Q4 2024 Rubrik Inc Earnings Call
Thanks for watching.
Speaker Change: Good afternoon, ladies and gentlemen, and welcome to Rubrik's fourth quarter in fiscal year 2025 Results Conference Call.
At this time, all lines are in listen only mode
Speaker Change: Following the presentation, we will conduct a question and answer session
Speaker Change: If at any time during this call, you require immediate assistance [inaudible]
Please press star zero for the operator.
This call is being recorded on Thursday, March 13th, 2025
Speaker Change: I would now like to turn the conference over to Melissa Franchi. Please go ahead.
Speaker Change: Hello everyone. Welcome to Rubrik's fourth quarter and fiscal year 2025 financial results conference call. On the call of me today are Bipul Sinha, CEO , Chairman and co-founder of Rubrik and Kiran Choudary, Chief Financial Officer.
Speaker Change: Our earnings press release was issued today after the market closed and may be downloaded from the Investor Relations page at www.ir.rubrick.com
Speaker Change: Also on this page, you'll be able to find a slide back with financial highlights that, along with our earnings release includes a reconciliation of staff's non-GAAP financial results.
Speaker Change: These measures should not be considered an isolation from or as a substitute for financial information prepared in accordance with gaps.
Speaker Change: During this call, we will make forward-looking statements, including statements regarding our financial outlook for the first quarter and full fiscal year of 2026.
Speaker Change: Our expectations regarding market trends, our market position, opportunities, including with respect to generative AI, growth strategy, product initiatives, and expectations regarding those initiatives, and our good market motion.
Speaker Change: These statements are only predictions that are based on what we believe today and actual results may differ materially.
Speaker Change: These board-looking statements are subject to risks and other factors that could affect our performance and financial results, which we discuss in detail with our filings with the SEC.
Speaker Change: Rubrik assumes no obligations update any board looking statements we make on today's call.
With that, I'll hand the call over to Bipul.
Bipul Sinha: Thank you, Melissa. I want to start by thanking everyone for joining today.
Bipul Sinha: The fourth quarter was an exceptional tennis, what has been a milestone year for Rubrik.
Bipul Sinha: This quarter, he once again exceeded all top line and profitability guided metrics.
Thera-5-K numbers
First, Subscription ARR reached a billion 93 growing 39% year-over-year.
Bipul Sinha: Yet again, a clear indication that we are winning the cyber-resilience market [inaudible]
Bipul Sinha: Let new subscription ARR reached over 90 million in the fourth quarter, which is a record for us, and it stands out for a cyber security company at ARR scale.
2nd, our subscription revenue was 244 million growing 54% year-over-year [inaudible]
Good, our subscription NRR remained strong above 120%
4th, Customers with 100K or more in subscription ARR reached.
2246, growing 29% year-over-year.
Bipul Sinha: Customers with 1 million or more in subscription ARR reached 162, growing 64% year over year.
Bipul Sinha: Finally on profitability, we once again made material improvement in subscription ARF contribution margin up over 1400 basis point year over year.
Bipul Sinha: On Kasth's generation, we are very happy to report that we had over 75 million in C Kasthur this quarter and approximately 22 million in C Kasthur for the full fiscal year.
Bipul Sinha: Overall, our total revenue grew 47% year over year and we generated 29% free cash flow margin in the quarter.
Bipul Sinha: We believe this combination of top line growth and free cash flow margin at this scale is rare which is truly a tremendous achievement.
Bipul Sinha: We continue to be very confident about our bezels and our leadership of the cyber-resilience market.
Bipul Sinha: Therefore, we are guiding fiscal 2026 numbers ahead of the consensus.
Bipul Sinha: Now, let me unpack what is fueling the strong performance of our business.
Speaker Change: I spent a significant time meeting with CIOs and CSOs around the world. In fact, I had over 400 customer meetings last fiscal year.
Speaker Change: What is clear is that companies are undergoing multiple technology transformation to find success in the AI era.
Speaker Change: As organizations prepare their infrastructure for genitive AI and re-platform to accentuate cloud adoption, they quickly realize the need for a modern data security strategy.
That provides robust, fiber resilience.
Speaker Change: This is why we continue to win significantly against all our competitors who struggle to deliver cyber resilience across the full breadth of customer transformation initiatives.
Speaker Change: What we see is that customers turn to rubric to provide cyber resilience as the re-platform across data centers and pivot to multiple clouds.
Speaker Change: As they depend their cloud and SaaS investments, they help them orchestrate uniform and consistent data security controls through a single policy engine.
Speaker Change: When a customer's identity service is compromised, it helps them quickly recover by automating a painfully manual recovery process, all while avoiding malware infection.
Speaker Change: As our customers look to modernize how they manage their unstructured data for GNAI readiness, they help them securely mobilize their unstructured data to the cloud.
Speaker Change: When our customers hold their GNII deployment due to overexposed sensitive data, we help them strengthen their data security posture so that they can confidently deliver GNII services.
Speaker Change: Our unique platform allows us to solve all these problems and more.
Post.
Speaker Change: Our differentiated architecture positions us at the nexus of data, security and AI. While other players are forced to consolidate, we continue to take market share away from the competition.
Speaker Change: These are the key contributors to our exceptional growth at the scale.
Speaker Change: Now, let me highlight a few customer wins with cloud and fast protection.
Speaker Change: This quarter, a European insurance company selected Rubrik to provide complete cyber resilience for his critical cloud workloads.
Speaker Change: Rubrik aligned with its key CEO initiatives to reduce the risk of downtime from a cyber attack.
Ensure Dora compliant and reduce IT's spend.
Speaker Change: Through a comprehensive proof of concept, Rubrik provided a single pane of glass to manage data security across AWS and Azure as well as demonstrated a 24% total cost of ownership production.
Speaker Change: Plus savings of over $400,000 per year by reducing infrastructure and storage costs.
Speaker Change: A Fortune 50 organization selected Rubik Security Cloud for RSC to protect M365, one of its most critical SaaS applications with tens of thousands of users.
Speaker Change: Rubrik has stood above other new-gen backup and recovery providers because of our demonstrated expertise in protecting the world's largest M-65 environment and our strategic partnership with Microsoft.
Speaker Change: We also demonstrated an ability to recover 98% faster than native recovery tools, avoiding billions in potential losses upon a successful driver attack.
Speaker Change: In the words of the customer, quote, this is about the survival of our company, unquote.
Speaker Change: A U.S. business conglomerate bought our RSC Enterprise Edition, including Rubrik's Universal Cloud License, Kasth data protection for M365, and unstructured data protection.
Speaker Change: This organization's CIO and CISO selected Rubrik due to our superior capabilities such as threat hunting and faster recovery times compared to legacy and new gen alternatives.
Speaker Change: With this purchase, the company was also able to consolidate 9 backup and recovery tools into a single platform for complete fiber resilience.
Speaker Change: The move to public-cloud infrastructure and greater option of SaaS applications is also driving strength in group rate, data security, posture management or DSPN business.
Speaker Change: This quarter we announced the full integration of our DSPM into Rubrik's Security Cloud, allowing customers to rapidly enable DSPM for increased data visibility and sensitive data control from the existing RSC instance.
Speaker Change: Our integrated DSPM solution in powers organizations to proactively reduce data risk across fragmented cloud sass and enterprise environment and ensures the sensitive data remain protected regardless of where it lives.
Rubrik DSTM, plus Rubrik Cyber Recovery Office, complete cyber-resilience.
and this makes us unique in the marketplace.
Let me give you an example.
Speaker Change: This quarter, an existing large financial services customer, upgraded their highest RFC edition for access to Rubrik DSPM and enhanced protection for their cloud and enterprise workloads.
Speaker Change: This customer also expanded Rubik's data protection to include critical structured and structured workloads in their AWS environment.
Speaker Change: With this purchase, this customer addressed a key business challenge of identifying where sensitive data lives on premises and in the clouds.
Speaker Change: The customer was also able to retire, several legacy backup tubes.
Speaker Change: CIO's look to Rubrik as a trusted partner in their journey to secure their critical enterprise databases and modernize their data centers with re-platformization initiatives.
Speaker Change: Along these lines, we recently announced our expanded support for Red Hat OpenShift Virtualization and Postgres SQL Databases. We'll continue to expand our capabilities to cover critical platforms across traditional and modern infrastructures.
Speaker Change: Companies are also turning to rubik to secure their massive unstructured data stage, but trend we believe will continue as enterprise AI initiatives gain more speed.
Speaker Change: In Q4, a U.S. airline expanded their Rubrik footprint by adding unstructured data protection.
Speaker Change: We demonstrated a 65% reduction in operating expense over 36 months by freeing up data center capacity while enhancing the protection of the critical data sets.
Speaker Change: This quarter, we also added a lighthouse government organization in Southeast Asia.
Speaker Change: This customer elected to replace the Legacy Backup Bender with Rubrik across structured and unstructured data in the data center as well as their cloud.
Our functionality was unmatched by legacy incumbent and new-gen competition.
Speaker Change: Additionally, this customer noted our robust and built-in security features, including threats, monitoring and anomaly detection. This purchase also included Ruby DSPM for complete cyber resilience and cyber preparedness.
Speaker Change: We continue to accelerate innovation to keep ahead of the threat landscape. Over a year ago, we launched our capabilities to secure Microsoft Active Directory, or
Speaker Change: These identity services are universally used and are primary targets for attackers.
Speaker Change: In fact, 90% of global 1000 used ADs to authenticate and authorize users
Speaker Change: Over to past year we have seen significant customer adoption of our immutable access control backups for Active Directory and Entry ID.
Speaker Change: Our customers can leverage their existing Rubik Security Cloud platform to restore their AD and INTRI-D services without reintroducing malware or misconfiguration.
Speaker Change: This quarter, we depend our innovation in identity with the general availability of orchestrated Active Directory Forest Recovery.
Speaker Change: When an attack compromises active directly, domain controllers, recovering the entire AD forest becomes an administrative nightmare, particularly for large organizations.
Speaker Change: Our orchestrated AD Forest Recovery allows enterprises to rapidly and automatically recover entire AD Forest to desire points in time while avoiding malware introduction.
What once was a manual recovery that can span weeks?
He is now transformed into recovery within an hour.
Speaker Change: We have already seen a number of wins across orchestrated AD Forest Recovery, which is currently sold as a standalone off-frame.
Speaker Change: One highlight is with the state lottery organization that is standardized on Rubrik's security cloud this quarter. Adding Rubrik, orchestrated AD Forest Recovery.
Speaker Change: Already protecting enterprise data, they also added cloud native workloads for Azure, Kasth data protection for N365, and Rubrik DSTM to enhance cyber preparedness.
Speaker Change: In addition, a global investment bank purchased Rubrik orchestrated AD Forest Recovery this quarter to shorten the recovery of active directory to just few hours versus five days
Speaker Change: In closing, I am proud of our unwavering customer focus and relentless execution as we create a new vision for the cyber security industry based on cyber resilience.
Speaker Change: However, we are still early in Rubrik's journey to realize the company's full potential. In calendar 2025, we aim to accelerate our product innovation, generate ground-breaking ideas
Speaker Change: I am confident that what is ahead of us is even more important and exciting than what we have previously achieved.
Speaker Change: Thank you to all our Rubrikans as well as our customers and partners around the world.
Speaker Change: The best is yet to come. With that, I am pleased to pass it over to our Chief Financial Officer, Kiran Choudary.
Kiran Choudary: Thank you, Bipul. Good afternoon, everyone and thank you for joining us today.
Kiran Choudary: Q4 was a record quarter to date. It was highlighted by solid top line growth at scale, driven by a leadership and the growing market for cyber resilience and significant expansions within our customer base. It was also marked by strong and continued improvement and profitability.
Kiran Choudary: Let me start by briefly recapping our fourth quarter and full year fiscal 25 financial results and key operating metrics and then I'll provide guidance for the first quarter and full year fiscal 2026.
All comparisons, unless otherwise noted, are on a year-over-year basis.
Kiran Choudary: Subscription ARR best illustrates the momentum of our business and we are very pleased to have ended Q4 with Subscription ARR of 1 billion and 93 million growing 39 percent.
We added $90 million in net new subscription ARR.
Kiran Choudary: We continue to drive an option of our Rubrik Sikiri cloud, which resulted in $876 million of cloud ARR up 67%.
Kiran Choudary: Our subscription ARR growth benefited approximately 2 percentage points from transitioning our declining maintenance base to subscription.
Kiran Choudary: We have a differentiated LAN and expand model, where we have multiple avenues to acquire new customers and expand the relationship with our customers after the initial contract.
Kiran Choudary: We can expand through the growth of data in applications already secured by Rubrik to the expansion of our footprint of application secured and or by the addition of more security functionality.
Kiran Choudary: All vectors of expansion are healthy contributors to our NRR, highlighting the meaningful run
Kiran Choudary: We ended the fourth quarter with 2,246 customers with subscription ARR of $100,000 or more up 29 percent.
Kiran Choudary: These larger customers now contribute 84% of our subscription error up from 80% in the year as we become an increasingly strategic partner to our enterprise customers
Total revenue was $250 million, up 47% [inaudible]
Kiran Choudary: Revenue and Q4 benefited from our strong ARR growth and tailwinds as we progress through a cloud transformation journey.
Kiran Choudary: We also saw a higher non-recurring revenue which was accounted for as material rights related to our cloud transformation which contributed a few points of growth this quarter.
Kiran Choudary: Turning to the geographic mix of revenue, revenue from the America's Group 48% to $185 million revenue from outside the America's Group 47% to $73 million
Kiran Choudary: Before turning to gross margins, expenses and profitability, I would like to note that I'll be discussing non-GAAP results going forward.
Kiran Choudary: A non-GAAP gross margin was 80% in the 4th quarter compared to 78% in the year ago period [inaudible]
Kiran Choudary: are gross margin benefited from the revenue or performance, including higher non-recurring revenue.
Kiran Choudary: A gross margin also benefitted from improved efficiency of our customer support organization offset by continued investments in our cloud hosting infrastructure.
Kiran Choudary: We anticipate total gross margin to remain within our long-term target of 75 to 80% in fiscal
Kiran Choudary: As a reminder, we look at subscription era contribution margin as a key measure of operating
Kiran Choudary: We believe the improvement in our subscription error contribution margin demonstrates that I believe you drive operating leverage and profitability at scale.
Kiran Choudary: Subscription Aeron Contribution margin was positive 2% in the last 12 months ended January 31st compared to negative 12% in the year of a period, an improvement of over 1400 basis points.
Kiran Choudary: The improvement in subscription ARR contribution margin was driven by higher sales, the benefits of scale and improving efficiencies and management of course across the business.
Kiran Choudary: Free cash flow of $75 million compared to $9 million in the fourth quarter of fiscal 2024.
Kiran Choudary: For the full year, free cashflow is $22 million compared to negative $25 million for fiscal
Kiran Choudary: This increase was primarily driven by higher sales and improved operating leverage, offset by higher expenses and increasing makes of annual and monthly consumption payments and shorter contract terms related to the year of opinion.
Kiran Choudary: Turning to our balance sheet, we ended the fourth quarter in a strong cash position with $75 million in cash, cash equivalence, restricted cash and marketable securities, and $32
Kiran Choudary: Let me now provide some contact to our Outlook for fiscal 26.
Kiran Choudary: We remain confident about the strength of the cyber resilience market and demand for our
Kiran Choudary: We believe these drivers, alongside a strong and consistent execution, will deliver strong subscription error growth ahead.
Kiran Choudary: As a reminder, we run our business on annual net new subscription error, but I'd like to give some guideposts on our current perspective on quarterly seasonality.
Kiran Choudary: We continue to expect higher net new subscription error in the second half of the year versus the first half.
Kiran Choudary: Well, this is relatively in line with normal seasonality. This is also reflective of a shift to annual sales complex this year, was a semi-annual previously.
Kiran Choudary: Currently, we expect the first half to comprise approximately 40% of the full-year net news subscription ARR with Q1 specifically contributing approximately 24% of the full-year net news subscription
Kiran Choudary: As we have mentioned before, revenue and revenue growth can fluctuate due to a number of variables. In fiscal 26, we expect revenue will continue to see tailwinds from our cloud transformation, including a few points of growth from non-recurring revenue due to material rights.
Kiran Choudary: In terms of operating expenses, we expect to maintain a disciplined approach to investing across our business in order to drive future growth as we continue to scale globally.
Kiran Choudary: Innovation remains a top priority for us and we will continue to invest in R&D while driving modest leverage in sales and marketing and GRI.
Kiran Choudary: I'd also like to note some seasonality in subscription ARR contribution margin due to the quarterly timing of net new subscription ARRR and operating expenses.
Kiran Choudary: Specifically, we expect Q1 contribution margins to be up from Q4 before moving lower in Q2 and Q3.
Ben Proceeding Higher in the fourth quarter [inaudible]
Kiran Choudary: For free cash flow, we expect Q1 and Q4 to be our seasonally strongest quarters and the first have to be approximately breakeven.
Kiran Choudary: Now, turning to our guidance for the first quarter and full year fiscal 2026
Kiran Choudary: In Q1, we expect revenue of $259 million to $261 million, up 38% to 39%.
Kiran Choudary: We expect non-GAAP subscription ARR contribution margins between 4% and 5%
Kiran Choudary: We expect non-GAAP earnings per share of negative 33 cents to negative 31 cents based on approximately
Kiran Choudary: For the full year fiscal 2026, we expect subscription ARR in the range of $1,350,000,000 to $1,360,000,000,000. Reflecting a year-over-year growth rate of approximately 24%.
Kiran Choudary: We expect total revenue for the full year of fiscal 2026 in the range of $1,145,000,000 to $1,161,000,000, implying approximately 30% growth.
Kiran Choudary: We expect non-GAAP subscription error contribution margins between 4.5% and 5.5%
Kiran Choudary: We expect non-GAAP earnings per share of negative $1.23 to negative $1.13 based on approximately $198 million, weighted average shares outstanding for the full year.
Kiran Choudary: We expect earnings per share to decline from Q1 to Q2 and increase in Q3 and Q4 [inaudible]
Bipul Sinha, Kiran Choudary, Bipul Sinha
Kiran Choudary: We expect free cashflow of $45 million to $65 million to $10 million.
Kiran Choudary: In closing, we are pleased with our performance in the fourth quarter and in our first year is a publicly traded company.
Kiran Choudary: Looking forward, we believe we have well positioned to continue to deliver efficient and durable growth given our leadership and innovation in the large and growing opportunity for
Kiran Choudary: With that, we'd like to open up the call for any questions.
Thank you.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Kiran Choudary: Should you have a question, please press the R1 under a touch stone phone.
Speaker Change: You will hear a prompt that your hand has been raised.
Kiran Choudary: Should you wish to decline from the polling process, please press R2.
Kiran Choudary: Fear using a speaker phone, please lift the handset before pressing any keys.
Kiran Choudary: Please be reminded that everybody is limited to one question only. One moment please for your first question.
Thank you for watching. Bye.
Your first question comes from Saket Kalia of Barclays
Your line is already open [inaudible]
Saket Kalia: Okay, great. Hey guys, thanks for taking my question here and nice finish to the year.
Thank you. Absolutely.
Saket Kalia: Bipul, I'll keep to one question and Bipul, maybe it's for you. So, you spend a lot of time with customers.
Saket Kalia: How are you feeling about the TAM here for data protection?
Speaker Change: You talked about how customers need a more modern data protection tool as they move to the cloud and deliver Gen AI. I think we see the share shift in numbers, but curious if you feel the TAM here is expanding
Through that sort of cloud and Genai transition as well.
Thanks, Saket!
Speaker Change: As you might recall, during IPO Roadshow and in our subsequent quarterly
Update. We have been...
We have done a fundamental transformation.
of the traditional data protection market, we brought.
Speaker Change: DSPM and Cyber Recovery together to create a new platform to deliver cyber resilience. And this platform, Rubrik Security Cloud, is a through data security platforms. So, let's bring in...
Speaker Change: This idea of data risk, data threat and cyber recovery on a single platform, we massively expanded the time for our market and as we had mentioned in our IPO prospectors, it's over fifty billion dollar market.
Speaker Change: What is exciting is that, as customers are taking JNAI journey and preparing for JNAI as well as doing cloud transformation, the need for
Speaker Change: Cyber-resilience and data security is only increasing as they are adopting more SaaS platforms they need to secure that data, they need to ensure that right data is available to the right user on the right platform at the right time for the right duration and all of it is expanding the time for us so
Speaker Change: From where we set, and as you can see, the squatter results, we are not opportunity constrained. We are the only cybersecurity company that sets at the intersection of data security in AI.
Speaker Change: And it is on us going forward is how do we prioritize our product development as well as in organic tuck-ins to really accelerate our journey to the AI future.
Very helpful. Thanks guys.
Thank you, Saket.
Dr. Pranjali, Dr. Pranjali, Dr. Pranjali, Dr. Pranjali
Speaker Change: Your next question comes from Kasthuri Rangan of Goldman Sachs. Your line is already open.
Cash Rangan: Hi, thank you very much. Congratulations on the end of the fiscal year, spectacular finish. What a year it's been you and public. You put up a few quarters. Nice performance.
Cash Rangan: As you Bipul and team, as you look into the next fiscal year and beyond
Cash Rangan: There's a core thesis of why Rubrik has worked so well for your customers. So, you've been...
At least two or three years, the health of your industry.
Cash Rangan: and I hope you continue that way. But as you look at customers evolving requirements, what are the new battles to be fought and won as you look to your most cutting-edge customers that are leading the company into your next two or three years of...
Cash Rangan: Strategy, what are your leading edge customers telling you as to what the leading edge requirements are?
Cash Rangan: Because we all know that one way to look at this market is merely a replacement market of
Cash Rangan: old technology being replaced with new, but then that's not always right. There are things that you've been doing with your DSPM, etc. to extend the frontiers. What are your best customers telling you as to what you need to be doing for the next two to three years?
Speaker Change: And finally, if you can, if you have the time to comment, you take on the tariffs, etc. in fact in the economy and what are your customers saying about their sending priorities with RSC. Thank you so much.
Thank you, Kasthuri.
Let me focus on the first question first.
Speaker Change: If you look at Rubrik, again, our co-focus is cyber resilient.
Speaker Change: And if you look at cyber resilience, what we are telling our customers is that assumed breaches will happen to you.
Speaker Change: And if you have to have an assumed beach posture, how do you ensure that you understand the risk in your most critical asset?
Speaker Change: as well as your services and how do you ensure that your services are up and running even when confronted with cyber attacks. And this is where we are doubling down our building like our data security platform to deliver cyber resilience across cloud, across science.
Speaker Change: And if you think about the fundamental risks to the data comes from the user interaction with the data, both user could be human or non-human identities.
Speaker Change: So that's why we are also focused on building the next F-curve [inaudible]
Speaker Change: Around identity related, FET and whether it's active directly or I try the...
Thank you.
Speaker Change: And we are seeing interesting momentum in that market. We launched the first identity recovery product about
Speaker Change: About a year ago, it had a very significant traction and then our recent forest recovery release has really proven that we are on the right track with respect to the identity.
Speaker Change: So, around cyber resilience, we continue to focus on data security, identity security and and delivering cyber recovery and the risk posture.
Speaker Change: And then we also have this other unique opportunity because we have all of the customer data and plus the governance and security and integrity on the data and our Anapurna platform is that how do we leverage this?
Speaker Change: Data Lake, the next-gen data lake that we are naturally creating to deliver fiber recovery because we have the source of food for the data.
Speaker Change: To Power Customers AI Applications, and that's where we are actually iterating and figuring out what is the product market fit. If you look at our success today...
Speaker Change: As you said, Kasth, our success today is a result of the work that we did four or five years ago.
Speaker Change: where we built a platform that was futuristic, where we took the market risk and built a purpose-built platform for cyber resilience. And we are thinking about what do we do on an opponent and all of these other new vectors of growth so that four, five years from today, we still have a high growth curve.
Speaker Change: And that's how we want to build a generational company. So a lot of opportunities as I said before for us they are not opportunity constraint we need to ensure that we invest in the right market focus and continue to drive again a very profitable growth business.
in terms of tariff and macro.
Speaker Change: We continue to see a very strong secular demand for our product because cyber don't care about market cycles, cyber don't care about what is happening in terms of the public market because
Speaker Change: On a down market, the customers get more worried about protecting their business and they want to ensure that their businesses are continuing operation.
Speaker Change: So, again, we are not seeing any demand shift for our product. Cyber resilience continues to be the number one topic for cyber security and our customers are investing to ensure that they are continuing operation even when they are confronted with successful cyber attack.
Terrific, very clear answers. Thank you so much, the court.
Thank you, Kasthuri
Speaker Change: Your next question comes from Fatima Boolani of City Group. Your line is already open.
Speaker Change: But I was hoping you could drill in on maybe some micro-level factors with respect to, you know, sales efficiency potentially being an area where you're seeing some, you know, outside or better leverage, as well as...
Speaker Change: Just maybe the inference that your deal sizes are getting bigger, your average transaction sizes so it's hoping you could add a little bit more color outside of just, you know, some of those other broader stars aligning and just more in discipline expense management, if there's anything intrinsically inflecting in the business from a deal size perspective. Thank you. Thank you.
Speaker Change: Sure Fatima, thanks for your question. So we are really pleased with the progression we've had in proximity as you know from the results.
Speaker Change: We are Subscription Air Contribution Margin Positive, as of the reported water, as well as cash flow positive for the full year.
Speaker Change: And we've been hard work on a number of fronts to achieve that and we've accelerated our path to possible living for the past year.
Speaker Change: We improved our subscription error contribution margin 1400 basis points year over year and the guide for fiscal 26 will indicate further improvement.
Speaker Change: I think you'll address the broader areas, setting up the question at the key leverage areas that efficiency came from a big investment areas in sales and marketing and R&D.
Speaker Change: Out of the 1400 basis points in margin, 200 basis points approximately came just from sales on marketing.
Speaker Change: And a number of drivers there. One is a productivity, and you can mention sales efficiency. Productivity is a key driver sales efficiency.
Bipul Sinha: As Bipul has talked about, we are investing in multiple different levels from a product perspective and more products to sell drives greater productivity. We're also investing in enablement to make our reps and sales team more productive in the messaging around cyber resilience.
Bipul Sinha: I will also add that there is a natural leverage we are getting in a model at scale, which is the growth in renewals. It's still a minority of our revenue near our base, but it's fairly efficient from...
Bipul Sinha: Investment perspective in renewing in our market and our product areas. So that is giving us quite a bit of efficiency as well. And then the last point I would say in R&D, we've talked to her previously as well. We hired from a global talent pool and in addition to able to attract great talents outside the...
Bipul Sinha: HQ, we are also able to get more cost leverage as well by leveraging our presence in India and Israel.
Bipul Sinha: I think you have a question around the deal sizes and ASPs as well. The one metric I would point to is we reported in our earnings transcript that the contribution from 100k plus customers is actually growing over year, it is now 84%. That just implies that we are becoming more strategic to customers and we are able to do larger transactions, both land and expand.
Thank you.
Very helpful. Thank you.
[inaudible]
Thank you, Fatima [inaudible]
Your next question comes from John DiFucci of Dougan Hyam Security.
Thank you.
John DiFuci: Thank you. My question, I think, is for Kiran. Kiran, the top line was really impressive as you guys have pointed out, but also the other questions on the call. I kind of think I want to lean more into a little bit more into Fatima's question. By the way, the top line was actually the best we've seen across our entire coverage, the universe's period. But
Speaker Change: Perhaps a year ago. And I know like the top line and bottom line are sort of related.
Speaker Change: because we know the greatest expense in any software company in sales and marketing.
Speaker Change: and that's all spent on new business and your new business is really stood out this quarter. At the same time, when you look at your balance sheet, you see accounts receivables up by much more sequentially than they have been in the last two-fourth quarters which I was kind of glad it made sense that you said the first quarter and the fourth quarter would be the strongest per cash flow and you feel good about that for next quarter. But how should we be thinking about that, especially in the context of your annual guide for
Speaker Change: Moderation of Cash Flow in Fiscal 26. Is that just sort of a place to start at the beginning of the fiscal year or is it just, you know, is it prudence or there's some else we should be thinking about when it comes to cash expenses. [inaudible]
Speaker Change: Sure. Thanks for the question, John . So, right, please, with the progression and cash flow for the past year. I have a meaningful year improvement, six-hour basis points of improvement.
Speaker Change: The guide would imply another couple of hundred basis points of little higher improvement as well. The key drivers in our business for cashflow is scale of the top line leverage that's indicated by margin subscription contribution margin and then timing of collections.
Speaker Change: As you know, plenty of collections, we largely still majority of our contracts are my tier and my tier collections up front, but we have been experiencing with the past couple of years the Billings duration compression gradually, I would say.
Speaker Change: High Single Digest Compression, Mitchell High Single Digest Compression, here we are, and we are assuming that continues. Obviously that varies quarter to quarter, so we are assuming some further compression as we look to the guide.
Speaker Change: Now it's early in the year, we're just starting our first full year guidance of the public company We want to be really thoughtful and that's what we wanted to start
Makes a total sense. Thank you very much. Nice job guys.
Thank you. Thank you.
Speaker Change: Your next question comes from Andrew Nowinski of Wells Fargo. Your line is already open.
Speaker Change: Okay, thank you for the question this afternoon and congrats on the good results. I wanted to ask about the divergence between revenue growth and ARR. It looks like you got to do about 30% revenue growth for this coming year and 24% ARR growth.
Speaker Change: I was thinking maybe it's related to the mix of on-prime and cloud, but and how that revenue is recognized, but I'm just wondering if you could provide any more color on what might be driving that divergence between the two growth rates. Thank you.
Speaker Change: Sure, Andrew, I'll take that one. So as you're familiar with our business, we are...
Speaker Change: Progressing through a cloud transformation, which we started for two years back, we're in the third year of it [inaudible]
Speaker Change: And the early part of the transformation revenue growth lagged subscription ARR and that's why you run our business on subscription ARR because it truly represents the moment on the business.
Speaker Change: Now, as we progress towards the latter half of the transformation [inaudible]
Speaker Change: revenue growth is catching up and it's actually benefiting now and that's what you see even in this quarter total revenue growth of 47% was the ARR 39%
Speaker Change: And that is what is the present in the guide as well [inaudible]
Speaker Change: Are we guiding to the mid-pond about 30% revenue, which is the NR 24%?
Speaker Change: There was one point that made in the prepared remarks as well. The Q4 revenue growth benefited for about four points of non-recurring upfront revenue from material rights to the cloud transformation and we expect that to continue in fiscal 2016 as well, a few points of growth.
and that's adding for their tailwinds to revenue.
Thank you very much.
Thank you, Andrew.
Your next question comes from Brad Zelnick of Deutsche Bank.
Your light is already open
Brad Zelnick: Rats, what an amazing end to a great year. My question is, I guess, for Bipul and Kiran we'd have left to hear whoever it was.
Brad Zelnick: Want to speak to it, but I'm curious why now is the right time to move from six month comp plans to 12 month comp plans and what behavior you're incentivizing this year and would impact you expect that these changes might have beyond the seasonality impact that you've called out. Thanks.
Hi, Brad. Thanks for your question. Let's get on.
and Allegrafic.
Brad Zelnick: So, as you know, we run our business on annual net new era and that's what we've been focused on for a few years now as we move to a subscription model and having an annual comp plan best
Brad Zelnick: The sales team and education and the field to how we run the business, how we plan and how we invest so that is our goal we had in mind for some time.
Brad Zelnick: and we are basically transitioning to that in terms of this change we're making in the company and when you look at it and we did benchmark as well when you look at companies of our size the billionaire plus this is more common. So we feel good about making the decision. It obviously has some impact on humanity which we factor into our guidance. [inaudible]
Brad Zelnick: from the top line as with a free cash flow, but that's really the driver is to align it with the way we run the business.
Brad Zelnick: And Brad and Shamsa applied our sales team, our sales leader has come from at-a-scale companies where they have run the business on the annual basis.
Brad Zelnick: And so we are essentially following large scale softwares as compiles how they align their yearly net new Arab number with the same team quota and how they proceed through the year.
Now, that makes perfect sense, and I appreciate it and-
We've seen it as companies matured and any...
The company of your scale would typically do this.
Brad Zelnick: I was also asking beyond that at the beginning of a fiscal year is often when we see companies make changes to go to market.
Brad Zelnick: You know, other changes to the compliment, which was just asking if there was any other behaviors that also you were looking to incentive. But that was very clear. Thank you.
Thank you. Thank you, Brad
Thank you.
Brad Zelnick: Your next question comes from Eric Keith of Keybank Capital Markets.
Her line is already open.
Eric Heath: Hey, thanks for taking the question, but I thought it was interesting in terms of the announcement you made with DSPM and to make it native inside the RSE console, so...
Eric Heath: I was just curious if you could talk about the benefit you expect to see and how maybe this could
Jesus could probably more easily [inaudible]
and Tinker with that new capability.
Eric Heath: Thanks, Eric. Rubrik always had this platform strategy. We want to give a single platform for all the data security capabilities to deliver complete fiber resilience and now AI through
Eric Heath: So, our idea is that our customers can easily enable DSP and directly on their existing
Eric Heath: to be able to secure and understand the risk in their data.
Eric Heath: And if you combine the DSPM plus cyber recovery, Rubrik Security Cloud is unique in terms of delivering complete cyber resilience and ads.
Eric Heath: Jenni Acceleration is happening within the enterprise. We believe that DSPM is a critical piece of that puzzle to be able to secure the data before the Jenni, before the data is fed into
Eric Heath: and Enterprise Delivered Response School AI. Just to give you an example, Financial Services Organization added DSPM, this quarter for Microsoft co-pilot.
Eric Heath: essentially our DSPM empowered them to quickly and securely adopt co-pilot and realized full productivity gains that they anticipated from co-pilot and that's the
Eric Heath: The story that we believe is going to be a critical, as businesses adopt AI, they need to understand security of the data, they need to understand sensitivity of the data, and ensure that only the right data is delivered to the right user.
Thanks, Bipul.
Thanks.
Your next question comes from Greg Brad Zelnick.
Mosco-Witz of Mizuhau [inaudible]
The line is already open.
Speaker Change: Okay, thank you and all that. Congratulations and I'm very good to you forward a terrific year. Bipul, you alluded to this briefly. I think in your script. But what are you hearing or seeing so far from your European customers following the implementation of Dora, the digital operational resilience act? And what do you think the impact of Dora will be on Rubrik Coventaurant? Thanks. Thank you very much. Thank you very much.
Speaker Change: are very, very important to every business with any data or application of any significance. And CSOs have this as high priority because it concerns the obviously continuing operation of the business as well as having the regulatory audit.
Past the Regulatory Audit [inaudible]
Speaker Change: And we believe that this is a secular tailwind for our business from a variety of drivers including financial regulations such as Dora.
Speaker Change: Just to illustrate a European insurance company, we had to win there this quarter and door
Speaker Change: So obviously regulation is an aspect of the cyber attack and cyber resiliency and recovery in addition to the business imperative of being an ongoing operation.
Speaker Change: So we feel very good about how we have created our offering and our customers have easier time finding passing the door or death because of the cyber resiliency including cyber recovery capabilities that we are driving.
Brad, thank you [inaudible]
Thank you, Greg.
Your next question comes from Joel Fishbind of Truist
The line is already open.
Speaker Change: Thank you and congrats on a great quarter and solid execution.
Speaker Change: My question's around sales capacity and channel with the channel partners. If you could just give us an update there on how you're thinking about your coverage for, you know, 2026 and 2027 from the sales capacity perspective, that would be great. Thank you.
Speaker Change: Thank you, Joe. In terms of the sales capacity, we believe that we have the right capacity on the ground. So, it is a cute to the opportunity.
Speaker Change: But at the same time as any prudent business would, we always look for fast ROI market pockets where we can make an investment and take advantage of the growth opportunity that could be in front of us.
Speaker Change: So we continue to kind of ensure, make sure that we look at the market and we are appropriately investing in the GTN capacity.
Speaker Change: In terms of our channel partners, we have the right number of channel partners in every major market we operate in, we have the right routes to market identified.
Speaker Change: And we want to kind of double triple down on our existing partners to ensure that they build, contribute to build a big business around Rubrik and drive an ecosystem.
Thank you.
Thank you, John [inaudible]
Thank you for watching. I'll see you next time.
Your next question comes from Keeze
Pacman of VMO. Your line is already open.
Yes, thank you very much for taking the question.
Speaker Change: Kiran, I think this is for you. I wanted to understand a little bit of context around the guidance. So in this past year you did 309 million of net new two really strong quarters to end the year, not just Q4, Q3 was
Speaker Change: was very strong, and you're guiding the 255 call of net new at the midpoint [inaudible]
Speaker Change: So, lower year over year and we've gone through quite a few things on this call, including DSPM and
Speaker Change: and how it's adding to the capability and sales capacity. I'm just wondering if there's anything you wanted to call out about why NetNew would be lower year-of-year in twenty-six versus twenty-five given all the tailwinds.
Speaker Change: that seemed to be at your back. For example, was there any deals that may have closed early in the January quarter or anything you want to call out about why net new would be down year of year? Many thanks.
Speaker Change: Let me give you some parts on that. So really pleased with the growth we witnessed in Festival 25. Obviously, I was said earlier, we planned the business on McNerar and it has strong growth and the delivered head of our expectations.
Speaker Change: A few things to call out, to give context on the guidance. One, we've talked about earlier as well and I mentioned that in the script. We got about two points of benefit to our ARR growth in fiscal 25 from the...
Speaker Change: Remaining part of the maintenance to subscription transition, that impact on net near R is higher than the error base.
Speaker Change: I will also say that we are early in the year. We are giving our first annual guide as a public company, what will be really thoughtful. As Bipul has talked about, we see strong demand, continued demand for cyber resilience, but also want to put numbers we feel really confident about and look forward to finishing the year strong.
Ok, many thanks
Thank you.
Your next question comes from James Fish of Piper Sandler.
Your line is already open.
James Fish: Hey guys, nice way to finish the year. First just want to understand what you're seeing on the competitive landscape in DSPM given
Speaker Change: Competitors, and in some case, your partners are more like data in motion players than sort of data at rest.
Speaker Change: In second, anyway, to think about the penetration of DSPM, either into the entire install base or even just the greater than 100K, ARR, customer cut, especially as you guys think about that enterprise plus addition being bumble
Speaker Change: Thank you, Jim. In terms of the DSP and Ausfe still very early market.
The awareness of this market is building.
Speaker Change: And now people are realizing that they need to understand the data risk, data being the core asset.
Speaker Change: of the business. And our strategy was to combine PSCM with cyber recovery to create a two cyber resiliency platform where customer can assume green and understand what risk they
Speaker Change: and to be able to deliver a complete silence to the business and silence I will recover with.
Speaker Change: So that's the angle we are taking. We are not competing with infrastructure security players who have the SPN solution.
Speaker Change: because their use case is different and if you look at this reason for success for Rubrik, the reason for success for Rubrik is around is around
Speaker Change: driving this complete cyber resilience and combining of DSPM and data and cyber recovery on a single platform. And that's what is driving our success in the market place.
Speaker Change: And if you look at the displacement of we are doing for the legacy platform as well as the new gen vendors, a lot of it is because of this.
Speaker Change: A complete cyber resiliency that we are driving to be able to give them peace of mind that their business will be up and running, no matter what attack happens.
Your next question comes from Shrenick Cothary of Beard
Your line is already open.
Shrenik Kothari: Yeah, we'll echo my congrats on the great quarter and an execution, the booker and time for working in my question. So Bipul, you mentioned about
Speed, or Microsoft-related relevance of the 365 co-pilot data protection and active
Speaker Change: Again, you can elaborate on how Rubrik's strategic partnership with Microsoft has.
Shrenik Kothari: He evolved in strengthening opposition, and how do you see it evolved further to address the emerging challenges opportunities in Azure environments and Microsoft environments? Thanks.
Shrenik Kothari: We have a very strong partnership with Microsoft. In fact, Microsoft will be one of our
Shrenik Kothari: are the strongest partners. And this partnership is based on complimentary offering that both Microsoft and Rubrik has. Microsoft is focused on cloud security and Rubrik is focused on data security.
and Delivering Cyber Resilience, including Cyber Recovery.
Shrenik Kothari: At the moment, Microsoft, we are driving a lot of workload on Azure native applications
Shrenik Kothari: We also at Ignite, OK, Rubrik as one of the four or five key partners that is building security security graph at Microsoft, you might have noticed that.
Shrenik Kothari: Microsoft gave Rubrik Partner of the Year in the US and UK in 2023 and last year they gave a health care partner of the Year.
Shrenik Kothari: So, we continue to have a deep, again deep partnership with Microsoft co-engineered products both on M365 as well as
Onhaj Yarnitiv,
Shrenik Kothari: And we continue to build solution for our customers. In fact, last quarter we had one of the very large wins for M565.
Shrenik Kothari: Again, Delivering Cyber Resilience to N365 for one of the largest Microsoft customers leveraging the Microsoft infrastructure.
Thanks again.
Thank you for joining us. Thank you.
Your next question comes from Param Singh of Openheimer.
Your line is already up.
Param Singh: Yeah, hi, thank you for taking my question and it was good to see a company execute well in the tough environment.
Speaker Change: Now, my question is, as you look to your quarter and towards 26th fiscal, what part of your AR do you think is coming from Greenfield versus Brownfield opportunities where you're taking
Speaker Change: And in that vein, have you seen any change in the competitor environment as Venus trying to push more upstream, and now that Cohesity has closed the acquisition of editors? Thank you.
Speaker Change: So, Rubrik is an equal opportunity as I said in the past to replace her of all technologies including legacy and new gen vendors.
Speaker Change: In fact, if you look at the legacy environment, Fortune 500 biotech went all in with Rubrik replacing a 20-year-foot hold by a legacy vendor and they wanted a single plane of glass for faster
Speaker Change: And there are so many examples of it. Another example is a Fortune 500 Logistics company replaced again a legacy provider that you mentioned with RSC as the shift workload to Google Cloud. Also selected Rubrik for Enterprise apps, M365 and Google Cloud protection.
Speaker Change: and in terms of legacy versus replacement versus new workloads.
Speaker Change: Obviously, as the customer takes the cloud transformation journey, we are securing their cloud as they adopt more SaaS platforms and as SaaS platforms become more mission critical, we are expanding those horizons and delivering data security at the same time transforming the enterprise workload.
Speaker Change: to ensure that they can deliver complete cyber resilience including cyber recovery when confronted with successful cyber attacks.
Speaker Change: Thank you so much, Mr. Gippo, and if I could really clean one on the pruna, I wanted to get a sense of what early conversations have you had around that, and would you need to expand on the pruna's capabilities beyond bedrock to see more meaningful adoption across the L.A.M.S. Thank you.
Thank you.
Speaker Change: We are early in Anapulam, we are still doing market discovery, discussions, figuring things out.
Speaker Change: And as I said before Annapurna is the next three, five years strategy for us and it is one of those
Speaker Change: Initiatives that we do to ensure that we have continued growth in success in the next horizon.
Speaker Change: as we create the next S-curve. And we see opportunity for N-Pourna, all across.
Speaker Change: and multiple clouds including Azure and GCP, as we continue to kind of build out the capabilities and figure out the product market threat.
All right, thank you so much for sharing the book. Appreciate it.
Thank you
Speaker Change: There are no further questions at this time. I would hand over the call to B Pools in Ha for closing remarks. Please go ahead.
Speaker Change: I wanted to thank everyone on this call including our analyst friends who cover us plus Rubrik customers, partners and Rubrik Inc. all around the world for their relentless focus and
Speaker Change: and diligence to help Rubrik realize his full potential. Again, I'll repeat.
Speaker Change: This early days for the company are ambitious and are very, very large [inaudible]
Speaker Change: We have a unique opportunity to continue to build out the company and build out the platform and the intersection of data security and AI and I'll repeat the best is yet to come. So stay tuned, thank you for your continued support and talk to you in next quarter.
[inaudible]
Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.