Shares in Rubrik Inc. fell more than 7% in late trading today despite the data security software provider reporting better-than-expected earnings and revenue in its fiscal 2025 second quarter and upping its outlook.
For the quarter ended July 31, Rubrik reported an adjusted loss of 40 cents per share, down from a loss of $1.33 per share in the same quarter of the previous year, on revenue of $205 million, up 35% year-over-year. Both were solid beats, as analysts had expected an adjusted loss of 49 cents per share on revenue of $196.21 million.
Rubrik’s better-than-expected headline results were driven by subscription revenue, which jumped 50% from a year ago, to $191.3 million. Subscription annual recurring revenue, as of the end of the quarter, rose 40%, to $919.1 million. Rubrik had 1,969 customers with subscription annual recurring revenue of $100,000 or more, up 35%.
In perhaps the only down figure in the company’s financials, Rubrik reported negative cash flow from operations of $27.1 million, higher than the $6.7 million negative cash flow a year ago. Free cash flow came in at negative $32 million, versus negative $13.4 million the year prior. Rubrik ended the quarter with $601.3 million in cash, cash equivalents and short-term investments on hand.
Business highlights in the quarter included Ruburk announcing a new partnership and technology integration with Google LLC’s Mandiant. The deal is said to bring together leaders in data security, incident response and threat intelligence with the aim of expediting customers’ threat detection and path to cyber recovery.
Rubrik also expanded its relationship with information technology management firm Assured Data Protection Ltd. for cloud data protection solutions. Under the deal, ADP will offer Rubrik’s services in Latin America.
“The long list of recent successful cyber attacks and IT outages is driving organizations to increasingly recognize the need for a robust cyber resilience plan to ensure business continuity in the face of cyber disruptions,” said Chief Executive Bipul Sinha. “Our Subscription ARR up 40% year-over-year in Q2 to $919 million showcases the value we provide to enterprises in delivering complete cyber resilience, which combines cyber recovery and data security posture management.”
For its fiscal third quarter, Rubrik expects an adjusted loss of 39 to 41 cents per share on revenue of $216.5 million to $218.5 million. Both were better than the 43-cents-per-share loss and revenue of $215.4 million expected by analysts.
For the full fiscal year, the company expects a loss of $2.06 to $2.12 per share on revenue of $830 million to $838 million, the latter revised upward from a previous outlook of $810 million to $824 million.
Aside from an expansion of its cash flow losses, there’s no standout reason why Rubrik shares fell after hours unless investors were secretly expecting stronger figures. One possible driver, however, was highlighted in a report from Bloomberg earlier today — an expiration of a restriction preventing insiders from selling. It’s possible that the selloff and price decline were driven in part by insiders selling their shares, but it’s still a surprisingly large price slump given otherwise solid beats and Rubrik’s higher forecast.