On Tuesday, KeyBanc reaffirmed its positive stance on Rubrik Inc (NYSE:RBRK), maintaining an Overweight rating and a $48.00 price target. The firm's confidence in the company has been bolstered by a robust annual recurring revenue (ARR) performance and an upward revision of the fiscal year 2025 ARR and margin guidance.
Rubrik's second fiscal quarter ARR outperformed expectations by $31 million or 3.5%, marking a continuation of the strong results seen last quarter, which exceeded predictions by $35 million. The FY25 ARR forecast was increased by $39 million, which is approximately $8 million more than the beat in the first fiscal quarter. This adjustment was attributed to improved visibility into the second half of the fiscal year. Moreover, the FY25 subscription contribution margin was revised to -6.5% at the midpoint, compared to the consensus of -12%.
The company's key performance indicators (KPIs) remained impressive, with net revenue retention (NRR) staying above 120% and a 35% increase in customers contributing over $100,000. Rubrik's momentum is notably growing in the data security field, with the company now serving over 50 data security (DSPM) customers. Additionally, more than a third of the subscription net expansion rate (NER) is derived from security cross-sell, which is up from a quarter a year ago.
Rubrik is recognized for its leadership in backup and recovery and is expanding its data security platform. KeyBanc sees a significant opportunity for market share gains in the $11 billion backup and recovery market, emphasizing Rubrik's unique focus on cyber resilience. The increasing frequency and severity of ransomware attacks are prompting enterprises to move away from legacy solutions that currently hold more than half of the market share.
Following these developments, KeyBanc has raised its revenue and margin estimates for Rubrik while reiterating its $48 price target on the company's shares.
In other recent news, Rubrik Inc. reported a strong performance for the July quarter, surpassing analysts' annual recurring revenue (ARR) growth expectations. The company also raised its fiscal year 2025 subscription ARR forecast and free cash flow guidance. Despite a reduction in its price target by BMO Capital due to broader market trends, the firm maintained an Outperform rating on Rubrik, reflecting confidence in the company's future performance.
Analyst firms such as Piper Sandler, Citi, Mizuho Securities, and Goldman Sachs (NYSE:GS) have also maintained positive ratings on Rubrik, indicating faith in the company's growth trajectory. Piper Sandler reiterated an Overweight rating, while Citi increased its price target. Mizuho Securities maintained its Outperform rating, and Goldman Sachs reaffirmed its Buy rating.
In addition to its robust financial performance, Rubrik recently acquired an unnamed company, focusing on cyber resilience and AI-driven recovery.
InvestingPro Insights
Adding to the optimism highlighted by KeyBanc, InvestingPro data underscores Rubrik Inc's (NYSE:RBRK) financial resilience and market potential. The company holds a notable market cap of $5.77 billion, reflecting investor confidence in its business model and growth prospects. Despite not being profitable over the last twelve months, as indicated by a negative P/E ratio of -2.69, Rubrik has shown a compelling revenue growth rate of 15.98% in the same period. This growth trajectory is further exemplified by a substantial quarterly revenue surge of 38.0% in Q1 2023.
InvestingPro Tips reveal that Rubrik's balance sheet is robust, holding more cash than debt, which provides a solid foundation for future investments and operations. Additionally, the company's focus on innovation and market expansion is recognized by analysts, as evidenced by eight analysts revising their earnings upwards for the upcoming period. However, it's important to note that analysts do not anticipate the company will be profitable this year, and it is trading at a high revenue valuation multiple. Rubrik does not pay a dividend, which may be a consideration for income-focused investors, but this allows the company to reinvest earnings back into growth initiatives.
For investors seeking a deeper dive into Rubrik's financial health and future prospects, InvestingPro offers additional tips that can provide a more nuanced understanding of the company's position within the competitive landscape. For more detailed analysis and tips, visit https://www.investing.com/pro/RBRK.
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