Premium: Crossing the Rubricon

As I noted last Q, I thought the sour market provided a great entry point for Rubrik (in the mid to low 70s), but any rebound over the next few months was then erased in the overly negative November (eventually dropping to 67-70 into earnings). That is all now countered by their stellar Q3 report last night, with the stock up +23% today as a result.

Let's take a look at Rubrik's Q326 results. As always, this is also of interest to next-gen security players like CrowdStrike, Sailpoint, and Okta, as well as the AI platforms & security products of the hyperscaler clouds.

• They swung non-GAAP profitable (both op and net), as predicted last Q. GAAP profitability remains far away, but all margins continue to trend up as expected.
• They have hit Rule of 40 TTM for 4Qs now, now at a record 69.
• Large customers continue to grow ARR faster than overall.
• Mgmt gave way more details about material rights impacts. Despite the financial impacts, the subscription credits are finally getting the legacy customer stragglers to adopt subscriptions (mgmt is still noting transition uplift in ARR this Q, details they were supposedly going to drop in FY26).
• Q3 seems to be their seasonally strongest, and this is the second time they've given us a sequentially negative Q4 guide after it. These Q4 guides are massive sandbags; last year they beat the negative guide by a record 10pp.
• However, material rights are going to be a headwind from here and across FY27, and mgmt noted that Contrib Margin will be back-loaded in FY27.
• They continue to push on Identity and DevOps Resilience, as shown at FORWARD in June. This pushes their core RSC into new areas that are bolstering both expansion and land.
• Beyond that, they have massively shifted their product line yet again, this time by adding an all-new agentic AI resilience platform that is completely separate from RSC and their first AI product, Annapurna.