Software names have been in the dumps over the past few months. One area getting hit by the ongoing "AI will eat software" punishment is next-gen security, with companies like Rubrik and Zscaler both starting 2026 off at -30% YTD. Netskope is faring even worse, down -43% YTD after its IPO last fall.

I can somewhat understand the malaise in SSE platforms like Zscaler, which is primarily user-based pricing and whose "re-acceleration" is from its acquisition of MDR provider Red Canary last August. Zscaler's ARR growth was +25.2% in its recent Q226, but that adjusts to +21.0% organically when excluding the over-performance from Red Canary since the acquisition.

Rubrik has been heavily punished since its big rebound in early December after strong Q326 results. I continue to think it's attractive here, both from the ongoing demand for its core resilience & data protection platform, and its more recent shifts into identity, DevOps, and now agentic AI resilience. They are in hypergrowth now and have several S-curves stacked up going forward.

  • Overall revenue grew +46.3%, and Sub Revenue grew +49.7%.  The topline continues to be boosted by material rights. Adjusting these out, revenue grew +43%.
  • Sub ARR grew +33.8%, and Cloud ARR grew +46.7%. Both had record net new ARR. Cloud is now over 88% of ARR (+8pp).
  • Mgmt guided Sub ARR to +25.8% growth in FY27 – a step up from last year's initial +24.5% guide. ARR is likely to continue growing >30%.
  • Land and expand metrics look healthy. Large customers grew ARR faster at +38.6%, and they added a record number of net new customers over $1M. NRR remains over 120%.
  • They hit their 2nd quarter of non-GAAP profitability, and are at a Rule of 67 TTM.
  • The material rights that helped boost revenue growth in FY26 are turning into headwinds over FY27. The initial FY27 guide was +22%, but adjusts to +28% when factoring out that headwind.
  • Fears of AI disruption to its core backup & recovery and data protection seem completely backwards. All evidence is that AI adoption is driving enterprise interest in protecting their existing data estate, and that AI use will be driving up data volumes from here.
  • Their new directions in identity protection are doing quite well, and they have a whole new S-curve in their agentic resilience solution.  Other cloud backup competitors are following them into these directions.
  • Their new agentic resilience solution is going right into a hot & crowded market, with all kinds of AgenticOps solutions cropping up across hyperscalers, next-gen security players, observability players, and AIOps startups. But I think resilience platforms like Rubrik have a key differentiator that will drive demand.