This was a really good report, especially considering last Q’s revenue was padded by non-recurring renewals of some legacy products. There’s still work to do narrowing losses, but cash flows, ARR, and customer growth are all in a good spot.
To @monkeydluffy’s point, even a lesser beat than either of the last two Q’s would continue accelerating revenue growth. That’s hard to find in the current market.
Great report, this was an easy buy in the mid/low $50s and continue to think its setup nicely even after this pop.
I expect them to hit approximately ~$1.45B in subscription ARR next year, meaning that they’re valued around ~7x NTM ARR. Put another way, they’re the fastest growing public enterprise SaaS yet its barely cracking the top 15 in valuation. Sure, still burning a lot of cash, but there’s visible improvement each quarter.
I think one of the reasons for its valuation discount is the perceived limited TAM. Management gets questions from analysts about the size of the market each earnings release - one of them even implied that they’re viewed as a mere “replacement of a legacy technology.” But I’m willing to give them a benefit of the doubt.
There are always reasons to remain cautious. Large customer growth and NRR remain strong but slowing more rapidly than I’d like; and there will be less benefit expected next year from the transition of their (legacy) maintenance customer cohort transition.
Take this with a grain of salt as I am taking notes while listening to the call (need to confirm with the transcript / 10Q). But I heard that Americas growth was 48%, which would be an acceleration from 46% YoY last quarter. Similarly, I heard that EMEA & APAC growth was 47%, which would be a notable acceleration from 34% YoY from last quarter.
I’m pretty excited about this one – their first year as a public company has been impeccable. It makes me nostalgic to the early days of this board when there were 5-10 similar companies to choose from…
Strong revenue frequently drives over valuation, however, Jamin Ball’s weekly Substack helps develop opportunity and risk when these two trend irrationally in either direction. RBRK is an example of this.
SG&A expenses are up significantly, which I believe may include “$913.9 million in stock-based compensation expense, compared to $5.7 million in the year ago period, due to the vesting of certain equity awards after and as a result of the completion of our initial public offering.” If that’s a non-recurring event, then perhaps not a long term concern. But the boost in operating expenses (with investors perhaps not looking at the underlying cause) may also be affecting valuation.
Where did you read the number? It looks that I can not find it. The attached is the SBC in their cash flow sheet. After the initial bump at IPO, I think the recent two quarters look reasonable.
“Net Loss per Share: GAAP net loss per share was $(7.48), compared to $(5.84) in fiscal 2024. GAAP net loss includes $913.9 million in stock-based compensation expense, compared to $5.7 million in the year ago period, due to the vesting of certain equity awards after and as a result of the completion of our initial public offering. Non-GAAP net loss per share was $(1.57), compared to $(5.72) in fiscal 2024.”
Ah, that makes sense now. The $913.9M SBC was for the entire year of 2024. As shown in the screenshot I attached, SBC was $630.3M in Q1 around the IPO time and then it dropped to the $85M ~ $105M range in the following 3 quarters. For 2025, they expected outstanding shares to be ~198M, which will just be ~3.8% of dilution from the current outstanding shares (~190.68M). So I believe the big SBC was just one time thing and I would not worry about it.
There is a second risk which I can attribute to its valuation discount. Based on its 10-k, 63% of Rubrik’s revenue comes from two customers.
Its slightly down from 65% and 67% the previous two years. But still, that represents significant customer concentration.
The good news is that accounts receivable from these two customers is down from 69% to 53% in one year; which may signify that this proportion will continue lowering. The bad news is that:
$100k customer growth is down from 92% (Q4’22) to 45% (Q4’23) to 29% (Q4’24)
DBNR is down from 150% (Q4’22) to 133% (Q4’23) to “over 120%” (Q4’24)
Not the end of the world, but definitely worth noting before considering this a ‘no brainer.’
@PaulWBryant bingo (though it’s not AWS/Azure/GCP)
from the same 10k:
Our three largest Channel Partners, Arrow Enterprise Computing Solutions, Exclusive Networks, and Ingram Micro Inc., and their respective affiliates collectively generated approximately 73% and 76% of our revenue for fiscal 2025 and fiscal 2024, respectively
in 2023 the number was 79% so it’s good to see it gradually coming down i suppose…
