Rubrik IPO: Net Losses 'Will Be a Concern,' Says Analyst

As anticipated since last summer, data security provider Rubrik plans to become a publicly traded company this year.

Rubrik filed its Form S-1 with the U.S. Securities and Exchange Commission (SEC) to go public. Last summer, we reported a Rubrik IPO could come in 2024 if the IPO market improved by then.

However, the S-1 shows Rubrik incurred heavy losses in its fiscal 2023 and 2024. In fact, it has incurred net losses since its inception nine years ago.

“We have continued to invest in growing our business and advancing our solutions to capitalize on our market opportunity,” it said. “As a result, in fiscal 2023 and fiscal 2024, we incurred net losses of $277.7 million and $354.2 million, respectively.”

Rubrik plans to trade on the New York Stock Exchange under the ticker symbol “RBRK.” The number of shares to be offered and the price range for the proposed offering are yet to be determined.

“We believe our total addressable market opportunity for our platform will be approximately $36.3 billion by the end of calendar year 2024 and approximately $52.9 billion by the end of calendar year 2027, based on market estimates in Gartner research, representing an average 13% compounded annual growth rate,” the company said.

Rubrik IPO: Data Security Solutions Sold Through Channel

Related:Rubrik Rolls Out Enhanced Partner Program for Data Security

The vast majority of sales of Rubrik's data security solutions flow through its channel partners with the support of its sales force, the company said.

“Our three largest channel partners, Arrow Enterprise Computing Solutions, Exclusive Networks and Promark Technology, and their respective affiliates, collectively generated approximately 79% and 76% of our revenue for fiscal 2023 and fiscal 2024, respectively,” it said. “Our channel partners enable us to extend our reach, in particular with smaller customers and in geographies where we have less sales presence. Additionally, we have entered, and intend to continue to enter, into technology alliance partnerships with third parties to support our future growth plans. For example, through our alliance with Microsoft, and along with our mutual go-to-market obligations, we have committed to spend $220 million over the course of up to 10 years for the use of Azure for our data security solutions and preferentially offer public cloud functionality for Azure to our customers.”

Rubrik expects to continue deriving a substantial amount of its revenue from channel partners.

“Organizations around the world rely on Rubrik to achieve business resilience in the face of cyberattacks, malicious insiders and operational disruptions,” it said. “As a result, we have experienced rapid growth, with our subscription annual recurring revenue (ARR) … increasing from $532.9 million as of Jan. 31, 2023, to $784 million as of Jan. 31, 2024, representing a 47% increase, and our total revenue increasing from $599.8 million in the fiscal year ended Jan. 31, 2023, or fiscal 2023, to $627.9 million in the fiscal year ended Jan. 31, 2024, or fiscal 2024. We measure our business on the basis of subscription ARR. Subscription ARR illustrates our success in acquiring new subscription customers, and maintaining and expanding our relationships with existing subscription customers. As of Jan. 31, 2024, we had 1,742 customers generating more than $100,000 in subscription ARR and 99 customers generating more than $1 million in subscription ARR.”

Related:Rubrik IPO Reportedly Possible in 2024 As IPO Market Continues to Struggle

Mixed Signals in IPO Market

Matthew Ball, chief analyst at Canalys, said there are mixed signals in the IPO market.

Canalys' Matthew Ball

“2023 was challenging and the situation remains cautious, but recent filings point to some improvement in appetite,” he said. “It being a smart move depends on Rubrik’s long-term goals. An IPO can raise significant capital to accelerate its growth, while increasing its exposure to attract new customers and talent. It can also fund strategic investments that could improve profitability. However, its current net losses will be a concern, especially given the focus of other publicly trading cybersecurity vendors to reduce costs by headcount and office space reductions. This could lead to a lower valuation. It will also face greater scrutiny on a quarterly basis to deliver short-term results.”