Rubrik delivered a standout QQ3 2025 quarter that underscored the transition to a cyber resilience-based platform with durable ARR growth and improving leverage, while still navigating GAAP profitability pressures. The company surpassed $1 billion in subscription ARR, up 38% year over year, and generated over $221 million in subscription revenue (up 55% YoY). Net new subscription ARR of $83 million set a quarterly record, signaling continued market penetration in cyber recovery, data security posture management (DSPM), and cloud protections across multiple workloads (enterprise data centers, public cloud, and SaaS). Rubrik also demonstrated strong free cash flow generation for the quarter (approximately $15.6 million) and raised its outlook for FY2025, highlighting confidence in the acceleration of durable growth and operating leverage. On the profitability front, non-GAAP gross margins remained strong at ~79%, while the subscription ARR contribution margin improved by ~1,100 basis points YoY (negative 3%), reflecting scale benefits and efficiency improvements in sales and marketing. Management framed the growth within three pillars: fastest cyber recovery enabled by a zero-trust AI-powered architecture, a unified Rubrik Security Cloud (RSC) platform that spans data management and security across on-prem, cloud, and SaaS workloads, and the unique DSPM+cyber recovery integration. The Q3 results also reinforce Rubrik’s multi-year Gen AI strategy (Annapurna) and expanding strategic partnerships (Okta, Pure Storage) that broaden deployment footprints and shorten backup windows. Full-year guidance was raised: subscription ARR of $1.57–$1.61B (≈+35% YoY), total revenue of $860–$862M (≈+37% YoY), and non-GAAP EPS of about -$1.82 to -$1.86 for FY2025, with free cash flow guidance of negative $22M to negative $16M (excluding IPO-related one-time payroll tax). The company also indicated that it does not expect a material benefit from maintenance-to-subscription ARR conversion in FY2026 and expects more normalized quarterly seasonality going forward. Investors should monitor (1) pace of ARR expansion and acceleration of cloud ARR, (2) progression toward breakeven or better on subscription contribution margin, (3) development and monetization of Annapurna and Gen AI-related initiatives, (4) the trajectory of free cash flow against shorter-term consumption-based headwinds, and (5) cadence of enterprise deployments and DSPM deals as demand for secure data and AI adoption evolves.
Key Performance Indicators
Revenue
236.18M
QoQ: 15.24% | YoY:42.62%
Gross Profit
180.03M
76.23% margin
QoQ: 20.20% | YoY:36.50%
Operating Income
-124.79M
QoQ: 25.85% | YoY:-91.16%
Net Income
-130.91M
QoQ: 26.01% | YoY:-51.75%
EPS
6.36
QoQ: 748.98% | YoY:1 397.96%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $236.178M; YoY +42.62%; QoQ +15.24%
Subscription revenue: $221M (approx.); YoY +55%
Total subscription ARR: >$1.0B; YoY growth 38%
Net new subscription ARR: $83M (quarterly record)
Cloud ARR: $769M; YoY growth +69%
Financial Highlights
Summary of key operating metrics and financial performance for QQ3 2025 (YoY and QoQ context where available):
- Revenue: $236.178M; YoY +42.62%; QoQ +15.24%
- Subscription revenue: $221M (approx.); YoY +55%
- Total subscription ARR: >$1.0B; YoY growth 38%
- Net new subscription ARR: $83M (quarterly record)
- Cloud ARR: $769M; YoY growth +69%
- Subscription ARR net retention rate: >120% (Qo3)
- Customers with subscription ARR ≥$100K: 2,085; YoY +32%; these customers represent ~83% of subscription ARR (up from 79% YoY)
- Gross margin (non-GAAP): 79% (YoY: 80%); cloud hosting credits contributed ~150 bps to margin for Q3
- Non-GAAP gross margin: expected to stay at the lower end of 75%–80% long-term target
- Subscription ARR contribution margin (non-GAAP): -3% in last 12 months ended Oct 31; improvement of ~1,100 bps YoY from -14%
- Free cash flow: $15.6M in Q3 2025; YoY growth to positive cash flow; drivers include scale, operating leverage, and working capital
- Q4 FY2025 guidance (non-GAAP unless noted): Revenue $231.5M–$233.5M; EPS (non-GAAP) -$0.41 to -$0.37; Subscription ARR $1.57B–$1.61B; Total revenue $860M–$862M; Non-GAAP subscription ARR contribution margins -3% to -2%
- Full-year FY2025: Free cash flow guidance negative $22M to negative $16M (excluding $23M IPO payroll tax); Net cash provided by operating activities $23.1M; cash at period end $111.1M; net debt about $222.5M
- Balance sheet indicators: Total assets ~$1.269B; total liabilities ~$1.779B; total stockholders’ equity negative ~-$521M; cash and short-term investments ~$0.632B; long-term debt ~$317M; deferred revenue ~$686M (current); substantial scale benefits in operating efficiency anticipated for FY2026.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
236.18M
42.62%
15.24%
Gross Profit
180.03M
36.50%
20.20%
Operating Income
-124.79M
-91.16%
25.85%
Net Income
-130.91M
-51.75%
26.01%
EPS
6.36
1 397.96%
748.98%
Key Financial Ratios
currentRatio
1.16
grossProfitMargin
76.2%
operatingProfitMargin
-52.8%
netProfitMargin
-55.4%
returnOnAssets
-10.3%
returnOnEquity
25.1%
debtEquityRatio
-0.63
operatingCashFlowPerShare
$0.16
freeCashFlowPerShare
$0.11
priceToBookRatio
-11.32
priceEarningsRatio
-11.27
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and quotes from the QQ3 2025 earnings call (grouped by themes):
- Strategy and market position
- “Cyber Resilience is the number one topic in cybersecurity.” (Bipul Sinha)
- “We are winning in the cyber resilience market” and achieved a quarterly record of $83M net new subscription ARR, underscoring market leadership (Bipul Sinha).
- “We are the only vendor in the market that combines fast cyber recovery with data security posture management, or DSPM.” (Bipul Sinha)
- “We surpassed $1 billion in subscription ARR, growing 38% YoY.” (Bipul Sinha)
- Product and platform development
- Rubrik Security Cloud (RSC) as a single platform for automated data management and security control across workloads (enterprise, cloud, SaaS). (Bipul Sinha)
- DSPM for M365 CoPilot announced to reduce the risk of sensitive data exposure and to accelerate secure AI adoption. (Bipul Sinha)
- Annapurna (gen AI initiatives) announced at AWS Reinvent; API service to access business data for gen AI apps; secure data embedding powered by RSC; enterprise data and metadata used to set access controls for AI apps. (Bipul Sinha)
- Customer wins and go-to-market
- DSPM deals nearly doubled QoQ in Q3; enterprise edition adoption and DSPM attach contributing to deal velocity and net retention. (Kiran Choudary)
- Okta integration with Okta Identity Threat Protection combined with RSC context for policy-driven responses (Okta partnership). (Bipul Sinha)
- Pure Storage partnership to deliver a complete cyber resilience solution to reduce backup windows and provide threat detection across production environments. (Bipul Sinha)
- Financials and outlook
- “We exceeded our guidance across all metrics” and raised full-year outlook for FY2025 (Kiran Choudary).
- “Subscription ARR attribution margin up by over 1,100 basis points YoY” highlighting operating leverage (Bipul Sinha).
- “We expect breakeven or better subscription ARR contribution margin for FY2026” and a move toward more normalized quarterly seasonality. (Kiran Choudary)
- Guidance and forward view
- Management emphasized a multi-year, durable growth trajectory driven by cyber resilience and Gen AI-related opportunities; Annapurna represents a long-term strategic initiative with API-first monetization posture under evaluation. (Bipul Sinha)
"Cyber Resilience is the number one topic in cybersecurity."
— Bipul Sinha
"We are the only vendor in the market that combines fast cyber recovery with data security posture management, or DSPM."
— Bipul Sinha
Forward Guidance
Near-term outlook and trajectory: Rubrik reaffirmed FY2025 guidance with Q4 revenue of $231.5M–$233.5M (up 32–33% YoY) and full-year subscription ARR guidance of $1.57B–$1.61B (≈+35% YoY). Total FY2025 revenue guided to $860–$862M (≈+37% YoY). Non-GAAP subscription ARR contribution margin is guided to negative 2% to negative 3%, indicating ongoing leverage from scale but continued profitability pressure on a per-subscription basis. FY2025 non-GAAP EPS expected at about -$1.86 to -$1.82, with ~154M weighted-average shares outstanding.
Key assumptions and risk factors:
- No material benefit from maintenance-to-subscription ARR conversion in fiscal 2026; normalization of quarterly seasonality expected. Management notes that the conversion benefit is unlikely to recur at the same magnitude in FY2026, implying more normalized ARR growth dynamics.
- Shorter invoicing and contract cycles in cloud/SaaS offerings may pose modest headwinds to free cash flow in the near term; management expects some compression in free cash flow for FY2026, albeit still aiming for breakeven or better subscription ARR contribution margin and modestly positive free cash flow late in FY2026.
- Annapurna monetization remains in early stages; monetization modeling and pricing remain under experimentation. Expect updates over the coming years as packaging and price points mature.
- Growth remains contingent on continued adoption of DSPM, enterprise edition, and expanding footprints via Rubrik Security Cloud in cloud-native and SaaS workloads, with partnerships (Okta, Pure Storage) and AI-enabled workloads (CoPilot integration) acting as catalysts.
Investor takeaway: The QQ3 2025 quarter solidified Rubrik’s strategic thesis that cyber resilience is a durable, expanding TAM driven by data-intensive AI workloads, hyperscalers, and cloud-SaaS transformations. The company’s trajectory toward positive free cash flow and subscription-margin breakeven (or better) in FY2026, plus monetization of Annapurna and ongoing ecosystem partnerships, are critical variables for future upside. Monitor: (1) progression toward break-even on subscription margin, (2) acceleration in cloud ARR and DSPM-driven deal flow, (3) monetization milestones for Annapurna, and (4) free cash flow trajectory amid consumption-based pricing dynamics.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RBRK Focus
76.23%
-52.80%
25.10%
-11.27%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Rubrik’s QQ3 2025 results reinforce a long-run, multi-year growth thesis anchored in cyber resilience and AI-enabled data protection. The company’s leadership in fastest cyber recovery, the unification of data security (DSPM) with recovery in a single platform (RSC), and the rapid cloud adoption position Rubrik to benefit from expanding digital transformations and AI workloads. The $1B+ subscription ARR milestone, >$120% net retention, and cloud ARR growth (69% YoY) provide a strong foundation for durable revenue expansion. Management’s FY2026 guidance suggests a move toward subscription-margin breakeven or better and modest positive free cash flow, though near-term cash flow remains pressured by pricing dynamics and shorter contract cycles. The Annapurna initiative and ecosystem partnerships offer meaningful optionality but require time to commercialize. Key catalysts to watch include: progression of enterprise adoption of Enterprise Edition, DSPM deals (which nearly doubled QoQ in Q3), monetization milestones for Annapurna, and continued improvement in operating leverage (subscription ARR contribution margin). If Rubrik can translate its strong ARR growth and product differentiation into sustained profitability and cash generation, the investment case strengthens. If market demand slows or monetization lags, upside could be constrained. Overall, Rubrik remains a high-growth, high-commitment play in the cyber resilience software space with meaningful optionality from Gen AI-enabled data protection strategies.
Key Investment Factors
Growth Potential
Robust growth potential from the expanding cyber resilience TAM, led by DSPM adoption, cyber recovery with DSPM integration, and cloud-native protection across enterprise workloads. The company’s ARR scale (>$1B subscription ARR) and high net retention (>120%) support durable revenue expansion, while the Annapurna gen AI initiative and ongoing ecosystem partnerships (Okta, Pure Storage) offer additional growth vectors and cross-sell opportunities across data security, cloud, and AI workloads.
Profitability Risk
Key risks include ongoing GAAP profitability pressures despite improving non-GAAP metrics, potential cooling of demand if cyber budgets soften, heavy reliance on a relatively small set of large logo deals, execution risk in monetizing Annapurna, and competitive pressure from legacy backup vendors expanding into cyber resilience. Also, balance sheet liabilities with negative stockholders' equity and elevated debt create financial leverage risk; cash flow headwinds from shorter-contract and consumption-based pricing could persist in the near term.
Financial Position
Liquidity is supported by cash and short-term investments (~$632M) with cash at period end of ~$111M. Long-term debt stands around $317M with net debt approximately $222.5M. Total assets about $1.269B versus total liabilities around $1.78B, yielding negative shareholders’ equity (~-$521M). The mix indicates substantial upside from recurring subscription revenue and a path to profitability through scale and efficiency, but a balance-sheet exposure to leverage risk remains and will require sustained cash generation and disciplined capital allocation.