Rubrik Beats Fiscal Q2 Targets and Lifts FY2027 Outlook as Cyber Resilience Demand Stays Strong

Rubrik (NYSE: RBRK) came in above its own targets again in the fiscal second quarter, extending a run of double-digit growth and prompting management to raise the full-year outlook as enterprise buyers keep spending on cyber resilience, backup modernization and AI-agent security.

For the quarter ended July 31, subscription annual recurring revenue rose 33% year over year to $1.66 billion, with net new subscription ARR of about $96 million. Subscription revenue climbed 37% to $407 million, while total revenue increased 38% to $427.3 million. Free cash flow followed at $65.7 million, up from $57.5 million a year earlier. CFO Kiran Choudary attributed the cash flow gain to higher sales and better operating leverage.

Rubrik has now beaten expectations for 10 straight quarters as a public company, according to CEO Bipul Sinha. The latest results also show improving customer concentration at the high end: customers with at least $100,000 in subscription ARR grew 23% to 3,084 and represent 88% of total subscription ARR, while the number of customers contributing over $1 million in subscription ARR rose more than 57%.

Subscription net revenue retention stayed above 119%, suggesting existing clients are expanding their use of Rubrik's platform. Non-GAAP gross margin was 81%, roughly flat from 81.6% a year ago, and subscription ARR contribution margin for the trailing 12 months reached 14%, up from 9.4%.

The beat and raise point to resilient demand for data security products even as corporate IT budgets face closer scrutiny. Rubrik's growth is increasingly tied to areas beyond traditional backup, including identity recovery and AI agent security, which management believes will drive the next wave of expansion.

Geographically, revenue in the Americas rose 33% to $299 million, while revenue outside the Americas jumped 52% to $129 million. Rubrik said total revenue, normalized for material rights related to its cloud transformation, grew 43% year over year. Material rights contributed $4.7 million to subscription revenue in the quarter, versus $8.5 million in the prior quarter.

Sinha used the call to emphasize what Rubrik calls "agentic cyber resilience," arguing that the rise of AI agents in both enterprise workflows and cyberattacks means organizations need faster recovery and stronger oversight. Rubrik Security Cloud remains the core platform, while the newer Rubrik Agent Cloud, which provides security, visibility and governance for AI agents, has more than 15 paying customers so far. Management said proof-of-concept engagements are converting into production deployments. The platform includes agent visibility, identity controls, runtime security and "Agent Rewind" capabilities designed to reverse damaging agent actions.

Rubrik is also seeing early traction in Identity Resilience, a product area focused on identity recovery, misconfigurations, privilege escalation and malicious changes in identity systems. Adoption is still in its early stages, but Sinha called it a major expansion opportunity, with both existing and new customers buying identity-focused products.

In another commercial shift, Rubrik introduced Rubrik Flex, a unified contract vehicle that bundles several cyber resilience capabilities into one license. A handful of Flex deals have already closed, and management expects it to become the default sales motion for the company's largest strategic accounts over time.

For the fiscal third quarter, Rubrik forecast revenue of $429 million to $431 million, which implies 23% reported growth or 31% growth excluding the material-rights effect. The company expects material rights to contribute roughly $2 million to $3 million to revenue. It projects non-GAAP subscription ARR contribution margin of about 14% and non-GAAP EPS of $0.07 to $0.09.

For fiscal 2027, Rubrik lifted its subscription ARR guidance to $1.88 billion to $1.885 billion, implying about 29% growth year over year. The company now sees full-year revenue of $1.685 billion to $1.693 billion, non-GAAP subscription ARR contribution margin of approximately 15.5%, non-GAAP EPS between $0.47 and $0.53, and free cash flow of $323 million to $333 million.

Choudary said the updated outlook includes roughly $18 million of material-rights revenue, which will drag on reported revenue growth, and assumes zero ARR contribution from the Strata Identity acquisition in both the fiscal second quarter and the full-year forecast. On the cost side, Rubrik did not see a material impact on subscription ARR from hardware price increases or supply constraints. The company sells some hardware in certain regions, but it describes itself primarily as a software business, with growth driven by cloud, self-hosted, SaaS, identity and agent-security offerings.

Rubrik ended the quarter with $1.75 billion in cash equivalents and short-term investments, along with $1.13 billion in convertible debt. The company is based in Palo Alto, California, and its flagship platform, Rubrik Security Cloud, automates backup and recovery across on-premises, edge and multi-cloud environments for ransomware protection, business continuity and compliance.

This article originally appeared on MarketBeat.