On Tuesday, Citi maintained its Buy rating on Rubrik Inc (NYSE:RBRK) and increased the price target to $48 from $47. The company's strong subscription annual recurring revenue (ARR) growth was a key factor, with a reported 40% year-over-year increase, outperforming expectations by approximately 5 percentage points. Rubrik's cloud segment also showed significant growth, approximately doubling in size.
Despite these positive indicators, there are concerns due to the negative net new annual recurring revenue (NNARR) growth on both a year-over-year and quarter-over-quarter basis. This has led to discussions about potential deal pull forwards, especially as the company's guidance now suggests a lower NNARR of $110 million for the second fiscal quarter of 2025 compared to the first half's $135 million, deviating from the previously expected even split.
Nevertheless, the company's net revenue retention (NRR) remains strong, exceeding 120%. A third of this comes from the uptake of new products, particularly in data security. Additionally, the current market dynamics, including a recent CrowdStrike (NASDAQ:CRWD) outage and the upcoming Cohesity/Veritas merger, are seen as potential reinforcements for the company's medium to long-term pipeline that are not yet reflected in the current view.
Citi also notes that Rubrik's narrowing losses, though still substantial, contribute to a more favorable outlook for the company's top-line growth. There is improved visibility and confidence in the company achieving positive free cash flow in the second half of fiscal year 2025. The upcoming lock-up expiration is expected to provide more balanced financial optics, which should help support the stock's performance.
In conclusion, Citi's updated price target reflects minor adjustments based on these factors, reaffirming confidence in Rubrik's stock with a slightly higher price target of $48.
In other recent news, Rubrik Inc. has been making waves with its robust financial performance and strategic initiatives. Following a strong quarterly report, Rubrik saw a 40% year-over-year increase in its Subscription Annual Recurring Revenue (ARR), exceeding both company and Wall Street expectations. This growth was largely driven by an 80% surge in the company's cloud ARR. Mizuho Securities maintained its Outperform rating on Rubrik, while Goldman Sachs (NYSE:GS) reaffirmed its Buy rating, reflecting confidence in Rubrik's market position and future prospects.
Rubrik has also raised its full-year guidance, reflecting its strong financial performance and expectations for continued growth. This upgrade in guidance was supported by improving win-rates and momentum in securing large deals. The company's focus on cyber resilience and AI-driven recovery was further solidified by the recent acquisition of an unnamed company.
Analyst firms such as Goldman Sachs, Wells Fargo (NYSE:WFC), and Cantor Fitzgerald have maintained positive ratings on Rubrik, citing strong financial results and promising future prospects. These ratings and the company's recent financial achievements indicate a strong trajectory for Rubrik in the data security and management industry.
InvestingPro Insights
InvestingPro data offers a deeper dive into Rubrik Inc's (NYSE:RBRK) financials, revealing a company that holds more cash than debt, which is a strong indicator of financial health and resilience. Additionally, with a market capitalization of $5.77 billion and a substantial revenue growth of nearly 16% over the last twelve months as of Q1 2025, Rubrik's financial position appears robust, despite the company not being profitable during this period. The revenue growth is even more pronounced on a quarterly basis, with an impressive 38% increase in Q1 2025.
Two InvestingPro Tips that stand out include the fact that 8 analysts have revised their earnings estimates upwards for the upcoming period, signaling optimism about Rubrik's future performance. However, it is important to note that analysts do not expect the company to be profitable this year, and the stock is trading at a high revenue valuation multiple. With more insights available, investors can explore additional InvestingPro Tips for Rubrik Inc at InvestingPro to make informed decisions.
Overall, while Citi maintains a Buy rating and a higher price target, these InvestingPro metrics and tips provide a nuanced view of Rubrik's financial standing, highlighting both strengths and areas that warrant investor attention.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.