI.

Comparison to Industry Standards

• The company's average subscription dollar-based net retention rate of 'over 120%' is a strong indicator, often considered a benchmark for successful SaaS companies, suggesting effective upsell and expansion within existing customer bases, comparable to high-growth SaaS peers.
• The growth in customers with $100,000 or more in Subscription ARR (27%) indicates successful penetration into larger enterprise accounts, a common goal for enterprise software companies.
• The company's reliance on third-party cloud providers (GCP, Azure, AWS) for its SaaS infrastructure is a standard industry practice for cloud-native solutions, aligning with modern IT trends.
• The acquisition of Predibase, Inc., a developer platform specializing in open-source AI models, positions Rubrik to compete in the growing 'agentic AI' space, aligning with broader industry trends of AI integration into cybersecurity, similar to how other major tech companies are incorporating AI into their offerings.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in various legal proceedings arising in the normal course of business, but management believes any liabilities will not have a material adverse effect.
• Received a grand jury subpoena from the Department of Justice (DOJ) in October 2023 regarding two companies associated with a former sales team employee who was indicted by a federal grand jury in the District of Maryland in October 2024.
• The company is fully cooperating with the DOJ investigation and conducting its own internal investigation, which discovered communications among certain sales team employees related to potential violations of federal law in connection with government contracts.
• The investigations are ongoing, and the ultimate outcome and full extent of potential consequences (fines, penalties, reputational harm, exclusion from federal contracting) are unknown.

Related Party Transactions

• No specific related party transactions are detailed in the filing beyond the general mention of 'affiliates' in the context of the capped call transactions.

Stakeholder Impact

• Shareholders: Potential for dilution from future equity issuances (including conversion of Notes), volatility in Class A common stock price, concentrated voting power with Class B holders, and no dividends expected. Positive impact from strong revenue growth and improved financial performance.
• Employees: Continued investment in R&D, sales, and marketing organizations, but also risks related to high competition for talent, potential attrition, and impact of company culture changes due to growth. Stock-based compensation is a significant component of compensation.
• Customers: Benefit from enhanced data security solutions, new AI features, and migration to RSC. Risks include potential dissatisfaction or delays during migration, reliance on third-party cloud providers, and potential issues with data recovery warranty if security incidents occur.
• Suppliers/Vendors: Reliance on third-party cloud providers (GCP, Azure, AWS) and a limited number of contract manufacturers (e.g., Supermicro) for commodity servers. Any disruptions or changes in relationships could impact the company's ability to deliver products.
• Creditors: Convertible Senior Notes holders are unsecured creditors. The company's ability to service debt depends on future performance and cash flow.

Next Steps

• Continuously innovate platform and product functionality to capture market share in data security.
• Attract new customers and expand sales to existing customers.
• Actively migrate existing customers from legacy CDM capabilities to RSC.
• Expand sales force and marketing efforts, including into new international markets.
• Invest in product development, including new features, functionality, and securing additional applications.
• Invest in cloud infrastructure technology (systems architecture, scalability, availability, performance, security).
• Continue use and development of AI technologies and tools.
• Expand partner ecosystem.
• Implement additional systems and processes to effectively scale operations.
• Monitor and comply with evolving data privacy and security regulations, including those related to AI.
• Manage the transition of existing maintenance customers to subscription editions, expected to be largely completed by end of fiscal 2026.
• Manage the decline of other revenue as Rubrik-branded Appliance sales transition to contract manufacturers.
• Assess the impact of adopting new accounting standards (ASU 2023-09, ASU 2024-03, ASU 2025-05).
• Prepare for ceasing to qualify as an emerging growth company as of January 31, 2026, which will expedite auditor attestation requirements for internal control over financial reporting.
• Continue to cooperate with the Department of Justice investigation regarding potential violations of federal law in connection with government contracts.

Key Dates

Recommendation

Rubrik demonstrates strong top-line growth, particularly in its subscription and cloud offerings, and has made significant strides in improving its financial health by reducing net losses and achieving positive free cash flow. The strategic acquisition of Predibase and the refinancing of debt are positive steps. However, the company still operates at a net loss, faces intense competition in a rapidly evolving market, and is subject to ongoing legal investigations related to government contracts, the outcome of which is uncertain. While the growth trajectory is promising, the inherent risks and the early stage of market development for some of its solutions suggest a 'hold' position until there is clearer visibility into sustained profitability and resolution of legal matters.

Keywords

Data Security, Cyber Resilience, AI, Rubrik Security Cloud, SaaS, Cloud Data Management, Ransomware Recovery, Enterprise Software, Cybersecurity, Data Protection, Convertible Notes, Financial Results, Q2 2026, RBRK, SEC Filing, 10-Q