Rubrik Inc

Previous wording

Subscription ARR does not include any maintenance revenue associated with perpetual licenses, which we generally no longer offer. Of the 40% and 72% growth, 2.5 percentage points and approximately 9.0 percentage points of growth for the twelve months ended

Current wording

Subscription ARR does not include any maintenance revenue associated with perpetual licenses, which we generally no longer offer. Of the 38% and 58% growth, 2.0 percentage points and approximately 6.0 percentage points of growth for the twelve months ended

Previous wording

July 31, 2024 and 2023, respectively, were a result of transitioning our existing maintenance customers to our subscription editions.

Current wording

October 31, 2024 and 2023, respectively, were a result of transitioning our existing maintenance customers to our subscription editions. We expect the contributions to growth from these transitions to subside in fiscal 2026.

Previous wording

Free cash flow was $(69.1) million and $(36.7) million for the six months ended July 31, 2024 and July 31, 2023, respectively. Free cash flow for the six months ended July 31, 2024 includes a cash outlay of $22.8 million for employer payroll taxes due to the vesting of certain equity awards in conjunction with the initial public offering. Adjusting for employer payroll taxes, the decrease in free cash flow was primarily due to higher expenses including expenses associated with our acquisition of Laminar which was completed in August 2023 and an increasing mix of annual and consumption payments from customers due to the growth in our Cloud and SaaS products. This trend when combined with changes in new business growth, may result in free cash flow volatility across periods.

Current wording

Free cash flow was $(53.6) million and $(33.2) million for the nine months ended October 31, 2024 and 2023, respectively. Free cash flow for the nine months ended October 31, 2024 includes a cash outlay of $22.8 million for employer payroll taxes due to the vesting of certain equity awards in conjunction with the initial public offering. Adjusting for employer payroll taxes, the modest improvement in free cash flow was primarily due to higher sales that were offset by higher expenses including expenses associated with our acquisition of Laminar which was completed in August 2023, a decrease in contract term due to the growth of our Cloud and SaaS products, and an increasing mix of annual and consumption payments from customers. This trend when combined with changes in new business growth, may result in free cash flow volatility across periods.

Previous wording

Subscription ARR Contribution Margin was (8)%, and (22)% for the 12 months ended July 31, 2024 and July 31, 2023, respectively. For the 12 months ended July 31, 2024, the non-GAAP operating expense includes the recognition of $22.8 million for employer payroll taxes due to the vesting of certain equity awards in conjunction with the initial public offering. Adjusting for this, the Subscription ARR Contribution Margin was (6)% for the 12 months ended July 31, 2024. The increase in Subscription ARR Contribution Margin was primarily driven by the strong year-over-year growth in Subscription ARR, compared to year-over-year growth in non-GAAP subscription costs of sales and non-GAAP operating expenses. We believe that this increase in Subscription ARR Contribution Margin reflects increased operating leverage in our business.

Current wording

Subscription ARR Contribution Margin was (3)%, and (14)% for the 12 months ended October 31, 2024 and 2023, respectively. For the 12 months ended October 31, 2024, the non-GAAP expenses includes the recognition of $22.8 million for employer payroll taxes due to the vesting of certain equity awards in conjunction with the initial public offering. Adjusting for this, the Subscription ARR Contribution Margin was (1)% for the 12 months ended October 31, 2024. The increase in Subscription ARR Contribution Margin was primarily driven by the strong year-over-year growth in Subscription ARR, compared to year-over-year growth in non-GAAP subscription costs of sales and non-GAAP operating expenses. We believe that this increase in Subscription ARR Contribution Margin reflects increased operating leverage in our business.

Previous wording

Comparison of the Three and Six Months Ended July 31, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended October 31, 2024 and 2023

Previous wording

Growth in subscription revenue was driven by growth in Subscription ARR but also benefited from the headwind in fiscal 2024 revenue related to the transition to RSC. Our Subscription ARR grew from $655.0 million as of July 31, 2023 to $919.1 million as of July 31, 2024, representing a 40% increase. Of the increase in Subscription ARR, 2.5 percentage points are a result of transitioning our existing maintenance customers to our subscription editions. A further indication of our ability to expand revenue from existing customers is through our average subscription dollar-based net retention rate which was greater than 120% as of July 31, 2024. We had 1,969 customers with $100,000 or more in Subscription ARR as of July 31, 2024, increasing from 1,463 as of July 31, 2023.

Current wording

Our Subscription ARR grew from $724.8 million as of October 31, 2023 to $1,002.3 million as of October 31, 2024, representing a 38% increase. Of the increase in Subscription ARR, 2.0 percentage points are a result of transitioning our existing maintenance customers to our subscription editions. A further indication of our ability to expand revenue from existing customers is through our average subscription dollar-based net retention rate which was greater than 120% as of October 31, 2024. We had 2,085 customers with $100,000 or more in Subscription ARR as of October 31, 2024, increasing from 1,581 as of October 31, 2023.

Previous wording

Maintenance revenue associated with sales of perpetual licenses of our legacy CDM product decreased for the three and six months ended July 31, 2024. Maintenance revenue represented 2% and 7% of total revenue for the three months ended July 31, 2024 and 2023, respectively and 3% and 8% of total revenue for the six months ended July 31, 2024 and 2023, respectively. We expect the transition of existing maintenance customers adopting RSC subscription offerings to be largely completed by the end of fiscal 2026.

Current wording

Maintenance revenue associated with sales of perpetual licenses of our legacy CDM product decreased for the three and nine months ended October 31, 2024. Maintenance revenue represented 2% and 5% of total revenue for the three months ended October 31, 2024 and 2023, respectively and 2% and 7% of total revenue for the nine months ended October 31, 2024 and 2023, respectively. We expect the transition of existing maintenance customers adopting RSC subscription offerings to be largely completed by the end of fiscal 2026.

Previous wording

Other revenue, which consists primarily of sales of Rubrik-branded Appliances and professional services, decreased for the three and six months ended July 31, 2024. Sales of Rubrik-branded Appliances decreased by $3.8 million and $8.9 million for the three and six months ended July 31, 2024, respectively, as we are transitioning sales of our Rubrik-branded Appliances from us to our contract manufacturers and no longer offer new perpetual licenses. We expect our other revenue as a percentage of total revenue to continue to decrease.

Current wording

Other revenue, which consists primarily of sales of Rubrik-branded Appliances and professional services, decreased for the three and nine months ended October 31, 2024. Sales of Rubrik-branded Appliances decreased by $2.3 million and $11.2 million for the three and nine months ended October 31, 2024, respectively, as we are transitioning sales of our Rubrik-branded Appliances from us to our contract manufacturers and no longer offer new perpetual licenses. We expect our other revenue as a percentage of total revenue to continue to decrease.

Previous wording

Cost of subscription revenue increased for the three and six months ended July 31, 2024 primarily due to the recognition of stock-based compensation expense of $5.4 million and $40.7 million, respectively, after and as a result of the completion of our IPO, an increase in $12.7 million and $23.9 million, respectively, in hosting costs due to the development and launch of more SaaS products, and an increase of $2.4 million and $6.8 million, respectively, from growth in our customer support organization.

Current wording

Cost of subscription revenue increased for the three and nine months ended October 31, 2024 primarily due to the recognition of stock-based compensation expense of $4.6 million and $45.3 million, respectively, after and as a result of the completion of our IPO, an increase in $13.1 million and $36.9 million, respectively, in hosting costs due to the launch and adoption of more SaaS products by our customers, and an increase of $2.6 million and $9.3 million, respectively, from growth in our customer support organization.

Previous wording

Cost of maintenance revenue decreased for the three months ended July 31, 2024 primarily due to a decrease in our customer support organization costs relating to maintenance revenue as we no longer offer new perpetual licenses and as existing maintenance customers adopt RSC subscription offerings. Cost of maintenance revenue increased for the six months ended July 31, 2024 primarily due to $2.7 million in stock-based compensation expense we recognized after and as a result of the completion of our IPO, partially offset by a $1.8 million decrease in our customer support organization costs relating to maintenance revenue as we no longer offer new perpetual licenses and as existing maintenance customers adopt RSC subscription offerings.

Current wording

Cost of maintenance revenue decreased for the three months ended October 31, 2024 primarily due to a decrease in our customer support organization costs relating to maintenance revenue as we no longer offer new perpetual licenses and as existing maintenance customers adopt RSC subscription offerings. Cost of maintenance revenue increased for the nine months ended October 31, 2024 primarily due to $2.9 million in stock-based compensation expense we recognized after and as a result of the completion of our IPO, partially offset by a $2.6 million decrease in our customer support organization costs relating to maintenance revenue as we no longer offer new perpetual licenses and as existing maintenance customers adopt RSC subscription offerings.

Previous wording

Cost of other revenue decreased for the three months ended July 31, 2024 primarily due to a decrease in Rubrik-branded Appliances costs as we are transitioning the sale of Rubrik-branded Appliances from us to our contract manufacturers. Cost of other revenue increased for the six months ended July 31, 2024 primarily due to $12.5 million in stock-based compensation expense we recognized after and as a result of the completion of our IPO, partially offset by a decrease in Rubrik-branded Appliances costs of $8.4 million as we are transitioning the sale of Rubrik-branded Appliances from us to our contract manufacturers.

Current wording

Cost of other revenue decreased for the three months ended October 31, 2024 primarily due to a decrease in Rubrik-branded Appliances costs as we are transitioning the sale of Rubrik-branded Appliances from us to our contract manufacturers. Cost of other revenue increased for the nine months ended October 31, 2024 primarily due to $13.6 million in stock-based compensation expense we recognized after and as a result of the completion of our IPO, partially offset by a decrease in Rubrik-branded Appliances costs of $10.6 million as we are transitioning the sale of Rubrik-branded Appliances from us to our contract manufacturers.

Previous wording

Subscription gross margin decreased for the three and six months ended July 31, 2024 due to the stock-based compensation expense we recognized after and as a result of the completion of our IPO and an increase in hosting costs associated with our development and launch of more SaaS products.

Current wording

Subscription gross margin decreased for the three and nine months ended October 31, 2024 due to the stock-based compensation expense we recognized after and as a result of the completion of our IPO and an increase in hosting costs associated with our development and launch of more SaaS products.

Previous wording

Research and development expenses increased for the three and six months ended July 31, 2024. Employee compensation and related expenses increased by $34.8 million and $272.2 million, respectively, due to $27.7 million and $251.7 million, respectively, of stock-based compensation expense we recognized after and as a result of the completion of our IPO and increases in headcount as we continued to develop new products and enhance the functionalities of our existing products.

Current wording

Research and development expenses increased for the three and nine months ended October 31, 2024. Employee compensation and related expenses increased by $27.0 million and $299.1 million, respectively, due to $22.9 million and $274.6 million, respectively, of stock-based compensation expense we recognized after and as a result of the completion of our IPO and increases in headcount as we continued to develop new products and enhance the functionalities of our existing products.

Previous wording

Sales and marketing expenses increased for the three and six months ended July 31, 2024. Employee compensation and related expenses increased by $45.4 million and $305.5 million, respectively, due to $33.7 million and $273.4 million, respectively, of stock-based compensation expense we recognized after and as a result of the completion of our IPO and increases in headcount.

Current wording

Sales and marketing expenses increased for the three and nine months ended October 31, 2024. Employee compensation and related expenses increased by $32.9 million and $338.5 million, respectively, due to $27.2 million and $300.6 million, respectively, of stock-based compensation expense we recognized after and as a result of the completion of our IPO and increases in headcount.

Previous wording

Interest income increased for the three and six months ended July 31, 2024 due to higher cash, cash equivalents, and investment balances and higher interest rates.

Current wording

Interest income increased for the three and nine months ended October 31, 2024 due to higher cash, cash equivalents, and investment balances and higher interest rates.

Previous wording

Interest expense increased for the three and six months ended July 31, 2024 primarily due to our Prior Credit Facility and Amended Credit Facility (each as defined below).

Current wording

Interest expense increased for the three and nine months ended October 31, 2024 primarily due to our Prior Credit Facility and Amended Credit Facility (each as defined below).

Previous wording

Our income tax expense decreased for the six months ended July 31, 2024 due to several of our foreign subsidiaries making an election in the current year to be treated as U.S. branches for federal income tax purposes effective in fiscal 2024.

Current wording

Our income tax expense decreased for the nine months ended October 31, 2024 due to the impact of integrating the operations of Laminar during the three months ended October 31, 2023 and several of our foreign subsidiaries making an election in the current year to be treated as U.S. branches for federal income tax purposes effective in fiscal 2024.

Previous wording

Our billings grow with new business growth. The majority of our billings are driven by invoicing our customers for multi-year commitments. However, this may evolve as customers have opted to, and may continue to opt to, pay us on an annual basis based on products purchased due to the growth in our SaaS product offerings and the uncertain macroeconomic environment. In addition, our billings are subject to seasonality, with billings in the fourth quarter being substantially higher than in the other three quarters. As of July 31, 2024, we had cash, cash equivalents, and short-term investments of $601.3 million. Our cash equivalents and investments primarily consist of money market funds, U.S. treasuries, commercial paper, corporate bonds, and U.S. government agencies securities. We have generated significant operating losses from our operations as reflected in our accumulated deficit of $(2,591.5) million as of July 31, 2024. We expect to continue to incur operating losses, and our operating cash flows may fluctuate between positive and negative amounts for the foreseeable future due to the investments we intend to make as described above. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.

Current wording

Our billings grow with new business growth. The majority of our billings are driven by invoicing our customers for multi-year commitments. However, this may evolve as customers have opted to, and may continue to opt to, pay us on an annual or consumption basis based on products purchased due to the growth in our SaaS product offerings. In addition, our billings are subject to seasonality, with billings in the fourth quarter being substantially higher than in the other three quarters. As of October 31, 2024, we had cash, cash equivalents, and short-term investments of $632.0 million. Our cash equivalents and investments primarily consist of money market funds, U.S. treasuries, commercial paper, corporate bonds, and U.S. government agencies securities. We have generated significant operating losses from our operations as reflected in our accumulated deficit of $(2,722.4) million as of October 31, 2024. We expect to continue to incur operating losses, and our operating cash flows may fluctuate between positive and negative amounts for the foreseeable future due to the investments we intend to make as described above. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.

Previous wording

For the six months ended July 31, 2024, net cash used in operating activities of $58.5 million resulted primarily from a net loss of $909.0 million, partially offset by $735.3 million of stock-based compensation, $42.4 million of amortization of deferred commissions, $19.2 million for non-cash interest related to debt, $14.1 million for depreciation and amortization, and $39.6 million of net cash inflow from changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $95.3 million increase in deferred revenue from increased billings and a $17.7 million increase in accrued expenses and other liabilities. The cash inflow was partially offset by a $70.2 million increase in deferred commissions and a $4.8 million increase in accounts receivable.

Current wording

For the nine months ended October 31, 2024, net cash used in operating activities of $35.4 million resulted primarily from a net loss of $1,039.9 million, partially offset by $827.9 million of stock-based compensation, $66.4 million of amortization of deferred commissions, $29.1 million for non-cash interest related to debt, $21.5 million for depreciation and amortization, and $62.8 million of net cash inflow from changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $177.0 million increase in deferred revenue from increased billings and a $3.9 million increase in accounts payable. The cash inflow was partially offset by a $90.4 million increase in deferred commissions, a $14.3 million increase in prepaid expense and other assets and a $14.3 million increase in accounts receivable.

Previous wording

For the six months ended July 31, 2023, net cash used in operating activities of $24.2 million resulted primarily from a net loss of $170.4 million, partially offset by $36.1 million of amortization of deferred commissions, $11.6 million for depreciation and amortization, $6.0 million for non-cash interest related to debt, and $90.0 million of net cash inflow from changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $155.1 million increase in deferred revenue from increased billings and a $17.1 million decrease in prepaid expense and other assets. The cash inflow was partially offset by a $55.6 million increase in deferred commissions and $25.4 million decrease in accrued expenses and other liabilities.

Current wording

For the nine months ended October 31, 2023, net cash used in operating activities of $17.3 million resulted primarily from a net loss of $256.7 million, partially offset by $56.7 million of amortization of deferred commissions, $17.8 million for depreciation and amortization, $10.1 million for non-cash interest related to debt, and $152.4 million of net cash inflow from changes in operating assets and liabilities. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $230.4 million increase in deferred revenue from increased billings, a $13.1 million decrease in accounts receivable and a $5.9 million decrease in prepaid expense and other assets. The cash inflow was partially offset by a $75.8 million increase in deferred commissions and $20.7 million decrease in accrued expenses and other liabilities.

Previous wording

For the six months ended July 31, 2024, net cash used in investing activities of $315.5 million resulted from $449.3 million in purchases of investments, $6.2 million in purchases of property and equipment, and $4.5 million in capitalized internal-use software, offset by $144.5 million in proceeds from maturities and sales of investments.

Current wording

For the nine months ended October 31, 2024, net cash used in investing activities of $387.6 million resulted from $641.3 million in purchases of investments, $11.3 million in purchases of property and equipment, and $6.9 million in capitalized internal-use software, offset by $271.9 million in proceeds from maturities and sales of investments.

Previous wording

For the six months ended July 31, 2023, net cash used in investing activities of $22.2 million resulted from $149.8 million in purchases of investments, $7.9 million in purchases of property and equipment, and $4.6 million in capitalized internal-use software, offset by $140.1 million in proceeds from maturities and sales of investments.

Current wording

For the nine months ended October 31, 2023, net cash used in investing activities of $122.0 million resulted from $221.6 million in purchases of investments, $90.3 million paid to acquire Laminar, $9.3 million in purchases of property and equipment, and $6.6 million in capitalized internal-use software, offset by $205.8 million in proceeds from maturities and sales of investments.

Previous wording

For the six months ended July 31, 2024, net cash provided by financing activities of $384.4 million resulted primarily from $815.2 million in proceeds from our IPO and underwriters' exercise of over-allotment option, net of underwriting discounts and commissions, and $3.7 million from the exercise of stock options, partially offset by $430.3 million in taxes paid related to the net share settlement of equity awards that vested since our IPO, and $3.5 million for payment of deferred offering costs.

Current wording

For the nine months ended October 31, 2024, net cash provided by financing activities of $396.1 million resulted primarily from $815.2 million in proceeds from our IPO and underwriters' exercise of over-allotment option, net of underwriting discounts and commissions, $11.1 million in proceeds from issuance of common stock under employee stock purchase plan, and $6.6 million from the exercise of stock options, partially offset by $432.5 million in taxes paid related to the net share settlement of equity awards that vested since our IPO, and $3.5 million for payment of deferred offering costs.

Previous wording

For the six months ended July 31, 2023, net cash provided by financing activities of $0.8 million resulted from $2.0 million from the exercise of stock options, offset by $1.2 million for payment of deferred offering costs.

Current wording

For the nine months ended October 31, 2023, net cash provided by financing activities of $96.4 million resulted primarily from $96.5 million in proceeds from the issuance of debt, net of discount and $3.1 million from the exercise of stock options, offset by $2.9 million for payment of deferred offering costs.